Filed 7/30/13 Marriage of Serio CA2/4
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
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IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION FOUR
In re Marriage of LAURA SERIO and B242743
DONALD L. SERIO. (Los Angeles County
Super. Ct. No. KD065590)
LAURA SERIO,
Appellant,
v.
DONALD L. SERIO,
Respondent.
APPEAL from a judgment of the Superior Court of Los Angeles County.
Rocky L. Crabb, Commissioner. Reversed and remanded with directions.
Law Offices of Ronald B. Funk and Ronald B. Funk for Appellant.
Garrett C. Dailey for Respondent.
Appellant Laura Serio challenges a judgment of the family court modifying
respondent Donald L. Serio’s child support obligation. We conclude that the
family court denied Laura an adequate opportunity to examine Donald regarding
the large sums deposited in his bank account. We therefore reverse the judgment
and remand the matter for a new trial.
RELEVANT FACTS AND
PROCEDURAL BACKGROUND
This is the second time that Donald’s child support obligation has come
before us. We summarize the events culminating in our first decision before
describing the facts pertinent to the present appeal.
A. First Appeal
Laura and Donald executed a pre-marital agreement regarding their rights to
property and entitlement to spousal support in case of a separation or divorce.
They married in July 2001, and a son, Patrick Blaze Serio, was born in February
2004. In September 2005, Laura filed a petition for dissolution of marriage. In
2007, the family court filed a judgment of dissolution with respect to status only,
and later awarded the parties joint legal custody and equal physical custody of
Patrick.
In December 2007, Laura asked the family court to establish Donald’s
permanent child support obligation. During the subsequent proceedings, she
submitted evidence that her spousal support ended in April 2007, that she had little
or no income, and that she was taking classes with the aim of entering college.
Donald submitted evidence that he worked as an engineer for Serco Mold, Inc.
(Serco), in which he also participated as a shareholder. Serco makes plastic parts
for residential irrigation systems and other products. According to Donald, his
2
income derived from four sources, his salary, shareholder distributions, rental
income, and interest income.
In late 2008, the family court conducted a trial on Donald’s child support
obligation. Following trial, the court found that Donald’s gross average monthly
income was $47,283. Applying the statutory guideline formula (Fam. Code,
§ 4055), the court determined that Donald’s child support obligation was $3,396
1
per month. The court also concluded that there was no basis for an “upward
deviation” from the guideline formula, finding that Patrick resided with each
parent for equal periods, and shared in their lifestyle, which the court characterized
as not “opulent.” On January 29, 2009, the court entered a final partial judgment
regarding child support in accordance with its findings after trial. After Laura
noticed an appeal from the judgment, we affirmed the court’s rulings in an
unpublished decision (Serio v. Serio (Feb. 24 2010, B215098)).
B. Present Appeal
1. Request to Modify Child Support Obligation
On April 29, 2011, Donald asked the family court to reduce his child support
obligation, stating that his annual income from Serco had fallen from $650,000 to
$300,000 due to a declining economy and the loss of customers. According to
Donald’s accompanying income and expense declaration, his average monthly
income consisted of $4,400 in salary and “corporate perquisites,” $22,916 in rental
income, and $3,711 in interest income. The declaration also stated that his average
1
All further statutory citations are to the Family Code, unless otherwise indicated.
3
2
monthly income included “minus” $2,498 in corporate distributions. His assets
totaled $4,132,000 and his average monthly expenses were $4,000.
Laura opposed the request, stating that she was unemployed, attending
school, and attempting to improve her “very limited English skills.” According to
her income and expense declaration dated May 19, 2011, she had no income, assets
totaling $30,000, and average monthly expenses of $5,958. Laura maintained that
she was dependent upon Donald’s child support payments to care for Patrick.
On June 29, 2011, Donald submitted a second income and expense
declaration regarding his child support obligations. According to the declaration,
his average monthly income consisted of $4,400 in salary and “corporate
perquisites,” $19,080 in rental income, $3,711 in interest income, and “minus”
3
$20,835 in corporate distributions. He also identified as additional income a
$130,000 inheritance from his grandmother. His assets totaled $6,132,000 and his
average monthly expenses were $7,400. In an accompanying declaration, he stated
4
that his annual income from Serco had fallen to $200,000.
In October 2011, Laura filed a motion to compel discovery, requested a
continuance of the hearing on Donald’s support obligation, and sought an award of
attorney fees. The motion contended that Donald had not produced certain
financial documents relevant to his request to modify his support obligation. In
opposing the motion to compel, Donald maintained that he had produced his tax
records and other information in his possession sufficient to determine the correct
2
The declaration describes Donald’s average monthly corporate distribution as “$-
2,498.”
3
The declaration describes Donald’s average monthly corporate distribution as “$-
20,835.”
4
On October 18, 2011, Laura filed a responsive declaration that reaffirmed her
grounds for opposing the modification of Donald’s support obligation.
4
guideline child support, but had properly objected to Laura’s request that he
produce Serco’s financial records. In addition, Donald argued that the motion was
untimely, lacked the required separate statement (Cal. Rules of Court, rule
3.1345(a)), and failed to show good cause for the requested discovery. The family
court continued the hearing on Donald’s support obligation to January 10, 2012,
but deferred its ruling on Laura’s motion to compel and attorney fee request.
In November 2011, Donald filed a memorandum of points and authorities in
support of his request to present expert testimony from a vocational examiner
regarding Laura’s earning capacity (§ 4058). Donald asked the family court, in
calculating the guideline child support, to use Laura’s earning capacity, rather than
her income. The motion stated: “[Donald] is specifically alleging that [Laura] has
the present ability and opportunity to become fully employed. The use of a
vocational evaluator wi[ll] provide the [c]ourt with the best evidence concerning
the use of earning capacity.”
On December 2, 2011, the family court denied Laura’s pending motion to
compel, but deferred ruling on her request for an attorney fee award. Later, on
December 22, 2011, Laura filed a new motion to compel, together with motions for
a continuance and an award of attorney fees. In support of the motions, she argued
that Donald had not produced the documents she had requested during his
deposition, which spanned three days from October through December 2011.
Donald opposed the motions, maintaining that he had fully complied with Laura’s
requests for his documents, that he could not provide the records from Serco that
she sought, and that Laura never asked Serco to produce those records, despite
ample opportunity to do so. The family court denied the motion to compel and
request for a continuance.
On January 9, 2012, Donald submitted a third income and expense
declaration, stating that his average monthly income included $10,528 in salary,
5
$1,200 in “[p]erquisites,” $11,544 in rental income, and $7,014.25 in interest.
According to the declaration, his average monthly income required a reduction of
$4,769 due to losses attributable to Serco. The declaration valued his assets at
5
$1,770,000 and his average monthly expenses at $5,000.
2. Hearing
On January 10, 2012, the family court initiated a three-day evidentiary
hearing on Donald’s child support obligation.
a. Donald’s Evidence
Donald’s case-in-chief relied primarily on his own testimony. According to
6
Donald, Serco’s circumstances in 2011 were significantly worse than in 2008. He
attributed Serco’s losses to the decline in the housing market, stating: “Principally,
we manufacture products for the irrigation industry. We have one customer, Rain
Bird, that represents approximately 70 percent of our sales and they’re tied directly
to housing. . . . [¶] . . . [¶] . . . As housing decreases, . . . Rain Bird sells less
irrigation systems . . . and as there’s less sales . . . , we sell less components . . . .”
According to Donald, the economic downturn resulted in significant
cutbacks at Serco. He stated: “[W]e’ve laid off over half of our workforce in the
last three years. We consolidated operations from multiple buildings in two states
down to one building to go ahead and conserve operating costs. We went to week
off, week on operations, actually physically closing down for a week at a time and
5
In January 2012, Laura filed an income and expense declaration that characterized
her financial situation as materially unchanged from May 2011.
6
He testified that he owned 46.8 percent of Serco’s stock. His mother was the
remaining shareholder.
6
then restarting another week; reduction of pay to salaried employees, some up to as
much as 50 per cent of their wage.”
Regarding the changes in Serco’s operations, Donald testified that in 2010,
he and his mother bought Serco’s facilities in La Verne, and transferred ownership
of the facilities to an entity called “241 Partners” in which they held equal
interests. Thereafter, 241 Partners rented the facilities to Serco for approximately
$36,000 per month. According to Donald, the two businesses were “closely
bound.” For this reason, although Serco’s losses totaled $57,000 in 2011, the two
businesses, viewed together, remained slightly profitable. Donald received one-
half of the net income from 241 Partners.
Later, in early 2011, Donald sold a facility in Arizona that had been rented
to Serco. As a result of the sale, Donald’s rental income from the property ended
in February 2011, after which he began receiving interest from the loan related to
the sale. Under the trust deed for the sale, Donald was entitled to monthly interest
payments in varying amounts.
Noting the changes in Serco’s operations, Donald testified regarding the four
sources of his income, namely, his salary, shareholder distributions, rental income,
and interest income. Regarding the first two components, Donald stated that in
early 2011, Serco increased his monthly salary from $10,528 to $12,500 and also
provided him with additional monthly perquisites worth $1,200, but made no
shareholder distributions. Regarding the remaining sources of income, Donald
stated that in 2011, he received average monthly interest payments totaling
$7,014.50, comprising $3,144.25 from the Arizona property trust deed, and $3,870
7
7
from other loans that he had made to Serco. Furthermore, in 2011, his average
monthly rental income was $11,544, based on the rent from the Arizona property
prior to its sale and his share of Serco’s rental payments to 241 Partners.
As Donald no longer obtained rent from the Arizona property, he testified
regarding 241 Partners as an ongoing and separate source of rental income. In
2011, his average monthly rental income through 241 Partners was $5,960,
although the calculation of this figure incorporated an adjustment for depreciation
expenses incurred in 2011. According to Donald, his current average monthly
8
income through 241 Partners was approximately $4,000.
Donald also testified that all of his income flowed through his bank account,
including Serco’s payments on his loans to it. Those payments included both
interest and principal. He further stated that in early 2011, when he sold the
Arizona property for approximately $1.15 million, he put the buyer’s $150,000
down payment in his checking account.
David Laine, a vocational examiner, testified that he had interviewed Laura
and contacted employers to assess her opportunities for employment. He opined
that she was capable of earning from $8 to $11 per hour as a cashier, customer
service representative, housekeeper, or warehouse worker. According to Laine,
Laura’s English skills were adequate for those positions. The family court
7
According to Donald, Serco is “self-funded,” that is, it does not rely on bank loans
to obtain funds for capital purchases and other expenditures. Rather, he made loans to
Serco, from which he derived interest as income.
8
Donald also offered an explanation for the significant decrease in the value of his
real and personal property, as stated in his June 2011 and January 2012 declarations:
whereas the former valued that property at $6.1 million, the latter valued it at $1.6
million. Donald testified that the higher figure encompassed his ownership interests in
Serco and 241 Partners, as well as his house and yacht, whereas the lower figure reflect
only his house and yacht.
8
admitted Laine’s report, which identified seven employers potentially interested in
hiring Laura.
Laura testified as an adverse witness (Evid. Code, § 776). She denied that
she had any sources of income not reflected in her income and expense
declarations. She also stated that she had contacted the employers listed in Laine’s
report, but none had a position for her. Several employers did not return Laura’s
messages, and one told Laura that she was not qualified when she explained that
she could not read or write English. Regarding her ability to read and speak
English, Laura acknowledged that she had lived in California for 25 years, and had
executed documents written in English when she bought a condominium. Laura
also acknowledged having told Laine that she lacked the equivalent of a high
school diploma, even though she had passed the G. E. D. test.
b. Laura’s Evidence
Cathy Fix, Laura’s forensic accountant, testified that she had reviewed
Donald’s tax returns and personal bank records, but not Serco’s tax records or
financial documents. According to Fix, in 2010 and 2011, Donald made deposits
in his personal bank account totaling $2,578,425. Of these deposits, Fix could not
identify the sources of approximately $1,294,000 of the funds.
Fix also testified that because Serco is an S corporation, its profits and losses
pass directly through to the individual shareholders and are reflected on their tax
return. According to Fix, Donald’s tax returns for 2006 through 2009 showed that
during that four-year period he had paid taxes on approximately $2.8 million. She
stated that because she lacked Serco’s tax returns, she could not resolve the extent
to which the funds reported on Donald’s tax returns reflected distributions to
shareholders or money retained by Serco as “working capital.”
9
Based on the deposits in Donald’s personal bank accounts and the income
reported on his tax returns, Fix opined that his monthly “controllable cash flow”
ranged from $35,000 to $44,000. Fix defined “controllable cash flow,” as “the
cash that a business owner or individual . . . has control over to pick and choose as
to when they receive it, less any legitimate business expenses . . . .”
Donald asserted foundational objections to Fix’s opinion, which the trial
court overruled, remarking that it would ultimately decide whether her opinion had
“appropriate foundation.” The following colloquy then occurred:
“The Court: [Donald] has said . . . that all of his income goes into his bank
account. But that doesn’t justify the conclusion that all money that goes into the
bank account is income, does it?
“[Fix]: No, and I absolutely agree with you on that. My problem is [that]
I’m very limited in what was provided to me. So my presumption is that it is
income. . . .”
“The Court: So then you are, as an expert, operating under a presumption
that unless he shows you otherwise, you will conclude that every dollar that goes
into his bank account must be income[,] is that correct?
“[Fix]: That is correct, absent any proof to the contrary.
“The Court: I’ll indicate if that is the foundation for your opinion, your
9
opinion is in deep trouble in this case.”
9
Later, the family court again examined Fix regarding the foundations of her
opinion. During Fix’s cross-examination, in response to questions from Donald’s
counsel, Fix stated: “My understanding is that the burden of proof is on the person
alleging that it is not income to identify . . . [that] it’s . . . coming from another source
that should not be considered by the court.” The following exchange then occurred:
“The Court: . . . [Why] in the world did you conclude[], ma’am, that it is a burden
of proof on one particular person to show money coming into the bank account is
(Fn. continued on next page.)
10
Following Fix’s testimony, Laura presented Donald as an adverse witness
10
(Evid. Code, § 776). Joseph Howington, Laura’s counsel, began his examination
by questioning Donald regarding the deposits into his bank account in September
2011, as reflected in his bank records. Donald stated that some of the funds were
his salary, and that others were loan payments from Serco, which included interest
and principal. When Donald’s counsel objected that the bank records spoke for
themselves, the family court asked, “[W]here are we going with this line of
questioning?” Howington replied that he was attempting to establish the sources
of the deposits. After observing that the questioning provided no basis for
identifying precisely how much of the deposits constituted income, the following
dialogue occurred:
“The Court: Mr. Howington, can you show me what parts of the September
deposits were income versus return of principal or anything other than income?
“Mr. Howington: You’re asking me?
something other than income? What would give you any idea that you were entitled to
jump to that conclusion?
“[Fix]: Because I’ve been doing this sort of accounting since 1994. And the
presumption that we have always operated on is that if it’s not income, please provide
and identify any non-income deposits which are going in.
“The Court: Who is ‘we’?
“[Fix]: Well, I was employed with Jen Wenner from 1994 through 2003. . . . I
subsequently took over the practice at the end of 2003, and we never varied that
presumption.
“The Court: Well, I’ll indicate to you that this court does not presume that all
entries into a bank account must be income. The testimony of [Donald] . . . was that
. . . he puts all his income into the bank account. But he did not say that all of the
deposits that go into the bank account are income. You have concluded the second
statement.”
10
In addition, Laura also testified briefly on her own behalf, during which she
denied that she could read English.
11
“The Court: Yes.
“Mr. Howington: I’m not the witness. I can’t tell you.
“The Court: The objection is sustained. You’re wasting my time.” The
presentation of evidence concluded with the court’s ruling.
3. Modification Order
On January 23, 2012, the family court issued its tentative statement of
decision. The court concluded that Donald had shown that since 2008, his average
11
monthly income had decreased from over $47,000 to $25,738. The court further
concluded that Laura was properly imputed the capacity to earn $1,387 per month,
that is, “full time employment at the level of at least [the] minimum wage,” and
that she was not entitled to an attorney fee award.
In the tentative statement of decision, the family court rejected Fix’s
testimony, stating: “[I]n reaching her opinion she considered that all money which
[Donald] put into his account was current ‘income.’ She reached this conclusion
without any foundation to do so, and notwithstanding the fact that [Donald] had
testified . . . that while he does put his income into the bank account, he also puts
his non-income money into the bank account. She could not determine what
portion of the money deposited into his bank account was income and what portion
was not income, and therefore simply concluded that it was all current income.
The improper presumption of Ms. Fix and defective foundation for her opinion
leads this Court to give her opinion no credibility or weight.”
11
The record does not disclose precisely how the family court arrived at its
determination of Donald’s average monthly income. During the closing arguments,
Donald’s counsel asserted that Donald’s average monthly income was $25,738, without
clearly relating that estimate to the evidence. Moreover, the statement of decision does
not set forth the actual calculation underlying the finding.
12
The tentative statement of decision also disclosed the family court’s
intention to order a two-staged reduction in Donald’s child support obligation:
commencing February 1, 2012, Donald’s obligation was to be modified to $2,001
per month, and commencing June 1, 2012, it was to be modified to $1,783 per
month. The reductions reflected applications of the statutory guideline formula, in
light of the court’s findings regarding Donald’s income and Laura’s imputed
income. The court stated: “In the first guideline calculation, no income is imputed
to [Laura]. By the date of [June 1, 2012], a little over four months from
now, [Laura] should have secured employment of at least [the] minimum wage,
and that fact is added to the input data. Whether [Laura] secures that employment
or not, those earnings are . . . imputed to her effective [June 1, 2012].” The court
also stated its intention to order Donald to pay the reasonable costs of any
necessary child care if Laura secured employment.
On May 16, 2012, the family court issued its final order, which adopted the
the findings and orders contained in the tentative statement of decision. This
appeal followed.
DISCUSSION
Laura challenges the family court’s rulings regarding Donald’s child support
obligations. She argues that the court erred in (1) determining that Donald showed
a material change in his circumstances, (2) imputing income to her, and (3)
denying her request for an attorney fee award. For the reasons discussed below,
we conclude that the family court committed reversible error by curtailing the
examination of Donald regarding the source of the deposits into his bank account.
13
A. Governing Principles
Section 4055 states the guideline formula, which determines the amount of a
party’s child support obligation on the basis of several factors, including the “high
12
earner’s net monthly disposable income.” Under the applicable statutes, “[t]he
amount of child support established by the [guideline] formula . . . is presumed to
be . . . correct.” (§ 4057, subd. (a).)
On appeal, Laura does not challenge the application of the guideline
formula, but instead attacks the family court’s determinations regarding the parties’
net income. For that reason, our focus is on the variables in the guideline formula
designated as “HN” and “TN,” which refer to the “high earner’s net monthly
disposable income,” and the “total net monthly disposable income of both parties.”
(§ 4055, subds. (b)(1)(C), (b)(1)(E).) Section 4060 provides: “The monthly net
disposable income shall be computed by dividing the annual net disposable income
by 12. If the monthly net disposable income figure does not accurately reflect the
actual or prospective earnings of the parties at the time the determination of
support is made, the court may adjust the amount appropriately.” Under section
4059, each parent’s net annual disposable income is derived from his or her gross
12
The guideline formula is as follows: “CS = K [HN - (H%) (TN)].” (§ 4055, subd.
(a).) The variables here are defined as follows:
“(A) CS = child support amount.
“(B) K = amount of both parents’ income to be allocated for child support . . . .
“(C) HN = high earner’s net monthly disposable income.
“(D) H% = approximate percentage of time that the high earner has or will have
primary physical responsibility for the children compared to the other parent. . . .
“(E) TN = total net monthly disposable income of both parties.” (§ 4055, subd.
(b)(1).)
14
annual disposable income, subject to enumerated adjustments. In turn, “section
4058 defines ‘gross income’ with language that was ‘lifted straight from the
definition of income in section 61 of the Internal Revenue Code.’” (In re Marriage
of Loh (2001) 93 Cal.App.4th 325, 332, quoting In re Marriage of Schulze (1997)
60 Cal.App.4th 519, 529.)
A child support order may be modified when there is a material change of
circumstances. (In re Marriage of Cryer (2011) 198 Cal.App.4th 1039, 1048.)
“‘[T]he [family] court’s determination to grant or deny a modification of a support
order will ordinarily be upheld on appeal unless an abuse of discretion is
demonstrated.’ [Citation.] Reversal will be ordered only if prejudicial error is
found after examining the record of the proceedings below. [Citation.]” (In re
Marriage of Calcaterra & Badakhsh (2005) 132 Cal.App.4th 28, 34 (Calcaterra).)
B. Limitation on Donald’s Testimony as Adverse Witness
Laura challenges the family court’s finding regarding Donald’s average
monthly income, asserting several contentions framed in terms of the burden of
proof at the evidentiary hearing. She contends the court misallocated the burden of
proof regarding Donald’s income throughout the hearing, including Howington’s
examination of Donald as an adverse witness during the presentation of Laura’s
defense case. Although we reject some of Laura’s contentions (see pt. C., post),
we agree that the court committed reversible error by limiting Howington’s
examination of Donald.
The record discloses that when Donald’s counsel objected to Howington’s
examination on the ground that the bank records spoke for themselves, the family
court asked, “[W]here are we going with this line of questioning?” Howington
replied that he intended to inquire regarding the sources of the deposits. After
Howington acknowledged that he could not show, with respect to each bank
15
deposit, the extent of which the funds reflected income, rather than principal or
other non-income, the family court sustained the pending objection.
We conclude that the family court erred. To begin, we observe that because
Donald testified as an adverse witness, Howington’s inquiry was functionally
equivalent to cross-examination. (Crosat v. Paige (1957) 147 Cal.App.2d 385,
389.) Under those circumstances, Laura may properly assert on appeal that the
ruling constituted reversible error, even though Howington made no offer of proof
regarding the specific testimony that he expected to elicit from Donald. (Tossman
v. Newman (1951) 37 Cal.2d 522, 525-526.) That is because “[q]uestions on cross-
examination . . . are largely exploratory, and [thus] it is unreasonable to require an
offer of proof since counsel often cannot know what pertinent facts may be
elicited.” (Id. at p. 525.)
Here, the family court’s ruling cannot be affirmed on the grounds specified
in the objection raised by Donald’s counsel or stated by the family court. The
objection that a document speaks for itself implements the secondary evidence rule
(formerly called the “best evidence” rule), which ordinarily obliges a party to
introduce a written document into evidence, rather than offering a witness’s
recollection of the words in the document. (Meadows v. Lee (1985) 175
Cal.App.3d 475, 490; see 2 Witkin, Cal. Evidence (4th ed. 2000) Documentary
Evidence, § 28, pp. 152-153.) However, because Howington’s intent was to
identify the sources of the deposits reported in Donald’s bank records, the
objection was inapplicable. (Meadows v. Lee, supra, at p. 490.)
Nor can the ruling be affirmed on the basis stated by the family court,
namely, that the proposed questioning was a “wast[e of its] time.” Generally, on
cross-examination, a party has a due process right to seek “relevant evidence of
significant probative value to the issue before the court.” (In re Jeanette V. (1998)
68 Cal.App.4th 811, 817.) In child support proceedings involving a wealthy
16
parent, it is ordinarily relevant whether the parent may have rearranged or
concealed assets or income in an effort to minimize his or her support obligations.
(In re Marriage of Berger (2009) 170 Cal.App.4th 1070, 1082-1083; In re
Marriage of Chakko (2004) 115 Cal.App.4th 104, 109 (Chakko); In re Marriage of
Schulze, supra, 60 Cal.App.4th at p. 529.)
That issue was critical here. During Donald’s case-in-chief, he offered
evidence that his average monthly income had decreased some 45 percent to
$25,738, thereby claiming that his yearly income was approximately $309,000. In
addition, Donald stated that he owned assets valued at $6.1 million. In presenting
his case-in-chief, Donald identified the source of only a few deposits in his bank
account. However, Fix later testified that in 2010 and 2011, Donald made deposits
in his personal bank account totaling $2,578,425, of which $1,294,000 came from
unknown sources. In view of the wide disparity between Donald’s claimed income
and the large flow of funds from undisclosed sources through his bank account,
Howington’s proposed inquiry was directed at an issue central to the proceedings.
The court thus erred in sustaining the objection. (Crosat v. Paige, supra, 147
Cal.App.2d at p. 389.)
We recognize that the family court, in sustaining the objection, focused on a
distinct issue, namely, whether Howington could show the precise extent to which
each deposit reflected income, as opposed to principal or other forms of non-
income. The court’s attention appears to have been drawn initially to that issue
during Fix’s testimony, who stated that her opinion relied on the “presumption”
that each deposit into Donald’s account constituted income unless Donald proved
otherwise. However, Howington’s proposed examination targeted a different and
independently important issue, that is, the sources of the funds entering Donald’s
account. In our view, Howington was entitled to determine whether Donald could
17
provide a credible account of the sources of those funds that was consistent with
his claimed income.
We further conclude that the error was prejudicial. Ordinarily, an error or
defect at trial is not harmless when “there is a ‘reasonabl[e] probab[ility]’ that it
affected the verdict.” (College Hospital Inc. v. Superior Court (1994) 8 Cal.4th
704, 715, quoting People v. Watson (1956) 46 Cal.2d 818, 836.) In this context, “a
‘probability’ . . . does not mean more likely than not, but merely a reasonable
chance, more than an abstract possibility. [Citations.]” (Id. at p. 715, italics
omitted.) Here, Donald presented little documentary evidence to corroborate his
testimony regarding his income and assets. He offered no tax records or other
evidence from Serco, even though his testimony was predicated on Serco’s
purported financial circumstances. In view of the disparity between Donald’s
claimed income and the unexplained funds in his bank account, the inquiry into the
sources of the funds in Donald’s bank account was crucial to an assessment of his
credibility. Accordingly, the judgment must be reversed for a new trial.
C. Laura’s Other Contentions
For the guidance of trial court upon remand, we address Laura’s remaining
contentions, insofar as they concern issues relevant to a new trial.
1. Pre-Trial Motions
Laura contends the family erred in ruling on her pre-trial motions. Pointing
to Chakko, supra, 115 Cal.App.4th 104, Laura argues that the court was obliged to
bar Donald from presenting evidence during the hearing because he failed to
produce Serco’s financial records during discovery. We reject this contention.
Generally, when a party fails to respond to discovery requests, Code of Civil
Procedure section 2023 “‘permits (1) a monetary sanction, (2) an issue sanction,
18
(3) an evidence sanction, (4) a terminating sanction or (5) a contempt sanction . . .
[¶] . . . [¶] In choosing among its various options for imposing a discovery
sanction, a trial court exercises discretion . . . . [Citation.]’” (Lang v. Hochman
(2000) 77 Cal.App.4th 1225, 1244, quoting Kuhns v. State of California (1992) 8
Cal.App.4th 982, 988.)
We see no abuse of discretion in the family court’s decision not to impose
issues or terminating sanctions. Generally, the duty to produce documents is
limited to items “in the possession, custody, or control of any other party to the
action.” (Code Civ. Proc., § 2031.010, subd. (a), italics added; People ex rel.
Lockyer v. Superior Court (2004) 122 Cal.App.4th 1060, 1080.) Furthermore,
Donald disobeyed no order to produce the documents that Laura sought, as the
family court denied her motions to compel. Because she does not challenge these
rulings on appeal, she has forfeited any contention that the court erred in ruling on
the motions to compel. We also note that Laura made no attempt to obtain the
records from Serco, even though the discovery statutes permit discovery of records
held by nonparties to an action (Monarch Healthcare v. Superior Court (2000) 78
Cal.App.4th 1282, 1287; Code Civ. Proc. § 2020.010, subd. (a)(3)).
Laura’s reliance on Chakko is thus misplaced. There, in a child support
proceeding, a father who owned a corporation refused to produce his tax returns
during discovery. (Chakko, supra, 115 Cal.App.4th at pp. 106-107.) After the
father disobeyed a court order to provide the tax returns, the family court awarded
issue sanctions against him that precluded him from presenting specified evidence
regarding his child support obligation. (Ibid.) The appellate court affirmed the
issues sanction and the related child support order. (Id. at pp. 108-110.) In
contrast, Donald disobeyed no order to compel and produced all his own records,
including his most recent tax returns. Accordingly, the family court did not err in
rejecting Laura’s request for issues or terminating sanctions.
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2. Laura’s Imputed Income
Laura contends the family court improperly imputed to her the capacity to
earn $1,387 per month, which reflected “full time employment at the level of at
least [the] minimum wage.” Generally, the statutory scheme governing the
guideline formula obliges each parent to “pay for the support of the children
according to his or her ability.” (§ 4053, subd. (d).) Moreover, the family court
may impute income to a parent based on his or her income, provided that the
imputation is “consistent with the best interests of the children.” (§ 4058, subd.
(b).) Laura argues that there was insufficient evidence to support the family
13
court’s imputation of income.
Laura challenges the sufficiency of the evidence on the ground that the
vocational examiner failed to conduct vocational testing when he interviewed her.
However, the evidence admitted at trial fully supports the court’s determination.
David Laine, the vocational examiner, testified that Laura’s English skills were
adequate for her to earn the minimum hourly wage as a cashier, customer service
representative, housekeeper, or warehouse worker. In response, Laura testified
that she could not read English. The family court found that this testimony was not
credible, noting that Laura’s school records manifested her ability to read English,
as did her responses at trial to questions regarding her income and expense
declarations. Accordingly, there is sufficient evidence to support the imputation of
income to Laura.
13
“‘On review for substantial evidence, we examine the evidence in the light
most favorable to the prevailing party and give that party the benefit of every
reasonable inference. [Citation.] We accept all evidence favorable to the
prevailing party as true and discard contrary evidence. [Citation.]’ [Citation.]”
(Calcaterra, supra, 132 Cal.App.4th at p. 34.)
20
In re Marriage of Ficke (2013) 217 Cal.App.4th 10, upon which Laura
relies, is distinguishable. There, the family court imputed average monthly income
of $13,333 to a mother who had 95 per cent custody of the pertinent child, even
though the evidence showed that her actual monthly income was approximately
$250. (Id. at p. 16 & fn. 5.) In reversing, the appellate court held that for purposes
of the guideline formula, income may not imputed to a custodial parent absent a
finding that the imputation is in the best interests of the pertinent children. (Id. at
p. 13.) The court explained: “[I]t is counterintuitive -- often counterproductive --
to impute income to a custodial parent, because the objective effect of such an
imputation will be to reduce the money otherwise available for the support of any
minor children.” (Id. at p. 19.)
In contrast, Laura is not the primary custodial parent, as the judgment of
dissolution provides that Donald and Laura have equal physical custody of Patrick;
moreover, the family court imputed only minimum wages to Laura, and required
Donald to pay for child care while Laura works. As Patrick is now nine years old
and is of school age, there is sufficient evidence to support the family court’s
implied finding that it was in Patrick’s best interests for Laura to enhance her
sources of income through employment. (See In re Marriage of LaBass & Munsee
(1997) 56 Cal.App.4th 1331, 1339 [family court properly imputed income to
custodial parent who elected to seek additional educational qualifications in lieu of
finding employment for which she was qualified].) In sum, we see no error in the
imputation of income to Laura.
3. Denial of Fee Award
Laura maintains that the family court erred in denying her request for a fee
award under section 2030. Her sole contention is that the court did not properly
assess Donald’s income during the evidentiary hearing. However, the record
21
discloses that the family court denied Laura’s fee request because she submitted
insufficient evidence to support the award. As explained in In re Marriage of
Keech (1999) 75 Cal.App.4th 860, 869, a fee award is improper absent a
determination that the fees incurred are “‘reasonably necessary.’” Here, the court
noted that Laura submitted no evidence regarding her attorney fees at the
evidentiary hearing, and that her income and expense declaration dated January 5,
2012, failed to state why the claimed fees “were reasonably incurred.” The court
thus did not abuse its discretion in denying Laura’s fee request.
22
DISPOSITION
The judgment is reversed with respect to the determination of Donald’s child
support obligation, and the matter is remanded to the trial court for a new trial in
accordance with this opinion. Laura is awarded her costs on appeal.
NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS
MANELLA, J.
We concur:
EPSTEIN, P. J.
SUZUKAWA, J.
23