Opinion
No. C5-01-557.
Filed September 4, 2001.
Appeal from the District Court, Ramsey County, File No. F9-98-50362.
Patrice M. Rico, (for respondent Dworak)
Susan E. Gaertner, Ramsey County Attorney, Amy A. Anderson, Assistant County Attorney, (for respondent Ramsey County)
Richard E. Prebich, (for appellant)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant Ronald Robert Dicklich appeals from the district court's order modifying his child support obligation, arguing that the district court abused discretion by calculating his net monthly income using his previous year's tax return rather than his current pay stub. Dicklich also argues that the court abused discretion by (1) finding that Dicklich had materially misrepresented his income because he provided respondent Patrice Marie Dworak with copies of his tax returns in May of each year, and only after she requested them, instead of April 15 as required by the court's original support order; (2) retroactively applying the modification order to May 2000 rather than to September 2000, the date Dworak served her motion to modify on appellant; and (3) reserving jurisdiction on whether to retroactively apply its modification order from May 1999 to April 2000.
DECISION
A party may move for review of a magistrate's decision to either the district court or the magistrate who issued the original decision. Minn.R.Gen.Pract. 372.01. Appellant Dicklich moved for review of the magistrate's decision by the district court. This court reviews the district court's decision rather than that of the magistrate. See Minn.R.Gen.Pract. 374.01 (stating party may appeal from order that determines motion for review under rule 372 to this court).
The district court has broad discretion to modify a child-support obligation. Moylan v. Moylan, 384 N.W.2d 859, 864 (Minn. 1986). A reviewing court will not reverse the district court's decision regarding child support unless the decision is an abuse of the district court's discretion. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).
Dicklich does not dispute that he had a substantial change in circumstances that warranted modification of his support obligation. Instead, he challenges the district court's calculation of his net monthly income and the court's retroactive application of the order modifying his support obligation.
I. Net Monthly Income Calculation
A reviewing court will not reverse a district court's determination of net income used to calculate child support if it has a reasonable basis in fact. Hicks v. Hicks, 533 N.W.2d 885, 886 (Minn.App. 1995). The district court must use current income when setting child support. County of Nicollet v. Haakenson, 497 N.W.2d 611, 615 (Minn.App. 1993). But the court may use the obligor's tax returns from the previous year if it determines that the obligor's year-to-date income information is not credible. Id.
In this case, Dicklich's income history demonstrates that he was self-employed as a consultant and lobbyist until July 2000. At that time, he became a partially salaried employee in addition to his consulting and lobbying contracts. The district court, however, chose to use Dicklich's 1999 tax return to calculate his net monthly income. Although Dicklich argues that his net monthly income is less now that he is partially salaried, his income history demonstrates a pattern of increasing income each year. Dicklich also has a history of losing and acquiring various contracts from his lobbying work. Based on these fluctuations, the district court did not abuse discretion by using Dicklich's 1999 tax return to calculate his net monthly income because, according to his income history, his assertion that he is making significantly less after July 2000 may not be credible. Further, if Dicklich does not acquire new lobbying contracts and his tax return reveals that his income did significantly decrease for 2000, he is allowed to move the district court to decrease his child support obligation. See Minn. Stat. § 518.64, subd. 2(a) (2000) (stating child support obligation may be modified if obligor has experienced substantial change in income).
II. Retroactive Application of the Modification Order
Dicklich argues that the district court abused discretion by finding that he materially misrepresented his income because he failed to provide Dworak with his income information by January 31 and a copy of his tax return by April 15. He also argues that the court should not have retroactively applied the modified support obligation to May 1.
Generally, a district court may order retroactive modification of child support only back to the date of service of the party's motion to modify. Minn. Stat. § 518.64, subd. 2(d) (2000). However, retroactive modification can be applied to an earlier period if the district court expressly finds that the party seeking modification was precluded from serving the motion because of another party's material misrepresentation and that the party promptly served the motion when the party was no longer so precluded. Id., subd. 2(d)(1).
A misrepresentation includes "making an affirmative statement that is itself false * * * or not disclosing certain facts that render the facts that are disclosed misleading." Gully v. Gully, 599 N.W.2d 814, 821 (Minn. 1999) (quotation omitted). The misrepresentation is material if it is germane to the alleged conduct and prejudices the party relying on it. Id. An obligor's failure to comply with a district court's order that requires the obligor to provide income information constitutes a material misrepresentation where the obligor's changing financial situation is a matter on which a party could be expected to rely in deciding whether to move to modify the obligor's support obligation. Id. at 822.
The original child support order required Dicklich to provide Dworak with verification of his total monthly income by January 31 of each year and an accurate copy of his previous year's tax return by April 15 of each year. Seemingly, the order's purpose was to ensure that Dworak had accurate information regarding Dicklich's income as he was self-employed and not earning a regular salary from month to month or from year to year. Despite Dicklich's obligation, he failed to comply with the order by not providing Dworak with his income information until May of each year. The information was the means by which Dworak could determine whether to move the district court to modify Dicklich's support obligation because without the information Dworak would have no way of knowing Dicklich's financial situation. Accordingly, the district court did not abuse discretion by finding that Dicklich's failure to provide Dworak with his income information, as specified by the original support order, constituted a material misrepresentation.
Next, we consider whether the district court correctly applied the modified support obligation retroactively to May 1, 2000.
The governing statute grants the district court authority to retroactively apply a modified support obligation if the court expressly finds that (1) there was a material misrepresentation, and (2) the party seeking modification promptly served the motion to modify after the party was no longer precluded from doing so by another party's material misrepresentation. Minn. Stat. § 518.64, subd. 2(d)(1).
According to an affidavit Dworak submitted to the district court, which Dicklich does not dispute, after Dworak received a copy of Dicklich's 1999 tax return in May, she contacted Ramsey County to assist her in moving the court to modify Dicklich's support obligation. Because her motion remained idle, she later contacted a private attorney to help expedite the process. Given these facts, we conclude that Dworak promptly acted to take the necessary steps to serve her motion to modify support, and the district court did not err by retroactively applying the modified support obligation to May 1.
Dicklich also argues that the district court should not have reserved the issue of whether to retroactively apply the modified support obligation to May 1999. We agree. Dicklich's 1998 tax return showed that his gross income was $91,393. His previous year's gross income was $72,838. Accordingly, Dworak was aware of Dicklich's significant increase in income by May 1999. But Dworak did not move to modify Dicklich's support obligation in May 1999, asserting that she relied on a note he wrote to her sometime after that, which read, "When you compute my 1999 income subtract $24,000" because he lost a lobbying contract. She contends that after she received documentation of Dicklich's actual 1999 income in May 2000, she realized that his note was not truthful.
Dworak's argument fails to explain adequately why she did not move to modify in 1999. After receiving verification of Dicklich's income in May 1999, Dworak could have moved the court to modify his support obligation. If, at the end of the following year, Dicklich's income had decreased by $24,000 as Dicklich predicted it would in his letter, Dicklich could have then moved the court to modify his support obligation based on the substantial change in his income. Thus, Dworak failed to demonstrate, and the district court failed to find, a legitimate reason why Dworak was precluded from promptly taking the necessary steps in May 1999 to move for modification of Dicklich's support obligation. Because there is no substantial reason for Dworak's failure to so move after she learned of his substantial increase in income, we conclude that the district court erred by reserving the issue.