High Earnings Exempted From Guidelines Child Support

California adopted a Uniform Child Support Guideline which took effect in 1992. The Guideline placed the interests of children as a top priority. The Guideline is an algebraic formula which allocates an amount payable by one parent to another parent as and for child support based upon the combined net incomes of the parties and the sharing arrangement of the children. The Guideline result is deemed to be presumptively correct in all cases, but may be rebutted by evidence of various factors including, as discussed in this article, that “the parent being ordered to pay child support has an extraordinarily high income and the amount determined under the formula would exceed the needs of the children.” Family Code, Section 4057(b)(3).

We have not had an Appellate decision to define what an extraordinary high income is, and that amount may vary based upon location in the State.

The cases that have been published on appeal relate to relevance of discovery being conducted into the income, assets and spending habits of the support paying parent. In Estevez v. Superior Court, the father had been paying a support package in excess of $14,000.00 per month for his two children. Mother sought to modify the manner in which the monies were disbursed. In furtherance of her request, she sought information relevant to father’s income and lifestyle. Father objected to discovery stating that he earned an extraordinarily high income and that he agreed to pay whatever reasonable amount of support the Court ordered. Father then argued that his financial records were therefore irrelevant. The Court of Appeal reviewing the decision of the trial Court agreed with the father stating that discovery of his financial records was unnecessary, burdensome and oppressive because the information was irrelevant to the issue of the amount of child support. “Where the extraordinarily high earner resists detailed discovery of his or her financial affairs, the trial Court may make such assumptions concerning his or her net disposable income, federal income tax filing status, and deductions from gross income as are least beneficial to the extraordinarily high earner. . . ” Estevez v. Superior Court.

The recent case of Johnson v. Superior Court builds on the prior decision in Estevez. Johnson, a member of the New York Knicks basketball team resisted discovery of his financial information stating that he earned in excess of $1 million annually and that he had ability to pay any amount of support the Court deemed reasonable. Mother asserted that Johnson earned $12 million per year and that the distinction between the earnings was relevant to the inquiry as to how much support should be pain in that support should be set at an amount that enables the child to share in the standard of living of the more affluent parent.

The Appellate Court in Johnson agreed that some examination was necessary, however, that the examination would be limited.

“… We can imagine that Taylor’s needs might be assessed differently depending upon whether Johnson earns $12 million a year instead of the $1 million income that he has conceded. Simply because the extraordinarily high earning parent is not constrained by the guideline formula, there is no reason to ignore the reality that great income discrepancies exist within the class of persons whose incomes are extraordinarily high and that this discrepancy can effect the child’s needs.”

To resolve the tension between the extraordinarily high earners desire for protection from discovery and the necessity that the trial Court be presented with sufficient information upon which to intelligently assess the child’s needs the “Trial Court may make….assumptions….as are least beneficial to the extraordinarily high earner…” Johnson v. Superior Court quoting Estevez v. Superior Court.

These “least beneficial assumptions” cannot be made in a vacuum, but must be based on reason. The discovery allowable should be limited to only that information from which the lease beneficial assumptions about the support paying parent’s income may reasonably be made. The Johnson Court stated:

“Our ruling does not necessarily mark the final resolution of the discovery question. As stated, if assumptions unfavorable to Johnson may reasonably be made in the absence of any discovery, no discovery should be granted. If the information available is insufficient to make assumptions, some form of discovery is appropriate. Thus, we wish to make clear that in granting the instant relief to Johnson we are not precluding Tate from seeking discovery. Rather, our ruling is that discovery be allowed only to the extent necessary to make assumptions with respect to Johnson’s income and lifestyle that are the lease favorable to him.”

With an apparent green light now on the discovery issue stay tuned for further appeals and refinement of this rule.