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In Re the Marriage of Elaine Tong and Richard Samson. v. Richard Samson

July 5, 2011


APPEAL from an order of the Superior Court of Los Angeles County, Elia Weinbach, Judge. (Los Angeles County Super. Ct. No. BD482622)

The opinion of the court was delivered by: Epstein, P. J.


Order affirmed in part, reversed in part and remanded to the trial court with directions.

This is an appeal from an order denying appellant Richard Samson's motion for modification of temporary spousal support. We reverse to the extent that the family court incorrectly allocated Richard's*fn1 severance pay to a single month for purposes of a provision in the parties' stipulated support order requiring Richard to pay respondent Elaine Tong Samson 35 percent of his monthly compensation in excess of $25,000. This percentage-based component of the stipulated order, modeled after In re Marriage of Ostler & Smith (1990) 223 Cal.App.3d 33 (Ostler & Smith), was intended to apply to Richard's variable monthly income from commissions, not to a one-time lump-sum severance pay. We affirm in all other respects.


The parties were married in 1985 and separated in 2007. Elaine filed a petition for dissolution and sought temporary spousal support in March 2008. Richard, a mutual funds wholesaler, argued that spousal support should be based on his base salary with an Ostler & Smith adjustment for sales commissions he received above his base salary. In May 2008, the court ordered Richard to pay Elaine $15,031 per month and 35 percent of "all his compensation in excess of $45,000 during that month." In June 2008, Richard sought a modification due to the decrease of his monthly commissions. Based on terms proposed by Richard, the parties stipulated that he would pay Elaine $9,059 per month and 35 percent of "all his compensation in excess of $25,000 for each month."

In June 2009, Richard was advised that he would be laid off from his job of 28 years. He was terminated effective July 10, 2009, and received a severance package of

$309,700.81 in September 2009. In March 2011, Richard filed an order to show cause (OSC) seeking clarification of the effect of severance pay on the support order, as well as a termination of temporary spousal support based on Elaine's cohabitation with a gentleman. The family court denied the OSC. Richard was charged with various arrearages, including $99,645.28 out of the severance pay. This timely appeal followed.*fn2


Richard asked the family court to treat his severance pay as income to be spread over thirteen months. His request was based on In re Marriage of Stephenson (1995) 39 Cal.App.4th 71, 75, 82 (Stephenson), where the family court treated $52,000 in severance pay the husband received upon his early retirement as the equivalent of eight and one-half months of salary. Elaine distinguished Stephenson on procedural grounds because the husband in that case brought an OSC before he retired and thus sought a prospective modification of spousal support. (Id. at p. 75) She argued that, since Richard brought the OSC months after he was laid off, he was in effect seeking to retroactively modify his spousal support obligation. The court agreed with Elaine that Richard was seeking a retroactive modification of temporary spousal support and denied the OSC because such a retroactive modification is impermissible. (See Fam. Code,*fn3 § 3603; In re Marriage of Murray (2002) 101 Cal.App.4th 581, 596 (Murray).) This was incorrect. Richard did not seek to retroactively lower the base monthly support of $9,059 or the 35 percent assessment on his compensation in excess of $25,000 in any given month. Rather, the parties disagreed whether Richard's lump-sum severance pay was to be allocated to a single month for purposes of the percentage assessment in the stipulated order.

Richard's severance pay had four components: (1) a years-of-service component limited to12 months of salary, or $100,000; (2) a lump sum in lieu of commission limited to a six-month benefit of $152,853.48; (3) a healthcare component of $1,500; and (4) a master retirement plan equivalent component of $3,422.28. The severance pay amounted to $294,984.10, but Richard was advised that his final paycheck would include "final earnings and pay for any unused, accrued vacation." He received $309,700.81 in September 2009. The severance pay was thus a lump sum comprised of more than a single month's compensation. Elaine argues at length that Richard's severance pay was compensation, a point that Richard does not contest. But Elaine assumes that because the severance pay is compensation, it must be compensation for September 2009, the month in which it was received. By its terms, the stipulated order envisions that Richard would pay the additional 35 percentage assessment of spousal support based on his compensation "for each month." The order provides no guidance on how lump-sum compensation for several months should be treated.

If an order is ambiguous, the reviewing court may examine the record for its scope and effect and may look at the circumstances of its making. (In re Marriage of Richardson (2002) 102 Cal.App.4th 941, 948-949.) Extrinsic evidence is allowed to determine the parties' intent when a stipulated order is ambiguous. (In re Marriage of Trearse (1987) 195 Cal.App.3d 1189, 1192.) Unless there are conflicts in the extrinsic evidence, the interpretation of a stipulated support order is reviewed de novo. (See City of Hope National Medical Center v. Genentech, Inc. (2008) 43 Cal.4th 375, 395.)

Elaine claims that there is no evidence that the parties ascribed any particular meaning to the word "compensation." Not so. The record is clear that the percentage assessment was included in the original support order and in the subsequent stipulated support order because Richard's monthly income was mostly comprised of his sales commissions, which fluctuated from month to month. Richard referred to this assessment as an "Ostler-Smith" percentage throughout the proceedings, as did the family court in its order denying the OSC. There is no evidence in the record that Elaine objected to this characterization. An Ostler & Smith percentage is assessed "over and above guideline support" for "any discretionary bonus actually received." (In re Marriage of Mosley (2008) 165 Cal.App.4th 1375, 1387.) It was originally justified on the ground that future bonuses are not guaranteed, and it would be unfair to require the obligor to file motions for modification every time a bonus is reduced. (Ostler & Smith, supra, 223 Cal.App.3d at pp. 41-42.) The variable income that the Ostler & Smith percentage was aimed at capturing in this case was Richard's fluctuating monthly sales commissions. There is no evidence in the record that in 2008 either party was aware Richard would be terminated or receive a lump-sum severance pay a year later. The court therefore erred in accepting Elaine's assumption that the lump-sum severance pay in its entirety was compensation subject to the Ostler & Smith percentage in the month when it was received.

Elaine argues that, because of its years-of-service component, the severance pay was payment for past services rather than a replacement of future income. While some early cases have made this distinction for purposes of characterizing a severance pay as community or separate property, more recent cases have found it unhelpful. (See In re Marriage of Frahm (1996) 45 Cal.App.4th 536, 538-541, 543-544, and cases cited in that decision.) Whether the severance pay is community or separate property is irrelevant to its allocation under the stipulated support order because the order does not depend on that characterization. In addition, even the early cases, such as In re Marriage of Lawson (1989) 208 Cal.App.3d 446, 454, on which Elaine relies, have recognized that although a severance amount may be based on years of service, it is designed to replace lost wages. The bulk of Richard's severance pay was apparently ...

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