Opinion
No. CX-00-429.
Filed August 29, 2000.
Appeal from the District Court, Winona County, File No. F597235.
Mary Anne Kircher, Laura J. Seaton, Bosshard Associates, (for appellant)
Lee Ann Riehle, James R. Forsythe, Streater Murphy, P.A., (for respondent)
Considered and decided by Halbrooks, Presiding Judge, Davies, Judge, and Peterson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
On appeal from an order increasing his child-support obligation, appellant-father David Pendleton argues that the district court erred by finding that a substantial change in circumstances had occurred since entry of the parties' stipulated dissolution judgment and by basing his child-support obligation on imputed income. We affirm in part and remand in part.
FACTS
The parties' marriage was dissolved in January 1998 by a stipulated judgment, which awarded mother physical custody of the parties' minor child.
At the time of dissolution, father, who has a two-year degree in graphics, worked as an independent contractor for Hal Leonard Publishing Company. In 1997, he earned a gross income of $13,600 for that work. Father also received rental payments for two properties, but the district court found that the payments were used to pay expenses for the properties. Father's monthly living expenses were $1,400.
Mother, who has a two-year degree in merchandising, worked as the sole proprietor of Pendleton's, a retail business that sells trophies and awards and does engraving work. Pendleton's pretax profits were $19,678 in 1995 and $11,150 in 1996. Mother's monthly living expenses were $2,575.
During the marriage, the parties received financial assistance from father's family. Cancelled checks dated from 1987 through 1995 show the following financial contributions: $152,687.15 to father; $7,000 to both parties; and $10,000 to the parties' child. In his application for temporary relief, father stated that throughout the marriage, he received gifts from his family of approximately $10,000 per year and also received gifts of antiques and furniture from them.
In a temporary order filed May 28, 1997, the district court found that father's work for Hal Leonard was only sporadic and set child support at $200 per month "pending [father's] opportunity to become more fully employed to enable him to contribute more meaningfully to [the minor child's] support." The dissolution judgment continued child support at $200 per month pursuant to the parties' stipulation.
In April 1999, mother filed a motion to increase father's child support obligation. The district court found:
5. [Father] was awarded the parties' two boats in the dissolution. One of those is a 52-foot long yacht, found by this Court to have a value of $120,000.00 to $125,000.00 in May of 1997. As of March of 1997, the yacht had a debt against it of $22,696.00. * * * [T]he monthly payment on the yacht is $300.00. Slip fees are $900.00 per year. The insurance costs $1,200.00 per year, and the fuel costs $1,200.00 per year. It costs $500.00 per year to store the yacht and $400.00 per year in maintenance costs. This averages $650.00 per month. * * *
6. If the expenditures set forth above are accurate, it is apparent to this Court that [father's] income is beyond what has been revealed. His child support and yacht obligations together total $10,200.00. He could not maintain those payments on the income he has revealed.
The district court concluded that a substantial change in circumstances warranting a modification of child support had occurred. The court explained:
Since [the time of dissolution, father] has remained current with his child support obligation, paid expenses on his rental properties which far exceed the rental income, supported himself, taken vacations with his child, and maintained the yacht. These factors are persuasive, although indirect evidence of a substantial increase in income since the date of the last order.
The district court increased father's monthly child-support obligation to $400 but stayed the order for 30 days to enable father "to provide evidence that either he has not been expending the funds related in this order or explaining where the money has come from to enable him to do so."
Father presented evidence that his mother forgave the debt owed on the yacht, that he worked at Dick's Marine to offset some yacht expenses, and that he used proceeds from the sale of personal property to help meet the remaining $320.16 in monthly yacht expenses. In an order filed December 3, 1999, the district court noted this evidence and also found:
2. [Father] has undertaken a major remodeling project in his home, including adding a fireplace, a hot tub and a built-in bar. He added a new heating and cooling plant. He represents that he took out a loan to assist with these expenses, but the Court does not know how much he borrowed or what the monthly payments are.
3. [Father] was treated by family members to an all-expense paid vacation to [t]he Bahamas.
* * * *
6. It was observed in this Court's order of May 27, 1997, that [father] must endeavor to become more fully employed to contribute meaningfully to his child support. There is no evidence that he has sought more lucrative employment.
7. The evidence which has been presented throughout these proceedings makes it clear that [father] has, and has always had, substantial financial support from his family. Although this income is not to be considered directly for purposes of determining child support issues, this income has enabled [father] to remain minimally employed while still maintaining an affluent lifestyle. However, because his child support is determined on his income only, he has been ordered to pay very little child support.
8. [Father] is, and has been, voluntarily underemployed. He has the opportunity and the ability to earn substantially more income than he does and thereby to pay substantially more child support.
Based on its finding of voluntary underemployment, the district court concluded that a child support award greater than that indicated by the guidelines, if strictly applied, was warranted and increased father's monthly child support obligation to $400.
DECISION
Whether to modify a child-support obligation is within the district court's discretion and an appellate court will not reverse for an abuse of discretion unless the district court resolves the matter in a manner "`that is against logic and the facts on record.'" Moylan v. Moylan, 384 N.W.2d 859, 864 (Minn. 1986) (quoting Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984)). The district court, however, must exercise its discretion within the limits set by the legislature. Id. Child support may be modified if the moving party shows a substantial change in circumstances that makes the existing award unreasonable and unfair. Minn. Stat. § 518.64, subd. 2(a) (1998).
The district court stated that it was deviating from the guidelines in modifying child support to $400 based on its finding that father was voluntarily underemployed. Voluntary underemployment, however, is not a factor to consider in deciding whether to deviate from the guidelines. See Minn. Stat. § 518.551, subd. 5(c) (Supp. 1999) (listing factors relevant to decision whether to deviate from guidelines). We, therefore, analyze the district court's decision as a child-support award based on imputed income. A monthly child-support obligation of $400 is the guidelines amount for an obligor with a net monthly income of $1,600. See Minn. Stat. § 515.551, subd. 5(b) (Supp. 1999).
Minn. Stat. § 518.551, subd. 5b(d) (1998) provides:
If the court finds that a parent is voluntarily unemployed or underemployed * * *, support shall be calculated based on a determination of imputed income. A parent is not considered voluntarily unemployed or underemployed upon a showing by the parent that the unemployment or underemployment: (1) is temporary and will ultimately lead to an increase in income; or (2) represents a bona fide career change that outweighs the adverse effect of that parent's diminished income on the child. Imputed income means the estimated earning ability of a parent based on the parent's prior earnings history, education, and job skills, and on availability of jobs within the community for an individual with the parent's qualifications.
Caselaw also permits income to be imputed when it is impracticable to determine actual income. Gorz v. Gorz, 552 N.W.2d 566, 569 (Minn.App. 1996).
A finding of voluntary underemployment requires evidence of choice in the matter of underemployment. Murphy v. Murphy, 574 N.W.2d 77, 82 (Minn.App. 1998). At least since the temporary order was entered, father has worked only sporadically. The temporary order indicated that father would seek additional employment "to enable him to contribute more meaningfully to [child] support." The record contains no evidence that since then, father has made any efforts to obtain additional employment. Father's failure to seek additional employment, particularly in light of the evidence regarding his affluent lifestyle, supports the district court's finding of voluntary underemployment. See Hopp v. Hopp, 279 Minn. 170, 175-76, 156 N.W.2d 212, 217-18 (1968) (explaining that lack of ability to pay child support must not be confused with lack of will to do so). We, therefore, affirm the determination of voluntarily underemployment.
The district court made no findings showing the amount of father's current income. The court did not make any findings regarding the factors to be considered when determining estimated earning ability under Minn. Stat. § 518.551, subd. 5b(d). The district court did find that father's lifestyle exceeded his income from employment. An obligor's lifestyle may be relevant to a determination of imputed income. See Roatch v. Puera, 534 N.W.2d 560, 564-65 (Minn.App. 1995) (affirming imputed income based in part on obligor's lifestyle). But, except for father's yacht expenses, the district court made no findings on the amount of father's expenses. It is unclear whether the district court found credible father's testimony that his monthly yacht expenses total $320.16. In any event, even if father paid $650 per month for yacht expenses, his ability to meet those expenses and also pay $200 per month in child support is insufficient to support imputing a net monthly income of $1,600 to him. The district court also found that father received financial assistance from his family. When "a gift is regularly received from a dependable source, it may properly be used to determine the amount of a child support obligation." Barnier v. Wells, 476 N.W.2d 795, 797 (Minn.App. 1991). The district court did not make any findings on the amount or regularity of financial assistance provided to father by his family.
When modifying child support, the district court is required to make written findings concerning the amount of the obligor's income "and any other significant evidentiary factors affecting the determination of child support." Minn. Stat. § 518.551, subd. 5(i) (Supp. 1999); accord Rouland v. Thorson, 542 N.W.2d 681, 684 (Minn.App. 1996). Because the district court did not make findings concerning the amount of father's income, we remand to permit the district court to determine the amount of father's actual income, make specific findings regarding what amount of income, if any, should be imputed to father, and to determine whether father's child-support obligation should be modified due to a change in father's income. The district court may at its discretion reopen the record for additional evidence.
Father contends that, in deciding whether to modify child support, the district court must defer to the parties' stipulation. Father maintains that, in arriving at the final stipulation, the parties considered their lifestyles as well as the child's. "Child support relates to nonbargainable interests of children and is less subject to restraint by stipulation than are other dissolution matters." Compart v. Compart, 417 N.W.2d 658, 662 (Minn.App. 1988). Reading the dissolution judgment together with the temporary order shows that the district court accepted the parties' stipulation to $200 per month in child support on the assumption that father would seek additional employment. Since father has not done so, the district court need not defer to the parties' stipulation. See id. (explaining standards for approval and modification of child support).
We express no opinion about how the remanded issues should be resolved.