Asfaw v. Woldberhan

• Decision Date: 27 February 2007
• Docket Number: No. B182096.,B182096.
• Citation: 55 Cal.Rptr.3d 323,147 Cal.App.4th 1407
• Court: California Court of Appeals Court of Appeals
• Parties: Yesem ASFAW, Plaintiff and Appellant, v. Zeman WOLDBERHAN, Defendant and Respondent.

55 Cal.Rptr.3d 323

147 Cal.App.4th 1407

Yesem ASFAW, Plaintiff and Appellant, v. Zeman WOLDBERHAN, Defendant and Respondent.

No. B182096.

Court of Appeal, Second District, Division 8.

February 27, 2007.

Certified for Partial Publication.^*

Hahn & Hahn, Don Mike Anthony and Candice K. Rogers., Pasadena, for Plaintiff and Appellant.

Law Offices of Gary W. Kearney and Gary W. Kearney, Pasadena, for Defendant and Respondent.

RUBIN, J.

Plaintiff and appellant Yesem Asfaw (mother) appeals from the judgment pursuant to which defendant and respondent Zeman Woldberhan (father) is required to pay monthly child support in the amount of $882. Mother contends the trial court erred: (1) in calculating child support payments; (2) in failing to order father to pay one-half of the children's uninsured medical expenses; and (3) in failing to make the child support payments retroactive to the filing of mother's initial order to show cause. We conclude that the trial court properly refused to make child support payments retroactive to the filing of the initial order to show cause, but reverse and remand with instructions to recalculate the child support payments and to make an order concerning payment of the children's uninsured medical expenses.

FACTUAL AND PROCEDURAL BACKGROUND

According to the original petition for dissolution of marriage, mother and father were married on June 18, 1994 and had two children: Addis, born November 1994; and Mikias, born November 1996. The couple legally separated on March 5, 1999, and mother filed the petition for dissolution on May 26, 1999. On July 7, 1999, father filed a response and request for (1) dissolution of marriage based on irreconcilable differences, and (2) nullity of marriage based on prior existing marriage. On August 24, 1999, the court made various custody and support orders.

The following years were contentious. A bifurcated trial commenced on August 27, 2004, and on that date a judgment of nullity was granted.¹ Evidence was completed on October 8, 2004. In a judgment filed November 4th, the trial court awarded parents joint legal and physical custody of the children with mother's home being the children's primary residence and mother having sole responsibility for decisions regarding medical and psychological treatments.

On November 23rd, the trial court filed a Memorandum of Intended Decision Re: Child Support. Adopting the dissomaster printout as its findings, the trial court ordered father to pay monthly child support, retroactive to September 1, 2004, in the amount of $882.

Mother requested a statement of decision regarding, in pertinent part, father's actual gross income from the apartments he owns, father's actual business expenses attributable to the apartments, father's income from all sources available for child support and father's net income, after taxes, available for child support. Pursuant to the trial court's order, father prepared a proposed statement of decision. Mother objected to the proposed statement.

In a Statement of Decision filed February 1, 2005, the court found, in pertinent part, as follows: (1) father's gross income from the apartments was $384,000 in 2003; (2) father's business expenses for 2003 attributable to those apartments was $357,000; (3) father owns only 50 percent of one of the apartments; (4) father's "actual gross annual income" from a parking lot he operated was $30,000 ($2,500 per month); (5) father's lease of the parking lot is a valid transaction; (6) gross income from the parking lot is attributable to father for purposes of calculating child support; (7) father's business expenses attributable to the parking lot is $1,400 per month ($16,800 annually); (8) the business expenses listed by father on Attachment 2 to his June 26, 2004, income and expense declaration were legitimate; (9) the monies father received from selling/refinancing real properties held in his name were paid to buy-out the interests of others who held an interest in the properties and so there were no funds the court could consider as income available to pay child support; (10) father's monthly sources of income from which to pay child support were: (a) $1,100 net profits from the parking lot; and (b) $2,250 income from apartment rentals; and (11) father's net monthly income was $2,685.

In a judgment filed that same day, the court found: (1) father's time with the two minor children is 20 percent; (2) father has gross monthly income of $3,350; (3) mother has gross monthly income of $3,771; and (4) mother has monthly child care expenses of $350. Based on those findings, the court ordered: (1) father to pay child support in the amount of $882 per month; (2) mother and father to each pay one-half of the children's private school tuition for the 2004/2005 school year; and (3) father to pay mother's attorney's fees in the amount of $10,000.

Mother filed a timely notice of appeal.

DISCUSSION

1. Child Support

Mother contends the trial court erred in calculating child support. She argues: (1) depreciation of father's rental properties should not have been used to reduce father's business income, and (2) the evidence was otherwise insufficient to support the finding that father's gross monthly income was only $3,350. We agree that depreciation is not properly deductible under the relevant Family Code provisions — section 4058 ("annual gross income") and section 4059 ("annual net disposable income").² Because of incorrect treatment of depreciation and for other reasons, the trial court's findings regarding father's gross monthly income are not supported by the evidence.

a. Depreciation of Rental Property in Calculating Child Support

In an attachment to his income and expense declaration filed June 26, 2004, father averred that the income derived from his rental properties was $384,000. (Judicial Council Form FL-150.) From that sum, he subtracted $357,000 in expenses, including "depreciation" of $57,000. He thus claimed $27,000 of net income derived from his rental holdings ($384,000-$357,000 = $27,000). The trial court (1) found the declared "business expenses," including the depreciation allocation, were "legitimate and appropriate business expenses" of father, and (2) calculated child support based on father's net income as reduced by those expenses.³

We have found no reported California opinion that addresses the propriety of deducting depreciation from annual gross income under these circumstances.⁴ Our analysis of the statutory language, the stated California policies attendant to a parent's child support obligations, and the available authorities on the subject, causes us to conclude that depreciation is not deductible, and that the trial court erred in this respect.

(i) Standard of Review

As in the trial court, we must determine whether depreciation is allowable under the statutory framework by which child support is calculated in California. Typically, an appellate court's review of child support orders is limited to whether the trial court abused its discretion. (See e.g., In re Marriage of Chandler (1997) 60 Cal.App.4th 124, 128, 70 Cal.Rptr.2d 109.) However, when an issue on appeal is strictly the interpretation of a statute, we traditionally exercise de novo review. (Sonoma State University v. Workers' Comp. Appeals Bd. (2006) 142 Cal.App.4th 500, 503, 48 Cal.Rptr.3d 330.) In the context of child support orders, the rule is no different. (See In re Marriage of Pearlstein (2006) 137 Cal.App.4th 1361, 1371-1372, 40 Cal.Rptr.3d 910 [interpretation of definition of income]; In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 282-283, 111 Cal.Rptr.2d 755 (Cheriton).) Hence, we review independently the trial court's order.

(ii) The Statutory Framework

Court ordered child support in California is, for the most part, a creature of statute. (See Cheriton, supra, 92 Cal. App.4th at pp. 282-283, 111 Cal.Rptr.2d 755 [child support is "a highly regulated area of the law"].) Sections 4058 and 4059 at issue here are part of Division 9, Part 2, Article 2 of the Family Code. (See Statewide Uniform Guideline, 29F West's Ann. Fam.Code (2004 ed.) foil. § 4050 et seq, p. 103.) The Legislature's expressed intent is that the uniform guidelines are necessary to insure that state law "remains in compliance with federal regulations for child support guidelines." (§ 4050.)⁵ Courts have the power to depart from the guidelines only in "the special circumstances" set forth in Article 2. (§ 4052.) In implementing the statutory scheme, the Legislature declared that "the courts shall adhere' to" the principles enumerated in the Family Code. (§ 4053.) Even where the Legislature has expressly afforded the courts discretion, "the only discretion a trial court possesses is the discretion provided by statute or rule. [Citations.]" (In re Marriage of Butler & Gill (1997) 53 Cal.App.4th 462, 465, 61 Cal.Rptr.2d 781; see In re Marriage of Leonard (2004) 119 Cal.App.4th 546, 555, 14 Cal.Rptr.3d 482 ["trial court discretion is not so broad that it `may ignore or contravene the purposes' " of the child support law]; In re Marriage of Muldrow (1976) 61 Cal. App.3d 327, 332,132 Cal.Rptr. 48.)

The actual amount of child support to be paid by the higher earning parent is determined by a formula, the components of which require the computation of each parent's annual gross income and annual net disposable income. (Mejia v. Reed (2003) 31 Cal.4th 657, 669, 3 Cal.Rptr.3d 390, 74 P.3d 166 (Mejia).) Annual gross income is generally defined in section 4058 as "income from whatever source derived." (See In re Marriage of Henry (2005) 126 Cal.App.4th 111, 118, 23 Cal.Rptr.3d 707.) Net disposable income, in turn, is computed by deducting from annual gross income amounts actually attributable to certain specified expenses. (§ 4059.)⁶

Fueling our interpretation of the statutory guidelines are various policies which the Legislature has identified. In its broadest formulation, "California...