Step ups, step downs, phase ins, phase outs. These concepts are tools that family lawyers and judicial officers utilize to incrementally increase or decrease pendente lite or post judgment support orders. The rules regarding their applications however, are not the same, and in some instances the well intentioned application of such a concept may still give a rise to a reversal.
A recent example of the well intentioned yet reversible application of one of these concepts can be seen in the recent case of In re Marriage of Rising 90 Cal.Rptr.2d 380; ___Cal.App.; LADR 11941 (November 4, 1999). The Risings were married for 18 years. Husband was an Endodontist who was making $13,882.00 gross per month. Wife was a high school graduate earning $578.00 or $397.00 net per month as a bookkeeper. Starting in 1989 the Court ordered the husband to pay his wife spousal support in the sum of $3,750.00 per month, and that same be reduced by a sum equal to one-half of wife’s actual gross earnings exceeding $500.00 per month.
In 1997, husband filed a motion to decrease spousal support on the grounds that the wife’s financial situation had improved since 1989, while husband’s physical and financial condition had deteriorated. He had been disabled and could not work as an Endodontist.
Applying a change of circumstances analysis pursuant to Family Code §4320 the Court found that the Dr. Rising’s ex spouse had graduated college and was now earnings $2,000.00 per month with $700.00 of additional investment income (her gross income had increased from $578.00 in 1989 to $2,700.00 per month and her liquid assets had nearly quadrupled in value). The evidence further showed that husband had suffered financial and health set backs and that his gross income had decreased. Further, husband’s net worth was going to be halved once again through a second divorce from his current spouse.
Based on these facts, the Court in its written statement of decision found that spousal support should be reduced to $3,000.00 per month through June, 1999 and commencing July, 1999, the step down to $2,000.00 per month and continuing at that rate through December, 2000. Commencing January, 2001 support would step down again to $1,500.00 per month and continue until further order of Court or the death or remarriage of either party or death of wife. The Appellate Court, in footnote 7, found the statement of written decision to be quite comprehensive and revealing of the court’s intention.
Wife appealed stating that there was no evidence on the record to support the portion of the trial court’s order providing for future step downs of spousal support.
The Court of Appeals agreed, but noted surprisingly that the trial court would not have been reversed had it immediately reduced Mrs. Rising’s support to $1,500.00 per month, as opposed to the step downs ordered (per page 385). In this case at the time of the making of the Order, the Trial Court had discretion based on the facts to decrease support to the ultimate step down level of $1,500.00 per month.
However, there were no facts stated on the record supporting the step down over two years as ordered. The Appellate Court noted that it was arguably the intention of the Court to phase in the reduction over two and one-half years to give wife time to adjust. [Page 381] However, the Reviewing Court stated:
“Unfortunately … (the Court) failed to state whether the final step down figure was justified by the parties current financial circumstances. Since the court failed to adequately explain the reasons for the step down, we reverse.” [Page 382]
The Appellate Court goes on to cite In re Marriage of Prietsch and Calhoun (1987) 190 Cal.App.3d 645; 235 Cal.Rptr.587 and In re Marriage of McCann (1996) 41 Cal.App. 4978; 48 Cal.Rptr.2d 864. The Appellate Court distinguishes these two cases by saying that Prietsch and Calhoun deals with an upward modification and that McCann deals with an original setting of spousal support. The Appellate Court finds that during an initial setting it is reasonable to make a step down order when the amount of support is being first set. [Page 384]
The availability of incremental support orders is not limited to spousal support orders, or to the recipient of said orders. Family Code §4076 provides a phase in of child support to a payor of child support. The phase in takes place in two steps towards the eventual full amount of guideline child support. If Dr. Rising was paying child support (which was not the case) and he was below guidelines, under certain circumstances (a finding of extraordinary hardship per FC 4076 (3)(b)(1) ) his child support could be increased by phase in to the guideline amount. The code provides a two step phase in upon a finding that the extraordinary hardship to the obligor outweighs the hardship caused to the supported children by the temporary phase in of the full formula amount of support. Specific finding by the trial court is required to implement this phase in.
However, in the Rising case, the Appellate Court found:
“In this case the trial court specifically found that the change of circumstances justified a decrease in spousal support …”. [Page 385]
In such cases the Appellate Court noted that
“… we do not believe it is critical that there be evidence showing the supported spouse’s needs will decrease on each step down date. Rather, in our view such a step down order is proper if, at the time of making the order, the court had discretion to decrease support to the ultimate step down level - here $1,500.00 per month …”. [Page 385]
So it was not the phase step downs or phase ins that did in the trial court, but was the lack of any finding by the trial court despite its statement of decision.
The error of the Rising Court was not the amount of the support that it ultimately reduced Mrs. Rising to, but rather the failure to state that it was implementing a step down to ease the impact of the decrease (as the Appellate Court states throughout the decision starting at page 381 and thereafter) on the supported spouse as opposed to any other factual reason which was not supported by the record. As the Appellate Court’s succinctly states at page 385, it should not be “left to guess at the basis for the court’s order.” That is the ultimate lesson from Rising.
