James told an Orange County, Calif. judge that Sunny "acts out, she's more agitated, she has sleeping problems," since Lindemulder was released from a halfway house on June 3 for misdemeanor tax evasion. "The more contact she has with her mom, the more fear she has to sleep in her own room."
James, 41, and Lindemulder are facing off in a trial regarding whether Sunny should be allowed to move to Austin with James. A court-appointed attorney for Sunny testified the move is in the child's best interest.
The motorcycle mogul testified he intends to relocate on July 31 and has already purchased an eight-acre, five-bedroom home "in a very private estate in Texas hill country," about 17 miles from the home of his other ex-wife, Sandra Bullock, who has helped raise Sunny.
Benefits of MovingAside from the problems with her mom, Sunny is doing well, according to James. "She's thriving, doing well in school, she has an amazing relationship with her brother and sister and Sandy," James said. "We're getting to a point where we can live in peace. [Moving to Texas] will only make things better."
James was recently quoted in an online interview saying he wants his kids to maintain a close relationship with Bullock, but hasn't explicitly said that in the trial thus far. He testified that part of the reason he's moving is to help run his custom car shop in Austin.
Asked if being near Bullock was more of a priority for James than his Austin business interests, James's attorney John Schilling told PEOPLE on Tuesday, "I can't place a priority between the two. He's going down there to deal with business issues, but he'd like to get his kids away from the limelight."
James also testified he feels Lindemulder, a recovering addict, has unresolved personal issues and should receive help. "I think she has yet to hit rock bottom and I fear [when she does] it will involve Sunny."
Lindemulder, who says she's been clean and sober for several years, previously testified that she's open to therapy and wants to improve trust and communication with James.