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In re Marriage of Marash

California Court of Appeals, Sixth District
Aug 15, 2008
No. H031329 (Cal. Ct. App. Aug. 15, 2008)

Opinion


In re the Marriage of VERED MARASH and ZACHARY WHITMAN. VERED MARASH, Respondent, v. ZACHARY WHITMAN, Appellant. H031329 California Court of Appeal, Sixth District August 15, 2008

NOT TO BE PUBLISHED

Santa Clara County Super. Ct. No. FL-128865

Duffy, J.

Appellant Zachary Whitman challenges the trial court’s order awarding temporary spousal and child support to the extent it imputed income to him based on what was characterized as his assessed earning capacity and on funds he was considered to be saving by living rent free with his mother. We affirm the order to the extent it imputed income based on earning capacity but we reverse to the extent the order imputed income based on the asserted value of expense-free housing for purposes of calculating guideline support. We remand for consideration whether the housing benefit is a special circumstance justifying deviation from the guideline.

STATEMENT OF THE CASE

I. Factual and Procedural Background

A. Prehearing Facts

Zachary Whitman and respondent Vered Marash were married on November 18, 1990. They had two sons, born in 1991 and 1998, respectively. Zachary and Vered separated on or about August 22, 2005, and on September 7, 2005, Vered petitioned for dissolution of the marriage. A month later, the parties stipulated to an order that provided, among other things, that Zachary would pay Vered temporary spousal support of $2,299 per month and temporary child support of $3,027 per month, for a combined monthly support award of $5,326 per month. The stipulated order also contained the following provision: “The parties acknowledge and agree that [Zachary’s] ability to pay temporary child and spousal support described herein, is based upon the expectation that he will continue to receive funds from his mother each month in an amount sufficient to enable him to receive a total of $6,000 of disposable funds between his net paycheck amount and funds gifted from his mother, plus the sum of $2,100 as additional gifts from his mother, all [totaling] a minimum of $8,100. Said support is without prejudice to [Zachary’s] assertion that funds received as a gift from his mother should not be considered in calculating child or spousal support, nor shall the amounts being paid be deemed precedent for the amount of support to be paid in the future.”

We will hereafter refer to the parties by their given names for ease of reference and not out of disrespect. (Rubenstein v. Rubenstein (2000) 81 Cal.App.4th 1131, 1136, fn. 1; In re Marriage of Schaffer (1999) 69 Cal.App.4th 801, 803, fn. 2.)

The temporary child support figure assumed that the time the children spent with Zachary was five percent. But his actual timeshare was zero as on October 7, 2005, the court also entered a stay-away order preventing Zachary from having contact with Vered or either of the children. At the time of the December 2006 hearing, Zachary was still subject to the stay-away order and custody issues remained to be litigated.

In August 2006, Zachary moved to, among other things, modify temporary child and spousal support per “guideline” in each case such that he would pay combined monthly support of $1,406, a combined reduction of $3,920. Zachary asserted in his accompanying declaration that “[s]ince the date of the [prior] order, there have been changes in both parties’ relative financial situations that warrant a modification of both child and spousal support. [¶] . . . When support was originally set, included in the income available to me to pay support were contributions to my income from my mother in the form of gifts. I no longer receive these gifted funds. [¶] . . . Further[,] the community home has been sold, and the proceeds divided with [Vered] reinvesting her share of such proceeds into another residence.” Zachary’s income and expense declaration filed with the motion on August 14, 2006 stated that he had started his current employment as a financial representative with “Northwestern Mutual” in the business of insurance and financial services on January 15, 2004, that he worked “about 65-75 hours per week,” and that after two-and-a-half years in the business, he “[got] paid $3,000.00 gross (before taxes) per month.” The declaration further noted that Vered was not working but that she may have been receiving interest and dividends in an unspecified amount. With regard to Zachary’s expenses, his income and expense declaration noted that he had no housing or mortgage expense or other expenses related to real property, and that he spent $100 per month for groceries and household supplies and $400 per month on eating out. His total monthly expenses were stated to be $1,800.

In response to Zachary’s motion, Vered filed her own request to, among other things, impute income to Zachary from his employment as he was asserted to be “underemployed and underachieving” and from the fact that he was living rent free with his mother and had “no housing expenses.” Vered also requested that the issues relating to support be placed on the long-cause calendar, as discovery was needed. Her accompanying declaration said that the funds that Zachary had received from his mother “during the marriage and for a significant amount of time after the date of separation” were “income replacement to maintain the standard of living and the income ‘draw’ that reflects [Zachary’s] true earning capacity.” Vered’s declaration further stated that “[a]n advance partial distribution of proceeds from the sale of the residence in the amount of $400,000.00 was made to each party on or about April, 2006.” Vered’s income and expense declaration indicated that she received no income from employment, which had terminated in November 2002 after a two-year medical leave, and that she incurred monthly expenses related to housing, including a mortgage and real-property related expenses.

Vered had earned an undergraduate degree in electrical engineering and graduate degrees in electrical engineering and technology management. She had been employed by Hewlett Packard from June 1982 until November 2002. In November 2000, she became “incapacitated” with “autoimmune disorder.”

Before the hearing, which was continued to the long-cause calendar as Vered had requested, Zachary submitted to a vocational assessment performed by Tim G. Harper, M.A., who prepared a written report, the stated goals of which were “1) To review [Zachary’s] employment history and current situation; 2) to report [Zachary’s] stated goals; and 3) to discuss [Zachary’s] prospects and earning potential for various employment alternatives.” Mr. Harper concluded and stated by declaration that Zachary “reports income well below his reasonable earning capacity.” His report, which was dated September 2006 and which elaborated on this conclusion, noted Zachary’s Bachelor of Arts degree in business, with an emphasis in accounting, finance, and real estate, from U.C. Berkeley in 1977 and his MBA in marketing in 1979 from U.C. Berkeley’s Haas School of Business.

The report further noted that after his education, Zachary had worked for 25 years in his family’s “upscale women’s clothing store in Menlo Park” that his parents had established in 1966. Zachary had assumed full responsibility as owner and manager of the store when his father died in 1991. The store was at its peak in the late 1980’s, achieving “annual sales of approximately $1.6 million.” Due to various forces, the store consistently lost money throughout the 1990’s and Zachary closed the business in December 2003, “liquidating inventory and resulting in approximately $12,000 in debts.” Zachary’s 2003 compensation from the store was approximately $90,000 and he drew approximately $8,000 per month from the business in the several years prior.

As observed by Harper’s report, prior to closing his family’s store at the end of 2003, Zachary had begun preparing for a second career in life insurance by completing coursework and obtaining a license as an insurance sales agent. He began working as an insurance sales agent and financial representative for Northwestern Mutual Financial Network in January 2004. He was credited with gross sales (before deduction of necessary expenses) of $57,946 in 2004 and $62,670 in 2005, an increase of 8.2 percent. Harper’s report characterized Zachary’s 2005 sales level as “within the middle half of all agents in his category (1-2 years of service; age 40 plus; a total of 114 individuals). His 2005 Total Sales [were] approximately 20 [percent] below the median for agents in his category ($62,670 versus $78,174), and his 2005 credit for total earnings was roughly 11 [percent] below the median for agents in his category.”

Harper’s report also observed that Zachary is “an intelligent and engaging individual, with effective communication and interpersonal skills. He is knowledgeable about business in general, and about the retail clothing business. He presents himself as a motivated and knowledgeable insurance sales agent, and as an effective Financial Representative of the Northwestern Mutual Financial Network.”

With regard to the failure and closure of Zachary’s family retail business, Harper’s report noted that it was “primarily due to various competitive trends and market circumstances, as opposed to a lack of necessary skills and/or knowledge.” The report further characterized Zachary’s second career choice as reasonable: “His decision to pursue insurance sales is consistent with his portfolio of experience, skills and abilities gained both in his previous career and through his education. It is also consistent with the strengths and interests identified through vocational testing competed as part of this assessment . . . . [¶] Since embarking on his new career, [Zachary] has made some significant progress in establishing himself as an Insurance Sales Agent. He completed the required coursework and passed the Series 6 and Series 63 exams within a relatively short period of time. He was quickly successful in securing a training position with Northwestern Mutual, an established industry leader. Over the past two years, he has begun to build his practice and his book of business, and he has continued to pursue appropriate continuing education to improve his performance and his prospects for success. He is enthusiastic about his career and he believes his prospects for success with the company are good.”

But with regard to Zachary’s earnings, Harper’s report concluded that “[Zachary’s] sales performance and his current income fall somewhat below the earning capacity range for similar professionals in his company, and within the Insurance industry. As previously noted, his 2005 sales were approximately 20 [percent] below the median for other Northwestern Mutual agents at his level. Salary.Com estimates that a typical training-level Insurance Sales Agent in the San Jose area currently earns base compensation in a range between $43,345 (the 25th percentile) and $53,537 per year (the 75th percentile), with a median of $47,460. However, this population includes a number of individuals who do not have undergraduate or graduate degrees. It would be reasonable to expect that [Zachary] should be earning at or above the 75th percentile in this range. [¶] Another useful index of [Zachary’s] current and future earning capacity as an Insurance Sales Agent is provided by Salary.Com data for Incentive Based Sales professionals, including Insurance Agents, Financial Representatives and others with a portfolio of education, skills and experience comparable to [Zachary]. Salary.Com estimates that an entry level Sales Representative with one to four years of experience currently earns between $49,287 (the 25th percentile) and $73,297 per year (the 75th percentile), with a median of $60,658 annually. With three to six [years] of experience, the appropriate range is from $67,743 to $92,476, with a median of $80,757 per year . . . . [¶] . . . [¶] A reasonable estimate of [Zachary’s] 2006 earning capacity as an Insurance Sales Agent is a range between $55,000 and $80,000.”

Harper’s report concluded that while Zachary could return to the retail sales industry, “[e]ven if he were successful in gaining a retail management position in the highest quartile, his earning capacity as a retail store manager would likely be well below his earning capacity in Insurance Sales.” The report finally observed that “[i]t seems reasonable for [Zachary] to continue to focus his professional efforts and attention on his new career as a Financial Representative for Northwestern Mutual Financial Network. As of May 2006, he appears to be on track to earn in a range between $60,000 and $70,000 for 2006: [H]is client base is growing, and he has implemented some effective networking and business development strategies. On a year-to-date basis, [Zachary] was ranked in the top ten agents in the Ladik Group (7th out of 45). In an income and expense declaration dated August 14, 2006, [Zachary] reported his July 2006 income as $2,824, and his average monthly year-to-date income as $3,581. If he continues at this pace, his 2006 earnings would be approximately $42,000—well below his reasonable earning capacity. He may find it valuable to work with a coach to improve his business strategy, his networking efforts and resources, and other aspects of business planning and business development.”

B. The December 20, 2006 Evidentiary Hearing

A status-only dissolution judgment was entered on October 12, 2006.

The hearing began with uncontradicted expert testimony establishing that Vered is totally disabled and cannot work at all. Then Tim Harper testified as to his report and conclusions about Zachary’s earning capacity as an incentive-based salesperson whose income is earned on commissions. He reaffirmed that Zachary’s career change was a reasonable one, that he has an ability and opportunity to work, and that with his education, he should be performing in the 75th percentile of insurance incentive-based salespeople. At the same time, Harper acknowledged that in the insurance sales business, like many other areas, “20 percent of the people mak[e] 80 percent of the profit” and “those are the rainmakers or the superstars. [Zachary] would fall outside of that range certainly over the first few years. He may, indeed, want to eventually be that way, but currently he would be in the 80 percent group.” Harper also acknowledged that he didn’t know whether Zachary had generated some commissions that would be paid later but that had not yet come to fruition and that for purposes of evaluating Zachary’s 2006 earnings, which as of December 6, 2006, were $33,250, it would be helpful to have this information. Still, $33,250 was just about half of what Harper projected Zachary’s annual earning capacity to be at that point in his new career—about $70,000 to $80,000. Harper further opined that based on his education and background, Zachary is not “an average performer” but is instead “somebody who would set his goal to at least the 75th percentile,” which would be “in the range of $70,000.”

Harper acknowledged on cross-examination that it is not uncommon for commission-based people like Zachary, who are effectively self-employed, to experience a dip in income as a result of divorce proceedings, which here began in late-2005 preceding Zachary’s asserted underperformance in 2006. In fact, Harper had noted in his report that Zachary had relayed to him as part of the vocational assessment that “the stress and disruption associated with the dissolution and separation from [Zachary’s] children had [had] a negative effect on his ability to focus.” Harper also acknowledged that he did not find that Zachary had been “somehow slacking off” or “not really trying in his new job” and that Zachary himself had conveyed the hope that his income would continue to grow as it had in the first two years of his new career. Harper also expressed that he had no reason to disbelieve that Zachary was working in excess of 40 hours per week, as he had relayed. Harper did note that Zachary should be more effectively using internet-based networking systems but he did not sense that Zachary was not also using other, more traditional networking methods to generate business or that following this recommendation would entirely change Zachary’s current earnings level; “it’s just something he should include in the repertoire.”

Harper also noted that the insurance sales business is “a long-term thing. And usually insurance people make a lot of money. They’ve been in the business for 10, 15 years. And they have residual income coming in from policies they wrote 10 years before. [¶] So part of the issue is that [Zachary] may be doing the best—maybe sidetracked a little bit with the divorce. And he’s earning a core amount, but some of the money that he might be planting the seeds for today, he’s not going to realize for five, six, seven or eight years down the road if those policies continue to be renewed. . . . [¶] So he’s in a long-term career, but he has short-term responsibilities with spousal support. And that’s kind of the dilemma that we have right now.”

Candace Seto, a director in the office where Zachary works, also testified. She is on the management team that supervises Zachary and characterized his work ethic as “[p]henomenal. He works very hard. He not only works to get the job done, but he also studies a lot. He spends a lot of time learning the profession, not just trying to sell.” She confirmed that Zachary works “above average hours,” including “[n]ights and weekends.” Seto rated Zachary’s then-current income production as “average” but “right in there with the people of his same” “peer group.” She characterized his performance as “acceptable taking into consideration his personal circumstances.” She also said that Zachary had shared a plan with her for getting his “business back in the right direction” and that he seemed to be adhering to that plan. She further said that measured in numbers of contracts entered into rather than earnings, Zachary’s 2006 performance was on par with that of 2005—23 to 24—but that the contracts were for lesser dollar amounts, resulting in less earnings. Though she still considered this performance to be “average,” she said that the 2006 contracts “might not have been as profitable as last year’s pieces of business, but he’s growing a clientele.”

Seto characterized Harper’s opinion of Zachary’s earning capacity between $55,000 and $80,000 as “high,” in part because of the company’s emphasis on its “long-term compensation structure . . . . [W]e don’t consider a rep to be really experienced until they have at least five years in the business. So [Zachary] is still a new rep.” She also noted that the difficulty with the insurance-sales business is that “it takes activity time to create [later] productivity,” as some contracts take months or even years to enter into after the contact is cultivated.

Zachary testified by offer of proof and testimony. He offered that with his $400,000 from the sale of the family home, he had invested $200,000 in a business and unless there was a “liquidity event,” he could not access these funds for at least four years and then only if there were to be a return on the investment. He testified that through November 2006, his annual income from employment was $32,856, his expenses totaled $12,082, and that he was no longer receiving financial assistance from his mother, which had begun around 2000 when Vered had become ill. The amount of monthly assistance he had received from his mother varied from $500 to $4,000 depending on the circumstances. This financial assistance ceased upon the sale of Zachary and Vered’s family home, which had produced the $400,000 income to each of them by way of a partial distribution. Since the distribution, Zachary had been living off his un-invested $200,000 and of this, he then had less than $10,000 remaining.

Vered confirmed through her own testimony that with her $400,000, she had purchased a home and lived off the remaining funds, which were likewise almost exhausted at the time of the hearing.

Vered called Katie Sims, a certified public accountant, to testify as a “rebuttal witness” in response to matters about which the court had received evidence—Zachary’s income, “how it’s calculated; matters on his income and expense declaration.” Zachary objected because Sims had not previously been disclosed as an expert witness and his counsel had not had the opportunity to take her deposition, objections Vered asserted did not apply to “rebuttal witness[es]” in any event. The court overruled Zachary’s objections and allowed Sims to testify.

Sims stated that she had reviewed Zachary’s papers in support of his motion to modify temporary support; his income and expense declarations dated October 3, 2005, and August 14, 2006; Tim Harper’s vocational assessment report; the couple’s 2004 and 2005 tax returns; Zachary’s commission statements from August 2005 to December 6, 2006; and summaries of the children’s academic and other expenses as well as Vered’s health expenses.

Sims had also prepared documents—proposed guideline support computations—that she said “would rebut the grounds and the basis” for the motion, utilizing the “computer-generated guideline support tables.” These documents were admitted into evidence. Sims noted that Zachary’s income and expense declaration said that his mother “[paid] some of [his] household expenses,” without specifying an amount, and that he lived rent-free with her. Sims described the residence in Atherton as a 2,270 square-foot house located on an acre and a half with a pool and other amenities. She imputed income to Zachary in the amount of $3,500 per month, representing her estimated monthly rental value attributed to Zachary’s free living arrangement plus the value of household expenses that he did not have to incur such as utilities, insurance, a housekeeper, and groceries. To arrive at this amount, Sims said she used information she had received from Vered about Zachary’s mother’s residence and information contained in Zachary’s income and expense declarations, which, in October 2005, had included estimated living expenses of $2,500. Sims acknowledged that she had no expertise in real estate values and that she had estimated the monthly rental value of Zachary’s living situation at $2,500 based on her “limited knowledge of rental values in the area; . . . on discussions with [Vered], and also somewhat based on the initial rent expense that was listed [by Zachary] on that October 2005 income and expense declaration of $2[,]500 a month.” But Sims acknowledged that she had no information as to what factors or types of rentals that Zachary had taken into account in making that estimated rental expense in October 2005. She also acknowledged that she had no information as to the factual basis or accuracy of her assessment of $1,000 per month for his household expenses and that this figure, like the rental expense, was just an estimate.

The parties did not transmit exhibits to this court and thus we are without Sims’s specific written calculations.

The trial court later disallowed cross-examination of Sims on the information she had received from Vered about Zachary’s mother’s residence, concluding that it was “obvious to [the court]” that “the information [had come] from . . . the income and expense declaration.”

Before this testimony, Zachary objected on relevance grounds to Sims testifying as to real estate issues for the reason that these were outside her area of expertise as a CPA but the court overruled the objection. We would characterize the substance of this objection as relating to a lack of foundation rather than relevance but the correct point was nevertheless made.

Sims also imputed earned employment income to Zachary for 2006, resulting in her calculation of his employment income at $70,000 per year, or $5,833 per month, which was “a rounded figure” based strictly on Harper’s report that, in Sims’s view, gave a range of Zachary’s earning capacity of $55,000 to $80,000 per year.

Based on Sims’s assumptions, estimates, and calculations, Vered asked the court to impute income to Zachary for earning capacity and his living arrangement to determine a modified amount of combined temporary monthly child and spousal support per the DissoMaster program of $5,264. This was $62 less than the $5,326 he was already paying per the parties’ initial stipulation that had taken into account monies Zachary was then receiving from his mother.

In rebuttal to Sims’s testimony, Zachary testified that he had moved in with his mother because given his low income, he did not foresee having the ability to pay rent and also because the divorce expenses and child custody arrangement were unclear upon separation such that he did not know what his housing needs and available funds would be and he thought it best to maintain flexibility at that time. He also testified that his October 2005 housing expense estimate of $2,500 was not based on any particular rental information but a “gut feel for what . . . it might cost to [rent] . . . a home or a town home in a . . . nicer neighborhood. . . . It was nothing that [he] had any hard and fast expectation of spending, and it certainly . . . [did not have] anything to do with the fact that [he] was staying in [his] mother’s home. It was out of need and flexibility, . . .”

Zachary further testified that he was then working just under 75 hours per week and that he ate one meal a week at home with his mother. To save money, he ate dinner at fast food restaurants at least two or three times per week and he attended business-networking dinner meetings a couple of times a week. He did not use any services of his mother’s housekeeper other than that she emptied the wastebasket and cleaned the bathroom.

In argument, Zachary’s counsel cited In re Marriage of Loh (2001) 93 Cal.App.4th 325 (Loh), as she had done previously, for the proposition that it was improper to impute income for free rent for purposes of determining support. Then she stated, “The court can consider a reduction in the expenses that are of benefit to my client because he’s not paying any rent at present.” But this statement was followed by her contention that the court was without factual evidence of the actual value of the benefit Zachary was receiving by living with his mother. Zachary’s proposed statement of decision also referenced Loh but in addition acknowledged the contrary authority of Stewart v. Gomez (1996) 47 Cal.App.4th 1748 (Stewart), in which, according to Zachary, the court of appeal held that the “[i]mputation of income for a reduction in living expenses is an allowable discretionary action.”

It appears to us that Zachary’s counsel was intending to acknowledge, per Loh, that free housing, though not properly considered as income under Family Code section 4058, may be properly considered a special circumstance justifying deviation from guideline support under Family Code section 4057, which requires the court to specify its basis for the deviation. (Fam. Code, § 4057, subd. (b).) Further statutory references are to the Family Code unless otherwise specified.

C. The Trial Court’s Order Regarding Temporary Support

At the conclusion of the hearing, the court said that it was “quite impressed with Mr. Harper and his analysis,” which the court incorporated “into [its] findings that [Zachary] is not working at his earning capacity.” The court accepted one of Sims’s DissoMaster calculations, except “instead of imputing $70,000, the court [imputed] $55,000. And the basis for that is that’s in the low range of Mr. Harper’s description of [Zachary’s] earning capacity as an insurance sales agent.” The court accepted as “rational” the imputation of $3,500 a month for Zachary’s living arrangement because it “made sense” as this amount is “in the form of expenses that have been avoided.”

Zachary requested a statement of decision and proposed what it should say, to which Vered objected. In response, Vered submitted her own proposed “FINDINGS OF FACT AND ORDER AFTER TRIAL,” to which Zachary objected.

On February 14, 2007, the court issued its own statement of decision and order after trial. With respect to temporary support issues, the court said the following as relevant here: “The Court credits the testimony of Tim G. Harper who conducted a vocational assessment of [Zachary]. Mr. Harper concluded that the income reported by [Zachary] at the time of trial was well below his reasonable earning capacity. Mr. Harper estimated that [Zachary’s] 2006 earning capacity . . . as an insurance sales agent [is] in a range between $55,000-$80,000. Accordingly, the court orders imputation of income to [Zachary] in the sum of $55,000 for tax year 2006. The court adopts and orders the following assumptions for determination of child and spousal support: [¶] . . . [¶] c. Wages are imputed to [Zachary] of $55,000 for tax year 2006 or $4,583 per month. [¶] . . . [¶] e. Other non-taxable income is imputed to [Zachary] as the value of reduced living expenses in the sum of $3,500 per month. [¶] . . . [¶] Applying the above assumptions results in orders for child support for both children of $2,764 per month and spousal support of $2,075 per month. Total support to be paid by [Zachary] is $4,839 per month commencing December 20, 2006.”

The order thus reduced Zachary’s temporary monthly child support from $3,027 to $2,764 and his temporary monthly spousal support from $2,289 to $2,075. In so doing, and as computed in accordance with Sims’s method, the court’s order imputes income based on Zachary’s perceived earning capacity and the perceived value of his free housing and household benefits as reduced living expenses for purposes of determining guideline support rather than for purposes of deviating from the guidelines under section 4057, subdivision (b), based on special circumstances.

Zachary timely appealed from the court’s “orders for temporary spousal support and temporary child support.”

DISCUSSION

I. Appealability and Standard of Review

On appeal, Zachary challenges the court’s findings c. and e. quoted above, both of which concern the imputation of income for purposes of determining temporary child and spousal support. An order awarding temporary child and spousal support is appealable as a final ruling on a collateral matter. (In re Marriage of Skelley (1976) 18 Cal.3d 365, 367-370.)

A child support order is reviewed for abuse of discretion, as is an order awarding spousal support. (In re Marriage of Cheriton (2001) 92 Cal.App.4th 269, 282, 304 (Cheriton); In re Marriage of Wittgrove (2004) 120 Cal.App.4th 1317, 1327 (Wittgrove); In re Marriage of Destein (2001) 91 Cal.App.4th 1385, 1393 (Destein) [“A trial court’s decision to impute income to a parent for child support purposes based on the parent’s earning capacity is reviewed under the abuse of discretion standard”].) That said, the exercise of judicial discretion with respect to child support may occur only within parameters set by the child support statutes. The “determination of a child support obligation is a highly regulated area of the law, and the only discretion a trial court possesses is the discretion provided by statute or rule.” (Cheriton, supra, at p. 283.) By contrast, temporary spousal support may generally be ordered in any amount based on the parties’ needs and ability to pay and the court is not restricted by any set of statutory guidelines in fixing the amount. (Id. at p. 312.)

But we note that to the extent the trial court’s decisions reflect an interpretation of the statutory definition of income for child support purposes, this is a question of law subject to de novo review. (In re Marriage of Pearlstein (2006) 137 Cal.App.4th 1361, 1371-1372.)

Under the abuse of discretion standard, we determine “ ‘whether the court’s factual determinations are supported by substantial evidence and whether the court acted reasonably in exercising its discretion.’ [Citation.] We do not substitute our own judgment for that of the trial court, but determine only if any judge reasonably could have made such an order. [Citation.]” (In re Marriage of Schlafly (2007) 149 Cal.App.4th 747, 753 (Schlafly).) In exercising its discretion, a trial court must not only base its findings on substantial evidence but it must also follow established legal principles. (Ibid.; In re Marriage of Cohn (1998) 65 Cal.App.4th 923, 931 (Cohn).) The failure to do so constitutes an abuse of discretion. (Cohn, supra, at p. 931.) And as Vered points out, in order to be reversible, error must be prejudicial, resulting in harm or a miscarriage of justice. (In re Marriage of Steiner & Hosseini (2004) 117 Cal.App.4th 519, 528; Michaely v. Michaely (2007) 150 Cal.App.4th 802, 808.)

II. Legal Backdrop

A. Child Support

Statutory guidelines regulate the determination of child support in California, whether permanent or temporary. (§§ 4050-4203.) “The guidelines set forth several important principles relating to child support determinations, including that (1) the interests of the child are the state’s top priority, (2) a parent’s principle obligation is to support his or her children ‘according to the parent’s circumstances and station in life[,]’ (3) ‘[b]oth parents are mutually responsible for the support of their children[,]’ (4) ‘[e]ach parent should pay for the support of the children according to his or her ability[,]’ (5) children should share in both parents’ standard of living, and (6) in cases ‘in which both parents have high levels of responsibility for the children[,]’ child support orders ‘should reflect the increased costs of raising the children in two homes and should minimize significant disparities in the children’s living standards in the two homes.’ (§ 4053, subds. (a)-(b), (d)-(g).) The guideline amount of child support, which is calculated by applying a mathematical formula to the relative incomes of the parents, is presumptively correct. (See §§ 4055, 4057, subd. (a); In re Marriage of de Guine (2002) 97 Cal.App.4th 1353, 1359 [].) ‘The court may depart from the guideline only in “special circumstances” set forth in the child support statutes. (§[§] 4052 [& 4057].)’ [Citation.]” (Schlafly, supra, 149 Cal.App.4th at p. 753; Wittgrove, supra, 120 Cal.App.4th at p. 1326.)

Although section 4055, which provides the statutory formula for computing child support, is expressly labeled the “statewide uniform guideline” per sections 4050 and 4055, subdivision (a), the statutes are far more than mere guidelines. Indeed, they impose mandatory requirements with the intent that application of the statutory formula will yield a presumptively correct amount of child support. (In re Marriage of Laudeman (2001) 92 Cal.App.4th 1009, 1013.)

Formula child support is a share of the parents’ “net monthly disposable income” (§ 4055, subds. (a) & (b)), computed by totaling “annual gross income” (§ 4058 [income from whatever source derived subject to certain exceptions]) less allowable deductions to arrive at “annual net disposable income ” (§ 4059) and then dividing that number by 12 to yield “monthly net disposable income” (§ 4060). (Marriage of LaBass & Munsee (1997) 56 Cal.App.4th 1331, 1336.) The amount must be set using each parent’s income, expressed in fixed dollar amounts, as of the time of the hearing. (In re Marriage of Hall (2000) 81 Cal.App.4th 313, 317-318; In re Marriage of Tydlaska (2003) 114 Cal.App.4th 572, 575-576.) In other words, child support is limited to the conditions and circumstances existing at the time the order is made and the court cannot speculate about what might happen later by providing for future contingencies. (Cheriton, supra, 92 Cal.App.4th at p. 298.) As pertinent here, section 4058, which defines “annual gross income” for purposes of child support calculations, expressly provides: “The court may, in its discretion, consider the earning capacity of a parent in lieu of the parent’s income, consistent[ly] with the best interests of the children.” (§ 4058, subd. (b).)

B. Spousal Support

Whereas child support awards facilitate a uniform purpose—that children’s best interests be served and that they share in their parent’s standard of living— spousal support necessarily serves varying functions, depending on the parties and the underlying facts and circumstances. For that reason, the Legislature has not codified any particular purpose of the award, which lies within the court’s broad discretion. (In re Marriage of Smith (1990) 225 Cal.App.3d 469, 480-481 (Smith); Cheriton, supra, 92 Cal.App.4th at p. 312.) With respect to permanent spousal support, the court must weigh and consider the statutory factors set out at section 4320. As long as these factors are considered and weighed as applicable in a given case, the ultimate decision as to amount, duration, and whether to retain spousal support jurisdiction rests within the court’s discretion, which is essential “in order to fairly exercise the weighing process contemplated by [the Code], with the goal of accomplishing substantial justice for the parties.” (Smith, supra, 225 Cal.App.3d at p. 481; Cheriton, supra, 92 Cal.App.4th at pp. 302-304.)

But with respect to temporary support, the purpose of which is “to maintain the [pre-separation] status quo as much as possible pending trial” (In re Marriage of Schulze (1997)60 Cal.App.4th 519, 525 (Schulze)), the section 4320 factors are not controlling. Except where a spouse has been convicted of domestic violence against the other spouse (§ 4325), the propriety and amount of temporary spousal support remains within the court’s discretion, unrestricted by any specific statutory circumstances and broadly based upon need and ability to pay. (§ 3600; Wittgrove, supra, 120 Cal.App.4th at p. 1327; In re Marriage of Dick (1993) 15 Cal.App.4th 144, 165; In re Marriage of Murray (2002) 101 Cal.App.4th 581, 594-595; Cheriton, supra, 92 Cal.App.4th at p. 312 [there are no explicit statutory standards governing temporary support].) The award should be tailored to the equitable rights of the parties in light of their economic needs and abilities during the period for which temporary support is sought. (Cheriton, supra, at p. 312.)

Subject to the same standards and limitations for imputing income based on earning capacity applicable to permanent spousal support (§ 4320, subds. (a) & (c)), the trial court may take into account earning capacity when setting temporary support in the appropriate case. There must be competent evidence that the party sought to be charged with imputed income has both the ability and the opportunity to earn the imputed income amount—the so-called “Regnery rule” based on In re Marriage of Regnery (1989) 214 Cal.App.3d 1367, 1373 (Regnery). (Wittgrove, supra, 120 Cal.App.4th at p. 1329; In re Marriage of Bardzik (2008) __ Cal.App.4th __ (Bardzik) (2008 Cal.App. Lexis 1153, *11-*23).)

III. Imputation of Income Based on Zachary’s Asserted Earning Capacity

To calculate earning capacity, the court must determine “the income the spouse is reasonably capable of earning based on the spouse’s age, health, education, marketable skills, employment history, and the availability of employment opportunities.” (In re Marriage of Simpson (1992) 4 Cal.4th 225, 234 (Simpson); § 4058, subd. (b).) Specifically, earning capacity is 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 opportunity to work which means an employer who is willing to hire. [Citation.]’ ” ’ [Citation.]” (Cohn, supra, 65 Cal.App.4th at pp. 927-928; Bardzik, supra, ___ Cal.App.4th at pp. __ [2008 Cal.App. Lexis at pp. *11-*23].) With respect to self-employed persons, which Zachary effectively is here, opportunity to work has been defined as the substantial “ ‘likelihood that a party could, with reasonable effort, apply his or her education, skills and training to produce income.’ ” (In re Marriage of Smith (2001) 90 Cal.App.4th 74, 82, quoting Cohn, supra, at p. 930 [self-employed people have an opportunity to work as long as there is a substantial likelihood that they can produce income by applying marketable skills].)

Although Regnery sets forth this three-prong test, the court there held that earning capacity can be considered when only ability and opportunity are present. In other words, earning capacity can be used in lieu of actual income even where one is unwilling to work. Thus, the test is more accurately described as two-prong. (In re Marriage of Hinman (1997) 55 Cal.App.4th 988, 995, fn. 6 (Hinman).)

Although there is no longer any requirement to show that a person was deliberately shirking family financial responsibilities, intentionally suppressing income, or refusing to accept or seek gainful employment, earning capacity cannot be imputed where “the ability to work or the opportunity to work is lacking . . . .” (Regnery, supra, 214 Cal.App.3d at p. 1373; Cohn, supra, 65 Cal.App.4th at p. 928; Destein, supra, 91 Cal.App.4th at pp. 1391-1392; Hinman, supra, 55 Cal.App.4th at p. 999; In re Marriage of Smith, supra, 90 Cal.App.4th at p. 82 [earning capacity cannot be substituted for actual income unless both ability and opportunity exist]; Bardzik, supra, ___ Cal.App.4th at pp. __ [2008 Cal.App. Lexis at pp. *11-*23].) If there is not ability and an opportunity to work at the imputed earnings level, there is no measurable earning capacity to impute. (Regnery, supra, 214 Cal.App.3d at pp. 1372-1373; In re Marriage of Reynolds (1998) 63 Cal.App.4th 1373, 1378.) It is thus inappropriate to use the earning capacity standard where a party lacks either the ability or the opportunity to work at the imputed earnings level. (Ibid.)

We note there is still some reference in the case law to the bad faith requirement in the case of spousal as opposed to child support, where the best interests of the child are paramount. (See, e.g., Rosen, supra, 105 Cal.App.4th at p. 825; Cheriton, supra, 92 Cal.App.4th at p. 301; In re Marriage of LaBass & Munsee, supra, 56 Cal.App.4th at p. 1338, fn. 2; Simpson, supra, 4 Cal.4th at p. 232.) Zachary does not challenge the imputation of income for purposes of setting spousal support based on a lack of bad faith.

And in order to “rely on earning capacity in lieu of actual income, ‘[t]he dispositive question is whether the evidence will sustain the inference that the party charged with support could, with reasonable effort, obtain employment generating the postulated (higher) income.’ [Citation.]” (Cohn, supra, 65 Cal.App.4th at p. 930.) The focus and proper inquiry is on what a person similarly situated could reasonably expect to earn. The figures to support earning capacity in lieu of actual income “cannot be drawn from thin air; they must have some tangible evidentiary foundation.” (Id. at p. 931; In re Marriage of Rosen (2002) 105 Cal.App.4th 808, 822-823 (Rosen) [expert testimony as to attorney’s reasonable compensation based on survey was conjecture and could not be used to determine earning capacity]; In re Marriage of Riddle (2005) 125 Cal.App.4th 1075, 1082-1083 (Riddle) [time period on which earning capacity is calculated on fluctuating income must be long enough to be representative as distinct from extraordinary, otherwise income figure is arbitrary]; In re Marriage of Graham (2003) 109 Cal.App.4th 1321, 1327-1328 [hourly rate used to determine earning capacity had no support in the record.)

Here, there was substantial evidence in the form of Tim Harper’s report and testimony on what a person functioning as a commissioned insurance sales agent or financial services representative with Zachary’s background, experience, and education could reasonably be expected to earn in 2006. Harper specifically testified that Zachary then had the ability and opportunity to work to the level of $55,000-$80,000 in income per year, consistently with others similarly situated. Harper placed much stock in Zachary’s education when assessing his earning capacity and placing him in an upper performance percentile relative to others less educated but it is not unreasonable to do so. The trial court expressly credited Harper’s testimony and his analysis and the court was free to discount the testimony of Candace Seto that Harper’s earning capacity figures were “high,” given the long term nature of the company’s compensation structure and Zachary’s “personal circumstances.”

Although the testimony was undisputed that Zachary worked in the neighborhood of 70 hours per week and that in 2006, he was responsible for virtually the same number of contracts as the prior year, albeit less lucrative ones, these efforts were not shown to have translated to income, which is the measurable figure against demonstrated earning capacity. And it was not necessary for Vered to show that Zachary was not employed, deliberately underemployed, or intentionally suppressing his income in order for the court to impute income in accordance with Zachary’s demonstrated earning capacity. It was likewise not necessary for her to show that Zachary could earn more in another line of work or for the court to instruct Zachary on what he should specifically do to increase his income, such as by changing jobs, contrary to what Zachary contends. Moreover, once Vered demonstrated the presence of ability and opportunity to work, the burden was on Zachary as the supporting spouse to negate these elements, a burden that on this record he cannot be said to have met. (Cohn, supra, 65 Cal.App.4th at p. 929; In re Marriage of LaBass & Munsee, supra, 56 Cal.App.4th at p. 1339.)

While Zachary relies on Riddle, supra, 125 Cal.App.4th 1075, for the proposition that imputation of income for earning capacity is only proper where it can be demonstrated or assumed that the payor can take some action to increase earnings to the imputed level, he does not point to evidence that he was unable to earn $55,000 in 2006. And $55,000 was at the low end of Harper’s range of Zachary’s earning capacity, which did not correlate to “superstar” performance as Zachary now contends. Nor did this figure suffer from Riddle’s “logical fallacy of extrapolation” (Riddle, supra, 125 Cal.App.4th at p. 1086) in that it was based on a broad enough time sample and within a range demonstrated to be historically representative both of Zachary’s past performance over a period of two years and that of others in his peer group. It was also not arbitrary, as in Riddle, by virtue of it being only a tiny slice of wild income fluctuations in Zachary’s business. Regardless of Vered’s allusion to this figure as representing Zachary’s future income by reason of the company’s long-term compensation structure and the nature of insurance sales in general, Harper did not characterize his projected range of Zachary’s earning capacity in this way and he supported the range with what the trial court could accept as accurate salary-survey data covering Zachary’s line of work in the appropriate geographical locale and Zachary’s own stated goals. (Cohn, supra, 65 Cal.App.4th at pp. 930-931.)

Zachary was credited by the company with earnings of $47,704 in 2005 and $43,855 in 2004.

In sum, there was substantial evidence of Zachary’s earning capacity as shown by the presence of his ability and opportunity to work at the imputed level of $55,000. Harper showed what a person similarly situated to Zachary could reasonably have expected to earn in 2006 and this figure was not drawn from “thin air.” (Cohn, supra, 65 Cal.App.4th at p. 931.) It is not within our purview here to substitute our judgment for that of the trial court. Our review of the court’s factual findings is limited to a determination whether there is any substantial evidence to support the court’s conclusions. (Wittgrove, supra, 120 Cal.App.4th at p. 1327.) Because there is, and we cannot say that no judge reasonably could have made such an order, it follows that we cannot conclude that the court abused its discretion.

IV. Imputation of Income Based on Zachary’s Rent-Free Housing

Zachary contends that the trial court erred by imputing $3,500 monthly (non-taxable) incometo him representing what the court accepted as the value of expenses avoided by virtue of his rent-free living situation, which was composed of $1,000 as the value of household expenses other than rent that Zachary was able to avoid by living with his mother and $2,500 as rental value. The court derived this amount based on Katie Sims’s testimony and calculations, to which Zachary had objected and which were in part based on Zachary’s own income and expense declarations. Zachary’s contention is two-part—first that the value of rent-free housing is not income for purposes of determining guideline support and second that the value of the benefit received lacks factual support as Sims was not disclosed as an expert prior to trial and she was not qualified to render opinions on the value of the rent or other household expenses avoided. Vered contends, on the other hand, that the court’s award should be affirmed as it is amply supported by substantial evidence. But she first contends that Zachary’s claim has been forfeited on appeal because his counsel acknowledged below that the court could attribute some economic benefit to his living situation in setting support.

Addressing this procedural issue first, we conclude that the issue has not been forfeited or waived. By her verbal and written references to Loh, which held that expense-free housing could not be considered as income for purposes of calculating guideline support and which expressly disapproved of Stewart, supra, 47 Cal.App.4th 1748, Zachary’s counsel sufficiently raised the claim below to preserve it for appeal. Although counsel also acknowledged Stewart, and then went on to contend that the evidence here was insufficient to support imputation in any event, we view this acknowledgement merely as an effort to confront contrary authority as a fall-back position. And, importantly, these events predated our own Schlafly case in which we subscribed to Loh’s reasoning, rejecting both Stewart and County of Kern v. Castle (1999) 75 Cal.App.4th 1442 (Kern), which followed it. Thus, at the relevant time period, Zachary’s counsel could not have known of our reasoning in Schlafly and it was thus only prudent for her to have raised alternate challenges to the imputation of income for Zachary’s expense-free housing given the existing legal landscape.

As noted at footnote 9 ante, it appears to us that in argument, Zachary’s counsel was intending to acknowledge, per Loh, that free housing, though not properly considered as income under section 4058, may be properly considered as a special circumstance justifying deviation from guideline support under section 4057, which requires the court to specify its basis for the deviation. (§ 4057, subd. (b).) This further supports our conclusion that Zachary’s challenges to the imputation of income based on his expense-free housing for purposes of calculating guideline support have not been forfeited.

Reaching the merits, and following Schlafly, we conclude that the court erred by imputing $3,500 per month in non-taxable income to Zachary in calculating guideline child support to account for Zachary’s rent-free housing. In Schlafly, one spouse lived in a mortgage-free house for which the trial court had imputed $3,000 per month in nontaxable income for purposes of setting guideline child support on a permanent basis. The court had previously disregarded the fact of mortgage-free housing as income in setting temporary support but had departed from the guideline amount by $1,000 after it had been calculated by considering the mortgage-free housing as a special circumstance that resulted in reduced living expenses. (Schlafly, supra, 149 Cal.App.4th at pp. 752-753.) Agreeing with Loh’s reasoning, we reversed the permanent child-support order that had been calculated in accordance with Stewart and remanded, leaving it to the court’s discretion to consider the mortgage-free housing as a special circumstance under section 4057 justifying deviation from the guideline amount. (Id. at pp. 758-760.)

In explaining our reasoning in Schlafly, we observed that the impact of free housing on child support payments had been discussed in Stewart and Kern, in both of which the characterization of free housing as income had been endorsed. In Stewart, the court relied on section 4058, subdivision (a)(3), which gives the court discretion to consider as income “employee benefits or self-employment benefits, taking into consideration the benefit to the employee, any corresponding reduction in living expenses, and other relevant facts.” (§ 4058, subd. (a)(3), italics added.) Even though the payor spouse’s living situation on an Indian reservation was not employment related, the court in Stewart concluded that there was “no reason to distinguish an employee housing benefit from an Indian reservation housing benefit” and the trial court had thus “properly included the reasonable rental value of [the father’s] house as income.” (Stewart, supra, 47 Cal.App.4th at p. 1755.)

The appellate court in Kern found that the lower court had erred in excluding from income any consideration of the benefits the father there had received as a result of his $1 million inheritance. (Kern, supra, 75 Cal.App.4th at pp. 1456-1458.) Citing Stewart, the court observed that, among other things, “the trial court here could have discretionarily considered as income the mortgage-free housing [the father] was living in because he paid the mortgage off with part of the proceeds from his inheritance.” (Id. at p. 1451.)

As we noted in Schlafly, the court of appeal in Loh discussed at length the propriety of incorporating nontaxable benefits into child support calculations and ultimately disagreed with the approach set forth in Stewart and recognized in Kern. (Loh, supra, 93 Cal.App.4th at pp. 333-336.) “Reiterating that income tax returns are presumptively correct in calculating a parent’s income, the Loh court observed that Stewart and Kern ‘departed altogether from an income tax model of section 4058 income with regard to certain free housing benefits.’ (Loh, supra, 93 Cal.App.4th at pp. 332-333.)” (Schlafly, supra 149 Cal.App.4th at p. 758.)

“The Loh court first questioned the limits of a rule that allows courts to consider anything that reduces living expenses as income, pointing out that it leads to support payments based on money the parent does not have. (Loh, supra, 93 Cal.App.4th at p. 334.) Moreover, the Stewart rule, which recognizes as income free housing provided by third parties, is incongruous when compared to the prohibition on considering free housing provided by a new partner or spouse in ordering child support. (Id. at pp. 334-335.) Second, the court noted that section 4058, subdivision (a)(3) refers to employee benefits that reduce living expenses, and found no statutory justification for interpreting the plain language of the statute to include as income reductions in living expenses not related to employment. ([Id.] at p. 335.) The Loh court therefore concluded that if a trial court determines that a parent’s housing situation (or other lifestyle factors) renders application of the guideline amount inappropriate or unjust, such a fact may be considered in a deviation from the guideline, but may not be included as non-taxable income. (Id. at pp. 335-336.) ‘[T]he proper course [i]s to first calculate the guideline amount in light of the parents’ incomes as revealed by such evidence as tax returns, income and expense declarations and pay stubs, and then, under section 4057, to adjust the amount upward in light of the free housing benefit. Such an approach respects the rebuttable correctness of the mechanically calculated guideline amount, and allows child support awards to properly reflect the parents’ standard of living without doing violence to the word “income” in a way that would make the Sheriff of Nottingham proud.’ (Ibid., fn. omitted.)” (Schlafly, supra, 149 Cal.App.4th at p. 758.)

We went on in Schlafly to agree with Loh that “[u]nder the plain language of section 4058, the court’s ability to consider housing benefits as income is limited to cases involving employment-related housing benefits” and that “[a]n upward adjustment pursuant to section 4057 . . . ensures that the court specifies the basis for its deviation from the guideline amount, but still allows the court to recognize the impact a parent’s free housing may have on the parent’s living expenses and resources. (See § 4057, subd. (b) [requiring the court to state its reasons for departing from the guideline on the record or writing pursuant to section 4056].) Under section 4057, subdivision (b)(5), the presumption that the guideline amount of child support is correct is rebuttable based on evidence showing that application of the guideline formula ‘would be unjust or inappropriate due to special circumstances in the particular case.’ ‘Special circumstances’ may include the fact that one parent . . . uses a much higher or lower percentage of income on housing. (§ 4057, subd. (b)(5)(B).)” (Schlafly, supra, 149 Cal.App.4th at pp. 758-759.)

We conclude under Schlafly that to the extent the court here imputed income to Zachary for his expense-free housing for purposes of calculating guideline child support, the court erred. We further conclude that the court similarly erred by imputing this income for purposes of calculating temporary spousal support. We acknowledge that both Loh and Schlafly concerned child support only, which, as Zachary points out, holds a position of primacy in the family law scheme. (See, e.g., §§ 3600 & 4058.) But Loh’s rationale in disapproving the blanket imputation of income for anything that reduces living expenses, which we followed in Schafley, applies equally to the setting of temporary spousal support, particularly where such support has been set through application of non-mandatory guidelines as was done here. (Loh, supra, 93 Cal.App.4th at p. 336, fn. 8 [“If the Castle and Stewart approaches were taken to their logical conclusion, there would be no end to litigation, and a relatively automatic computerized process would become bogged down in numerous problems of where to draw the line between things that ‘reduce living expenses’ and things that merely make life better”].) Whether calculating child support or spousal support, this sort of imputation-of-income approach leads to support payments based on money the parent doesn’t have, and therefore cannot be justified as contributing to or increasing the payor spouse’s ability to pay, which is a limitation on an award of temporary spousal support.

And we reject Vered’s characterization of Zachary’s housing arrangement with his mother as a recurring family or parental “gift,” which perhaps may be characterized as income for guideline child support purposes under section 4058, a point on which we express no opinion. (In re Marriage of Shaughnessy (2006) 139 Cal.App.4th 1225, 1240-1243; but see Schulze, supra, 60 Cal.App.4th at p. 529 [gifts are not a form of compensation and because section 4058 contemplates calculation of income per an income tax model and gifts are not taxable, they are logically outside the purview of the child support statute]; In re Marriage of McQuoid (1991) 9 Cal.App.4th 1353, 1360.) There is no evidence in this record that Zachary’s living arrangement was intended to be or could be characterized as a recurring “gift” from his mother. The only evidence is that Zachary moved in with his mother out of financial need and because at the time, he needed to retain flexibility in his housing situation in order to deal with the fall-out from the divorce, including the then-unknown child custody arrangements.

Moreover, in this case, whether for purposes of imputing income to Zachary for child or spousal support, there is not substantial evidence of the $3,500 assessed value of the expenses Zachary was avoiding or benefits he was receiving as a result of his living arrangement. Katie Sims admittedly had no expertise in real estate values and she based her calculations only on “estimates” that were untethered to even a theoretical reality. And the only evidence regarding the figures Zachary had used as estimated housing expenses in his October 2005 income and expense declaration, which the court found had formed the basis of Sims’s figures, was that Zachary had estimated what he might spend on housing, when he was still receiving monthly funds from his mother, based on a “gut feel.” There is simply no evidence to support that the value of living expenses Zachary avoided by living with his mother was equivalent to $3,500 per month. And Zachary was obviously prejudiced by the court having received and credited Sims’s testimony on this point because the court’s imputation of income on this issue was based on her testimony alone.

Zachary also objected to Sims’s testimony on the basis that she had not been previously disclosed as an expert witness under Code of Civil Procedure section 2034.300 or Santa Clara County Local Family Law Rule (6)(E)(4) and she was not a true rebuttal witness as Vered had represented to the trial court in urging that her testimony be allowed. It is not necessary for us to address these issues in light of our opinion today because we direct that upon remand, the parties are entitled to present new evidence on the question whether Zachary’s mortgage-free housing, and its monthly value as a reduced expense, is a special circumstance under section 4057, subdivision (b)(5), justifying deviation from the guideline amount. We do observe, however, that in the court below, Zachary did not establish under Code of Civil Procedure section 2034.230 that he had made a demand for exchange of expert information or that under Code of Civil Procedure section 2034.300, he had made a complete and timely disclosure, which are conditions precedent for excluding another party’s undisclosed expert witnesses under Code of Civil Procedure section 2034.300.

With respect to this issue, Zachary finally contends that this case should not be remanded, as in Schlafly, for a determination whether the value of reduced expenses by virtue of his living arrangement should be considered a “special circumstance” justifying deviation from guideline child support under section 4057. We conclude that the matter is appropriate for remand for this purpose. But on remand, the court shall base any upward adjustment to the guideline under section 4057 on admissible evidence, supported by adequate foundation.

See preceding footnote regarding our direction on remand.

DISPOSITION

To the extent the trial court’s order imputed income to Zachary based on earning capacity for purposes of determining temporary child and spousal support, it is affirmed. To the extent the order also imputed income to Zachary for the same purposes based on the assessed value of his reduced expenses by reason of his living with his mother, it is reversed and the matter remanded for further proceedings consistent with this opinion. The parties are to bear their own costs and attorney fees on appeal.

WE CONCUR: Mihara, Acting P.J., McAdams, J.


Summaries of

In re Marriage of Marash

California Court of Appeals, Sixth District
Aug 15, 2008
No. H031329 (Cal. Ct. App. Aug. 15, 2008)
Case details for

In re Marriage of Marash

Case Details

Full title:In re the Marriage of VERED MARASH and ZACHARY WHITMAN. VERED MARASH…

Court:California Court of Appeals, Sixth District

Date published: Aug 15, 2008

Citations

No. H031329 (Cal. Ct. App. Aug. 15, 2008)