Marriage of Ostler & Smith, In re

• Decision Date: 23 August 1990
• Docket Number: No. A044157,A044157
• Citation: 272 Cal.Rptr. 560,223 Cal.App.3d 33
• Court: California Court of Appeals Court of Appeals
• Parties: In re the Marriage of Victoria J. SMITH and Clyde W. OSTLER, Jr. Clyde W. OSTLER, Jr., Appellant, v. Victoria J. SMITH, Respondent.

Page 560

272 Cal.Rptr. 560

223 Cal.App.3d 33

In re the Marriage of Victoria J. SMITH and Clyde W. OSTLER, Jr.

Clyde W. OSTLER, Jr., Appellant, v. Victoria J. SMITH, Respondent.

No. A044157.

Court of Appeal, First District, Division 3, California.

Aug. 23, 1990.

Camera & Colyer, Paul Camera, Mary Halbert-Brown, San Rafael, De Goff and Sherman, Richard Sherman, Berkeley, for appellant.

Robert Roth, Oakland, for respondent.

BARRY-DEAL, Associate Justice, Assigned. ^*

After a hearing on the reserved issues of support, custody, and attorney fees in his action for dissolution of marriage, Clyde W. Ostler (Clyde) appeals from the order awarding spousal and child support to Victoria J. Smith (Vicki), whose maiden name was restored to her in the earlier judgment dissolving the marital status. He claims that an escalation provision for spousal and child support, based on a percentage of his future bonuses over and above the fixed monthly amounts, was error as a matter of law and an abuse of the court's discretion. This issue is apparently one of first impression, as we have found no California case directly on point, nor have the parties cited to any. ¹

We hold that the order for additional support, based on a percentage of Clyde's future bonuses, was within the trial court's discretion under Civil Code sections 4700 and 4801, ² and we affirm.

I. Statistics and Procedural History

Clyde and Vicki were married on November 25, 1964. They separated on January 1, 1986, the marriage lasting a little over twenty-one years. Four children were born of the union: two daughters, who were adults at the time of the bifurcated hearing in May 1988; and two minor sons, Clyde W. Ostler III, born on July 20, 1974, and Joseph Ostler, born on February 22, 1979.

Clyde filed a petition for dissolution of the marriage on March 27, 1986. The issue of marital status was bifurcated, and a judgment dissolving the marriage was entered on December 31, 1986. In March and April 1988, the parties executed a marital settlement agreement and an amendment to it, dividing all of their assets and liabilities. At the bifurcated hearing in May 1988, the parties stipulated to joint legal custody of the two minor sons, with physical custody to Vicki and a reasonable schedule of visitation to Clyde. Thus, the only contested issues at the hearing were the amount and duration of spousal support, the amount of child support, and attorney fees for Vicki.

II. Family Background

Vicki and Clyde were each 17 when they married in 1964, and Clyde had just begun his first year of college. He continued undergraduate and graduate school full-time for about six and a half years, receiving a master's degree in banking.

Clyde was general auditor of a major bank on the date of separation. At the time of the hearing in May 1988, he had become an executive vice president and chief financial officer, serving directly under the president, the chairman of the board, and four vice-chairmen of the board. In 1971, when Clyde first was employed by the bank, his annual salary was $15,216. It increased in annual increments, and by 1977 he was earning $39,210. From 1978 on, in addition to salary, he received an annual bonus, attributable to work performed in the previous year. ³ In 1988 at the time of the hearing, his fixed annual salary was $165,000, plus a bonus (attributable to 1987 services) of $135,000, or a total of $300,000 in compensation. Clyde also received bank stock and stock options which generate dividends of approximately $18,500 per year in addition to salary. He is provided with an annual car allowance of $11,280 and various other benefits such as partially subsidized health insurance, life insurance, pension contributions, an expense account for business meals, and the availability of executive credit.

Clyde testified that during the last few years of the marriage the parties did not use his bonus to enhance their standard of living, but to fund real estate investments. Vicki, however, testified that the parties "always" calculated receipt of the annual bonus into their spending plans, and at the time of separation the couple had $100,000 in unsecured debt. She said the bonus was taken into account, along with Clyde's raises and dividends, in establishing the family's standard of living and level of indebtedness. She further testified that during the last three years of the marriage, the standard of living was described by Clyde as one of " 'upward mobility.' " Clyde would become angry with her if she told the children that the family could not afford something. He insisted that he never wanted her to tell that to the children. "That he could always afford something, that he's making lots of money and he's going to make more...." ⁴

Vicki testified that while Clyde was in college full time, she contributed to the family support by doing housecleaning, ironing, and baby-sitting. She and Clyde had agreed that one of them--Vicki--would be available to the children at all times, and that she would have total responsibility for their upbringing so that Clyde could devote time to an occupation and financial support of the family. They had also agreed that when the children were in high school, she would have time to continue her education. She had not worked outside the home during the marriage, except for the minor jobs mentioned above, and was currently unemployed.

After the couple's separation, Vicki considered moving to San Diego to be near her family. Their emotional and physical support would have enabled her to complete her education with less stress. She decided against this move because the boys needed their father; his influence was more important to them than the help of her family would be to her.

Vicki attended community college from 1965 through 1973, qualifying for transfer to a four-year college. She took a few courses at San Francisco State University through 1975, then dropped out until the fall of 1983, when she resumed taking a few community college classes each semester. She had volunteer work experience in school athletic programs and Little League.

The certified career counselor who evaluated Vicki commented that she was above average in numerical ability, mechanical reasoning, word knowledge, and manual speed and dexterity. The counselor concluded (in April 1987) that if Vicki were motivated, she had the capacity to become a math-science teacher with earnings ranging from $19,000 to $24,000 per year, depending on the school district. The counselor's reservation about this goal was Vicki's stated priority of parenting responsibilities, leaving limited energy for full-time academic involvement. If Vicki were interested in a shorter time frame for employment (about one year), her aptitudes pointed to being a bookkeeper, with a beginning salary in the range of $580 to $1,600 per month and after several years of experience from $1,100 to $2,500 per month. After a short training period, Vicki's capabilities would lend themselves to a position as a medical or dental assistant with a starting salary of $1,100 to $1,500 per month. Without additional training, Vicki's age and lack of work experience or a college degree would limit her to "the typical path used by many re-entry women (i.e., retail sales clerk, general office worker, receptionist)." Earnings for those occupations range from approximately $4.00 to $6.50 per hour.

Neither party had any separate property. Vicki exercised her option under the marital settlement agreement to keep the family home in Marin County so her sons could be near their father; it had an equity of $230,000 and required monthly payments of $1,032 on the loan plus taxes of about $191. In the division of property, she received a cash differential of $11,000, some IRA accounts, furniture and furnishings, and two cars. She owed a balance of approximately $25,000 on attorney fees. She thus had no income-producing assets, a net liability of $14,000, and indeed no financial cushion.

Shortly before the hearing, Clyde purchased a home about a mile from the family home and close to the boys' schools. ⁵ He paid $485,000, wholly financed through an executive loan with his employer bank, requiring monthly payments of $3,644. He pays $550 per month for taxes and insurance. In the division of assets, Clyde received some IRA accounts, and all of his employer bank stock and stock rights, with all obligations relating to their acquisition; he receives approximately $18,500 per year in dividends. Each of the parties received one-half the value of the insurance annuity with the bank retirement plan, which terminated in 1984, after which a new retirement plan was instituted. Clyde received his interest in the new plan.

At the time of the hearing in May 1988, both parties were forty-one and in good health. Vicki has a genetic disorder called Hashimoto's thyroiditis which is controlled by medication and requires medical supervision. She testified that it does not interfere with her ability to function, but does interfere with her ability to manage stress. The two minor boys were about nine and fourteen at the time of the hearing. The oldest daughter has completed college and is working in San Diego. The second daughter is still in college in San Diego, but her expenses are paid through a trust fund.

III. The Statement of Decision and Order

After the matter was submitted, each party filed a post-trial brief. Clyde urged the court in awarding support to consider only his fixed salary, not his bonus income, and if the court did consider his annual bonus, to award only a percentage, with a ceiling of $1,000 per month on the maximum amount to be paid. Vicki proposed that support be based on Clyde's total income--both fixed salary and annual bonus. The disposition of the bonus income was obviously the major impediment to settlement and is the focus of this appeal.

Each party requested a statement of decision, which the court...