Marriage of Stern CA4/1

Filed 10/27/26 Marriage of Stern CA4/1 NOT TO BE PUBLISHED IN OFFICIAL REPORTS California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115. COURT OF APPEAL, FOURTH APPELLATE DISTRICT DIVISION ONE STATE OF CALIFORNIA In re the Marriage of KATIE STERN and PETER STERN. KATIE STERN, D086838 Appellant, (San Diego Super. Ct. v. No. 17FL004525C) PETER STERN, Respondent. APPEAL from a postjudgment order of the Superior Court of San Diego County, Euketa L. Oliver, Judge. Reversed with directions. Cage & Miles and John T. Sylvester for Appellant. Jenkins Law Firm and Erik C. Jenkins for Respondent.  Katie Stern appeals a postjudgment order reducing the amount of child support her former husband, Peter Stern, must pay each month. She claims the trial court erred by inexplicably excluding his wages in calculating child support according to the statewide uniform guideline. For reasons we explain, we agree and remand for the court to recalculate child support. FACTUAL AND PROCEDURAL BACKGROUND Katie and Peter married in 2010 and separated in 2017. During the marriage, they had two children, and Peter founded a solar energy installation company. Upon their divorce, Katie received primary physical custody of the children and Peter was awarded visitation. A neutral expert determined that Peter’s income at the time was $158,244 a year ($13,187 per month) and child support was set at $2,500 a month. This was a knowing deviation above the guideline child support. A divorce judgment was entered in 2019. A. Request For Orders In January 2023, Peter filed a request for orders increasing his timeshare with the children and decreasing his child support payments, to be determined based on the guideline. Peter filed income and expense declarations indicating that he remained self-employed with his solar company and paid himself a monthly salary of $8,333. He explained that although his company historically generated a slight profit each year, with anomalously high profits in 2022, he expected to earn less and less each year going forward. He claimed that a policy promulgated by the California Public Utilities Commission—NEM 3.0, effective April 2023—generally reduced the amount that utility companies would reimburse customers when they 2 generated more power than they consumed, which stifled his business since it now takes longer for customers to see a return on their investment in solar energy systems. In response, Katie sought to reduce Peter’s time with the children to daytime visits only. She also requested child support according to the guideline, but saw no basis to reduce the payment. She explained that despite extensive discovery efforts, Peter had not disclosed sufficient documentation—such as client contracts, invoices, or receipts for vague business expenses—to precisely determine his current total income. Using the limited documentation she had, however, Katie hired forensic accountant Karen Kaseno to analyze Peter’s income. Kaseno concluded that Peter earned $299,421 in 2022 ($24,952 monthly)—$99,996 in wages1 and $199,425 in adjusted net income from his business—and $273,746 in 2023 ($22,812 monthly)—$98,996 in wages and $174,750 in adjusted net income. This was more than his estimated income at the time of their divorce. Katie also filed her own income and expense declaration indicating she was not working outside the home at that time. B. Evidentiary Hearing The court held a multiple-day evidentiary hearing across August and September 2024. At the hearing, Kaseno explained that she analyzed financial statements, bank statements, credit card statements, general ledgers, and tax records related to Peter’s business. Using this information, Kaseno discerned the business’s net income. She then reviewed the reported business expenses more closely and added back certain amounts that 1 This annual amount is consistent with Peter’s claimed monthly salary of $8,333. Peter produced his 2022 W2 reflecting this amount. 3 appeared to be personal expenses (e.g., charges on the business credit card) or distributions2 to the net income, which became the adjusted net income figures. To those figures she added Peter’s wages to arrive at his total available income. Despite Peter’s claim that NEM 3.0 negatively affected his business, Kaseno noted that the company’s gross income was higher in 2023 than in 2022. On cross-examination, Kaseno acknowledged that the expenses she added back to the business net income, and in turn to Peter’s adjusted net income figures, included the wages and expenses paid for Evi Stern, Peter’s adult daughter from a prior marriage. Kaseno explained that despite her repeated requests for information as to what Evi did for the company, she remained unaware of her role. Kaseno agreed, however, that if Evi performed legitimate work and received a fair wage it would not be appropriate to add those amounts back into Peter’s total available income. At the hearing, Peter and Evi confirmed she worked full time as the company’s office manager. In closing arguments, Peter conceded that his income includes his wages and distributions from the company. He only challenged the various expenses that Kaseno added back into his income, maintaining that these were legitimate business expenses. Katie, on the other hand, asked the court to calculate child support based on Peter’s total available income as determined by Kaseno. The court rendered its decision orally about one month later, in early October 2024. It awarded Peter equal time with the children provided he completes an anger management course and participates in conjoint therapy 2 Peter testified that in addition to the $8,333 monthly salary he pays himself, he occasionally takes distributions from the company. 4 sessions with the children. Regarding child support, the court found that Katie had the ability to earn $3,467 per month. It imputed that income to her and ordered her to seek employment. As to Peter, the court found insufficient evidence that NEM 3.0 harmed his business. It expressly found Kaseno’s testimony regarding Peter’s income to be credible. It also credited the testimony that Evi was legitimately employed by the company and therefore deducted her 2023 income ($48,465) from the adjusted net income figure for that year ($174,750). The court concluded Peter’s total income available for support was $126,285 per year ($10,524 per month).3 The court then read aloud the information it entered into DissoMaster to calculate guideline child support. This included each parent’s timeshare with the children, tax filing status, and monthly income—$3,467 for Katie and $10,524 for Peter. Once Peter completes the required counseling and the new physical custody schedule takes effect, he will be required to pay $1,003 in child support each month. The court informed the parties that they would receive copies of the DissoMaster printouts. It directed Peter to prepare the formal findings and order after hearing (FOAH). C. Motion to Vacate/For New Trial The following month, in November 2024, Katie filed a motion to vacate the child support orders and enter revised orders (or, in the alternative, a motion for a new trial) on grounds that the court failed to include Peter’s wages when inputting his income into DissoMaster and calculating child 3 The court stated Evi’s income was $48,495, but Kaseno’s report indicates it was $48,465. It appears the court misspoke because the 2023 adjusted net income listed on Kaseno’s report ($174,750) less Evi’s income ($48,465) equals the total available income pronounced by the court ($126,285). 5 support. Katie did not realize the omission when the court gave its oral findings as to Peter’s total available income. She only discovered the error upon reviewing the DissoMaster printouts that were given to the parties at the conclusion of the evidentiary hearing. And despite the fact that Peter’s wages were never in dispute, he refused to stipulate to a correction. In her motion, Katie reminded the court that it found Kaseno’s testimony regarding Peter’s income credible, except that it believed Evi’s income should be deducted. Kaseno reported that Peter’s total available income for 2023 was $273,746, which consisted of $98,996 in wages and $174,750 in adjusted net income from the business. Deducting Evi’s income of $48,465 from the adjusted net income equals $126,285, the figure the court pronounced as Peter’s total available income. This figure divided by 12 months is $10,542, the only income amount entered into DissoMaster. Because all income must be considered when calculating child support, Katie requested a revised child support order that also accounts for Peter’s wages. Katie input both sources of income into DissoMaster and determined she should receive $743 more each month. In opposition, Peter simply contended the “court did a thorough review of the income available for support, and there is no need to modify support.” The court heard the motion in April 2025. After both parties argued, the matter was continued so the court could review the testimony.4 At the continued hearing, the court declined to vacate its orders or grant a new evidentiary hearing. It noted that neither party had alerted the court to the fact that Peter’s wages were undisputed or overlooked when it described its 4 The court ultimately did not review Peter’s testimony because he failed to timely provide the court with a transcript as ordered. It denied his request to continue the hearing again. 6 DissoMaster entries on the record. It also faulted the parties for not ensuring this issue was resolved earlier, “when the testimony, the orders, and the Court’s rationale and reasoning was fresher in the Court’s memory.”5 The court then ruled as follows: “[T]he Court finds that in review of its order, it finds that its order is detailed, well-reasoned. The Court is not required to give an explanation as to every evidentiary fact it relied on, and the Court noted that the discussion did include the Court’s legal conclusions. And the Court finds that in the absence of an ability to recall every reason for the Court’s rationale is insufficient to grant the requested actions as proposed and as requested by [Katie]. As such, the Court denies the request.” Despite the court’s order directing Peter to prepare the FOAH after giving its original child support orders, he failed to do so. Katie prepared the FOAH for the original orders and the denial of the motion to vacate. She filed a timely notice of appeal. DISCUSSION Katie maintains the trial court erred in determining guideline child support because it failed to include Peter’s undisputed wages and thus did not take his total available income into account. In response, Peter contends the issue is forfeited because Katie did not object at the time the court gave its oral findings. In any event, he suggests it was the court’s prerogative as 5 The vacate/new trial motion was initially set for March 2025. But by then the judge who presided over the evidentiary hearing and issued the child support orders, Judge Euketa Oliver, had been assigned to another department. When the motion came on for hearing in March 2025, Judge Rebecca Kanter continued the matter to April 2025 so that Judge Oliver could review and decide it. 7 the factfinder to accept Kaseno’s opinion only in part. We conclude the issue was clearly preserved for appeal and the court erred in setting child support. A. The Issue Was Preserved for Appeal Generally, an appellate court will not review an erroneous ruling “ ‘ “ ‘where an objection could have been, but was not, presented to the lower court by some appropriate method ... .’ ” ’ ” (In re Marriage of Nelson (2006) 139 Cal.App.4th 1546, 1558.) It is not fair to raise an error on appeal “ ‘that the opposing party did not have an opportunity to argue and the trial court did not have an opportunity to consider’ ” below. (In re Marriage of Falcone & Fyke (2008) 164 Cal.App.4th 814, 826.) Moreover, it is a waste of judicial resources to wait until the case is on appeal to assert an error that could have been quickly and easily corrected in the trial court. (Nelson, at p. 1558.) This is especially true with respect to complicated child support orders. (In re Marriage of Whealon (1997) 53 Cal.App.4th 132, 144 (Whealon).) Although Katie did not alert the court to the omission of Peter’s wages when it gave its oral findings, she did so shortly thereafter by moving to vacate the child support orders (or for a new trial), affording Peter and the court an opportunity to address the error below. Peter does not clearly articulate a reason why Katie’s motion was inadequate to preserve the issue. He appears to suggest that a motion to vacate was improper because his income was a disputed factual issue, and that a new trial motion would have been more appropriate. (See Simac Design, Inc. v. Alciati (1979) 92 Cal.App.3d 146, 153 [“A motion to vacate under [Code of Civil Procedure] section 663 is a remedy to be used when a trial court draws incorrect conclusions of law or renders an erroneous judgment on the basis of uncontroverted evidence ... and is distinguished from a motion for a new trial, to be used when, e.g., the evidence is insufficient to support the 8 findings or verdict”].) At the same time, he recognizes that Katie requested a new trial in the alternative, and that the court denied that remedy as well. He otherwise acknowledges that the court “fully considered and rejected [Katie’s] position” in denying her motion. This is precisely why the issue is reviewable on appeal. B. The Court Erred in Calculating Guideline Child Support “California has adopted a ‘statewide uniform guideline’ for determining child support according to a complex formula based on each parent’s income and custodial time with the child.” (In re Marriage of McHugh (2014) 231 Cal.App.4th 1238, 1245 (McHugh); see Fam. Code,6 §§ 4050, 4055.) In this context, income is broadly defined. (M.S. v. O.S. (2009) 176 Cal.App.4th 548, 553 (M.S.).) It includes wages as well as “[i]ncome from the proprietorship of a business, such as gross receipts from the business reduced by expenditures required for the operation of the business.” (§ 4058, subd. (a)(1)–(2).) “The child support amount the formula establishes is rebuttably presumed to be the correct amount, and the court may order a different amount only in limited circumstances and only after making certain findings.” (McHugh, supra, 231 Cal.App.4th at p. 1245; see §§ 4056–4057.) More specifically, the court may depart from the guideline only “by specifying (either in writing or on the record) three things—the guideline amount, the reason why the amount ordered differs, and the reason the different amount is consistent with the best interests of the child.” (Whealon, supra, 53 Cal.App.4th at p. 144, citing § 4056.) “In other words, only after the guideline formula is computed on a legitimate evidentiary basis as to the 6 Further undesignated statutory references are to the Family Code. 9 supporting parent’s income may a court” exercise discretion to deviate from the guideline. (In re Marriage of Hubner (2001) 94 Cal.App.4th 175, 184.) With those parameters in mind, we review a child support order for abuse of discretion. (M.S., supra, 176 Cal.App.4th at p. 553.) We determine whether the court’s factual findings are supported by substantial evidence and whether the court reasonably exercised its discretion. (Ibid.) “ ‘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.’ ” (Ibid.) Here, the trial court obviously made a mistake in calculating the guideline child support. It explicitly credited Kaseno’s testimony, except that it found Evi’s legitimate income should be excluded from Peter’s income. Kaseno concluded that Peter’s total available income was $273,746, which was $98,996 in wages and $174,750 in adjusted net income for the year 2023. Deducting Evi’s income of $48,465 from the adjusted net income results in $126,285 per year. This is the precise amount the court pronounced was Peter’s total available income, and its monthly component ($10,524) was the only income figure entered into DissoMaster. It is clear the court intended to use Kaseno’s figures but simply overlooked the wages. There was no testimony that the adjusted net income subsumed the wages. And Peter never claimed his wages should be excluded from his income for any reason. To the contrary, he expressly conceded his wages and distributions from the company should be considered. He only disputed that other business expenses should be added back into his income, a position the court implicitly rejected (with the exception of Evi’s income) by adopting Kaseno’s adjusted net income. In denying Katie’s request to correct the child support orders or hold a new evidentiary hearing, the court did not offer any explanation for the omission. 10  While the court has discretion to deviate from the guideline under specifically defined circumstances, it does not have discretion to arbitrarily exclude a parent’s undisputed wages from the formula. (See In re Marriage of Macilwaine (2018) 26 Cal.App.5th 514, 534–535.) We therefore conclude the child support order does not rest on a legitimate evidentiary basis, and remand for the court to recalculate the guideline. DISPOSITION We reverse and remand for the trial court to recalculate guideline child support based on Peter’s total income to include his wages ($98,996 annually/$8,250 monthly) and adjusted net income from his business ($126,285 annually/$10,524 monthly). Katie is entitled to costs on appeal. DATO, Acting P. J. WE CONCUR: DO, J. RUBIN, J. 11