The Court Need Not Find Bad Faith Before it Can Consider a Parent’s Ability to Earn in Setting the Amount of Child Support

Ronald and Lori ended their marriage in 1990. Pursuant to a written agreement incorporated into their interlocutory decree, Ronald was to pay $550 in monthly child support. In 1993, after new child support guidelines were enacted and the visitation schedule changed, Lori’s Orange County divorce attorney filed an order to show cause seeking an increase in child support and a contribution toward her attorney fees. Ronald originally agreed to this increase, but prior to the hearing, he changed his mind because he resigned from his employment to start his own business. After the January 7, 1994 hearing, the parties stipulated to modifications of the visitation order. Based on Ronald’s previous income, the Orange County divorce court found it had “the discretion to increase child support to a total amount of $797.” However, because Ronald had begun a new business, there was no basis for a change of child support, the Orange County divorce court ordered a six-month review hearing on July 7, 1994, to again consider child support. The review hearing took place on July 7, and there was no indication when Ronald’s income would increase, or accruing child support arrearages would be paid. The findings and order entered on August 22 stated there was no bad faith motive in Ronald’s quitting his employment to open his own business. The mandated guidelines for child support resulted in a $765 order.

Ronald’s Orange County divorce attorney’s September 23, 1994 Notice of Appeal specifies he is appealing the August 22, 1994 order and “from any prior proceeding or ruling within the parameter of Code of Civil Procedure §906. Ronald’s Orange County divorce attorney misunderstood the nature of the January 26 order. He wanted the support order decreased. The Orange County divorce court denied Ronald’s Orange County divorce attorney’s request. The resulting order was neither interlocutory nor intermediate but a final determination. As an injured party, Ronald could have appealed, but did not.

Next, the Court considered the August 22 order and as to whether the Orange County divorce court abused its discretion in basing the child support order on Ronald’s earning capacity rather than on his actual earnings. The family law court need not find bad faith before it can consider a parent’s ability to earn in setting the amount of child support. In Philbin v. Philbin (1971) 19 Cal.App.3d 115, 121, the court does not require a bad faith finding before earning capacity may be imputed to a parent. Philbin does hold earning capacity may only be considered when a parent unreasonably fails to avail himself or herself of employment possibilities. A parent cannot be held to an unavailable income level, but a parent may have income imputed if he or she unreasonably fails to take advantage of an employment opportunity. In In re Marriage of Regnery (1989) 214 Cal.App.3d 1367, the court noted the Agnos Child Support Standards Act of 1984 was “consistent with previous decisional law and the reading of [it and Philbin] together creates a three-prong test before the capacity to earn standard may be applied. Earning capacity is composed of (1) the ability to work, including such factors as age, occupation, skills, education, health, background, work experience and qualifications; (2) the willingness to work exemplified through good faith efforts, due diligence and meaningful attempts to secure employment; and (3) an opportunity to work which means an employer who is willing to hire. When the payor is unwilling to pay and the other two factors are present, the court may apply the earnings capacity standard to deter the shirking of one’s family obligations. Furthermore, public policy supports our conclusion. Because children’s interests are a top priority and payment of appropriate support is a parent’s primary obligation, a child support obligation “‘must be taken into account whenever an obligor wishes to pursue a different lifestyle or endeavor. A parent may voluntarily leave a job for one paying less when the children’s reasonable needs are satisfied. Moreover, In re Marriage of Simpson (1992) 4 Cal.4th 225, recognizes “the statutory guidelines governing…child support do not limit the circumstances under which the trial court may consider the earning capacity of the supporting spouse…with the exception that…reliance earning capacity must be ‘consistent with the best interest of the children.’” Thus, the Orange County divorce court’s judgment was affirmed.

In re Marriage of Padilla, 38 Cal.Spp.4th 1212 (1995).