THE COURT CAN IMPUTE EARNING CAPACITY TO EITHER PARENT

Donald F. Conviser, a Woodland Hills Certified Family Law Specialist, owner of Warner Center Law Office, with over 35 years' experience aggressively and effectively representing clients in Divorce and Family Law cases in the Courts of Los Angeles and Ventura county, offering a free confidential consultation at 818-880-8990, publishes another blog: THE COURT CAN IMPUTE EARNING CAPACITY TO EITHER PARENT, to address situations in which a Custodial or Noncustodial parent is not contributing, or not adequately contributing, to the support of his/her child as a result of unemployment or underemployment.

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." Family Code Section 4058(b).

It used to be the law that "earning capacity" was a 3-pronged test, composed of (1) the ability to work, including such factors 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 ability to work. Marriage of Regnery (1989) 214 Cal.App.3d 1367 required that those three prongs all be satisfied before the trial court may utilize a parent's earning capacity rather than actual income in computing child support.

The Philbin case [Regis's income fell one year through no fault of his own] tells us that the "willingness to work" prong of the 3-pronged test was addressed in a number of cases as: a deliberate attempt to avoid financial responsibilities by refusing to seek or accept gainful employment [Marriage of Pencovic], refusing to secure or take a job [Marriage of Weber, Marriage of Tomkins], a father deliberately not applying himself to his business [Marriage of Clark], a father intentionally depressing his income to an artificial low [Marriage of Elliott], or a father intentionally leaving his employment to go into another business [Marriage of Baron].

However, the "willingness to work" prong of the three prongs was eliminated in Marriage of Padilla (1995) 38 Cal.App4th 1212, which stated that Philbin's comments regarding bad faith were dicta [not citable authority - because those comments were not necessary to the court's judgment] because the Philbin court hadn't addressed the issue - instead it says that Phibin considered whether a child support order may be premised on a parent's former income level when through no fault of the parent, that income is no longer available. Padilla tells us that Philbin didn't hold, even as dicta, that bad faith is a condition precedent to the imputation of income. Padilla tells us that, simply stated, a parent cannot be held to an unavailable income level, BUT a parent may have income imputed when he/she fails to take advantage of an employment opportunity.

Padilla states: "Because childrens' interests are a top priority, and payment of appropriate support is a parent's primary obligation [Family Code section 4053(a)(d)], a child support obligation must be taken into account whenever an obligor wishes to pursue a different lifestyle or endeavor. Child support is an overhead which must be paid before any other expenses. A payor does not have the right to divest himself/herself of his/her earning ability at the expense of the minor children."

Fast forward to Marriage of LaBASS and MUNSIE (1997) 56 Cal.App.4th 1331: which shows us that income can be imputed to the Custodial parent, among other lessons that case teaches.

Catherine Munsie decided to work part time teaching at a local college while pursuing another postgraduate degree and using time that she could have been working at a full time job to spend with the parties' children. Barry LaBASS filed an Order to Show Cause to reduce his child support obligation, seeking to impute to Catherine the salary of a full-time teacher rather than her part-time earnings.

Barry submitted L.A. Times classified ads to show that full-time teaching employment was available. The trial court allowed those ads into evidence over a hearsay objection [that they weren't admissible to prove the truth of the matter asserted in them], holding that they were admissible for a non-hearsay purpose: to show that "offers to bargain" existed. An important lesson to attorneys - if you can't find a hearsay exception, look for non-hearsay purposes for what appears to be inadmissible hearsay.

The LaBASS court cited Padilla [a parent does not have the right to divest himself/herself of his/her earning ability at the expense of minor children]. When a parent decides not to seek employment to the best of his or her ability, the court must retain discretion to impute income - otherwise one parent by a unilateral decision could eliminate his or her own responsibility to contribute to the support of the child, causing the entire burden of supporting the child to fall upon the fully employed parent [citing Marriage of Paulin (1996) 46 Cal.App.4th 1378, 1384], stating that while Catherine may choose to pursue her education and spend more time with her children, she may not use this choice to avoid her obligation to contribute financially to their support, unless the court finds that such decision is in the best interests of the minor children.

Marriage of Moseley (2008) 165 Cal.App.4th 1375 imputed income to another custodial mother. Dawn, the stay-at-home mother of the parties 5 children, was a licensed attorney, former law review editor at her law school, had started her legal career at Latham & Watkins, but stopped practicing law and let her license become inactive to devote her time to care for her 5 children, stating that doing so was consistent with the parties' faith as devout Mormons. Paul's income changed with a job change, and he filed an Order to Show Cause to modify his support obligation. In this article, I'll deal only with the imputation of income aspects of this case [which had other interesting aspects not relevant to this article].

Paul appealed the trial court's denial of his OSC. The appellate court reversed, agreeing with Paul that LaBASS and MUNSIE offers important guidance in this case, stating: "As that case makes clear, each parent should pay for the support of the children according to his or her abiltiy, insmuch as both parents are equally responsible for the support of their children", and repeated what I cited hereinabove from LaBASS [starting with "When a parent decides not to seek..."]."

The appellate court commented that it is difficult to disagree with the suggestion that Dawn is likely employable as an entry level attorney and that substantial salaries are generally available to entry level attorneys with Dawn's academic standing; it is even more difficult to disagree with the assertion that a licensed attorney with some amount of experience at a law firm the stature of Latham & Wakins would be unable to find employment as a paralegal.

The early imputation of income cases appeared to target Noncustodial Dads. LaBASS and MUNSIE and MOSLEY demonstrate that the law is not sexist, and not biased against the Noncustodial parent. Instead, an unemployed or underemployed parent may have income imputed to him/her if the other party demonstrates his ability to earn and opportunity to earn, and classified ads (and/or the testimony of a vocational consultant) are admissible to prove the opportunity to earn element.