Before
the appellant filed this case, and despite his health stature, any
attorney that really knew what they were doing would have likely
realized that one cannot charge cheap rent in San Francisco, and it
is unlikely this was under rent control at the time, therefore the
attorney should have warned the client that if that came up, it would
cost the client as to imputed income? I seriously doubt that was done
and the attorney likely did not do a thorough investigation of why
the rent was so low. (I actually know the real facts but it was not
my position to tell another attorney how to do his job...)
http://law.justia.com/cases/california/court-of-appeal/4th/76/150.html
MARRIAGE
OF DACUMOS
Although
this is an older case, attorney
found it to be interesting, as before attorney relocated
to San Diego, the Appellant used to work in our shared law
office with several other attorneys
across from Arden Fair Mall in Sacramento. It is true that Appellant
had become quite ill as he suffered a stroke and also was later not
able to work.
Court of
Appeal, Third District, California.
In re the
MARRIAGE OF Eduardo and Hilda DACUMOS. Hilda Dacumos, Respondent, v.
Eduardo Dacumos, Appellant.
No. C030209.
Decided:
November 08, 1999
Thomas
Upholt, for Appellant. Douglas Broomell and Hilda Dacumos, in pro.
per., for Respondent.
Eduardo Dacumos appeals from a judgment
awarding child support and attorney fees to his ex-wife, Hilda
Dacumos. Eduardo contends the trial court abused its discretion
in imputing rental income to determine his income, including the
entirety of his 401(k) plan distributions in determining his income,
in excluding Hilda's second job from her income, and in awarding
Hilda attorney fees. We affirm.
FACTUAL AND PROCEDURAL BACKGROUND
Hilda and Eduardo were married in 1989 and had
a son the following year. They separated March 4, 1991. A
judgment of dissolution was entered in 1992, with jurisdiction
reserved on other issues, including child support.
In 1996, Hilda moved for an order for child
support. She declared that Eduardo had paid $650 a month child
support when they separated. He had decreased the support without
explanation and was now paying only $350 a month.
In response, Eduardo explained that he had been
laid off from his job as an engineer and had been plagued with health
problems. He had been diagnosed with a panic disorder that
limited his ability to work. He was currently working part-time
for a law office and was unable to obtain employment in the
engineering field.
He had depleted funds in his retirement plan to
meet his financial obligations. He was able to pay only $350 a
month in child support. His income and expense declaration
indicated he had income of just over $2,000 a month. This income
included a rental property in South San Francisco, which had been
rented for $1,000 a month, but after a vacancy was rented for $500 or
$750 a month. The rent exceeded expenses by only about $1,000 a
year.
Eduardo was ordered to pay $400 a month in
child support, plus $76 a month for tuition. The order was based
on Hilda's monthly wages of $5,349.00 and Eduardo's income from
self-employment of $2,013 and other income of $234 a month.
In 1998, Hilda filed an at-issue memorandum.
Hilda requested the $400 a month child support be continued and that
the court determine there was an arrearage of $7,616. Hilda's
income and expense declaration showed she had two jobs in 1997.
She worked full-time as a nurse at Kaiser for $67,423.62 a year, and
had a part-time job at Methodist Hospital from which she received
$5,599.87. She listed as community assets, real property located
on Erin Drive in Sacramento and a Nolte Associates 401(k) plan of
unknown value.
The parties entered into a marital settlement
agreement that was approved by the court. Hilda was awarded legal
and physical custody of the child. Their separate property was
confirmed and Eduardo was awarded the property in Sacramento and
contributions to the Nolte Associates 401(k) plan. There was no
agreement on child support.
Eduardo provided a new income and expense
declaration that indicated his expenses exceeded his income. He
made $9,400 a year as a legal assistant, but he had two rental
properties that lost money. The property in South San Francisco
was rented for $550 a month and lost almost $2,000 in one year.
The property in Sacramento was rented for $375 a month and lost over
$11,000.
The court ordered Eduardo to pay $832 a month
in child support. The court based its order on Hilda's wages
consistent only with her full-time job. It found she had a second
job because Eduardo was unwilling to support his child. The
court imputed income to Eduardo of $2,000 a month, based on his
income of $4,000 a month in 1994. It also considered $2,900 a
month of additional income, consisting of distributions from pension
investments and imputed rental income. The court
determined the imputed rental income by considering both the fair
market rental value of his properties and his net equity in the
properties of $200,000 to $250,000. The court ordered Eduardo to
pay Hilda $2,500 in attorney fees. There was no request
for a statement of decision.
DISCUSSION
I
Eduardo contends the trial court abused its
discretion in imputing rental income in determining his income for
child support purposes. He contends the only express provision
permitting imputation of income is Family Code section 4058,
subdivision (b), which provides: “The court may, in its
discretion, consider the earning capacity of a parent in lieu of the
parent's income, consistent with the best interests of the children.”
Eduardo argues “earning capacity” is limited to
income derived from employment and does not include imputed rental
income.
“The
fundamental principle of statutory interpretation is to ascertain the
legislative intent in order to effectuate the purpose of the law.
[Citations.] The statute should be construed with reference to
the entire statutory system of which it forms a part so that
harmony may be achieved among the various provisions. [Citation.]
In determining intent, we first look to the words used.
[Citations.]” (People v. Martinez (1987) 188 Cal.App.3d 1254,
1258, 233 Cal.Rptr. 877.)
The cases that have considered the definition
of “earning capacity” in Family Code section 4058 have followed
that set forth in In re Marriage of Regnery (1989) 214 Cal.App.3d
1367, 1372, 263 Cal.Rptr. 243: “Earning capacity is composed of
(1) the ability to work, including factors such as age, occupation,
skills, education, health, background, work experience and
qualifications; (2) the willingness to work exemplified through
good faith efforts, due diligence and meaningful attempts to secure
employment; and (3) an opportunity to work which means an employer
who is willing to hire. [Citations.]” (See, e.g., In re
Marriage of Simpson (1992) 4 Cal.4th 225, 234, 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; In re Marriage of
Paulin (1996) 46 Cal.App.4th 1378, 1383, 54 Cal.Rptr.2d 314; In re
Marriage of Padilla (1995) 38 Cal.App.4th 1212, 1218, 45 Cal.Rptr.2d
555; County of Yolo v. Garcia (1993) 20 Cal.App.4th 1771, 1781, 25
Cal.Rptr.2d 681.)
The
question we must answer is whether earning capacity is limited to
income from work or whether the court may also consider the parent's
ability to receive income from assets.
In the cases cited above, the issue was earning capacity from work.
There was no issue as to whether earning capacity could be based on
income from sources other than work. We do not read these cases
to limit the definition of earning capacity as cases are not
authority for propositions not considered. (Roberts v. City of
Palmdale (1993) 5 Cal.4th 363, 372, 20 Cal.Rptr.2d 330, 853 P.2d
496.)
In In re Marriage of Regnery, supra, 214
Cal.App.3d 1367, at page 1372, 263 Cal.Rptr. 243, the court adopted
the definition of earning capacity from the law of worker's
compensation. In worker's compensation the income at issue is
solely that from work, so such a limited view of earning capacity is
appropriate. In the context of child support, however, income is
broadly defined to include “income from whatever source derived.”
(Fam.Code, § 4058, subd. (a).)
Accordingly, “earning capacity” should also
be given a broad interpretation. The language is susceptible to a
broader interpretation than the ability to earn from work. “Earning”
need not be limited to payment for work; it may also be defined
as: “something (as wages or dividends) earned as compensation
for labor or the use of capital.” (Webster's New Internat. Dict.
(3d ed.1971) p. 714, col. 2.) “Earn” means “to bring in by
way of return.” (Ibid.)
This broader definition of earning capacity to
include income that could be derived from income-producing assets as
well as from work is in accord with the legislative intent.
In calculating child support, the state's top
priority is the interests of the children. (Fam.Code, § 4053,
subd. (e).) Supporting a child according to the parent's
circumstances and station in life is a parent's first and principal
obligation. (Fam.Code, § 4053, subd. (a).) Child support
orders must ensure that children receive sufficient support.
(Fam.Code, § 4053, subd. (l).) Just as a parent cannot shirk
his parental obligations by reducing his earning capacity through
unemployment or underemployment, he cannot shirk the obligation to
support his child by under-utilizing income-producing assets.
The
trial court did not err in imputing rental income based on the fair
market rental value of the properties and Eduardo's equity therein in
calculating his income.
II-IV **
DISPOSITION
The judgment is affirmed.
FOOTNOTES
FOOTNOTE. See
footnote *, ante.
MORRISON,
J.
BLEASE, Acting P.J., and NICHOLSON, J., concur.
