Filed 10/21/13 Marriage of DeRosa 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                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS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
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                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                  DIVISION ONE

                                           STATE OF CALIFORNIA



In re the Marriage of JENNIFER A. and
THOMAS J. DEROSA.
                                                                 D061906
JENNIFER A. DEROSA,

         Respondent,                                             (Super. Ct. No. D514565)

         v.

THOMAS J. DEROSA,

         Appellant.


         APPEAL from an order of the Superior Court of San Diego County, Edlene C.

McKenzie, Commissioner. Affirmed.

         Law Office of Anthony J. Boucek and Anthony J. Boucek for Appellant.

         No appearance for Respondent.

         Thomas J. DeRosa appeals from an order denying his second motion to modify his

spousal and child support obligations to his former wife, Jennifer A. DeRosa, which he

brought four months after the court denied his first motion to modify support. Following
three days of hearings, during which both Thomas1 and Jennifer testified, the court found

that Thomas's motion was "based upon the same facts and circumstances" upon which his

first motion was based and, thus, Thomas had failed to meet his burden of showing a

change of circumstances.

       Thomas asserts six principal claims of error. Specifically, he contends the court

abused its discretion (1) in finding there was no change in circumstances regarding his

income after the court denied his first motion to modify support; (2) in determining the

amount of Thomas's income; (3) in finding that Thomas's monthly gross earning capacity

continued to be $21,833 and in imputing such income to Thomas without making any

finding he had an available opportunity to earn such income; (4) in calculating child

support arrears; (5) in finding that the gross monthly proceeds from Thomas's sale of a

software module totaled $20,800; and (6) in imposing sanctions and attorney fees.

       Jennifer has not responded to this appeal.

       We affirm the order denying Thomas's second motion to modify support.

                  FACTUAL AND PROCEDURAL BACKGROUND

       Thomas and Jennifer were married in mid-2000 and separated in 2009 after a

marriage of eight years seven months. They have three minor children.

       Jennifer filed her petition for dissolution in February 2009. At that time, Thomas

was chief executive officer (CEO) and the majority shareholder of ezGDS, an Internet

airline travel business that used a software program (the software module) Thomas


1     We will refer to the parties by their first names for clarity and convenience only.
We intend no disrespect.
                                             2
developed during the marriage. Although Jennifer had occasionally worked as a

substitute teacher during the marriage, she primarily stayed home to care for the children.

       A. Temporary Support Orders

       In early May 2009, the court2 issued temporary child and spousal support orders.

Finding that Thomas's gross monthly income was $21,833 and Jennifer had no income,

the court ordered Thomas to pay monthly child support in the amount of $5,078. In lieu

of spousal support, the court ordered that Jennifer have temporary exclusive possession

and use of the family residence and that Thomas pay all expenses associated with the

residence. The court adopted the parties' family court services agreement, which

provided that the children would primarily reside with Jennifer.

       B. Stipulation for the Entry of Judgment

       On August 19, 2010, Thomas and Jennifer entered into a negotiated global

settlement of all issues, which was memorialized in a stipulation for the entry of

judgment (Stipulation) that Thomas signed on that date. Jennifer signed the Stipulation

about three months later on November 29, the day before Thomas filed his first motion to

modify his support obligations (discussed, post).

       As pertinent here, the Stipulation provided that Thomas would continue paying

monthly child support in the amount of $5,078 and that in lieu of spousal support Jennifer

would continue to have exclusive possession and use of the family residence─and

Thomas would continue to pay all expenses associated with the residence─until June 1,



2      The Honorable Edward P. Allard III.
                                             3
2011 (or a later date agreed to by the parties), at which time Jennifer would vacate the

residence and Thomas would pay monthly spousal support and child support in specified

amounts.

       In addition, the Stipulation provided that Thomas "shall indemnify Jennifer and

hold her harmless from any and all liabilities related to [ezGDS], including but not

limited to any liabilities arising out of litigation or bankruptcy proceedings."

       With respect to the software module, the Stipulation memorialized the parties'

agreement that (1) although the software module was Thomas's separate property, "the

community has an interest" in it; (2) Thomas would "use good faith efforts to sell the

software module for the highest available price"; and (3) Jennifer was "entitled to receive

50[ percent] of the net sale proceeds, up to a maximum of $275,000" (italics added).

       The Stipulation provided that Thomas would pay to Jennifer the sum of $15,000 as

his contribution toward her attorney fees and costs, and he was responsible for payment

of his own attorney fees and costs.

       The Stipulation also memorialized the parties' anticipation that a marital settlement

agreement reflecting the agreements would be prepared and "entered as part of the

judgment in this case," but that "if a Marital Settlement Agreement cannot be reached,

this stipulation may be entered as the Judgment of Dissolution pursuant to Code of Civil

Procedure [section] 664.6."




                                              4
       C. Thomas's Sale of the Software Module:

       Effective October 22, 2010─about five weeks before he filed his first motion to

modify his support obligations on November 30─Thomas sold the software module to

LBF Travel, Inc. (LBF Travel).

       To effectuate the sale, Thomas and LBF Travel entered into two agreements: (1)

an asset purchase agreement (APA); and (2) a consulting services agreement (CSA),

under which Thomas agreed to work for LBF Travel for a period of time as a consultant.

       1. The APA

      a. Purchase price and conditional minimum cash consideration ($20,800 per
month)

       Section 2.4 of the APA provided that LBF Travel agreed to pay Thomas a cash

consideration and issue to him a stock consideration.3 Subdivision (a) of section 2.4

defined the cash consideration as "up to $1,250,000 in cash . . . as follows:" (1) the sum

of $499,200 (denominated the minimum cash consideration), which LBF Travel would

pay to Thomas in 24 "equal monthly installments of $20,800 each," commencing 30 days

after the closing date; plus (2) $750,800 (denominated the earn-out consideration), which

LBF Travel would pay to Thomas in quarterly earn-out payment installments in the

amount of 25 percent of LBF Travel's "Net Income for the prior full fiscal quarter,"

commencing with the first full fiscal quarter following the closing date.




3      The stock consideration is not at issue in this appeal.
                                              5
       b. Adjustments to purchase price

       Of particular importance in this appeal, section 2.5 of the APA provided that, if

Thomas quit or LBF Travel terminated his consulting services with or without cause prior

to the end of the specified consulting period, the conditional monthly installment of

$20,800 "for each full month remaining in the Consulting Period at the time of such

termination shall be reduced by [$10,000] . . . ." (Italics added.)

       2. The CSA and the agreed-upon full consideration for Thomas's consulting
services

       Under the CSA, which expressly referred to the APA, LBF Travel retained

Thomas as a consultant and independent contractor, and Thomas was "expected to devote

a reasonable amount of time" providing consultant services for a period of two years

beginning on October 22, 2010.

       The CSA expressly provided that Thomas's retention was "non-exclusive and [he]

shall be permitted to perform consulting services for other parties provided that such

services [do] not violate the non-competition provisions set forth in Section 6.14 of the

[APA]."

       a. Section 6 and exhibit B (full consideration for Thomas's consulting)

       Section 6 of the CSA, which explicitly addressed the full consideration and

compensation LBF Travel owed Thomas for his consulting services, provided:

          "As full consideration for the Services rendered by [Thomas]
          pursuant to this Agreement, [LBF Travel] shall pay [Thomas] the
          compensation as described in Exhibit B. All fees for the Services
          shall be paid without any deduction including, without limitation,
          any deduction for social security, federal or state or withholding
          taxes or unemployment insurance. [Thomas] acknowledges that he

                                              6
          is responsible for the proper reporting and payment of all taxes on
          such fees." (Italics added.)

       As pertinent here, exhibit B to the CSA provided that Thomas was entitled to

receive─as full consideration for his consulting services ─100 percent of the hosting fees

and ticketing fees received by LBF Travel, up to $230,000 per year, plus 50 percent of

any hosting fees and ticketing fees received in excess of $230,000 during the same year.

     D. ezGDS's ABC and the Assignee/Trustee's Termination of Thomas's
Employment as ezGDS's CEO

       Five days after he entered into the APA and CSA and sold the software

module─Thomas decided to dissolve ezGDS and terminate his employment as ezGDS's

CEO. On that date, Thomas signed an ABC, whereby ezGDS, as the assignor, assigned

all of its assets to Leslie Gladstone doing business as Financial Law Group (Gladstone) in

trust for the benefit of ezGDS's creditors.4 On that same date Gladstone terminated all of

ezGDS's operations as well as Thomas's employment as its CEO and his monthly gross

income of $21,833.




4       Gladstone's June 22, 2011 declaration defines an ABC as "a formal insolvency
status under California law by which an entity (such as ezGDS) ceases to operate and all
employee's employment therewith is terminated." Gladstone stated that an ABC assignee
has "an affirmative duty to liquidate and make distributions to all creditors on a prorated
payment plan."
                                             7
      E. Thomas's First Motion To Modify His Support Obligations, and Jennifer's
Motion To Have the Stipulation Entered as the Judgment

       1. Thomas's motion to modify support claiming his monthly income was $0

       On November 30, 2010─about a month after he signed the ABC that immediately

resulted in the termination of his employment as ezGDS's CEO─Thomas filed in propria

persona his first motion to modify his child support and spousal support obligations.

       In his supporting declaration, Thomas stated his circumstances had changed when

ezGDS filed the ABC, resulting in the loss of his job and the termination of his salary and

benefits. He also stated that as a result of this "change of circumstances," his "current

income [was] $0 per month." Thomas requested that the court reduce to zero his monthly

obligations for both child support and spousal support. He did not mention the sale of his

software module to LBF Travel, the APA, or the CSA.

       In his separate income and expense declaration, Thomas stated that his employer

had filed an ABC and his position was terminated on October 27, 2010.

       2. Jennifer's opposition and her companion motion to have the parties' Stipulation
entered as the judgment

       Jennifer thereafter filed her responsive declaration opposing Thomas's motion to

modify support, in which she informed the court that Thomas had "liquidate[d] our

community property business, ezGDS" by entering into the ABC, thereby terminating his

own employment, and that Thomas was "not unemployed, as he represent[ed] in his

pleadings" because he had entered into the APA and CSA and had sold the software

module, which had "retained [him] as a consultant."



                                              8
       In a companion motion set forth in her declaration, Jennifer requested that the

Stipulation be entered as the judgment under Code of Civil Procedure section 664.6, as

provided in the Stipulation (a copy of which she lodged as an exhibit), and that their

marital status be terminated. She stated that Thomas had not paid child support since

October 2010, and he owed $12,695 in child support arrears. She also stated that Thomas

had agreed in the Stipulation to pay $15,000 towards her attorney fees and costs, but "to

date [he] ha[d] never made or been ordered to make a contribution to [her] attorney[]

fees." Jennifer requested that the court order Thomas to "pay the child support due and

owing for November 2010, December 2010 and January 2011" and to "make a

contribution toward [her] attorney[] fees and costs."

       3. January 2011 hearing and rulings

       At the January 24, 2011 hearing on Thomas's motion to modify support and

Jennifer's motion to have the Stipulation entered as the judgment under Code of Civil

Procedure section 664.6, Jennifer was present with her counsel. Thomas, who was not

present, was also represented by counsel.

       a. Jennifer's motion for entry of the Stipulation as the judgment

       The court5 first granted Jennifer's motion for entry of the Stipulation as the

judgment, finding that the Stipulation "appear[ed] to be a complete resolution of the

parties' assets and obligations towards each other and toward their children" and ruling

that "the agreement of the parties is entered per their stipulation." The court observed


5      The Honorable Susan P. Marrinan.

                                             9
that Thomas "did act upon the [Stipulation] with the sale of this [software module] asset,

so he can hardly come into court and say I can act on it but nobody else can." The court

directed Jennifer to "prepare the rest of the judgment to attach thereto."6

       b. Thomas's motion to modify support and his request for a Gavron7 warning

       Addressing next Thomas's motion to modify child support and spousal support,

the court found that the parties' Stipulation "appear[ed] to control" and that "[Thomas's]

change of circumstances predate[d] today." Observing that Thomas "filed [in propria

persona] an income and expense declaration on . . . November 30, 2010," the court found

that "[n]owhere in that income and expense declaration does he reference the [APA],

which certainly would have some bearing on his assets, at the very least" (italics added).

The court found Thomas's income and expense declaration was, "on its face, inaccurate,"

observing that if Thomas "were here, he could testify as to why he might have neglected

to mention" the sale of the software module.

       The court denied Thomas's motion to modify his support obligations and noted

that Thomas was "asking the court to modify previous spousal support and child support

based on an inaccurate income and expense declaration." The court added that this

"cause[d] the court to wonder about his declaration, the change of circumstances where

he lost his job, particularly if he terminated his own company." The court found "[t]here



6      The record shows and Thomas acknowledges on appeal that the Stipulation was
entered as the judgment on May 18, 2011, one week after Thomas filed his second
motion to modify support (discussed, post).

7      In re Marriage of Gavron (1988) 203 Cal.App.3d 705.
                                             10
[was] no evidence of unemployment benefits," noting that "[i]f a person gets fired, they

can get unemployment benefits," but "[i]f they fire themselves, they probably can't, but

we don't have any evidence of that, no documentary evidence." Noting also that Thomas

was claiming he had $12,534 in monthly expenses and this was "a bit high for someone

who has no income," the court stated, "I don't think he carried his burden of proof in that

regard regarding the circumstances which now find him to be without income."

       The court granted Thomas's request for a Gavron warning, but stated, "I'll make it

to both of these parties." The court explained that, as a matter of public policy, the courts

in California "expect both parties to be self-supporting within a reasonable period of

time." The court admonished Thomas and Jennifer that "[t]hey both appear to be

intelligent, capable, talented people, and the court sees no reason why they can't be self-

supporting at some reasonable time in the future. There is your Gavron warning."8 The

court ordered both parties to make 10 job contacts per week.

       c. Attorney fees and child support arrears

       Regarding attorney fees, the court ruled that "each party pay their own since they

both have assets now to do it."

       The court ordered Thomas to pay child support arrears in the total amount of

$15,234, based on the monthly rate of $5,078 as set forth in the Stipulation.


8       The court's findings and order after hearing contained the following Gavron
warning: "Pursuant to In re Marriage of Gavron, both parties are advised as followed: It
is the goal of this state that each party will make reasonable good faith efforts to become
self-supporting as provided for in Family Code Section 4320. The failure to make
reasonable good faith efforts may be one of the factors considered by the court as a basis
for modifying or terminating spousal or partner support."
                                             11
       F. Thomas's Second Motion To Modify His Support Obligations

       On May 11, 2011, less than four months after the court denied his first motion to

modify support (discussed, ante), Thomas filed his second motion for modification of

child and spousal support, which is the subject of this appeal.

       1. Thomas's supporting declaration

       As pertinent here, Thomas asserted in his supporting declaration that "there has

been a significant change of circumstances meriting a modification of child and spousal

support" and requested that child support be reduced from $5,078 per month to guideline

support of $1,220 per month and that spousal support be reduced to $167 per month. He

stated that when he signed the Stipulation in August 2010 and agreed to pay monthly

child support in the amount of $5,078, he then was earning $20,8339 per month, and

Jennifer had no income. Thomas asserted that circumstances significantly changed

between August 2010 and November 2010, when Jennifer signed the Stipulation, in that

"[his] company ezGDS went broke," he "looked into bankruptcy," he met with his

attorneys, and "it was determined the best thing for the company to do was an

Assignment for Benefit of Creditors [(ABC)]." Thomas asserted that ezGDS was

insolvent when it made the ABC on October 27, 2010, and it "had insufficient funds to

pay any of its employees including, but not limited to, me." He stated that on that date,




9     In his reply declaration filed on June 22, 2011, Thomas stated that when he was
employed by ezGDS in 2009, he was "earning $21,833.00 per month in income."

                                             12
Gladstone, the trustee and assignee of the ABC, "terminated all operations and all

employees, including, but not limited to, me."

       Thomas also stated that he sold the software module by executing the APA and

CSA, under which he "sold the software to [LBF Travel] in an incremental basis and with

an agreement to work for the company for a period of time as a consultant, which

employment included a salary to me." Thomas recounted the terms of the purchase price

set forth in section 2.4 of the APA,10 as well as the terms of section 2.5 of the APA,

which provided that, if Thomas quit or LBF Travel terminated his consulting services

with or without cause prior to the end of the specified consulting period, the monthly

installment of $20,800 "for each full month remaining in the Consulting Period at the

time of such termination shall be reduced by [$10,000] . . . ." (italics added).

       In his declaration, Thomas also stated that (1) he was "contractually obligated to

work for [LBF Travel] at the rate of $10,000.00 per month for 24 months"; (2) this

$10,000 per month in "self-employment income" was "income available for child and

spousal support"; (3) his monthly work-related expenses were $3,777, leaving him with

monthly self-employment income of $6,223; (4) Jennifer was entitled under the

Stipulation to receive 50 percent of the net sales proceeds from the sale of the software



10      In the interest of clarity, we reiterate that section 2.4 of the APA provided that
LBF Travel agreed to pay Thomas a cash consideration of "up to $1,250,000 in
cash . . . as follows": (1) the sum of $499,200 in 24 "equal monthly installments of
$20,800 each," commencing 30 days after the closing date; plus (2) $750,800 in quarterly
earn-out payment installments in the amount of 25 percent of LBF Travel's "[n]et
[i]ncome for the prior full fiscal quarter," commencing with the first full fiscal quarter
following the closing date.
                                             13
module, up to a maximum of $275,000, which Thomas calculated to be $3,796 per

month; and (5) he had paid Jennifer $2,852 in excess of the amount of net sales proceeds

she was entitled to receive.

       Thomas denied Jennifer's claim that he owed $15,234 in child support arrears and

asserted he had overpaid child support by $997 as of January 31, 2011.

       In his summary, Thomas requested modification of the current order for child

support and spousal support based on "the significant change of circumstances regarding

[his] income, the insolvency of [his] company, the sale of the software, [his] obligated

full-time consulting employment contract with [LBF Travel], [Jennifer's] receipt of one-

half of the sales proceeds from the software, [her] Gavron warning, [her] failure to

comply with the court order regarding job contacts, and [her] ability to earn."

       In his motion,Thomas requested an award of attorney fees in an amount exceeding

$40,000. He also requested an award of sanctions.

       In his income and expense declaration, Thomas asserted his average monthly

income from self-employment as a consultant for LBF Travel was $6,222.

       a. Other supporting declarations

       In support of his second motion to modify support, Thomas submitted the

declaration of Ray Gallagher, a certified public accountant. Based on the provisions of

the APA, Gallagher stated that Thomas received $20,800 per month of which $10,000 is

income for consulting services under his consulting agreement (i.e., the CSA). Gallagher

opined that "[t]he remaining $10,800 would be characterized as capital gain income



                                            14
related to the sale of the purchased assets." He also opined that Thomas "would incur a

combined 25[ percent] federal and state tax rate on his net capital gain income."

       Thomas also submitted the declaration of attorney Jeffry Davis, who stated that

Gladstone was the assignee of ezGDS's ABC and an assignee or trustee for an ABC "has

an affirmative duty to liquidate assets and make distributions of the proceeds to all

creditors on a prorated payment plan."

       In addition, Thomas submitted the declaration of Gladstone, who stated that

ezGDS was insolvent when it made the ABC on October 27, 2010. She also stated that

"[w]hen ezGDS made the ABC, [she] terminated all operations and all employees,

including, but not limited to, [Thomas]." Gladstone also asserted that pursuant to the

ABC, Thomas "did not receive any cash, distributions, refunds, compensation owing,

past due or deferred or any other monetary or property award resulting from the

liquidation"; and "[Thomas's] salary and all other rights to compensation were

permanently terminated effective 10/27/10, and he has received nothing from ezGDS or

from me, as the trustee, since said time."

       2. Jennifer's responsive declaration

       In her responsive declaration, Jennifer asserted that Thomas's new motion to

modify support was based on "the same set of 'changed' circumstances" that was the basis

of his first motion to modify support, which the court denied. Jennifer reminded the

court that in his first motion to modify support Thomas claimed he was unemployed and

earned zero income. She stated the court had ordered Thomas to pay her monthly child

support in the amount of $5,078, but he "has not made a single child support payment to

                                              15
me since October 2010," and "[h]e owes me $40,624 in child support and $30,027 in

property division payments, plus interest, to date," for a total of $70,651 plus interest.

She acknowledged that in March, April and May 2011, Thomas paid her $8,766 each

month, and he had not yet paid anything for June 2011. She also acknowledged that

Thomas had made "partial payments of the software sale proceeds in November 2010 and

since January 2011."

       Jennifer also stated that "[b]ecause Thomas has refused to comply with the Court's

orders regarding property division and support payments," she was financially unable to

pay her attorneys. In a footnote, Jennifer asserted that "[her] total attorney[] fees incurred

in this matter are $127,161.02, of which Thomas has paid nothing, despite being the sole-

wage-earner in our marriage and the person who controlled all of our finances and

assets." She asked the court to order Thomas "to make a contribution to [her] attorney[]

fees and costs."

       Supported by an attachment to her income and expense declaration, Jennifer stated

she had "received minimal income from [her] part-time work organizing and filing

records as an independent contractor, and from jewelry parties"; and she "ha[d] just

started a commission-based job working for a magazine," but she had not yet received

any income from this new position.

       3. Hearings on the two motions

       The court conducted three days of hearings on the parties' two motions and

received testimony from both Thomas and Jennifer supporting the facts stated in their

respective declarations. At the conclusion of the evidentiary phase of the proceeding,

                                              16
Thomas and Jennifer presented their closing arguments through their respective

attorneys.

       4. Order (final statement of decision)

       In March 2012, the court11 issued its final statement of decision after it received

and considered Thomas's objections to the court's original statement of decision. The

court issued the following rulings:

       i. Spousal support

       Explaining that "[a] spousal support modification may be granted only if there has

been a material change of circumstances since the most recent order," the court found

Thomas had "[brought] his second motion to modify support four months after his motion

to modify was heard and denied based upon the same facts and circumstances." (Italics

added.) Specifically, the court found that in October 2010─before Thomas filed his first

motion to modify support in November of that year─Thomas sold the software module to

LBF Travel, he started his consulting services with LBF Travel, and he also started

receiving the monthly $20,800 payments from LBF Travel.

       The court also found Thomas was compensated as set forth in exhibit B to the

CSA, which "sets forth the 'full consideration' for the consulting services rendered by

[him]."




11     The Honorable Edlene C. McKenzie.
                                            17
       The court further found Thomas had a monthly "earning capacity of $21,833 per

the court[']s findings of May 5, 2009"; and, in October 2010, he entered into the ABC and

"liquidated the community business, effectively terminating his own job."

       In addition, the court found that, at that time, Thomas also began negotiations to

sell the software module to LBF Travel "for a considerable profit and to begin work as a

consultant for [LBF Travel]." Thomas "negotiated a deal with [LBF Travel] that resulted

in two contracts, [the APA] and [the CSA]," under which he "negotiated to receive up to

$1,250,000 in cash for the sale of the software," and "chose to enter into a non-

competition agreement which would prevent him from competing with LBF Travel for a

period of two years."

       Based on these findings, the court determined that "there has been no change of

circumstances regarding [Thomas's] income since [his] last motion to modify support,"

which the court denied on January 24, 2011, "the date the court use[d] as a benchmark for

determining a change of circumstance." The court found Thomas had "engineered his

current earning capacity through decisions he made himself, first with the decision to

liquidate the community business, then his decision to sell the software module he

created during the marriage and finally his decision to negotiate a non-competition clause

with LBF Travel." The court also found that "[Thomas's] earning capacity continues to

be $21,833 per month", and he "has the ability to pay for the support of [Jennifer] at the

current levels."

       The court imputed to Jennifer an earning capacity of $2,253 per month for

purposes of calculating child support and spousal support. The court then found that,

                                            18
"[e]ven with this court imputing monthly income to [Jennifer] in the amount of $2,253,

her modified child support payment of $4,911 combined with the spousal support

provided in the Judgment of $4,481 (upon her vacating the residence) would not be

sufficient to cover her monthly household expenses."

       After making various other findings, the court denied Thomas's request for

modification of "the existing spousal support order."

       ii. Monthly child support

       Based on Thomas's imputed gross monthly income of $21,833, his monthly

property tax and mortgage deductions, Jennifer's imputed gross monthly income of

$2,253, and other factors, the court reduced Thomas's monthly child support obligation

from $5,078 to $4,911 effective June 1, 2011.

       iii. Child support arrears

       With respect to the issue of child support arrears, the court first noted it had

previously determined that Thomas owed child support arrears in the amount of $15,234

for the period from November 2010 through January 2011. The court then found that

from February 2011 through August 2011, Thomas had paid to Jennifer a total of

$52,596.

       Stating that "[t]he court applies [Thomas's] payments to [Jennifer] first to child

support," the court then found Thomas owed Jennifer $4,911 in child support arrears

from February 2011 through August 2011, plus $42,872 in property division arrears, for a

total of $47,783.



                                             19
        Based on these findings, the court ordered Thomas to "pay child support arrears of

$20,145 ($15,234 + $4,911)" at the rate of $1,500 per month, beginning on February 15,

2012.

        iv. Net monthly software module sale proceeds payable to Jennifer

        The court found that Thomas was receiving gross monthly software sales proceeds

in the amount of $20,800, and he would incur a tax liability of 25 percent on those

proceeds, resulting in a monthly net payment to him of $15,600. Pursuant to the

judgment, the court ordered Thomas to pay to Jennifer "on a monthly basis [one-half] of

the net sale proceeds or $7,800 per month."

        v. Attorney fees and sanctions

        The court ordered Thomas to pay $35,000 in attorney fees, costs and sanctions in

monthly installments of $1,500 beginning on February 15, 2012. The court denied

Thomas's request for attorney fees and sanctions.

      G. Thomas's Motion To Correct a Clerical Error in the Final Statement of
Decision, and His Notice of Appeal

        Thomas thereafter brought a motion (discussed, post) under Code of Civil

Procedure section 473, subdivision (d), to correct claimed "clerical, mathematical errors"

in the March 2012 final statement of decision. The court denied the motion, and Thomas

thereafter filed his notice of appeal.




                                              20
                                      DISCUSSION

         I. THE COURT'S FINDING OF NO CHANGE IN CIRCUMSTANCES
                      REGARDING THOMAS'S INCOME

       Thomas asserts that in denying his second motion to modify spousal and child

support, the court abused its discretion when it found "there has been no change of

circumstances regarding [Thomas's] income since [his] last motion to modify support,

[which the court] heard and denied January 24, 2011." We reject this contention.

       A. Applicable Legal Principles

       "Modification of spousal support . . . requires a material change of circumstances

since the last [spousal support] order." (In re Marriage of McCann (1996) 41

Cal.App.4th 978, 982, italics added; accord, In re Marriage of Dietz (2009) 176

Cal.App.4th 387, 396.) Similarly, modification of child support requires a material

change of circumstances since the last child support order. (In re Marriage of Cryer

(2011) 198 Cal.App.4th 1039, 1054.)

       "Change of circumstances means a reduction or increase in the supporting

spouse's ability to pay and/or an increase or decrease in the supported spouse's needs. It

includes all factors affecting need and the ability to pay." (In re Marriage of McCann,

supra, 41 Cal.App.4th at p. 982, italics added; accord, In re Marriage of Dietz, supra, 176

Cal.App.4th at p. 396.)

       Appellate review of orders modifying spousal or child support is governed by an

abuse of discretion standard. (In re Marriage of McCann, supra, 41 Cal.App.4th at pp.

982-983; In re Marriage of Cryer, supra, 198 Cal.App.4th at p. 1054.)


                                            21
       B. Analysis

       Thomas filed his second motion to modify support about four months after the

court denied his first motion to modify support. Claiming "there ha[d] been a significant

change of circumstances meriting a modification of child and spousal support," Thomas

asked the court "to modify the child and spousal support ordered in the Judgment that

was deemed to be entered on January 24, 2011," by reducing his monthly obligations for

both types of support.

       However, in support of his second motion to modify support, Thomas did not

claim there had been a material change of circumstances affecting his income and ability

to pay support since the last child and spousal support orders issued by the court, as he

was required to do. (See In re Marriage of McCann, supra, 41 Cal.App.4th at p. 983; In

re Marriage of Cryer, supra, 198 Cal.App.4th at p. 1054.) Rather, he asserted "there has

been a significant change of circumstances since I entered into the Stipulation for Entry

of Judgment on August 19, 2010." Thomas then improperly detailed "circumstances

[that] significantly change[d] between August and November 2010" and predated not

only the January 2011 support orders, but also his first motion to modify child and

spousal support, which he filed on November 30, 2010.

       Specifically, as his claimed changes of circumstance affecting his income and

ability to pay support, Thomas cited (1) his sale of his software module and the APA and

CSA into which he entered to effectuate that sale; (2) his working as a consultant

pursuant to the terms of the those agreements; (3) his monthly receipt of $20,800 in gross

minimum cash consideration installments resulting from the sale of the software module;

                                            22
and (4) the ABC liquidation of ezGDS, with the resulting termination of his position and

his $20,833 gross monthly CEO salary.

       For purposes of his second motion to modify support, none of these claimed

changes of circumstance was a material change in circumstance affecting his income and

ability to pay support because they all predated the last support orders issued by the court

in January 2011 when it denied Thomas's first motion to modify support. Thus, we

conclude Thomas's contention that the court abused its discretion when it found there had

been "no change of circumstances regarding [his] income since [his] last motion to

modify support" is without merit. The court properly found Thomas "[brought] his

second motion to modify support four months after his motion to modify was heard and

denied based upon the same facts and circumstances."

            II. THE COURT'S DETERMINATION OF THOMAS'S INCOME
                          AVAILABLE FOR SUPPORT

       Next, Thomas claims the court "abused its discretion in determining [his] income

available for support." Specifically, he contends the court erroneously "found that the

entirety of [his] true monthly cash flow" of $20,800 "reflected proceeds from the sale of

the software module," and thereby "implicitly found that [he] had no income available for

support." Thomas asserts that according to the express language of section 2.5 of the

APA, $10,000 of the monthly $20,800 cash flow is "gross income from his consulting

services for LBF Travel," and the remaining $10,800 is monthly gross proceeds from the

sale of the software module. We conclude the court did not abuse its discretion.




                                            23
       Thomas is essentially claiming that, as a result of both his sale of the software

module and the ABC proceeding that resulted in the liquidation of ezGDS and the

termination of his position, his gross monthly income fell from $21,833 to $10,000,

which he claims is the income he is now earning as a consultant to LBF Travel pursuant

to Section 2.5 of the APA. As previously discussed, Section 2.5 of the APA provides that

if Thomas quits or LBF Travel terminates his consulting services with or without cause

prior to the end of the specified consulting period, the monthly minimum cash

consideration installment of $20,800 "for each full month remaining in the Consulting

Period at the time of such termination shall be reduced by [$10,000] . . . ." (Italics

added.)

       However, section 6 of the CSA, which explicitly addressed the full consideration

and compensation LBF Travel owed Thomas for his consulting services, expressly

provided in part:

          "As full consideration for the Services rendered by [Thomas]
          pursuant to this Agreement, [LBF Travel] shall pay [Thomas] the
          compensation as described in Exhibit B." (Italics added.)

       Neither the foregoing provisions of section 6 of the CSA, nor those of any other

section of either the CSA or the APA, expressly mentioned or referred to a monthly

$10,000 salary as compensation for Thomas's consulting services. Thus, section 6 of the

CSA, expressly governed Thomas's compensation and provided that that compensation

was "described in Exhibit B."

       As pertinent here, exhibit B to the CSA provided (as the court found) that Thomas

was entitled to receive─as full consideration for his consulting services under Section 6

                                             24
of the CSA─100 percent of the hosting fees and ticketing fees received by LBF Travel,

up to $230,000 per year, plus 50 percent of any hosting fees and ticketing fees received in

excess of $230,000 during the same year.

       Thus, we conclude the court did not abuse its discretion because the plain express

language of the foregoing contractual provisions support the court's finding that the

$10,000 monthly payment in question was not Thomas's gross monthly income "available

for support." For reasons we now discuss, the court properly imputed to Thomas the

gross monthly income he had been earning before he sold the software module and

instituted the ABC proceedings that resulted in the termination of his position.

          III. THOMAS'S IMPUTED GROSS MONTHLY INCOME OF $21,833

       Thomas contends the court abused its discretion (1) in finding his earning capacity

continued to be $21,833 and (2) in imputing such income "contrary to the evidence"

without making any finding that he had an available opportunity to earn such income.

We conclude the court did not abuse its discretion.

       Noting that Thomas "effectively terminat[ed] his own job," the court found that

Thomas "engineered his current earning capacity through decisions he made himself" and

that his "earning capacity continues to be $21,833 per month." The appellate record,

discussed at length in the factual and procedural background, ante, supports the court's

findings. The court properly relied on In re Marriage of LaBass & Munsee (1997) 56

Cal.App.4th 1331, in which the Court of Appeal explained that "[a] parent does not ' "

'have the right to divest himself [or herself] of his [or her] earning ability at the expense

of . . . minor children.' " ' [Citation.] When a parent decides not to seek employment to

                                              25
the best of his or her ability, the court must retain discretion to impute income─otherwise

'one parent by a unilateral decision could eliminate his or her own responsibility to

contribute to the support of the child[ren] . . . .' " (Id. at p. 1339; accord, In re Marriage

of Mosley (2008) 165 Cal.App.4th 1375, 1391.) "'Each parent should pay for the support

of the children according to his or her ability'" (In re Marriage of LaBass & Munsee, at p.

1337, italics omitted) because "both parents are equally responsible for the support of

their children." (Id. at p. 1340; accord, In re Marriage of Mosley, at p. 1391.)

                             IV. CHILD SUPPORT ARREARS

       Thomas also claims the court abused its discretion in calculating child support

arrears. Specifically, he contends the court "patently abused its discretion in finding any

[child support] arrears owed, given its own findings on payments made and child support

owed" during the period from February 2011 through August 2011. We reject this

contention.

       As Thomas essentially repeats the arguments he asserted in his unsuccessful

motion to correct claimed clerical errors in the court's final statement of decision, we

shall begin with a discussion of that motion and the court's ruling.

       A. Background

       1. Thomas's motion

       In his motion Thomas sought correction under Code of Civil Procedure section

473 , subdivision (d) of claimed "clerical, mathematical errors" in the court's final

statement of decision. Specifically, he claimed the court "made a mathematical error in

the calculation of the child support arrears" when it (1) found he owed $4,911 in new

                                              26
child support arrears for the period from February 2011 (the month after the court denied

his first motion to modify support) through August 2011, and (2) ordered him to pay a

total of $20,145 in child support arrears (consisting of $15,234 in existing arrears plus the

$4,911 in new arrears).

       In support of this claim, Thomas noted the court had found that (1) he owed

Jennifer $15,234 in existing child support arrears for the period from November 2010

through January 2011, and (2) he had paid Jennifer a total of $52,596 for the period from

February 2011 through August 2011. Thomas asserted that for the latter period he owed

additional child support in the amount of $35,045 "calculated at four months of child

support at $5,078[] per month (February 2011 through May 2011) and three months of

child support at $4,911[] per month (June 2011 through August 2011)."

       Noting that the court had stated in the final statement of decision that it was

"appl[ying] [Thomas's] payments to [Jennifer] first to child support," Thomas then

asserted (as he does on appeal) that─for the period from February through August

2011─he "actually overpaid [Jennifer] the sum of $17,551[] in child support" for that

period, which he calculated by subtracting $35,045 (the amount of child support he owed

for that period) from $52,596 (the total payments he made to Jennifer during that period)

       Last, Thomas claimed (as he also does on appeal) that the court "should have

applied this [$17,551 child support] overpayment to the finding of $15,234 in [existing

child] support arrears, resulting in a payment in full of the support arrears and a further

credit to [him] of $2,317[] in support overpayments" for February 2011 through August

2011. He asserted the court should have applied this $2,317 child support overpayment

                                             27
to the $15,000 in attorney fees he was required to pay to Jennifer under the judgment,

"leaving a balance owing on the attorney fees contribution of $12,683[]."

       2. Jennifer's opposition

       In her opposition, Jennifer argued that Thomas was improperly asking the court to

"materially alter the . . . Final Statement of Decision" and "revise its deliberately

exercised judicial discretion," not correct a clerical error, by "modify[ing] its

mathematical calculations such that every penny he paid to [her] between February and

August 2011 is credited only toward past, present and future child support." She asserted

that the evidence presented during the three days of hearings on Thomas's second motion

to modify support and the court's final statement of decision established that "the

payments Thomas made to [her] during [that period] constituted not only child support,

but also payment toward [her] share of the proceeds from the sale of a community

asset[12]─a payment Thomas was obligated to make pursuant to prior and existing court

orders." Citing In re Candelario (1970) 3 Cal.3d 702, Jennifer argued that here any error

was "an error made in rendering the judgment, and not an error made in recording it";

and, thus, Thomas's "backdoor attempt to modify the Court's ruling must be denied."

       3. Hearing and ruling

       The court held a hearing on Thomas's motion and following oral arguments took

the matter under submission. The court denied the motion without explanation later that

day.



12     Jennifer was referring to the sale of the software module (discussed, ante).
                                              28
       B. Applicable Legal Principles

       In proper circumstances, a trial court may correct clerical errors appearing in a

minute order that contains findings following a bench trial. (Bell v. Farmers Ins.

Exchange (2006) 135 Cal.App.4th 1138, 1144 ["It is elementary that '[a] court can always

correct a clerical, as distinguished from a judicial error which appears on the face of a

decree by a nunc pro tunc order.' "]; In re Candelario, supra, 3 Cal.3d at p. 705 ["It is not

open to question that a court has the inherent power to correct clerical errors in its records

so as to make these records reflect the true facts."].)

       "Clerical error, however, is to be distinguished from judicial error which cannot be

corrected by amendment." (In re Candelario, supra, 3 Cal.3d at p. 705.) Clerical error

refers to inadvertent errors in entering or "'recording the judgment rendered.'" (Ibid.) A

judicial error, by contrast, "which cannot be corrected by amendment" (ibid.) under Code

of Civil Procedure section 473, subdivision (d), occurs when "'the error was made in

rendering the judgment.'" (In re Candelario, supra, at p. 705.)

       "If the court misconstrued the evidence before it, or misapplied the law applicable

to the facts disclosed by the evidence, or was even misled by counsel, such an error was

in no sense a clerical error which could thereafter be corrected by the court upon its own

motion . . . ." (Lankton v. Superior Court (1936) 5 Cal.2d 694, 696.) "Any attempt by a

court, under the guise of correcting clerical error, to 'revise its deliberately exercised

judicial discretion' is not permitted." (In re Candelario, supra, 3 Cal.3d at p. 705.)




                                              29
       C. Analysis

       In essence, Thomas claims the court abused its discretion by not considering the

entire amount of the $52,596 in total payments he made during February through August

2011 to be payments for child support. However, for that period the court, in the exercise

of its discretion, had ordered Thomas to make payments in specified amounts for child

support, child support arrears, and Jennifer's share of the proceeds of Thomas's sale of the

software module. Although Jennifer has not responded to this appeal, she correctly

argued below in opposition to Thomas's motion that he was improperly asking the court

to "revise its deliberately exercised judicial discretion," not correct a clerical error, by

modifying its mathematical calculations so that the entire amount of the $52,596 in total

payments he made during February through August 2011 would be "credited only toward

past, present and future child support" (italics added). (See In re Candelario, supra, 3

Cal.3d at p. 705.) We conclude Thomas has failed to meet his burden of showing the

court abused its discretion.

        V. FAILURE TO DEDUCT $10,000 FROM THE MONTHLY $20,800 IN
                GROSS SOFTWARE MODULE SALE PROCEEDS

       Next, Thomas contends the court abused its discretion when it found that "the

gross software sales proceeds total $20,800 per month." Specifically, citing Section 2.5

of the APA, he contends the court abused its discretion in not deducting $10,000 from the

monthly $20,800 in gross software sales proceeds. This contention is unavailing.

       As we have already discussed, the section 2.5 of the APA provided that if Thomas

quit or LBF Travel terminated his consulting services with or without cause prior to the


                                               30
end of the specified consulting period, the monthly installment of $20,800 "for each full

month remaining in the Consulting Period at the time of such termination shall be

reduced by [$10,000] . . . ." (italics added).

       Although Thomas's contention is not entirely clear, he appears to be claiming that

$10,000 of each monthly payment of $20,800 should be treated as gross monthly

consulting income, not gross proceeds from his sale of the software module. However,

we have already concluded the $10,000 is not consulting income.

               VI. IMPOSITION OF ATTORNEY FEES AND SANCTIONS

       Last, Thomas contends the court abused its discretion in the imposition of

sanctions and attorney fees. We reject this contention.

       Pursuant to Family Code sections 2030 and 2032, the court ordered Thomas to

"contribute $25,000 toward [Jennifer's] attorney fees and costs." Pursuant to Family

Code section 271, it ordered Thomas to pay an additional $10,000 in attorney fees and

costs "as a sanction." The court also ordered that Thomas pay "[t]he combined award of

$35,000" in monthly installments of $1,500 beginning on February 15, 2012. In support

of these orders, as Thomas points out, the court found Thomas's "conduct in failing to

comply with existing orders, failing to honor the terms of the [Stipulation], and his

derogatory references to [Jennifer] and/or her attorney, increased the cost of litigation

thereby justifying an award of attorney fees and costs as a sanction." The court also

found "there is a disparity of income between the parties" and Thomas "has the ability to

pay the award of attorney fees."



                                                 31
       Thomas concedes he failed to comply with the terms of the Stipulation. The

record amply supports the court's finding that Thomas "increased the cost of litigation."

As we have discussed, in bringing his second motion to modify support, which the court

denied, he utterly failed to show any material change in circumstances affecting his

income and ability to pay support since the last child and spousal support orders issued

by the court, as he was required to do. (See In re Marriage of McCann, supra, 41

Cal.App.4th at p. 983; In re Marriage of Cryer, supra, 198 Cal.App.4th at p. 1054.)

Jennifer's request for an award of attorney fees and costs was supported by the

declaration of her counsel. Accordingly, we reject Thomas's contention that the court

abused its discretion by ordering him to pay attorney fees, costs, and sanctions.

                                      DISPOSITION

       The order of the trial court is affirmed. Costs on appeal to Jennifer.



                                                                       NARES, Acting P. J.

WE CONCUR:


McDONALD, J.


McINTYRE, J.




                                             32
