In re Marriage of Leonard

• Decision Date: 15 June 2004
• Docket Number: No. H026717.,H026717.
• Court: California Court of Appeals Court of Appeals
• Parties: In re the MARRIAGE OF Leslie and Mark LEONARD. Leslie Bayes, Respondent, v. Mark Leonard, Appellant.

14 Cal.Rptr.3d 482

119 Cal.App.4th 546

In re the MARRIAGE OF Leslie and Mark LEONARD.

Leslie Bayes, Respondent, v. Mark Leonard, Appellant.

No. H026717.

Court of Appeal, Sixth District.

June 15, 2004.

Mark Portman, Corte Madera, Law Office of Mark Portman, for Appellant.

No appearance, for Respondent.

WALSH, J.^*

A father had been paying child support for many years. In January 2003, he was laid off from his job as a software salesman due to the economic downturn in the high technology field. Accordingly, he filed a motion (motion) to reduce his child support obligation and requested — under Family Code section 3653, subdivision (b) (section 3653(b))¹ — that the modification order be made retroactive to the date he served the motion. The mother opposed the motion.

The court granted the motion in part by reducing monthly child support, but refused to make the order retroactive. Concluding that the father had other financial resources and that the needs of the children would make retroactivity inappropriate and unfair, the court made the order effective on the date of the hearing on the motion.

The father appeals the trial court's failure to reduce the child support obligation retroactively. He claims that the court abused its discretion under section 3653(b) by not making the order effective on the date the motion was served.

Under section 3653(b), if a court modifies or terminates a support order because of a party's unemployment, the trial court must make its order retroactive unless it finds good cause to deny retroactivity and specifies its reasons. The statute, however, does not define "good cause" justifying a trial court's denial of retroactivity.

We define good cause as it applies to section 3653(b). We determine that the court provided specific reasons for its order, supported by the evidence, sufficient to constitute good cause. We conclude that the trial court did not abuse its discretion by denying the father's request for retroactivity. Accordingly, we affirm the trial court's order.

FACTS

I. The Parties And Their Children.

Appellant, Mark Leonard (Mark)² and respondent, Leslie Bayes (Leslie) were married for approximately nine years. They had four children together — a 20-year-old daughter who attends college, an 18-year-old son, and two children residing with Leslie, ages 16 and 15.

Leslie received child support for approximately 10 years. Pursuant to a prior stipulation and order, Mark was to pay guideline child support for the two minor children totaling $2,223 per month, effective December 1, 2002. Because he was laid off from his employment, Mark unilaterally reduced the amount he paid as monthly support between February and July 2003. From January through July 2003, he made aggregate child support payments of $5,700.

II. Leslie's Financial Condition.

Leslie is a 50-year-old, self-employed, academic tutor. According to her profit and loss statement,³ the gross income for Leslie's tutoring business for 2002 was $44,954 and she received wages of $29,425. In her income and expense declaration filed in opposition to the motion, Leslie stated that her average gross monthly income and average net monthly income for the 12 months prior to January 2003 were $2,366 and $2,006, respectively.⁴

There was evidence of significant fluctuation in Leslie's monthly income between January and June 2003; there were periods in the first half of 2003 in which her monthly income was significantly less than her average income for 2002. Leslie declared that her gross monthly income and net monthly income for January 2003 were $900 and $572, respectively. Her gross monthly income and net monthly income for June 2003 were $870 and $820, respectively.

Leslie's monthly expenses as of January 2003 were $3,922. Her monthly expenses as of July 2003 were $4,638. These expenses listed as of July 2003 included educational expenses for the two minor children totaling $2,200 annually.

Leslie held cash and checking accounts totaling $25. She estimated that her equity in real property was $175,000. Leslie identified no other assets.

III. Mark's Financial Condition.

Mark is a 52-year-old unemployed software salesman. He has an MBA degree. Mark earned wages in 2002 of $188,909, approximately half of which consisted of sales commissions. His average gross monthly income and average net monthly income for the 12 months prior to January 2003 were $14,833 and $9,142, respectively. Mark's gross monthly income and net monthly income for January 2003 were $8,700 and $5,441, respectively.⁵ His gross monthly income and net monthly income for May 2003 were $1,480 and $1,192, respectively. His former employer, iManage, provided him with severance pay of $3,653 and accrued vacation of approximately $900.

Mark declared that his total monthly expenses as of January 2003 were $7,655 (and $150 lower in June 2003). Included in his expenses was a monthly figure of $850 as a voluntary contribution for the education of the parties' elder daughter.

Mark's real and personal property had a combined value of $620,000. These assets included a sailboat (one-half interest) in which his estimated equity was $24,500. His cash and checking accounts totaled $1,000. Mark owned stocks, bonds, and other liquid assets totaling $55,000.

IV. Mark's Changed Circumstances.

On January 10, 2003, Mark was laid off from his software sales position with iManage, where he had worked since April 2001. Mark testified that his termination was involuntary. Over Leslie's opposition, the court ultimately found that to be the case.

Because of the downturn in the economy and the weakening of jobs in his area, Mark decided after being laid off that he would become self-employed in the franchise business that he and his wife had begun to develop in mid-2002 (discussed post). This decision was reflected in both his January 2003 declaration and in his testimony at the July 2003 hearing. Mark declared that iManage had been laying off staff continuously for a period of over six months before his January 2003 layoff and that there was no possibility that he would be called back to work. He testified that, before his termination, he made inquiries about opportunities to stay in the high technology field, "but high tech has been devastated, as is well-documented, and decided to devote full-time attention to creating a business that is very predictable . . . that could afford [him] the same level of income as [he] had previously earned." Mark also testified that, after being laid off, he continued to make inquiries of people he knew in the industry and concluded that his chances of locating another position were very poor.

Since around mid-2002, Mark and his wife had planned to own and operate a Subway sandwich shop in San Francisco. They had expended approximately $25,000 toward this venture up to July 2003. Originally, Mark and his wife had intended that she would run the business, as she was not employed for most of 2002. Since she received another contract to work elsewhere and because Mark was laid off, they later decided that Mark would operate the business. As of the time of the July 2003 hearing, Mark expected that the store would be operating in October 2003. He estimated that, based upon the income figures for other franchises, his store would have approximate monthly profits of $10,000 after one year of operation.

PROCEDURAL HISTORY

Mark filed and served the motion for modification of child support on January 8, 2003. Mark sought a modification of a prior order entered pursuant to stipulation, under which he paid monthly child support for two minor children in the total amount of $2,223. He requested that the proposed order modifying child support be made retroactive to the date of service of the motion.

Mark alleged in support of the motion that he had been involuntarily laid off in January 2003 by iManage. He alleged further that, given the downturn in the high technology market and his knowledge that colleagues in the industry had been unable to find work, he had decided to become self-employed by developing a Subway sandwich franchise business in San Francisco.

Leslie's opposition to the motion requested that the court establish guideline support by determining Mark's actual earning ability and by imputing income based upon his prior earnings. Leslie's declaration urged that "[t]he court should not allow [Mark] to shirk his child support obligations . . . [after his] job mysteriously disappeared at the beginning of this year just after he had to start paying . . . $2,000.00 per month in child support." Her declaration indicated, inter alia, that Mark's request should be denied and child support should be established based upon imputed income of $189,000 per year. She also requested that she be awarded attorney's fees of at least $3,000.

After a specially set hearing on July 23, 2003, the court entered an order on August 1, 2003, in which it (1) granted Mark's motion for modification of child support, (2) ordered that child support be reduced from $2,223 to $423 per month (as requested by Mark), (3) made the reduction order effective July 23, 2003, and (4) denied Leslie's cross-motion for attorney's fees. In its order, the court expressly found that Mark "did not voluntarily terminate employment with iManage and that he has been making good faith efforts in the current economy to produce a higher income not only for himself but for the minor children as well."

On August 8, 2003, Mark filed alternative motions for new trial (Code Civ. Proc., § 657, subds. (4) & (6)), to reconsider (Code Civ. Proc., § 1008, subd. (a)), or to vacate the prior order (Code Civ. Proc., § 663) (alternative motions). The court denied Mark's alternative motions on October 31, 2003. It stated: "I would amplify the Court's order that I made previously by saying that in doing that, I — at least mentally but didn't articulate in the order that I made, findings in doing...