Opinion
NO. 2016-CA-000463-ME
06-02-2017
JASMINA EMIC APPELLANT v. AMIR MEHIC APPELLEE
BRIEF FOR APPELLANT: Paul J. Mullins Louisville, Kentucky BRIEF FOR APPELLEE: Karen E. Faulkner Louisville, Kentucky
NOT TO BE PUBLISHED APPEAL FROM JEFFERSON CIRCUIT COURT
HONORABLE DEANA MCDONALD, JUDGE
ACTION NO. 11-J-503016 OPINION
VACATING & REMANDING
** ** ** ** ** BEFORE: JONES, J. LAMBERT, AND MAZE, JUDGES. JONES, JUDGE: Appellant, Jasmina Emic, appeals the Jefferson Circuit Court's order of February 5, 2015, which reduced the child support obligation of Appellee, Amir Mehic. Based on the following, we vacate and remand.
I. BACKGROUND
Jasmina and Amir have one child together, who was born in June of 2011. Both Jasmina and Amir are Bosnian; while Jasmina is able to converse in English, Amir's ability to do so is very limited and he has required the use of an interpreter in all relevant proceedings. The parents have never been married, and no longer have a relationship apart from their shared child. Jasmina commenced a paternity action against Amir in July of 2011 and Amir filed an answer to that petition acknowledging that he was the father of the child. On September 21, 2011, Jasmina filed a motion for child support in which she requested $1,298.00 per month. A temporary child support order was entered on October 25, 2011, which set child support at $700.00 per month.
After a series of temporary orders, Jasmina was granted sole custody of the child with Amir having visitation two days a week. Prior to a final hearing, the parties agreed that Amir's child support obligation would be $1,080.00 per month. At that time, Amir was the owner of Rocky Transportation, a shipping company that provided over-the-road and local truck driving services. Amir's income was not entered into the record at that time; however, Amir's 2012 tax returns are now a part of the record on this appeal. Those records indicate that Amir's gross income in 2012 was $294,832.00, and his net profit for the year was $26,191.00.
On April 20, 2015, Amir moved the court to reduce his child support obligation, stating that he was no longer making the same income and was now unable to make the required monthly payments. This motion was heard on October 6, 2015. At the hearing, Amir testified that when Rocky Transportation had been doing well, he believed that his personal income was somewhere between $34,000 and $40,000 a year. Amir stated that after several years of operating Rocky Transportation, he began to experience business troubles due to repeated issues with miscommunication, caused by the language barrier between him and his clients. Fearing that he would soon have to file bankruptcy, Amir dissolved Rocky Transportation and transferred its business assets to his adult daughter, for no consideration, in December of 2013. Amir's daughter then opened Cardinal Transportations, also a trucking business, for which Amir now works; his daughter apparently runs Cardinal Transportation in addition to working for Norton Hospital, where she is employed as a nurse full-time. Cardinal Transportation employs Amir as a driver and he now only takes in-town runs; he testified that he does so in order to spend more time with his and Jasmina's child. Amir testified that his salary with Cardinal Transportation is $400 per week, no matter what hours he works or how far he travels.
On cross-examination, Jasmina's counsel questioned Amir on an extensive list of vehicles purchased by him and registered in his name. Amir acknowledged that many, if not all, of the vehicles used by Cardinal Transportation are still registered in his name and that he maintained some of the truck loans, but stated that this is because his daughter does not have a commercial driver's license. Amir also testified that many of the vehicles about which he was questioned are no longer in working order. Amir explained that his daughter provided him with money each month to make payments on the vehicles that are still under loans. To support this explanation, Amir tendered the following to the court: a letter from BB&T, dated October 13, 2015, indicating that Cardinal Transportation had set up a payment to come out of its account, payable to Amir, in the amount of $1,991.47; a copy of a check, dated September 30, 2015, from Cardinal Transportation to Amir in the amount of $1,991.47; and the front page of a purchase agreement for a 2014 Volvo truck, which did not indicate the amount of the loan payments.
Jasmina argued that Amir basically voluntarily chose to give his business away to his daughter for no consideration so that he could reduce his child support obligation. She explained that he was basically still performing many of the same tasks he did when he owned Rocky Transportation and that most of Cardinal Transportation's current clients were previous clients of Rocky Transportation. She pointed out that Amir failed to explain why the company was on the verge of bankruptcy and noted that the tax records showed the Rocky Transportation was solvent before Amir dissolved it. He also failed to explain how his current salary was negotiated or explain why he did not seek employment with another trucking company.
Jasmina testified that she had witnessed Amir's constant telephone communications with his children during which he instructed them on which jobs to take and how to handle various aspects of the business. Further, Jasmina's counsel pointed out that Amir had purchased real estate for his mother in 2015 and had been able to co-sign loans for two of his adult children in 2014 and 2015. Additionally, Jasmina's counsel elicited testimony from Amir acknowledging that Amir had purchased a $43,000 car for personal use in 2013, the same year he dissolved the company. Jasmina's counsel argued that Amir would not have been able to do those things if he was, in fact, making the income that he was reporting to the court. To rebut this assertion, Amir submitted an affidavit from his mother, in which she testified that Amir lived in the home with her, that the mortgage on the home is $828 a month, and that she and Amir split the mortgage payments. Amir acknowledged that he did own another house, besides the one shared with his mother. When questioned, Amir stated that he does not remember filling out a loan application or taking out a loan against that house, but knows that he owes money on the house.
On February 5, 2016, the trial court entered an order reducing Amir's child support obligation to $462.00 per month. The court found that Amir had produced sufficient evidence to show that his daughter is the owner/operator of Cardinal Transportation and to show that his income is in line with what he earned following all of the allowances permitted by the federal government and by KRS 403.212 with regard to determining gross income. Accordingly, the court declined to find that Amir was voluntarily underemployed and did not impute any income to him. The court determined that Amir's gross annual income is $20,796.00.
Kentucky Revised Statutes.
Jasmina filed a motion to alter, vacate or amend. The trial court denied the motion. Therein, it acknowledged that it had failed to include the additional $1,991.47 Cardinal Transportation paid to Amir each month, but did so because Amir testified that the trucks were still in Amir's name, as "he was the prior owner of the business, and the daughter provides [Amir] with the necessary amount of money to keep the payments current on the equipment."
This appeal followed.
II. STANDARD OF REVIEW
"[W]hether a child support obligor is voluntarily underemployed is a factual question for the trial court to resolve." Gossett v. Gossett, 32 S.W.2d 109, 111 (Ky. App. 2000). "Findings of fact shall not be set aside unless clearly erroneous, and due respect shall be given to the opportunity of the trial court to judge the credibility of the witnesses." CR 52.01. A finding of fact is "not clearly erroneous if supported by substantial evidence, which is 'evidence of substance and relevant consequence having the fitness to induce conviction in the minds of reasonable men.'" Eagle Cliff Resort, LLC v. KHBBJB, LLC, 295 S.W.3d 850, 853 (Ky. App. 2009) (quoting Owens-Corning Fiberglas Corp. v. Golightly, 976 S.W.2d 409, 414 (Ky. 1998)).
Kentucky Rules of Civil Procedure.
III. ANALYSIS
KRS 403.212(2)(a) defines "income" as "actual gross income of the parent if employed to full capacity or potential income if unemployed or underemployed." (Emphasis added). In turn, gross income is defined as "income from any source." Amir receives $1,991.47 each month from his employer Cardinal Transportation. It is income. Moreover, while Amir testified that he is supposed to use that money to pay the mortgages for equipment still in his name, there is nothing in the record that reflects that he is required to do so. Likewise, there is nothing to suggest that once the equipment is paid off, Amir is required to dispose of it in any particular way. The facts irrefutably establish that Amir receives almost $2,000 per month from his employer each month in addition to his regular salary of $400 per week. Amir failed to produce any evidence to rebut these facts. As such the trial court erred in excluding that amount from Amir's total gross income.
We also conclude that the trial court failed to consider the fact that Amir allows Cardinal Transportation to use equipment titled in his name without any additional compensation from Cardinal Transportation. It would seem that if the facts are as Amir suggests, he should lease the equipment to Cardinal Transportation.
We also believe this case requires some additional consideration by the trial court as to the circumstances which led to Amir's decision to dissolve Rocky Transportation. While Amir testified that Rocky Transportation was on the verge of bankruptcy, nothing in the record indicates that was in fact the case. In fact, Amir testified that other businesses owed him money at the time he decided to the dissolve the company, but nothing suggests that the company was actually in debt or losing money. While the current statute does not require a court to find bad faith on the part of the obligor before making a determination that he is underemployed, it also does not exclude the court from considering the circumstances surrounding a sudden change in employment. Indeed, "[t]rial courts establishing child support [] have the discretion and the duty to scrutinize taxable income and to deviate from it whenever it seems to have been manipulated for the sake of avoiding or minimizing a child support obligation." Snow v. Snow, 24 S.W.3d 668, 672 (Ky. App. 2000).
Based on record, we conclude that the trial court abused its discretion when it failed to consider all the facts and circumstances surrounding Amir's decision to dissolve Rocky Transportation. On remand, the trial court should consider whether Amir performs services for the company in addition to driving, such as: managing the operations and advising his daughter on how to run the company, whether Cardinal Transportation uses equipment owned by Amir without compensating Amir for that use, the amount of compensation Cardinal Transportation pays to Amir in comparison to the amount he could earn on the free market, and the like. The trial court must then balance these factors to determine whether they support a finding that Amir's decision to dissolve Rocky Transportation was motivated in whole or part by a desire to reduce his child support obligation. If so, the trial court should use its discretion to impute a higher income to Amir based on his "potential income" as set forth in KRS 403.212(1)(d). At the very least, as set forth above, the trial court must include the additional $1,991.47 Amir receives monthly from Cardinal Transportation in its calculations.
If necessary, the trial court may conduct further proceedings to explore these issues. --------
IV. CONCLUSION
Based on the forgoing, we vacate and remand to the Jefferson Circuit Court.
LAMBERT, J., JUDGE, CONCURS.
MAZE, JUDGE, CONCURS WITH SEPARATE OPINION.
MAZE, JUDGE, CONCURRING IN RESULT: I agree with most of the reasoning, and the result of the majority opinion, with two caveats. First, I would note that a trial court may find a parent to be voluntarily unemployed or underemployed without finding that the parent intended to avoid or reduce the child support obligation. KRS 403.212(1)(d). Rather, "[p]otential income shall be determined based upon employment potential and probable earnings based on the obligor's...recent work history, occupational qualifications, and prevailing job opportunities and earning levels in the community." Id. While the majority correctly directs the trial court to apply this latter standard on remand, I am concerned that the opinion also suggests that the trial court should consider whether Amir intended to reduce his child support obligation.
Second, the majority opinion also states that the trial court must include the additional $1,991.47 in its calculation of Amir's income. Although Amir transferred the assets of the trucking company to his adult daughter, a number of the trucks and the debts on those vehicles remain in his name. The successor company provides Amir $1,991.47 each month for debt service on those trucks. I would agree this amount must be included as gross income under KRS 403.212, but I am not convinced that it must be included in the trial court's final calculation of his income. If, as Amir testified, that amount must be applied toward the debt service on the trucks, then that amount could be counted as an expense offsetting the income. The majority opinion specifically directs the trial court to consider additional evidence and make necessary findings, but it seems to preclude Amir from supplementing his proof on this issue. The majority also suggests that Amir's testimony was insufficient without supporting documentation. I disagree. While documentation would greatly support his testimony, I do not believe that the trial court was precluded from accepting his testimony without supporting documentation. Since we are sending the whole case back, I would direct the court to reopen all of the proof and make factual findings on all of these issues. BRIEF FOR APPELLANT: Paul J. Mullins
Louisville, Kentucky BRIEF FOR APPELLEE: Karen E. Faulkner
Louisville, Kentucky