Loh v. Loh
93 Cal.App.4th 325, 2001 Daily Journal DAR 11575, 112 Cal. Rptr. 2d 893 (2001)
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Rule of Law:
A parent's gross income as stated under penalty of perjury on recent tax returns is presumptively correct for calculating child support, and a court cannot impute a higher income based on 'lifestyle' evidence, particularly when that lifestyle is subsidized by a nonmarital partner.
Facts:
- Pamela L. and Victor J. Loh divorced in 1997 with a stipulated child support order based on Victor's monthly income of $5,400 as an investment adviser.
- Following the divorce, Victor's securities firm was shut down by regulators, he lost his license, and he was unable to find new employment as an investment adviser.
- Victor started a new business selling race car parts, which he testified netted him between $2,000 and $3,000 per month.
- Victor lived with his girlfriend in her $800,000 home and was photographed with various cars, including a Suburban and a boat owned by his girlfriend or her relatives.
- Pamela L. sought an upward modification of child support.
- At the hearing, Pamela presented photos of Victor's 'lifestyle,' including the girlfriend's house and cars, as evidence of his income.
- Victor submitted an income and expense declaration showing a gross income of approximately $5,700 per month, consistent with his testimony.
Procedural Posture:
- Pamela L. filed an Order to Show Cause in the family law trial court to request an upward modification of child support from Victor J. Loh.
- Victor stipulated to produce financial records, including tax returns for 1997-1998, but failed to do so.
- Pamela did not file a motion to compel the production of the stipulated documents.
- At the modification hearing, the trial court found Victor had a 'nontaxable' monthly income of $9,000 based on lifestyle evidence and ordered him to pay $3,639 per month in child support.
- Victor, the respondent below, timely appealed the trial court's order to the California Court of Appeal.
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Issue:
Does a trial court err in imputing income for a child support modification based on 'lifestyle' evidence, such as photos of a parent with a new partner's assets, instead of relying on documented income or compelling the production of tax returns?
Opinions:
Majority - Sills, P. J.
Yes. A trial court errs by imputing income based on lifestyle evidence funded by a new partner, as this is not a valid substitute for proper discovery and improperly considers the new partner's income. A parent's gross income as stated on recent tax returns is presumptively correct for child support calculations. The court reasoned that Pamela failed to use available discovery procedures, like a motion to compel, to obtain Victor's recent tax returns. The court cannot create a 'de facto' discovery sanction by simply inventing an income figure. Furthermore, the Family Code's definition of 'gross income' is closely tied to the Internal Revenue Code, making tax returns the core component of support calculations. Finally, Family Code § 4057.5 explicitly prohibits considering a new partner's income in modifying child support, and using 'lifestyle' as a proxy is an impermissible circumvention of this rule, as established in In re Marriage of Wood.
Analysis:
This decision solidifies the principle that tax returns are the primary, presumptively correct evidence for determining income in child support cases. It curtails the use of ambiguous 'lifestyle' evidence, especially when a new partner's assets are involved, thereby preventing an end-run around the statutory prohibition against considering new-mate income. The ruling places a clear burden on the party seeking modification to use formal discovery tools to obtain financial documents, rather than relying on the court to impute income as a punitive measure. This strengthens procedural requirements and promotes uniformity by tying child support calculations more closely to verifiable, tax-reported income.
