Monday, August 18, 2008
Inclusion of Possible Bonus in Support Calculation Held Error
By STEVEN M. ELLIS, Staff Writer
A trial court erred when it declined to modify a man’s support obligations because a discretionary yearly bonus at his new job might bring his gross income back up to its previous level, even though the man had to borrow to cover the obligations most of the year, the Fourth District Court of Appeal has ruled.
Concluding Thursday that changed circumstances supported redetermining Paul Mosley’s child and spousal support obligations based what he actually received, Justice Eileen C. Moore wrote for Div. Three that the trial court abused its discretion when it assumed Mosley would earn a six-figure bonus each year from his homebuilder employer simply because Mosley had earned one during his one-year employment.
Mosley and his wife Dawn, both lawyers, dissolved their marriage of 17 years in 1999. At the time, Paul Mosley was a real estate partner at a large law firm who made almost $450,000, and Dawn Mosley was the stay-at-home mother of their five children. In 2002, the trial court ordered $6,810 per month in child support and $4,100 in spousal support.
The child support amount was increased the following year after the share of time Paul Mosley spent with his children went down, and Mosley was ordered to pay one half of the costs for college and a Mormon mission trip for each child. However, his child support obligations began to decrease as his children started reading 18.
Mosley’s firm later terminated him after paring down its real estate practice due to a market downturn, so in 2005 he took an in-house position with a homebuilder for a base salary of $205,000, with the possibility of a 150 percent year-end bonus. He was awarded a bonus during his first year, making his 2005 income almost equal to his salary at his previous job.
In 2006, Mosley sought modification of the support orders. Arguing changed circumstances, he pointed out that a significant portion of his income would be paid, if at all, as a discretionary bonus by a homebuilder grappling with a depressed real estate market.
Borrowing to Pay
He also presented evidence that almost all of his net monthly take-home pay from his salary was required to pay support obligations, and that he had to borrow his monthly living expenses for most of the year in the hopes of receiving a year-end bonus that would permit him to repay the debt before embarking again on the same cycle.
Orange Superior Court Commissioner Richard Vogl denied Mosley’s request, concluding that Mosley had failed to show changed circumstances because his overall gross income in 2005 had not decreased from the previous year.
But Moore, focusing on the bonus’ nature, opined that Vogl had abused his discretion.
“While no one disagrees that [Mosley] may be eligible for a whopping bonus…, no one disagrees that he may get zero….,” she wrote. “And, [he] works for a homebuilder. And the residential housing industry is in the dumps....”
Moore reasoned that it was a “miscarriage of justice” to put someone in a position of having to borrow for living expenses, and remarked that “it exceeded the bounds of reason to require [Mosley] to pay nearly 100 percent of his take-home pay in support payments, on the assumption, based on only a one-year history with the homebuilder, that he would continue to receive a six-figure bonus each subsequent year.”
Remand to Recalculate
Remanding the matter, she directed the trial court to determine the monthly support obligation on the base salary, exclusive of any “speculative bonus,” but clarified that any order “must include” a method for counting any bonus Mosley actually received.
Moore similarly concluded that Vogl had erred in rejecting Mosley’s request to reduce spousal support by imputing income to his former wife, an inactive attorney who had been a law review editor at Brigham Young University’s J. Ruben Clark Law School, and who had started her career at Latham & Watkins before assuming inactive status in 1995.
“Paul [Mosley] has done what he could to make the best of a bad situation,” Moore wrote.
“Dawn [Mosley] has failed to recognize that the circumstances have indeed changed and the wealth to which the parties had become accustomed is no longer guaranteed. She has failed to do her part to address the changed circumstances.”
Presiding Justice David G. Sills and Justice William W. Bedsworth joined Moore in her opinion.
The case In re Marriage of Mosley, 08 S.O.S. 5003.
Copyright 2008, Metropolitan News Company