$600,000 PER MONTH ENOUGH FOR DODGER CEO JAMIE MCCOURT

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Did you see the CBS news piece where Los Angeles Dodgers CEO Jamie McCourt has asked the family law court to continue ordering her soon-to-be-ex-husband to pay more than $600,000 per month in spousal support – in spite of the fact the Dodgers recently filed for bankruptcy.  Hmm, we ask.  And where might Frank McCourt continue to come up with this not-so-modest sum of cash?

Well, in her opposition papers filed last week in their divorce case, Jamie said that should be no problem.  Frank has access to more than “$70 million in income and assets” that should be able to help him satisfy such a large support order.  Of course poor Frank, in his moving papers, didn’t agree.  He felt his payments should be more in line with the paltry $5 million he receives annually.  And we, the fans and distant observers, can only sigh and blink our eyes at the unreality these two face; the problems we wish we had to deal with.

Stay tuned.  Their hearing is set for August 10th.

TEMPORARY SPOUSAL SUPPORT: NEED VERSUS ABILITY TO PAY

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One of the most common issues regarding a family law order to show cause is temporary spousal support.  Any motion involving temporary spousal support would begin with Family Code §3600.  This section provides that the court may order a party to “pay any amount that is necessary for the support of the wife or husband.”  This has been interpreted by the courts to be the maintaining of the status quo, subject to the general criterion of “Need” and “Ability to Pay.”  In re Marriage of Schulze (1997) 60 Cal.App.4th519, 70 C.Rptr.2d 488.

The reality is that in family law, “Need” and “Ability to Pay” are at opposite ends of the same spectrum.  “Ability to Pay” applies to the income of the high earner in the relationship, while “Need” is the income of the low earner.

COURT HAS DISCRETION RE DIVIDING COMMUNITY RETIREMENT PLANS

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Retirement plans and the community benefits to be derived therefrom are covered under California Family Code §2610.  According to the code, with some exceptions, in a dissolution action the court shall make “whatever orders are necessary or appropriate” to ensure that each party receives the party’s full community property share in any retirement plan, whether public or private, including all survivor and death benefits.  This might include the court ordering one party to elect a survivor benefit annuity or other similar election for the benefit of the other party, as specified by the court, in any case in which a retirement plan provides for such an election, “provided that no court shall order a retirement plan to provide increased benefits determined on the basis of actuarial value.”

SERVICEMEN’S NON-TAXABLE ALLOWANCES INCLUDED IN GROSS INCOME

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For anyone who serves in the military an important case has come down that might affect their obligations to pay spousal support and child support.  The case is In re Marriage of Stanton, (11/24/10), 4 Civ D056713, Div 1 (McConnell) 2010 WL 4751776, in which the California appellate court held that a serviceman’s non-taxable allowances for housing and food are includible in his or her gross income for purposes of calculating child or spousal support.

In deciding this case of first impression, and in following a majority of out-of-state decisions, CA-4 concluded that:

  1. The Federal preemption issue may be considered on appeal because the trial court had the jurisdiction to consider it;
  2. Nontaxable status of military allowances does not mean that Congress intended federal law to preempt child or spousal support;
  3. Protection of military allowances from garnishment does not support preemption;
  4. USSCT authority exempts family law support matters from federal jurisdiction unless federal law requires preemption;
  5. BAH and BAS statutes do not specifically require preemption; and,
  6. Family Code Section 4058(a)(1) precluded the trial court from considering mother’s spousal support payments from father as part of her gross income for child support purposes.

TERMINATION OF CHILD SUPPORT CONSTITUTES CHANGED CIRCUMSTANCES RE SPOUSAL SUPPORT

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When it comes to modifying spousal support, a party might want to look at California Family Code §4326.  This section dictates that the termination of child support by operation of law constitutes a change of circumstances within the code, and that change may justify a request to modify spousal support.  To effectuate this, a motion for modification must be filed within six (6) months from the date that child support order ends.  Either party may file such a motion.

However, there are exceptions to the statute that should be noted.  They occur when jurisdiction over spousal support was previously terminated, or where the child support and spousal support orders are the result of a marital settlement agreement (MSA) or dissolution judgment that (1) provides that spousal support is not modifiable or is waived, and jurisdiction over such support has ended, or; (2) specifies what will happen when the child support order terminates.

SUPPORT MODIFICATION NOT TO BE APPLIED RETROACTIVELY

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In California, an important rule for parties to remember is that the court cannot reserve jurisdiction to retroactively modify an existing support order based upon the outcome of an expert’s later review of the parties’ incomes.  This is exactly what Irmo Gruen (2011) 191 Cal.App.4th 627, stands for.

Gruen was a high-income case where Husband tried to retroactively modify a temporary support order he did not agree with.  The 4th District Court of Appeal did not agree with Mr. Gruen’s request for retroactive modification.

In dealing with any kind of support modification issue, it is important to remember that family law courts generally will not revise temporary or permanent support orders unless there has been a proven material change of circumstances.  And even if changed circumstances are shown, the trial court cannot retroactively modify an existing order for temporary support.  The filing date is what establishes the outermost limit regarding retroactivity.

According to Irmo Tavares (2007) 151 Cal.App.4th 620, 615-628, The “Legislature established a bright-line rule that accrued child support vests and may not be adjusted up or down.”  If a parent feels the amount ordered is too high – or too low – he or she must seek prospective modification.  Accordingly, trial courts have no discretion to absolve an obligor of support arrearages.

CHANGED CIRCUMSTANCES RE MODIFICATION OF SPOUSAL SUPPORT

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Any party who decides to modify spousal support must consider all factors as set forth in Family Code §4320Irmo West (2007) 152 Cal.App.4th 240, 247.)  A change of circumstances justifying modification of support must be shown in either a reduction or an increase in the supporting spouse’s ability to pay or in the supported spouse’s needs.  (Irmo Dietz (2009) 176 Cal.App.4th 387, 396.)

California courts agree that changed circumstances can be found in factors such as an annuity payment derived from a party’s property, because it reduces the supported party’s need for support.  The existence, and not the source of sums of money or services available, is considered the relevant factor in such a case.

HUSBAND’S RETIREMENT INCOME SUBJECT TO SPOUSAL SUPPORT

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In California courts have ruled that it is okay to consider a husband’s retirement income when awarding spousal support, even though the retirement income was awarded to a party in the division of property.  In Irmo White (1987) 192 Cal.App.3d 1022, the court determined that a claim for support is not a claim to an ownership interest, but is a claim that monthly pension benefits “constitute income to (a party) which must be considered when assessing ability to pay spousal support.”

In White, the husband had been awarded the pension, while the wife was awarded the house.  In reaching its decision regarding husband’s pension, the court determined that any division of community property should be considered to be distinct from the ordering of support.

Because the division of community property is premised on absolute ownership of community assets by both parties, each must receive a respective full share.  In contrast, an award of spousal support is “broadly discretionary,” and it is based on considerations of equity in which the trial court needs to consider such factors as the needs and incomes of both parties.

HOW GAVRON APPLIES TO SPOUSAL SUPPORT

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We often deal with cases where one side wishes to modify a previous spousal support spousal support order.  One of the leading cases involving this area is Irmo Gavron (1988) 203 Cal.App.3d 705, which advises that at the time of any spousal support judgment, a supported spouse should be given a Gavron warning, which dictates that self support is expected, and that spousal support will likely terminate if the supported party fails diligently to take steps to enhance his or her earning ability.  The court further noted that any such warning should indicate that the supported spouse should make every effort to diligently “enhance her (or his) earning ability through retraining and education, and if she (he) fails to do so, support could be reduced or terminated.”

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