Opinion
Docket No. 24139
Filed: September 14, 1998 Reversed. See Humberger v. Humberger, 134 Idaho 39, February 25, 2000.
Appeal from the District Court of the Fifth Judicial District, State of Idaho, Twin Falls County. Hon. Roger S. Burdick, District Judge. Hon. Charles P. Brumbach, Magistrate.
Order of the magistrate modifying child support provision of divorce decree, affirmed in part and reversed in part.
John B. Kugler, Pocatello, for appellant. John B. Kugler argued.
Hollifield and Bevan, Twin Falls, for respondent. William R. Hollifield argued.
Tani Hall, formerly Tani Humberger, appeals from the district court's affirmance of the magistrate's order modifying the child support provision of her divorce decree. The magistrate modified the support payments based on its findings, and the decision was affirmed by the district court in toto. We affirm in part and reverse in part the rulings of the magistrate.
I. FACTUAL BACKGROUND PRIOR PROCEEDINGS
Hall and Tod Humberger were married in December of 1985, and divorced in August of 1987. One child, Brandi, was born as issue of the parties. The divorce decree awarded Hall primary physical custody of Brandi, with Humberger having reasonable rights of visitation. Humberger was ordered to pay $150.00 per month in child support and to maintain medical insurance for the child, while both parties were ordered to split equally medical expenses not covered by insurance. Hall was given the benefit of claiming the child for income tax purposes and the parties were ordered to pay their own attorney fees.
In October of 1995, Hall filed a petition for modification of the divorce decree. In her petition, Hall asserted that Brandi's needs had increased and that her ability to pay support had decreased while Humberger's ability had increased. Thus, Hall claimed a permanent, material and substantial change of circumstances had occurred and modification was therefore justified pursuant to the Idaho Child Support Guidelines (Guidelines). Hall sought an increase in the amount of monthly child support paid by Humberger, modification of the provision in the decree relating to medical expenses unpaid by insurance, and the payment of attorney fees. Humberger filed a response denying his increased ability to pay child support and asserted that Hall was voluntarily unemployed. Humberger agreed that the provision of the decree dealing with the payment of medical expenses not covered by insurance be modified from equal shares to pro rata shares, but disputed Hall's claim for attorney fees and asserted his own request for such fees.
Subsequently, Humberger filed his own petition for modification, seeking to have child support set in accordance with the Guidelines and further requesting that he receive the child dependency exemption. A pretrial conference was held and on July 15, 1996, the parties' cross-motions for modification were tried to the magistrate court. Both parties presented exhibits and testimony in support of their motions. At trial, the magistrate accepted the stipulation of the parties to a new visitation schedule and took the child support issues under advisement.
On July 22, the magistrate issued an order and opinion increasing Humberger's child support obligation from $150.00 per month to $253.00 per month, and ordered each party to pay his or her own attorney fees and costs. The court further ordered annual re-evaluations of Humberger's child support obligation due to the unpredictable nature of his employment and income. Humberger was also awarded the child dependency exemption for income tax purposes.
Humberger is employed as a journeyman electrician. Hall brought the modification proceeding because Humberger had recently changed his status from an apprentice to a journeyman electrician, which resulted in an increase in his income.
On September 20, 1996, Hall filed a motion for relief to set aside the court's order on the ground that it was unjust and also requested the opportunity to present oral argument. The magistrate denied the motion without holding a hearing.
Hall filed a notice of appeal asserting that the magistrate erred in determining the parties' individual incomes, in awarding the tax exemption to Humberger, in denying her request for attorney fees, and in denying her motion for relief from the court's order. The district court heard oral argument and thereafter issued an opinion on July 23, 1997, affirming the magistrate's order and opinion. Hall again appealed.
II. STANDARD OF REVIEW
This Court reviews the decision of a magistrate independently of the district court sitting in its appellate capacity, but with due regard for its ruling. Noble v. Fisher, 126 Idaho 885, 888, 894 P.2d 118, 121 (1995). The magistrate's findings of fact are upheld if they are supported by substantial and competent evidence, Ireland v. Ireland, 123 Idaho 955, 958, 855 P.2d 40, 43 (1993), while the magistrate's conclusions of law are upheld if they follow from these findings. Rohr v. Rohr, 126 Idaho 1, 3, 878 P.2d 175, 177 (Ct.App. 1994). If the findings are not supported by the evidence, an abuse of discretion has occurred. Id.
The modification of a divorce decree provision for child support is a two-step process. First, the party seeking modification must demonstrate that a modification is warranted by "a substantial and material change of circumstances." I.C. § 32-709. Once this showing has been made, the court must then determine the amount of the modification, considering all relevant factors contained in I.C. § 32-706 and the Guidelines. Here, because neither party challenges the magistrate's finding that material and substantial changes of circumstance warranted modification of the divorce decree, we address only whether the magistrate abused his discretion in determining the amount of support allocable to each party.
An abuse of discretion occurs when the trial court exercises its discretion without giving consideration to relevant factual circumstances. Rohr v. Rohr, 128 Idaho 137, 141, 911 P.2d 133, 137 (1996). The standard for determining whether the court abused its discretion is a three-prong test: (1) whether the trial court properly perceived the issue as one of discretion; (2) whether the trial court acted within its discretion and consistent with legal standards applicable to the specific choices made; and (3) whether the trial court reached its decision through an exercise of reason. Id.
III. ANALYSIS A. Voluntary Unemployment
Hall asserts that the trial court abused its discretion in determining that she was voluntarily unemployed and in disregarding her status as a full-time student. Specifically, Hall argues that because Humberger failed to meet his burden of demonstrating that she was voluntarily unemployed, the trial court erred in imputing income to her on this basis. In addition, Hall argues that the court abused its discretion in failing to set forth the basis for its finding that she was voluntarily unemployed and for refusing to recognize her student income and status pursuant to Idaho Child Support Guideline § 6(c)(1)(B).
Hall was employed as a waitress for a cumulative period of ten years, both during her marriage to and after her divorce from Humberger. When Hall lost her job as a waitress and could not find employment sufficient to provide for herself and her two children, she decided to seek a college degree. Hall testified that she was a full-time student pursuing a career in vocational education and that she would complete her degree in two years and would thereafter be earning $20,000 to $25,000 per year. Although Hall worked as a survey and drafting technician in the summer of 1995 for $7.00 per hour, she testified that she did not seek employment in the summer of 1996 because she had secured a job as a student aid at Marsh Valley High School in the fall. As a student aid, Hall testified that she would work from 8:00 a.m. to 4:00 p.m. Monday through Friday while attending night classes Monday, Tuesday and Thursday nights from 6:00 p.m. to 9:00 p.m. Although Hall will not be compensated for her work as a student aid, she would receive credit toward her degree. In 1996, Hall received approximately $2,700 in educational grants.
Hall is currently remarried and also has a son from a second marriage.
On the basis of Hall's testimony, the magistrate concluded: "The plaintiff admits to being voluntarily unemployed in order to pursue her education . . . . It is the finding of this court that plaintiff is voluntarily unemployed and has potential income of $7.00 an hour for 50 weeks a year." Hall argues that the trial court disregarded her student status and abused its discretion in determining that she was voluntarily unemployed and imputing full-time draftsman income to her on this basis.
The magistrate relied on section 6(c) of the Guidelines, which provides guidance for determining whether a parent is voluntarily underemployed or unemployed, and if so, whether a trial court should impute income to that parent.
If a parent is voluntarily unemployed or underemployed, child support shall be based on gross potential income, except that potential income should not be included for a parent that is physically or mentally incapacitated. A parent shall not be deemed underemployed if gainfully employed on a full-time basis at the same or similar occupation in which he/she was employed for more than six months before the filing of the action or separation of the parties, whichever occurs first. Ordinarily, a parent shall not be deemed underemployed if the parent is caring for a child not more than 6 months of age. Determination of potential income shall be made according to any or all of the following methods, as appropriate:
(A) Determine employment potential and probable earnings level based on the parent's work history, occupational qualifications, and prevailing job opportunities and earnings levels in the community.
(B) Where a parent is a student, potential monthly income during the school term may be determined by considering student loans from any source.
(emphasis added). This section, however, provides no guidance for determining whether a parent who seeks a higher education is voluntarily underemployed or unemployed for purposes of calculating child support obligations.
In Ireland v. Ireland, 123 Idaho 955, 855 P.2d 40 (1993), the Idaho Supreme Court reviewed the trial court's decision to impute full-time income to the ex-wife on the basis of its finding that she was voluntarily underemployed. The ex-wife had held a number of part-time and temporary jobs since her divorce. She was within two semesters of receiving an associate degree in drafting, possessed an inactive real estate license and had done some work as an apprentice drafter, earning up to $7.00 per hour. A vocational evaluator testified that after meeting with the ex-wife and becoming familiar with her skills, and on the basis of job opportunities and earnings levels in the Boise area, she was capable of earning $8.75 as an apprentice drafter. The Supreme Court affirmed the trial court's finding that the ex-wife was voluntarily underemployed, concluding that such finding was supported by substantial and competent evidence.
Ireland is distinguishable from the instant case. Hall is foregoing employment in order to obtain an education to enhance her career marketability and income, whereas the ex-wife in Ireland was simply foregoing steady employment. In addition, a vocational evaluator was called to testify in Ireland regarding the ex-wife's ability to obtain employment in light of job opportunities and earning levels in the Boise area for a person with her skills. Here, Humberger failed to present any testimony that Hall would actually be able to obtain full-time employment as a survey technician or that she could earn $7.00 per hour; nor was there other testimony or proof to demonstrate that Hall could actually obtain such a job.
Other jurisdictions that have addressed this issue have employed a generalized framework to determine whether a parent's decision to return to school either warrants a temporary decrease in the parent's child support obligation or renders the parent voluntarily unemployed and therefore entitled to no decrease. Under this framework, courts look to whether the temporary reduction will be in the best interest of the children, with a focus on whether the children will reap any benefits from the parent's education through the parent's increased earning ability and concomitant ability to eventually make a larger contribution toward the child's support. See Overbey v. Overbey, 698 So.2d 811, 814-15 (Fla. 1997); Ledbetter v. Bell, 698 So.2d 1272, 1273 (Fla.Dist.Ct.App. 1997); McDaniel v. McDaniel, 670 So.2d 767, 771 (La.Ct.App. 1996); Louisiana v. Flintroy, 599 So.2d 331, 334 (La.Ct.App. 1992). In addition, under this framework, a parent's decision to end employment in favor of obtaining a higher education must be made in good faith and not for the purpose of avoiding support obligations, and the action must not deprive the children of continued reasonable financial support. Massingill v. Massingill, 564 So.2d 770, 772 (La.Ct.App. 1990); Daigre v. Daigre, 527 So.2d 9, 11 (La.Ct.App. 1988).
Under this analysis, Hall's decision to return to school could eventually benefit Brandi. According to the magistrate's child support calculation sheet, Brandi was born in January of 1985 and was eleven years old at the time of this action. Based on Hall's testimony, her projected date of graduation is the summer of 1998. By this time, Brandi will be thirteen years old and could benefit from Hall's increased earning capacity for at least five years. Moreover, the trial court could still obligate Hall to provide some reasonable measure of support for her daughter. Hall was not employed during the summer of 1996, even though she was not attending school on a full-time basis; nor was she was employed for pay during the school year. Because Hall is employable and has some job skills, the court would certainly have discretion to allocate to her some contribution for the support of Brandi by working part-time during the school year and full-time during the summer.
We hold that the magistrate erred in concluding Hall was voluntarily unemployed solely on the basis of her full-time educational pursuits. Furthermore, there is insufficient factual support for the magistrate's conclusion that Hall could earn $7.00 per hour as a full-time survey technician. Hall was employed in that capacity for only one summer, while she was employed as a waitress for a cumulative ten-year period.
Accordingly, we reverse the magistrate's finding that Hall was voluntarily unemployed and capable of earning $7.00 per hour for fifty weeks a year and remand the case for the trial court to re-evaluate the evidence, take additional evidence if necessary, and make appropriate findings and conclusions consistent with the views expressed herein.
B. The Trial Court Did Not Abuse Its Discretion In Calculating Humberger's Adjusted
Gross Income 1. The trial court did not abuse its discretion in permitting Humberger to adjust his 1995 income for a child born in 1996
Since Humberger's income as a journeyman electrician was irregular and unpredictable, the magistrate utilized his 1995 income as the basis to calculate his new support obligation which took effect in 1996. Hall argues that this ruling imposes a concomitant limitation on Humberger's deductions to those existing in 1995, and that the court abused its discretion in adjusting his 1995 income for a child born in 1996.
In determining gross income for purposes of calculating a parent's child support obligation, the Guidelines explicitly permit deduction for other children living in the parent's home.
Because the custodial parent's share of support is presumed to be spent directly on the child a deduction shall be allowed from Gross Income when a natural or adopted child of another relationship resides in the home of either parent. The deduction shall be the Guideline support amount calculated for that child, using only that parent's income.
I.C.S.G. § 7(3) (footnote omitted). Pursuant to this Guideline, the trial court deducted from Humberger's 1995 gross income the support expenses for a child he had with his new spouse in 1996.
Hall's challenge to the court's decision to deduct Humberger's 1996 child support expenses from Humberger's 1995 gross income is without merit. The trial court modified Humberger's child support obligation in July of 1996. At that time, Humberger's child was three months old and Humberger and his new spouse were responsible for the support and care of the child. It would make little sense for the court to deny Humberger a deduction for the expenses he actually incurred in supporting his child. Cf. Levin v. Levin, 122 Idaho 583, 589, 836 P.2d 529, 535 (1992) ("a retroactive award of child support may be proper where expenses have actually been paid or incurred."). Given the unpredictable nature of Humberger's income, the court did not abuse its discretion in utilizing his 1995 income for the purpose of calculating his child support obligation, while deducting expenses for a child born in 1996.
2. The trial court did not abuse its discretion in deducting trade-related expenses from Humberger's gross income
Hall claims that the trial court abused its discretion in deducting business-related expenses from Humberger's gross income in calculating child support. Specifically, Hall asserts that these expenses did not qualify as business expenses because Humberger neither operated his own business nor was self-employed, the only possible bases by which he could deduct business-related expenses in accordance with the plain language of I.C.S.G. § 6(a)(2).
The trial court relied on Humberger's 1995 tax returns, including Federal Income Tax Form 2106 entitled "Employee Business Expenses," to calculate and deduct Humberger's work-related expenses from his gross income. These expenses included out-of-pocket travel, lodging, tools and supplies that Humberger incurred during the course of his employment for which he was not reimbursed. The Guidelines explicitly permit the exclusion of such expenses for purposes of calculating gross income: "For rents, royalties, or income derived from a trade or business (whether carried on as a sole proprietorship, partnership, or closely held corporation), gross income is defined as gross receipts minus ordinary and necessary expenses required to carry on the trade or business or to earn rents and royalties." I.C.S.G. § 6(a)(2) (emphasis added).
Here, the court deducted from Humberger's gross income the "ordinary and necessary expenses" required to carry on his trade as an electrician. Humberger testified that if he had declined to travel from his Twin Falls residence to Boise, Sun Valley and Hailey for employment, he would not have been employed during those periods; rather, he would have had to wait for a position to come open within his area. Humberger further testified that he was required to purchase, at his own expense, hand tools and other supplies necessary for the performance of his trade. In this context, these expenses clearly qualify as the "ordinary and necessary expenses required to carry on the trade." Thus, the district court did not abuse its discretion in deducting these expenses from Humberger's gross income.
C. The Trial Court Abused its Discretion in Awarding Humberger the Child Dependency Exemption Without Accounting For The Benefit In The Child Support Award
Hall argues that the magistrate's decision to give Humberger the benefit of the child dependency exemption for tax purposes was not supported by substantial and competent evidence. In the original divorce decree and until the magistrate's order was issued, the child dependency exemption was assigned to Hall. However, evidence presented at trial established that Hall earned minimal income while Humberger earned approximately $40,000 per year. On this basis, the trial court granted Humberger's request for the child dependency exemption, determining that Humberger would benefit from the exemption while Hall would not earn enough income to justify filing an income tax return and therefore the tax exemption would be a meaningless benefit to her.
At the time the trial court reassigned the child dependency exemption from Hall to Humberger, section 8(b) of the Guidelines provided that "[t]he actual federal and state income tax benefits recognized by the party claiming the Federal Child Dependency Exemption should be considered in making a child support award." I.C.S.G. § 8(b) (1996) (emphasis added). In addition, I.C. § 32-706 (1996) provided that for the purpose of calculating child support, the court must consider all factors, which may include "[t]he actual tax benefit recognized by the party claiming the federal child dependency exemption." See also Rohr v. Rohr, 118 Idaho 689, 697, 800 P.2d 85, 93 (1990) (because the federal tax exemption impacts the financial resources of the parties, a court must consider the financial effect of assigning the exemption as a factor affecting the financial resources, need, and obligations of both the custodial and noncustodial parents.)
In relevant part, section 8(b) of the Guidelines was amended in 1998 to provide as follows: The parent not receiving the exemption(s) is entitled to a pro rata share of the income tax benefit in proportion to his/her share of guidelines income. The pro rata share of the income tax benefit will be either a credit against or in addition to the basic child support obligation and shall be included in the child support order. Section 8(b) (as amended) also advises the court to assign the benefit to the party deriving the greater benefit from the exemption and contains a table to assist the court in determining which parent would realize the greater benefit.
A review of the record indicates that the court did not consider the financial ramifications of assigning the exemption to either party. After finding that Hall would receive no benefit from the exemption, the court simply reassigned the benefit to Humberger without considering the actual financial benefit that inured to Humberger. Moreover, the trial court did not account for the exemption in calculating the parties' child support obligations. The court's failure to consider the reassignment in modifying and calculating the child support award constitutes an abuse of discretion. Accordingly, we reverse and remand for further findings with respect to the financial impact of the reassignment.
D. Hall's Failure To Challenge The Trial Court's Decision Ordering The Child Support Modification To Take Effect One Month After Humberger's Motion Was Filed Precludes Her From Challenging The Effective Date For The First Time On Appeal
For the first time, on appeal to this Court, Hall argues that the trial court abused its discretion in failing to require the modification to take effect on October 19, 1995, the date she filed her petition for modification. The Idaho Supreme Court has previously held that if a petition for modification is granted, the modification is effective as of the date the motion was filed. See Rohr v. Rohr, 128 Idaho 137, 142, 911 P.2d 133, 138 (1996). Here, however, the trial court ordered that the modification begin the first day of the month after Humberger's motion for modification was filed, over eight months after Hall filed her initial petition. Nevertheless, we decline to address this argument because there is nothing in the record to indicate that Hall raised this issue either in the proceedings before the magistrate or on her intermediate appeal to the district court. See, e.g., State v. Smith, 130 Idaho 759, 763, 947 P.2d 1007, 1011 (Ct.App. 1997).
We note that the trial court's use of the improper date may have been a clerical error. Clerical errors "may be corrected by the court at any time of its own initiative or on the motion of any party and after such notice, if any, as the court orders." I.R.C.P. 60(a).
E. The Trial Court Did Not Err In Denying Hall's I.R.C.P. 60(b) Motion Without Holding A Hearing
Hall asserts that the trial court abused its discretion in summarily denying her motion to vacate the modification order. She argues that because she specifically requested the opportunity to present oral argument on the motion, the court abused its discretion in failing to schedule a hearing or give notice that it would not allow one. Hall has failed to make her I.R.C.P. 60(b) motion and the order denying the same part of the record on appeal. It is with this limitation that we address Hall's challenge.
Humberger states that Hall did not schedule a hearing or submit a brief in support of her Rule 60(b) motion. In the absence of a record on this point and because Hall does not dispute Humberger's allegation, we presume that Humberger's assertion is correct. A Rule 60(b) motion is one for relief from a final judgment, order or proceeding. There is nothing in the record to indicate the basis upon which Hall filed her Rule 60(b) motion.
Although Hall requested oral argument, Rule 7(b)(3) of the Idaho Rules of Civil Procedure provides that if a party requests argument on any motion, "the court may, in its discretion, deny oral argument by counsel by written or oral notice to all counsel before the day of the hearing . . . ." Here, the court did not give advance notice because no hearing had been scheduled by Hall. This rule does not require the trial court to schedule a hearing and then give notice to the parties that such hearing is denied. Thus, the trial court did not abuse its discretion in denying Hall's motion without first scheduling or holding a hearing.
F. The Trial Court Abused Its Discretion In Denying Hall's Request For Attorney Fees Without Making Appropriate Findings
Hall asserts that the magistrate abused his discretion by refusing to permit argument on the issue of attorney fees and by failing to set forth his reasoning for denying her request for fees. Idaho Code § 32-704(3) authorizes a trial court to award attorney fees in post-divorce proceedings.
The court may from time to time after considering the financial resources of both parties and the factors set forth in section 32-705, Idaho Code, order a party to pay a reasonable amount for the cost to the other party of maintaining or defending any proceeding under this act and for attorney's fees, including sums for legal services rendered and costs incurred prior to the commencement of the proceeding or after entry of judgment.
The decision to award attorney fees is discretionary and absent an abuse of that discretion, a trial court's denial of attorney fees will not be disturbed on appeal. Antill v. Antill, 127 Idaho 954, 958, 908 P.2d 1261, 1265 (Ct.App. 1996). In determining whether to make an award of attorney fees in post-divorce decree proceedings, the financial resources of the parties must first be considered. Then the factors under I.C. § 32-705 must be considered and applied. Id.
At the modification hearing, Hall's attorney raised the issue of attorney fees and attempted to present evidence and testimony in support of such an award. However, when Hall's counsel attempted to inquire into Humberger's assets for the purpose of establishing his ability to pay attorney fees, the following exchange occurred:
COURT: Are we, are we, just a minute, are we in the middle of a divorce case?
MR. KUGLER [Hall's attorney]: We are, your honor.
COURT: I thought the parties were divorced.
MR. KUGLER: They are, your honor. This is a modification proceeding which [sic] we seek attorney fees.
COURT: Oh, are you trying the case on attorney fees?
MR. KUGLER: That is, were, that is correct, your honor. We're entitled to show what he has by way of assets as an ability to pay.
COURT: Pay what?
MR. KUGLER: Pay the attorney fees and costs.
COURT: Well, let's move on and skip that issue cause right now what we're talking about is child support.
MR. KUGLER: And with reference to the child support, your honor, I believe I have that done and I'll, I will end my questioning there.
This exchange indicates that the trial court did not permit Hall's counsel to continue with his questioning. Subsequently, in a written order, the trial court denied Hall's request for attorney fees without explanation and ordered each party to pay his or her own attorney fees.
In the Antill case, 127 Idaho at 959, 908 P.2d at 1266, we held that when a trial court denies a motion for attorney fees, it must make specific findings on the factors set forth in I.C. § 32-705. Here, the court did not make any findings with respect to the denial of Hall's request for attorney fees. We agree with Hall that the trial court's refusal to permit counsel to pursue the attorney fees issue and subsequent failure to set forth the reasons for denying attorney fees constituted an abuse of discretion and, accordingly, we remand for further consideration.
G. Attorney Fees On Appeal
Finally, Hall requests attorney fees on appeal should she prevail on any of the issues raised herein. We find that Hall is the prevailing party, but decline to award fees under I.C. § 32-704 in our appellate capacity. The Idaho Supreme Court has expressed a policy of generally leaving it to the trial court to make orders under this statute as necessary to provide one party with the means of prosecuting or defending an appeal. McNett v. McNett, 95 Idaho 59, 501 P.2d 1059 (1972); Tolman v. Tolman, 93 Idaho 374, 461 P.2d 433 (1969). Whether an award of attorney fees for appeal should be made, and if so, the amount, are issues addressed to the sound discretion of the trial court. Losee v. Losee, 91 Idaho 77, 415 P.2d 720 (1966); See also Wilson v. Wilson, 98.14 I.S.C.R. 581 (Idaho Supreme Court, June 30, 1998). Since the issue of attorney fees is being remanded for redetermination by the trial court, it may also consider Hall's application for fees on appeal.
IV. CONCLUSION
For the reasons set forth, we affirm in part and reverse in part the magistrate's findings and remand for further proceedings consistent with this opinion. Costs are awarded to appellant Hall pursuant to I.A.R. 40.
Chief Judge LANSING and Judge PERRY, CONCUR.