Opinion
No. C2-02-2101, C2-02-2132.
Filed August 12, 2003.
Appeal from the Beltrami County District Court, File No. F4981278.
Merry D. Charles, (pro se respondent)
Darrell G. Carter, (for appellant)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
In these consolidated appeals, appellant argues that (1) the district court abused its discretion in modifying support retroactively to include a period during which no support modification motion was pending and (2) the record does not support the findings of the court regarding appellant's net income. Respondent argues that the district court erred by not (1) including rental property income in computing appellant's child support obligation; (2) reimbursing respondent for marital debt paid on behalf of appellant; (3) reimbursing respondent for dental expenses; (4) assigning responsibility for medical coverage in the most current support order; and (5) awarding respondent attorney fees. We affirm in part, reverse in part, and remand.
FACTS
The record before us for review is both procedurally and substantively complex. Respondent Merry Hendricks, now known as Merry Charles, and appellant Dennis Hendricks had two children during their marriage. An order for protection was issued by the district court on June 12, 1998, and, in addition to other provisions, ordered that Hendricks pay Charles $430 per month in child support. A dissolution action was commenced and Charles moved for temporary relief in that proceeding. The district court denied Charles's request to alter the level of child support which had been set under the order for protection, required both parties to continue maintaining medical and dental insurance for the children, and ordered Hendricks to pay $175 per month toward the marital debt.
An amended dissolution decree was entered on December 16, 1999. Pursuant to the decree, marital property was divided, marital debt was apportioned, and Charles was ordered to pay a cash equalization payment to Hendricks. The dissolution decree also required Hendricks to maintain health insurance through his employer; if coverage was not available, then the parties were to share equally in the cost of their children's health care plan. All necessary, unreimbursed medical and dental bills were to be divided between the parties. In the decree, the parties agreed that Hendricks would pay $504 per month in child support. The parties also appear to have agreed that:
It is not clear whether a provision for review was included at the sole request of Charles's attorney or whether it was agreed upon between the parties. In any event, it was not challenged in the appeal from the decree.
At the end of the calendar year 1999 either party may bring a motion to review and reset child support based on the actual income of [Hendricks] in 1999.
Charles appealed the division of marital property and property-equalization payment provisions of the decree. On November 9, 2000, during the pendency of the appeal, she moved for modification of child support. A hearing on that motion was scheduled for November 27, 2000 before a child support magistrate (CSM). Hendricks requested a continuance, apparently because he was uncertain whether child support could be addressed in the district court while Charles's appeal was still pending in the court of appeals. In opposing Hendricks's request for continuance, Charles argued that the appeal was completely unrelated to her motion for modification. The CSM granted a continuance and rescheduled the matter for hearing on January 2, 2001.
In Hendricks v. Hendricks, No. C7-00-257, 2000 WL 1780279 (Minn.App. Dec. 5, 2000), this court affirmed the district court's division of property, but remanded the property-equalization payment issue. In addition, we directed the district court to address on remand the issue of "[Hendricks's] failure to make all of the payments required by the temporary order."
On January 3, 2001, the CSM referred the child support issue to the district court to be heard with the remanded issues. In doing so, the CSM stated that
the hearing of this matter shall be CONTINUED AND REFERRED TO DISTRICT COURT. * * * [A]ny modification of the existing child support obligation may be made retroactive to the original date of service of [Charles's motion].
On November 6, 2001, the district court issued a scheduling order providing in part that
all outstanding issues addressed by the Court of Appeals and all outstanding issues that the parties may have arising out of the [amended decree] shall be resolved by way of motions, supporting affidavits and briefs.
Numerous motions ensued. Charles moved to increase child support, to retroactively calculate child support from 1999-2001, to determine that there were arrearages of $1,225 pursuant to the 1999 temporary order directing Hendricks to pay $175 per month toward marital debt, and to reimburse her for medical and dental costs resulting from Hendricks's failure to maintain coverage in 2000 and 2001. Charles also sought to recover marital debt she paid on Hendricks's behalf. Hendricks responded, asserting that (1) any child support modification should be effective no earlier than the time of Charles's motion for modification, which Hendricks alleged to be November 2001; (2) absent any indication that temporary payments were being sought, they were waived; and (3) most of the medical expenses for which Charles sought reimbursement were discharged in bankruptcy.
On May 15, 2002, the district court issued an order in which it decided the property equalization issue, awarded Charles $1,013 for health care premiums paid during 2000 and 2001, denied Charles's request for $3,499.77 in marital debt reimbursement, and (without referring to the January 3, 2001 CSM order referring all issues to the district court) remanded the child support issue to a CSM. In an order dated September 27, 2002, the CSM recalculated Hendricks's child support obligation from July 1999 through August 2002, reduced that amount by the child support already paid, determined that total past support due was $8,925, and ordered judgment against Hendricks in that amount. The CSM also awarded ongoing child support in the amount of $1,016 per month, effective September 1, 2002.
Both parties appealed; Hendricks from the September 27, 2002 order of the CSM, Charles from both that order and from the district court order dated May 15, 2002. This court consolidated the appeals.
DECISION I.
A district court has broad discretion in modifying child support orders and will be reversed if it abused its discretion by resolving the matter in a manner that is contrary to logic and the facts on the record. Gully v. Gully, 599 N.W.2d 814, 820 (Minn. 1999). Generally, the district court can modify an order for child support upon a showing of substantially changed circumstances. Minn. Stat. § 518.64, subd. 2 (2002). However, the court may establish an amount of child support following a reservation of that support in the dissolution decree without a showing of changed circumstances. Mulroy v. Mulroy, 354 N.W.2d 66, 69 (Minn.App. 1984). A "subsequent establishment of a support obligation is treated as an initial matter rather than a modification of a prior support order." Anderson v. Anderson, 470 N.W.2d 719, 721 (Minn.App. 1991). The decree language expressly reserving child support obligations indicates the parties' obvious intention to examine that issue at a later time. Bennyhoff v. Bennyhoff, 406 N.W.2d 92, 94 (Minn.App. 1987).
The parties disagree as to the nature of the child support decisions made by the CSM. Hendricks argues that an existing support order was modified and, therefore, the CSM was required to find that there had been a substantial change of circumstances rendering the current order unreasonable and unfair. He argues further that the modification of a support order can be effective only from the time of the service of the motion to modify, and he identifies this date as November 200l, the date of Charles's second motion to modify.
Charles, in rejecting these arguments of Hendricks's, contends that child support was reserved in the decree, and the CSM, in establishing what was an original support obligation, was not constrained by the requirement that modification can be effective only from the time of the service of a motion to modify.
In our search to untangle the thorny and complex questions present in this case, we find both some support for and some fatal errors in the positions urged by the parties. Charles is incorrect in arguing that support was reserved in the decree. It was not. It was set at $504 per month, subject to review upon request of either party. On November 8, 2000, Charles brought a motion that we can reasonably interpret only to be one for modification of child support. Therefore, the CSM was required to comply with the requirements of Minn. Stat. § 518.64, subd. 2. Support could be modified only upon a determination that there had been a substantial change of circumstances rendering the current order unreasonable and unfair, and then could be made effective only from the time of service of the motion to modify.
This motion refers to Minn. Stat. § 518.64 (2002) (which addresses modification), and Charles's affidavit accompanying the motion requests an increase in support based upon substantially decreased earnings and increased need, both of which are factors addressed in Minn. Stat. § 518.64.
Hendricks, too, is incorrect in arguing that the date of the motion to modify was November 2001. A searching review of the record convinces us that the motion brought by Charles in November 2000 was never dismissed or abandoned. It was continued and referred through the multitudinous proceedings that have occurred in this case. Also, the order of the CSM dated January 3, 2001, states that "any modification of the existing child support obligation may be made retroactive to the original date of service of the [motion]." The only motion for modification in existence at the time of this order was the November 8, 2000 motion, and modification from that time would have been authorized.
Charles herself expressed uncertainty as to whether her November 2000 motion was still viable. She filed a second motion in December 200l (it is this motion, apparently, that Hendricks refers to as being filed in November 2001), apparently believing that her November 2000 motion might have been withdrawn. But nothing in the record supports that belief. While we recognize that a moving party may, indeed, waive a claim to retroactive modification by abandoning a motion, Hicks v. Hicks, 533 N.W.2d 885, 886 (Minn.App. 1995), there was no waiver or abandonment here. The November 2000 motion was continued and referred through actions of the court.
Hendricks is correct, however, in arguing that a modification of child support must be accompanied by a finding that there has been a substantial change in circumstances rendering the current order unreasonable and unfair. Minn. Stat. § 518.64, subd. 2, requires that finding. The order before us for review makes no finding regarding changed circumstances rendering the current order unreasonable and unfair. A remand on this basis alone would be appropriate.
An additional basis for remand remains, however. In its order of September 27, 2002, the CSM determined that Hendricks owed Charles $8,925 "for past adjusted support from July 1999 through August 2002" and awarded judgment against Hendricks in that amount. We are unable to determine the correctness of this figure. We have already determined that any modification of the $504 per month child support ordered in the decree could be effective only from November 2000. But it appears that in the September 27, 2002 order, the CSM actually modified support from the pre-decree date of July 1999 to entry of the decree in December 1999. On this record, we are unable to determine any basis for such remote modification. It appears, further, that modification was made for the post-decree period January 1, 2000 through December 2000. Because we have determined that any modification in support may be made effective only after November 2000, a substantial period of the year 2000 should not have been included in any modification, but apparently was included. A remand is necessary, therefore, on the additional basis of what past due amounts of support would accrue under a modification that was effective only after November 2000.
While Hendricks does not challenge the fact that past due amounts were calculated and the award of judgment was granted on those amounts in the same order, a question about the propriety of that dual action is a viable one. See County of Nicollet v. Haakenson, 497 N.W.2d 611, 616 (Minn.App. 1993) (concluding that the ALJ erred in awarding judgment for, and establishing the obligation to pay, retroactive child support in the same order that the obligation to pay support at an increased level was established). He does, of course, challenge the court's authority to make any modification prior to November 2001.
II.
A district court has broad discretion when deciding whether to modify child support. Putz v. Putz, 645 N.W.2d 343, 347 (Minn. 2002). We review a child support magistrate's decision in the same manner as we would if a district court had made the decision. Brazinsky v. Brazinsky, 610 N.W.2d 707, 710 (Minn.App. 2000). We will reverse an order for modification of child support only if "the district court abused its broad discretion" and resolved the matter in a manner that is "against logic and the facts on [the] record." Putz, 645 N.W.2d at 347.
When it has been established that a substantial change in circumstances has occurred and rendered the current support order unreasonable and unfair, the presumptively correct child support obligation is calculated by multiplying an obligor's net income by the percentage in the guidelines. Minn. Stat. § 518.551, subd. 5(b) (2002). "Net income" is defined as the obligor's total monthly income less certain deductions. Id. Permitted deductions include (1) federal and state income taxes; (2) social security and reasonable pension deductions; (3) union dues; (4) individual, group, or dependent health insurance coverage costs or actual medical expenses; and (5) a current child support or maintenance order. Id.
Hendricks argues that the findings of fact of the CSM in the September 27, 2002 order were clearly erroneous. Hendricks has raised several credible arguments on issues that we conclude must be addressed by the court on remand. First, it is not clear to Hendricks, nor to us, how the CSM arrived at a figure of $1,297 per month for federal and state taxes and social security. Also, the CSM's order contains no finding regarding other statutorily-allowed deductions, including, according to Hendricks, union dues.
Inadequate findings preclude a meaningful review of a support modification. See Rosenfeld v. Rosenfeld, 311 Minn. 76, 82, 249 N.W.2d 168, 171 (1976) (stating particularized findings promote the use of statutory standards, explain the district court's decision to parties, and facilitate meaningful appellate review). Because the order of the CSM does not adequately address the required statutory criteria, we remand for a determination of Hendricks's net income as defined by Minn. Stat. § 518.551, subd. 5(b).
By our listing of specific items of concern, we do not intend to limit the discretion of the court on remand to permit the parties to argue regarding other appropriate or inappropriate inclusions in or deductions from gross income. We note particularly that Charles has submitted a signed document indicating that Hendricks received $2,000 in rental income in 2001. Payments such as this are often construed as income for the purposes of calculating a child support obligation. Thompson v. Newman, 383 N.W.2d 713, 716 (Minn.App. 1986). The CSM did not address this claimed income in its findings. On remand, we direct that the court determine whether this omission was an oversight or whether Charles's documentation was deemed to be unreliable.
Charles also contends this court should reserve income from a pending lawsuit against Hendricks's former employer. This issue, however, is at best premature. When and if Hendricks receives a favorable judgment, a motion regarding those funds may be brought.
III.
Charles, in her appeal of the May 15, 2002 district court order, argues that the court erred in failing to include a provision addressing health insurance for the children and erred in not reimbursing her for costs associated with providing medical coverage for their children in 2002. There is merit to Charles's arguments. Every support order must "expressly assign or reserve the responsibility for maintaining medical insurance for minor children and the division of uninsured medical and dental costs." Minn. Stat. § 518.171, subd. 1(a)(1) (2002); Bock v. Bock, 506 N.W.2d 321, 326 (Minn.App. 1993) ("An obligor's liability for medical needs is deemed child support for the purpose of enforcement."). Under Minnesota law, the district court must order the party with the better dependent health and dental insurance coverage available on a group basis or through an employer or union to name the minor child as a beneficiary. Minn. Stat. § 518.171, subd. 1(a)(2) (2002). Moreover,
if the court finds that the obligee is not receiving public assistance for the child and has the financial ability to contribute to the cost of medical and dental expenses for the child, including the cost of insurance, the court shall order the obligee and obligor to each assume a portion of these expenses based on their proportionate share of their total net income as defined in section 518.551, subdivision 5.
Minn. Stat. § 518.171, subd. 1(d) (2002).
In the original decree, the district court directed Hendricks to maintain health insurance in the event that there was a group plan offered by his employer. In the event a group plan was not available through Hendricks's employer, the parties would share equally in the costs of the health plan for their children. Hendricks has not provided medical coverage, the district court has not addressed whether he is able to do so, and it is unclear from the record whether he is currently able to obtain coverage through his employer. Instead, it appears that Charles insures her children through Minnesota Care. Minnesota Care is not "health insurance coverage" as defined by Minn. Stat. § 518.171 subd. 1(a)(2)(iii). As such, the parties' children do not have medical coverage as required by the parties' dissolution decree and Minn. Stat. § 518.171 (2002). We, therefore, remand this issue to permit the court to expressly assign or reserve the responsibility for maintaining medical coverage for the parties' minor children.
IV.
Charles next argues the district court erred by failing to award her reimbursement for one-half of the children's dental expenses. The medical needs of a minor child "are in the nature of child support." Korf v. Korf, 553 N.W.2d 706, 708 (Minn.App. 1996) (citations omitted).
The dissolution decree required the parties to "equally share all [unreimbursed] medical and dental bills which are necessary rather than elective." Charles moved for $3,750 in what she described as necessary dental expenses. Charles filed for bankruptcy, but she did not discharge the $3,750 owed to the children's dentist. The debt was, instead, reaffirmed pursuant to 11 U.S.C. § 524(c) (2000).
The district court awarded Charles one-half of the unreimbursed medical/dental expenses that were non-discharged in the bankruptcy proceeding. The accompanying memorandum specifically addressed this issue.
The Court has spent considerable time reviewing the hodge-podge of bills and invoices [Charles] submitted regarding insurance and medical expenses. Many of the invoices do not appear genuine and are peppered with [Charles's] own editorial comments. Any doubts as to the veracity of this material are properly resolved in [Hendricks's] favor. * * * The court, on the basis of equity, is unwilling to award [Charles] [Hendricks's] half of orthodontic and/or dental bills she discharged in Bankruptcy. Holding otherwise simply rewards [Charles] for discharging a claim she no longer must pay. Any reaffirmation of this claim, if any, was [Charles's] choice to make.
The district court ordered Hendricks to pay $539.02 in "non-discharged" dental expenses. In doing so, the district court determined Charles's invoices were unreliable, and we defer to those credibility determinations. Vangsness v. Vangsness, 607 N.W.2d 468, 472 (Minn.App. 2000). It appears that a key factor in the court's analysis of this issue was that Charles voluntarily reaffirmed this debt. When given the choice either to discharge or reaffirm this debt, Charles voluntarily chose the latter. We therefore affirm the district court's decision on the issue of reimbursement for dental bills.
V.
Charles next argues that the district court also erred by not reimbursing her for marital debt paid on Hendricks's behalf. She contends that, despite ultimately filing for bankruptcy, she paid $3,499.77 on marital indebtedness prior to filing for chapter 7 relief. The decree apportioned marital debt between the parties. Hendricks was responsible for two bills: First USA Visa — $3,064 and Advanta — $2,424.88. The decree also provided that
[n]either party shall discharge in bankruptcy his or her obligation to * * * pay joint debts. * * * Should either party discharge in bankruptcy * * * any joint debt of the parties assumed by one of the parties, such discharge shall constitute a basis upon which the other party may move the court to modify the maintenance provision (if any) and/or seek an additional property award if that party is held liable for the discharged debt * * * .
While Charles argued that she made payments on First USA Visa and Advanta before filing for bankruptcy, the district court decided that these payments were voluntarily made. Payments made under the threat of creditor action, however, are not necessarily voluntary. We must remand this issue to determine the amount of marital debt paid prior to filing for bankruptcy.
In a related matter, Charles challenges Hendricks's noncompliance with the 1999 temporary order, which required Hendricks to pay $175 per month towards the parties' marital debt. It is unclear from the record whether payments were actually made, and if so, to what extent. In our opinion resulting from the first appeal in this case, we directed the district court to address this issue on remand. Hendricks v. Hendricks, No. C7-00-257, 2000 WL 1780279, at *3 (Minn.App. Dec. 5, 2000) ("because the judgment does not address respondent's failure to make all of the payments required by the temporary order, the trial court shall address this issue as well"). However, the issue was not addressed. We again remand this issue to determine if Hendricks made the required payments pursuant to the 1999 temporary order.
While it seems clear that the remanded issue was to deal with Hendricks's $175 monthly payments on marital debt, we question whether nonpayment under the temporary child support order might also have been in issue. We suggest that on remand the parties should be given an opportunity to at least address the scope of the remanded "temporary order payment" issue, and that the court's discretion in addressing those arguments should be broad.
VI.
Charles, in her final issue, argues that the district court abused its discretion by not awarding her attorney fees because her financial circumstance warranted attorney fees, Hendricks had the ability to pay, and Hendricks failed to obey the court's orders. The decision to award attorney fees rests almost entirely within the discretion of the district court . Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn.App. 1998), review denied (Minn. Feb. 18, 1999); Zagar v. Zagar, 396 N.W.2d 98, 102 (Minn.App. 1986). The district court noted that both Charles and Hendricks have prolonged litigation in this matter by filing duplicative motions. The record supports the district court's conclusion. We, therefore, conclude that the district court did not abuse its discretion by denying attorney fees.
Finally, in an effort to facilitate a conclusion to this litigation that has been far too costly emotionally and financially to the parties and to the minor children, we offer the following suggestions and guidelines. First, we assure the parties, the attorneys, the district court, and the CSM that it is only with the greatest reluctance that we, again, remand. Had it been possible for us, within the parameters of our proper role of review on appeal, to have decided all of the issues without remand we would have done so. By way of suggestion, we believe that resolution of all issues will be expedited and simplified by having those issues addressed in one forum. Because of the property questions yet remaining, that forum should be the district court. We recognize the value of having child support issues determined expeditiously by a CSM. But this case has few aspects of expediency connected to it. The CSM in its January 3, 2001 order commendably foresaw possible additional complications looming. That foresight was unfortunately correct.
By way of guidelines for the court on remand, and without intending to limit the broad jurisdiction of the district court, we submit the following:
On remand, the court should address the child support issue by applying Minn. Stat. § 518.64, subd. 2, and must make a finding on whether there has been a substantial change in circumstances from the December 1999 decree, rendering the original support order of $504 per month unreasonable and unfair. If that finding is made, the court has the discretion to modify support effective November 2000, the date of the motion to modify. The court must make appropriate findings regarding Hendricks's net income available for current child support purposes. Depending on the modification date chosen (not prior to November 2000), the court shall also determine appropriate amounts of child support payable from and after the chosen date of modification. Further, the court must address the issue of responsibility for providing health insurance for the minor children. And last, the issue of the "payments under the temporary order" remains. Did Hendricks make any, some, or all of those $175 per month payments? Did our remand on the issue of "temporary order payments" permit a review of support payments made pursuant to the temporary order?
We do not intend for these guidelines to limit the authority of the court to address other questions raised by the parties. The emotional and financial toll on the parties and their children has already been too high. All involved attorneys, represented parties, pro se parties, CSMs, and the district court must marshal all efforts to finally put all issues to rest. It is time.