Cortese v.

• Decision Date: 26 December 2013
• Docket Number: DR09110671,A147560.
• Citation: 317 P.3d 340,260 Or.App. 291
• Parties: In the Matter of the MARRIAGE Andrea Kay CORTESE, Petitioner–Respondent, and Joseph Giuseppi Cortese, Respondent–Appellant, and Raffael Cortese and Francesca Cortese, Appellants.
• Court: Oregon Court of Appeals

260 Or.App. 291

317 P.3d 340

In the Matter of the MARRIAGE Andrea Kay CORTESE, Petitioner–Respondent, and Joseph Giuseppi Cortese, Respondent–Appellant, and Raffael Cortese and Francesca Cortese, Appellants.

DR09110671; A147560.

Court of Appeals of Oregon.

Argued and Submitted July 30, 2012.

Decided Dec. 26, 2013.

Helen C. Tompkins argued the cause and filed the briefs for appellants.

Richard W. Todd argued the cause for respondent. With him on the brief was Todd & Shannon.

Before ORTEGA, Presiding Judge, and SERCOMBE, Judge, and HADLOCK, Judge.

ORTEGA, P.J.

Husband appeals a general judgment of dissolution awarding spousal support, an order of contempt for violating that general judgment by not paying spousal support, and a supplemental judgment awarding attorney fees. We write to address husband's first assignment of error, that the trial court's transitional spousal support award was based on a finding of his earning capacity that the record does not support. We conclude that the trial court did not err in that award and reject husband's other assignments of error without discussion. Husband's parents also appeal the dissolution judgment, challenging the award of certain personal property to wife, and we likewise conclude that the trial court did not err in that award. Accordingly, we affirm.

We begin with a procedural summary. Wife, married to husband since 1993, petitioned for dissolution of their marriage in November 2009 in Clackamas County Circuit Court. Shortly before the original trial date (which was ultimately set over to a later date), parents filed a lawsuit against husband in Multnomah County Circuit Court alleging that he owed them about $76,000. At the time, husband was living in parents' home. That court entered a default judgment against husband, and the following month issued a writ of execution to the Clackamas County Sheriff, ordering the satisfaction of the default judgment amount out of husband's personal property. Parents' attorney instructed the sheriff to levy and sell a Dodge Viper, some other vehicles, and firearms, all of which were located at the family home, where wife was then living. Shortly thereafter, the sheriff seized the Viper and other items and provided notice of a public auction date. When wife learned of the default judgment and efforts to execute it, she objected to the sale of any marital property, and the sheriff's sale was postponed pending the outcome of the dissolution hearing.

Wife then moved to join parents as necessary parties to the dissolution proceeding so that complete relief could be accorded to husband and wife, and the trial court granted that motion. After the dissolution trial, the court entered a general judgment ordering husband to pay child support of $457 per month and transitional spousal support of $1,500 per month for three years, to be followed by maintenance spousal support of $1,000 per month for seven years. The court based the spousal support award on its determination that husband's earning capacity was $8,000 per month. The trial court divided husband and wife's assets and debts, awarding the Viper to wife free of any claim by husband or parents. Husband and parents appealed.

Several months after the appeal was filed, the trial court held husband in contempt for violating the dissolution judgment by failing to pay spousal support, and husband amended his notice of appeal to include the contempt order. A few months later, the trial court entered a supplemental judgment against husband awarding wife $25,000 in attorney fees under ORCP 68, based on its conclusions that the dissolution proceeding “was made substantially more difficult because of [husband's] conduct” and that husband “significantly increased [wife's] legal fees by failing to comply with discovery requests, by secreting assets, and by generally being less than forthright in his approach to resolution of this case.” The court found that husband “did all he could to protect his parents at the expense of [wife].” Husband again amended his notice of appeal to include that supplemental judgment.

Husband asks that we review the award of transitional spousal support de novo. SeeORS 19.415(3)(b) (providing for discretionary de novo review on appeal in certain equitable actions); Turner and Muller, 237 Or.App. 192, 194–98, 238 P.3d 1003 (2010), rev. den.,350 Or. 231, 253 P.3d 1080 (2011) (exercising discretionary de novo review in a domestic relations case). Parents do not make a similar request with regard to the award of the Viper to wife. We do not view this as the type of exceptional case that justifies de novo review, and therefore decline to exercise such review. SeeORAP 5.40(8)(c). Accordingly, we review the trial court's award of spousal support and the Viper to wife for legal error and “state the facts consistently with those found by the trial court to the extent that there is evidence to support them.” Nice v. Townley, 248 Or.App. 616, 618, 274 P.3d 227 (2012); see Kirkpatrick and Kirkpatrick, 248 Or.App. 539, 541 n. 1, 273 P.3d 361 (2012) (the court states “the facts consistently with the trial court's express and implied findings, supplemented with the uncontroverted information from the record”).

We begin with husband's challenge to the spousal support award, which centers on husband's argument that the trial court's determination that his potential earning capacity was $8,000 per month was based on “instinct” and not supported by evidence in the record. At the time of trial, husband owned a business that sold automotive service equipment. Once prosperous, its fortunes took a turn for the worse after losing a franchise in Canada. Husband had been earning a monthly salary of $12,000, but stopped receiving any salary three months after wife filed for divorce. In 2010, in the months leading up to the trial, a significant amount of money—about $120,000—was deposited in one of the business checking accounts and then debited without an explanation. Husband had actively managed and operated the business since 1998, but by the time of trial, he had hired someone else to run the business so that he could have time to look for a job. Husband applied for two jobs in the eight months after he stopped receiving a salary from his business and before the trial. He has a bachelor's degree in automated manufacturing and an associate's degree in electronic engineering. Before starting his business, husband had worked in the field of automotive service equipment.

Wife has a high school diploma and was a stay-at-home parent for most of the marriage. She worked as a preschool physical education teacher for about two years before the dissolution trial, earning $11 an hour without any paid vacation or medical insurance benefits. At the time of trial, wife received about $500 monthly in supplemental nutritional assistance. Husband, at the time of trial, collected unemployment insurance of $1,800 per month while he lived with his parents. In addition to his unemployment income, husband received from his business family health insurance in the amount of $945 per month, as well as reimbursement for his family's cell phone expense and use of a credit card for personal expenses in the amount of about $1,000 per month.

Husband contends that the trial court should have used his actual income, which he pegs at $1,800 per month, in setting transitional spousal support, rather than the $8,000 per month which the court found was his earning capacity. Husband relies primarily on two cases in which we concluded that an award of spousal support based on projected income rather than actual income was too speculative: Waterman and Waterman, 158 Or.App. 267, 974 P.2d 256 (1999), and Hendgen and Hendgen, 242 Or.App. 242, 255 P.3d 551 (2011).

In Waterman, exercising then-mandatory de novo review,¹ we held that the husband's spousal support obligations should be based on his actual income, rather than his past income or income potential, because there was little evidence to rebut his testimony that a higher wage was not available to him. 158 Or.App. at 271, 974 P.2d 256. We recognized that the term “earning capacity” in ORS 107.105(1) allows the trial court to consider a spouse's past income and “income potential,” but also noted that the court must be “circumspect about imposing a support award based on income not presently available.” Id. Nevertheless, we acknowledged that, in some cases, spousal support may be based on earning capacity higher than actual income when the obligor has not presented evidence that could explain the inability to earn an amount consistent with past income. Id.; see also Pagano and Pagano, 147 Or.App. 357, 362–64, 935 P.2d 1246 (1997) (concluding that earning capacity and job opportunities could be considered when there was nothing that would prevent the obligor from practicing medicine in the future); Gable and Gable, 89 Or.App. 664, 668–69, 750 P.2d 534 (1988) (reasoning that the trial court properly considered earning capacity instead of actual unemployment income when the obligor had quit his dental practice just before trial and there was no evidence of any physical or professional impediment that would have prevented him from working as a dentist).

Likewise, in Hendgen, also on de novo review, we modified an award of spousal support where the trial court had not explained how it arrived at the amount awarded. 242 Or.App. at 246, 255 P.3d 551. We noted that a spousal support award cannot be based on “pure speculation” or “instinct” as to what an obligor's income potential above any actual income might be. Id. at 248–50, 255 P.3d 551.

We recently reached a similar conclusion even though not exercising de novo review in Andersen and Andersen, 258 Or.App. 568, 310 P.3d 1171 (2013). There, despite evidence that an economic recession had affected the husband's ability to earn as much as he had in the past as an attorney in solo practice, the trial court had found...