Marriage of Cohn, In re
| Decision Date | 27 July 1998 |
| Docket Number | No. C027700,C027700 |
| Citation | 65 Cal.App.4th 923,76 Cal.Rptr.2d 866 |
| Court | California Court of Appeals Court of Appeals |
| Parties | , 98 Cal. Daily Op. Serv. 5824, 98 Daily Journal D.A.R. 8044 In re the MARRIAGE OF Howard E. and Patricia O. COHN. Howard E. COHN, Appellant, v. Patricia O. COHN, Respondent. |
Harrison L. Goodwin, Auburn, for Respondent.
Appellant Howard Cohn (Howard), former husband of respondent Patricia Cohn (Patricia), appeals from a judgment after trial which awarded Patricia temporary and permanent child and spousal support. Howard contends the court abused its discretion in imputing income to him based on earning capacity when the evidence showed he had no opportunity to work.
We shall conclude the trial court acted within its discretion in imputing income to Howard, but that the court's earning capacity figures are not supported by substantial evidence. We will therefore reverse and remand for further proceedings on the issue.
Howard and Patricia married on September 4, 1983, and separated in August of 1994. They had three children: Matthew born in 1986, Brian born in 1988, and Regina born in 1992. During the marriage, Howard worked in various capacities. In 1987, he obtained a job as house counsel for a management company, earning $70,000 per year. At the peak of his career in 1993, he was working as an attorney for a group of related real estate investment companies and was grossing approximately $28,600 per month. Patricia held a degree in mechanical engineering and was employed throughout the marriage, earning a steady professional income until 1992 when Regina was born.
In August of 1993, Howard's employer filed for bankruptcy. Howard's income dried up and the Cohns' financial world began to crumble. Howard received some retainer income between February and August of 1994, but by January of 1995 he was effectively unemployed. In early 1994, Howard began having severe stress-related emotional problems, culminating in mental breakdowns and temporary hospitalization in January of 1995.
While Howard was hospitalized, Patricia took the three children and moved to Seattle. The marriage was formally dissolved on January 18, 1996.
After a custody hearing in July of 1996, Patricia was awarded primary physical custody of the three children, with liberal visitation to Howard. The parties were ordered to share equally the transportation and lodging expense for the children's visits with Howard.
Trial on other issues, including child and spousal support, was held on March 12-14, 1997. Howard filed for chapter 7 bankruptcy just prior to trial.
At the trial, Howard testified in exhaustive detail about his efforts to find employment since his mental breakdown in January 1995. After completing 40 hours of Mandatory Continuing Legal Education (MCLE), he looked for jobs in the Daily Recorder, submitted resumes and cover letters to most of the firms in the Sacramento area, and applied to numerous public agencies such as the Sacramento, Placer, and Shasta County Public Defender's and District Attorney's offices. He did not receive a single job offer.
Frustrated by his inability to find work, Howard moved to Los Angeles in mid-1995 for about three months where he worked for a private lender, but was unable to make any money. He then returned to Sacramento and pursued an opportunity to sell living trusts, obtaining the required insurance license, but was eventually informed by the company he worked for that it had adopted a new policy not to hire attorneys. Howard then sought out other types of employment such as in-house counsel, paralegal, law clerk, contract attorney, and car salesman, all to no avail.
In March 1996, Howard set up his own law office in Hayward, where he used to practice, and accepted court appointments from Patricia testified that she did not know of any job offers that Howard turned down, or of any employment opportunities he could have, but failed to pursue.
Alameda County. [65 Cal.App.4th 927] However, the appointments were few and far between, and even with a few private retainer cases, he experienced a negative cash flow. 1 At the time of trial, Howard's plan was to close his Hayward office, move back to Sacramento and set up his own law practice there
The court issued a statement of decision in which it found that Howard earned virtually nothing during 1995, and that his gross income in 1996 was approximately $8,000. The court also found that Howard's mental and physical problems prevented him from earning any significant income between January and August of 1995, and it therefore declined to order him to pay child or spousal support for that period.
However, for the period between August 1995 and August 1996, the court set Howard's annual earning capacity at $40,000, "given his previous experience, education and professional background." From August 1996 to the time of trial in March 1997, the court imputed income to Howard at the stepped-up rate of $80,000 per year "based upon the additional time that passed thereby allowing [him] to obtain income or employment more consistent with his previous experience and training." The court also imputed income to Patricia based on her earning capacity. Using the "DissoMaster" computer program and the imputed income figures, the trial court calculated Howard's temporary and permanent child and spousal support.
In computing child support obligations under the statewide uniform guidelines, the trial court has discretion to impute income to either parent based on that parent's "earning capacity." (Former Fam.Code, 2 § 4801, subd. (c)(1), repealed in 1997 (Stats.1997, ch. 194, § 1); see now § 4058, subd. (b).) The Family Code also permits the court to consider a party's present or future "earning capacity" as a factor in determining spousal support. (§ 4320, subds. (a), (c); see In re Marriage of Simpson (1992) 4 Cal.4th 225, 230, 14 Cal.Rptr.2d 411, 841 P.2d 931.)
(In re Marriage of LaBass & Munsee (1997) 56 Cal.App.4th 1331, 1337-1338, 66 Cal.Rptr.2d 393, internal quotation marks omitted.) Use of the earning capacity standard is inappropriate where a party lacks either the ability or the opportunity to work. (In re Marriage of Hinman (1997) 55 Cal.App.4th 988, 999, 64 Cal.Rptr.2d 383; In re Marriage of Ilas (1993) 12 Cal.App.4th 1630, 1636, 16 Cal.Rptr.2d 345; In re Marriage of Everett (1990) 220 Cal.App.3d 846, 860, 269 Cal.Rptr. 917.)
Taking his cue from the above line of authority, Howard contends that (1) because the trial court did not find in its statement of decision that he had the opportunity to work, it erred in imputing income to him based on earning capacity, and (2) use of earning capacity rather than actual income figures was an abuse of discretion because there is no substantial evidence in the record that Howard had the opportunity to work. We discuss each claim individually.
Judgments and orders of the lower courts are presumed to be correct on appeal. (In re Marriage of Arceneaux (1990) 51 Cal.3d 1130, 1133, 275 Cal.Rptr. 797, 800 P.2d 1227.) Under Code of Civil Procedure section 632, after the court issues its tentative Here, Howard requested a statement of decision but failed to bring the court's attention to the fact that it did not make findings with respect to his opportunity to work. Thus, insofar as Howard's challenge to the judgment is based on this deficiency, it is waived. We imply all findings necessary to support the judgment, and our review is limited to whether there is substantial evidence in the record to support these implied findings. (In re Marriage of Aninger (1990) 220 Cal.App.3d 230, 238, 269 Cal.Rptr. 388; In re Marriage of Jones (1990) 222 Cal.App.3d 505, 515, 271 Cal.Rptr. 761.) Because the court could not impute income without finding the "opportunity" element was present, we turn to the sufficiency of the evidence to support its implied finding that Howard had the opportunity to work.
decision, a party may request a statement of decision explaining the basis for its ruling. (Fn. omitted, Arceneaux, supra, at pp. 1133-1134, 275 Cal.Rptr. 797, 800 P.2d 1227.)
The record shows that after reaching the pinnacle of success as counsel to a close-knit group of companies, Howard's personal and professional life was shattered when his employer filed bankruptcy and he was laid off in 1993. He suffered a complete mental breakdown and had to be hospitalized in January 1995.
In August 1995, Howard began again to seek out employment. The evidence was uncontradicted that, despite an exhaustive job search, Howard was unable to find an employer willing to hire him in an attorney position. After attempts to earn money in other fields proved fruitless, Howard opened a solo practice in Hayward which he operated for a year, with little to show for it. At the time of trial he planned to move his practice to Sacramento where, hopefully, he would have better luck.
Substantial evidence supports the first two elements...
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