The Rule of Sheerer v. Panas is that a trial court must include all bonus income and restricted stock units (RSUs) in calculating child support under the uniform statewide guideline formula, under circumstances where a parent receives such variable compensation and the court has not made proper findings to deviate from the presumptively correct guideline amount.
Appeal from child support modification order in Superior Court, San Mateo County.
Plaintiff Appellant was Anna Sheerer — the ex-wife seeking to include her ex-husband's bonus and RSU compensation in child support calculations.
Defendant Respondent was Thomas Panas — the ex-husband who received substantial bonus and RSU compensation that was excluded from the child support calculation.
The suit sounded in family law/child support modification. The California Department of Child Support Services intervened as respondent.
The key substantive facts leading to the suit were that Sheerer and Panas divorced with two children and 50/50 custody, previous orders included Smith-Ostler provisions for bonus income, but when Sheerer moved to modify support in 2023 due to changed circumstances, the trial court's November 2023 order excluded Panas's substantial bonus and RSU compensation (averaging $25,925 monthly in bonuses plus significant RSU compensation) from the child support calculation, basing it only on his $19,640 monthly salary.
The procedural result leading to the Appeal: The trial court denied Sheerer's request for a Smith-Ostler provision in July 2024 and maintained the November 2023 order that excluded bonus and RSU income, ruling that its concern was "the support and the amount of time Ms. Sheerer has been unemployed."
The key question(s) on Appeal: 1. Whether the trial court erred by failing to account for Panas's bonus income and RSU compensation in calculating child support; 2. Whether the court violated Sheerer's due process rights by failing to hold an adequate hearing.
The Appellate Court held that the trial court erred by excluding Panas's bonus and RSU compensation from child support calculations without making proper findings under Family Code sections 4056 and 4057 to deviate from the presumptively correct guideline amount, as bonus income and vested RSUs constitute "income from whatever source derived" under Family Code section 4058.
The case is inapplicable when the trial court makes proper written findings under Family Code sections 4056 and 4057 to deviate from the guideline amount, when bonus or equity compensation is not yet vested or legally available to the parent, or when the variable income is properly addressed through an adequate Smith-Ostler provision or other court-approved method.
The case leaves open how trial courts should structure Smith-Ostler provisions or other mechanisms to address highly variable bonus and RSU compensation, and what specific findings would justify excluding bonus income from child support calculations under the statutory deviation provisions.
Counsel
For Appellant: Covington & Burling, Breanna Katherine Jones; Family Violence Appellate Project, Cory Delfin Hernandez, Arati Vasan, Jennafer Dorfman Wagner
For Respondent: Thomas Panas, in pro. per.
For Intervener: Rob Bonta, Attorney General of California, Cheryl Lynn Feiner, Senior Assistant Attorney General, Maureen Chinyere Onyeagbako, Supervising Deputy Attorney General, Pablo Nicholas Rossenblum, Deputy Attorney General