In Re Marriage of Schlafly
57 Cal. Rptr. 3d 274, 149 Cal.App.4th 747 (2007)
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Rule of Law:
The fair rental value of a parent's mortgage-free residence cannot be imputed as non-taxable income under Family Code § 4058 for calculating guideline child support. However, it may be considered a 'special circumstance' under Family Code § 4057, justifying an upward deviation from the guideline amount after it has been calculated.
Facts:
- Roger Schlafly and Julie Schlafly married in December 1996 and had two children.
- Julie was a stay-at-home mother throughout the marriage while Roger, a mathematician, was self-employed in the computer software industry.
- Roger's assets included a minority interest in a corporation, several patents, his own business, a $2.9 million stock portfolio, and a mortgage-free home.
- The couple separated in October 2003, and Julie filed for dissolution of the marriage.
- The parties initially shared 50-50 custody of their children.
- On November 16, 2004, Roger's custody percentage decreased significantly to approximately 20 percent.
Procedural Posture:
- Julie Schlafly filed a petition for dissolution of marriage against Roger Schlafly in the trial court.
- In August 2004, the trial court (Judge Kelly) ordered child support by deviating upward from the guideline amount to account for Roger's mortgage-free housing.
- In May 2005, following a custody change, Judge Kelly modified the temporary support to the guideline amount, explicitly deferring the issue of the housing benefit.
- On December 20, 2005, a different judicial officer (Commissioner Joseph) issued a new order that calculated future child support by imputing $3,000 per month in non-taxable income to Roger for his housing.
- Roger filed a motion for reconsideration, which the trial court denied.
- Roger Schlafly, as appellant, appealed the December 20, 2005 order to the California Court of Appeal, with Julie Schlafly as the respondent.
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Issue:
Does California's child support guideline statute permit a court to impute the fair rental value of a parent's mortgage-free home as non-taxable income when calculating the guideline child support amount?
Opinions:
Majority - Mihara, Acting P. J.
No. A court abuses its discretion by imputing the fair rental value of a parent's mortgage-free home as non-taxable income in the initial child support guideline calculation. The court reasoned that Family Code § 4058(a)(3), which allows consideration of benefits that reduce living expenses, is limited by its plain language to 'employee benefits or self-employment benefits.' A parent's mortgage-free housing, if not employment-related, does not fall into this category. The court adopted the approach from In re Marriage of Loh, holding that the proper procedure is to first calculate the guideline amount based on the parents' actual and imputed income. Then, the court may treat the free housing as a 'special circumstance' under Family Code § 4057 that makes the guideline amount 'unjust or inappropriate,' justifying an upward deviation from that guideline amount. This requires the court to state its reasons on the record, preserving the integrity of the guideline formula while allowing for adjustments based on a parent's true economic circumstances.
Analysis:
This decision clarifies a split in authority on how to treat the economic benefit of mortgage-free housing in child support calculations, endorsing the approach in In re Marriage of Loh over that in Stewart v. Gomez. By classifying the benefit as a potential 'special circumstance' for deviation rather than as 'income' for the initial calculation, the court reinforces the statutory definition of income and promotes transparency. This holding requires trial courts to first establish a baseline guideline support amount before justifying any departure, preventing the arbitrary inflation of a parent's income based on non-liquid assets and ensuring that any adjustments are explicitly reasoned and recorded.
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