Opinion
No. 34626-5-II.
October 9, 2007.
Appeal from a judgment of the Superior Court for Pierce County, No. 04-3-04172-3, Katherine M. Stolz, J., entered March 24, 2006.
Affirmed by unpublished opinion per Quinn-Brintnall, J., concurred in by Armstrong and Hunt, JJ.
Michael Bort appeals from a decree of dissolution ending his 20-year marriage to Kimberly Bort. On appeal, Michael challenges the trial court's imputation of income, distribution of community debts, and award of attorney fees. We affirm.
We use the parties' first names for clarity.
FACTS
Michael and Kimberly were married in 1986. Michael worked with his father in the family business, Bort Sons Construction. Michael began his own concrete construction business during the marriage, but continued to do work for Bort Sons. By 2002, Michael and Kimberly's marriage had deteriorated. On more than one occasion, Michael was incarcerated for assaulting Kimberly and he repeatedly violated no-contact orders.
Kimberly petitioned for dissolution of their marriage and, on January 26, 2005, a Pierce County Superior Court Commissioner entered a temporary order restraining Michael from contacting Kimberly in person or by telephone. In lieu of maintenance and child support, the temporary order also provided that all business income be sent to Kimberly. Kimberly was to give Michael 25 percent of the amounts received and use the rest to support herself and the couple's two children, a boy, then age 12, and a girl, then age 10. Kimberly received a few checks which she handled as the temporary order directed. Then all income stopped.
The order required that Kimberly keep detailed records of the amounts spent.
In April 2005, Michael went to the front porch of the couple's Gig Harbor home threatening to kill himself. He was arrested for violating a no-contact order and incarcerated in the Pierce County Jail until June when his parents posted bail. In September, Michael pleaded guilty to felony violation of the no-contact order and harassment and was sentenced to 15 months. Because he was still serving this sentence when the dissolution trial commenced on February 9, 2006, Michael attended the hearing by telephone.
The trial lasted four days. On March 24, 2006, the trial court dissolved the couple's 20-year marriage, entered a permanent restraining order, and restored Kimberly's maiden name. The decree also distributed the couple's assets, the greatest of which was $83,527.52 from the proceeds of the sale of the family home, which had been deposited in the court's registry.
The court declined to enter a parenting plan until Michael was released from jail and a parenting investigation and psychological reports had been completed.
The decree required that the following be paid from the registry funds:
a. IRS $12,000 b. Children's medical bills $ 1,200 c. Kimberly's father's loan $ 8,300 d. Sterling Savings Bank $ 3,000 e. Court Registry Reserve Fund for guardian ad litem and psychologists $ 5,000 f. Filing fee for dissolution $ 120 Total Debts $29,684.86 Balance $53,842.66 Amount to Wife $29,613.46 Amount to Husband $24,229.20 The court then deducted the following from Michael's share of the proceeds: $1,000 for Kimberly's attorney fees at the temporary hearing; $2,000 for attorney fees for the dissolution trial; and $18,937.20 child support from January 1, 2005 through March 31, 2006. Child support was set at a rate of $1,262.48 per month after imputing Michael's income at $6,000 per month.The court required that Kimberly pay her own credit card debt and any amounts due on the Mitsubishi Lancer, which had been totaled in an earlier accident. And that Michael pay his own credit card debt, the Corliss debt, and any amounts due on a dump truck.
The court also awarded various items of personal and separate property to each spouse which are not at issue in this appeal.
Michael filed a timely appeal in which he challenges: (1) the court's imputation of his income for purposes of computing child support; (2) the start date for child support; (3) the court's distribution of community liabilities; and (4) the decision to award Kimberly her attorney fees and costs.
Kimberly does not respond to this appeal.
ANALYSIS
Child Support
We review a trial court's decision setting child support for abuse of discretion. In re Marriage of Fiorito, 112 Wn. App. 657, 663-64, 50 P.3d 298 (2002). A trial court abuses this discretion only when its decision is manifestly unreasonable or based on untenable grounds. Fiorito, 112 Wn. App. at 663-64.
Michael argues that the trial court abused its discretion here by incorrectly determining his income and by making the final order of child support retroactive. On the facts of this record, we disagree.
The trial court found:
[T]hat the father became voluntarily underemployed prior to his incarceration. When father was incarcerated in 2002, it was uncontroverted that when father was released he got $30,000.
Clerk's Papers (CP) at 292.
Orally the court found: "whether Mr. Bort is incarcerated or not, he has the ability to generate a substantial income." Report of Proceedings (RP) (February 15, 2006) at 263.
RCW 26.19.071(6) specifically provides:
The court shall impute income to a parent when the parent is voluntarily unemployed or voluntarily underemployed. The court shall determine whether the parent is voluntarily underemployed or voluntarily unemployed based upon that parent's work history, education, health, and age, or any other relevant factors. A court shall not impute income to a parent who is gainfully employed on a full-time basis, unless the court finds that the parent is voluntarily underemployed and finds that the parent is purposely underemployed to reduce the parent's child support obligation. Income shall not be imputed for an unemployable parent. . . . In the absence of information to the contrary, a parent's imputed income shall be based on the median income of year-round full-time workers as derived from the United States bureau of census, current populations reports, or such replacement report as published by the bureau of census.
Michael argues that, because he was incarcerated for a crime other than failure to pay child support, the trial court could not find that he was "voluntarily unemployed" within the meaning of the child support statutes and was required to set child support in light of his actual earned income which he testified was $20.58 per month. In re Marriage of Blickenstaff, 71 Wn. App. 489, 859 P.2d 646 (1993). We agree with the trial court that Blickenstaff does not control the proper computation of Michael's support obligation.
First, Michael reads Blickenstaff too broadly. Nothing requires a trial court to determine a father's or mother's income solely on earned income or turn a blind eye to financial assets and income from other sources, like investments, royalties, or parents who continue support even when the recipient is incarcerated. Although Michael was surely incarcerated for a crime other than failure to pay child support, the record supports the trial court's conclusion that Michael has sources of income, notably his interest in Bort Sons Construction, which continued to pay his bills while he was incarcerated. It is undisputed that while Michael was incarcerated in 2002, he continued to have an income stream and received $30,000 on his release. The record also shows that after entry of the January 2005 temporary order requiring Bort Construction's checks be paid to Kimberly, Michael ceased receiving checks from those for whom he worked, that he did work during the period of time preceding his incarceration, that he routinely did work for cash that was not reported to the Internal Revenue Service (IRS), that his financial debts were paid, that he took a vacation after the couple's separation, and that he stated he would not pay support to Kimberly for support of the couple's children.
Blickenstaff dealt with a child support modification order, but we agree with Michael that for these purposes there is no material distinction between a child support order and a modification of such an order.
Here, the record supports the trial court's finding that Michael was voluntarily underemployed prior to being incarcerated. But in imputing Michael's income at $6,000 per month, the court relied on income received four years earlier during 2002, when he was incarcerated for two of those months. Ordinarily such evidence, if rebutted, would be insufficient to support setting Michael's monthly gross income at $6,000. But we agree with the trial court that no credible rebuttal evidence was presented here.
During trial, in response to his own and opposing counsel's questions regarding income or expenditures, Michael repeatedly stated that he did not know, could not recall, or did not remember details of his financial dealings.
For example, the following exchange occurred when Michael was questioned about his employment after entry of the temporary order:
There was a court order in January of 2005. Between that court order and April 11th, 2005, when you were arrested, did you receive any funds? [Michael]: I haven't received any checks.
RP (February 13, 2006) at 115 (emphasis added).
And when asked how often he worked for Bort Sons Construction in the spring of 2005, Michael indicated that the only job he had done was the Admiral job for which he received a check for $3,000. Counsel then pointed out that Michael was arrested in April of 2005, and asked whether he had been working "say between January and April of 2005." RP (February 13, 2006) at 116. Michael then stated, "Yes. I had a few jobs." RP (February 13, 2006) at 116 (emphasis added). He did not specify the jobs or amounts earned. His attorney then asked him if he had ever done a job for Valley Construction. He admitted that he had, but claimed that he had not billed them "completely." RP (February 13, 2006) at 117. When asked when he did the Valley Construction job, Michael replied that he was not sure the job was even completed and did not remember when he began work on the job.
Michael claimed that he was owed $5,300 for the Admiral job. He gave the check for $3,000 to Kimberly after his counsel told him that the court order required he do so. Admiral stopped payment on the check resulting in the overdraft to Sterling Savings Bank.
Later Michael testified that a utility trailer and a horse trailer which Bort Construction used were located at a Valley Construction work site.
Michael knew that his defense attorney in the criminal case was paid and he claimed that he personally paid the attorney fees, but he did not know how much the bill was. Michael did not remember whether he made any of the mortgage payments on the family home, but did vaguely remember saying in a declaration filed in May of 2005, that he would be back at work when released from jail and would do whatever he had to do to save the family home. He did not know whether he had auto insurance on his personal car or on his dump truck. He had no value for his business, Bort Construction. Michael testified that, when he worked, he got paid and that he expected to continue working for Bort Construction and Bort Sons when he was released. He testified that his current income was $20.58 a month. Michael confirmed that he sometimes worked cash jobs, but disputed Kimberly's testimony that his income from cash jobs ranged from $20,000 to $35,000, saying that most businesses needed the write-off and would be foolish to give that kind of money out and not get anything back for it. But he did not indicate another amount he thought he might have earned from these cash jobs.
On cross-examination, Michael admitted that he had done jobs in Bellevue, Auburn, and Federal Way. In addition, he stated that he did not know the amount of the community indebtedness, and he did not remember authorizing the sale of the family home.
After hearing this testimony, the trial court understandably found Michael's testimony incredible. Moreover, the trial court determined that the $30,000 annual income declared to the IRS was about one-third of the actual. It based this conclusion on a review of the evidence of the couple's expenses incurred during the marriage which included about $2,900 for housing expenses for first and second mortgages, taxes, and insurance.
The court then made a 45 to 55 percent division of the assets. Michael received $20,300 in cash and $13,000 in kind, including the dump truck and other tools, while Kimberly received $36,200 in cash and $4,500 in kind.
In short, the record indicates that Michael and Kimberly lived well beyond their stated means, falsified tax returns, and routinely received income and funds from Michael's parents. Moreover, the fact that his bills are paid up and current suggests that Michael continues to receive income. Other than the $20.58 he was earning while incarcerated, Michael provided no credible evidence of the amount of his income or personal expenses and little evidence of the amount of debt. On this record, therefore, we cannot say that the trial court abused its discretion in imputing Michael's income in an amount similar to that established in 2002 when Michael, although incarcerated, had received income sufficient to satisfy the expenditures the uncontroverted evidence showed that the couple continued to make during the intervening years. On this record, and in the absence of competent evidence to the contrary, the trial court did not abuse its discretion in setting Michael's support contribution for his two teenaged children at $1,262.48 per month.
Retrospective Child Support
Michael also claims that the trial court erred by requiring that he pay child support commencing in January 2005, the date of the temporary order. Section 3.2 of the order, entitled "Temporary Relief," directed the husband to pay $4,300 per month starting January 2005, through the Washington State Child Support Registry, and is initialed by Kimberly ("KB"). CP at 50. Both this section and the following language, "Child support shall be paid in accordance with the order of child support, signed by the court," had been crossed out. CP at 50. Nonetheless, the temporary order was intended to provide support for Kimberly and Michael's children. Section 3.4, "OTHER," provides: "All business income to be sent to wife (who shall keep detailed records). She shall give him 25%. No visitation until alcohol evaluation to be sent to wife and reviewed by court. Mother shall temporarily have full placement and decision making of the children." CP at 51.
In child support modification proceedings, the law prohibits retroactive modification because it opens the door to uncertainties, costs, and hardship. In re Marriage of Schumacher, 100 Wn. App. 208, 212, 997 P.2d 399 (2000). Cf. In re Marriage of Ortiz, 108 Wn.2d 643, 648-49, 740 P.2d 843 (1987). Michael argues that the principles that prohibit trial courts from retroactive modification of child support should apply equally to a retroactive award of permanent child support.
Although uncertainties, costs, and hardships are similar in modification and initial permanent child support circumstances, they are not identical. In modifications, the custodial parent is already receiving support or the obligor parent is paying some support and seeks only to modify that amount to reflect a change in circumstances warranting a change in the amount of the support. It seems to us that the initial setting of child support is similar to a finding of paternity and the initial setting of a support obligation as in the Uniform Parentage Act, chapter 26.26 RCW. The Uniform Parentage Act contemplates liability for past support which was not provided.
RCW 26.26.130(3) provides:
The judgment and order shall contain other appropriate provisions directed to the appropriate parties to the proceeding, concerning the duty of current and future support, the extent of any liability for past support furnished to the child if that issue is before the court, the furnishing of bond or other security for the payment of the judgment, or any other matter in the best interest of the child. The judgment and order may direct the father to pay the reasonable expenses of the mother's pregnancy and confinement. The judgment and order may include a continuing restraining order or injunction. In issuing the order, the court shall consider the provisions of RCW 9.41.800.
And RCW 26.26.130(5) states:
Support judgment and orders shall be for periodic payments which may vary in amount. The court may limit the father's liability for the past support to the child to the proportion of the expenses already incurred as the court deems just. The court shall not limit or affect in any manner the right of nonparties including the state of Washington to seek reimbursement for support and other services previously furnished to the child.
In State v. Base, 131 Wn. App. 207, 126 P.3d 79 (2006), Division Three of this court addressed a trial court's application of equitable principles to limit the State's request for reimbursement of support provided to a child born out of wedlock following a "one night stand." The putative father had been unaware of the child's existence and did not credit his ex-wife's report that she had seen a child that looked exactly like him. Accordingly, the trial court limited the father's liability for support of his child to the date he first received the state's summons in the paternity action rather than the five-year time limit set out in the reimbursement statute, RCW 26.26.134. That statute provides:
A court may not order payment for support provided or expenses incurred more than five years prior to the commencement of the action. Any period of time in which the responsible party has concealed himself or avoided the jurisdiction of the court under this chapter shall not be included within the five-year period.
RCW 26.26.134.
The temporary order here did not characterize the unspecified award as maintenance or child support. Additionally, it did not set a specific support award amount. Instead, it fashioned the award as a percentage of gross income from Michael's business. Michael neither appealed nor complied with the temporary order. At the insistence of his counsel, he did give Kimberly one check from Admiral for $3,000, which she deposited and withdrew according to the terms of the temporary order. But Admiral put a stop payment on that check and Kimberly incurred overdraft debt to Sterling Savings Bank for funds she expended to support the children and herself, believing the money to be in her account.
In child support modifications, no retrospective support is allowed and the start date for a new support amount is the date of the modification petition. But we are not convinced that it is necessary to reverse the trial court's decision here. Michael testified that he contributed $4,000 to the support of his children during the 13 months since the temporary order was filed; included in that $4,000 was the $3,000 Admiral check for which payment was stopped. Therefore, taking him at his word, Michael contributed only $1,000 over the 13-month timeframe to support children he knew were his, whom he had previously been supporting. Coupled with his tape recorded threats and statements to Kimberly that he would not provide any support, the evidence is enough to affirm the trial court's just determination that Michael pay back support for expenses already incurred under the Uniform Parentage Act reasoning which we find compelling.
In addition, although equitable doctrines such as laches may bar a custodial parent's dilatory request for retroactive child support, a trial court has discretion to mitigate the harshness of a claim for back support and may exercise this discretion to avoid an injustice to the custodial parent or the child. Michael cites In re Parentage of Hilborn, 114 Wn. App. 275, 278, 58 P.3d 905 (2002) (citing Hartman v. Smith, 100 Wn.2d 766, 768-69, 674 P.2d 176 (1984)), in support of this proposition, but in those cases the court denied retrospective support, finding it would work a hardship for the father and the mother and children would receive a windfall. Here, the record makes clear that others supported Michael and Kimberly's children during the couple's separation. And that Kimberly owes money to relatives and friends for this support. Annualization of Extraordinary Medical Expenses
Extraordinary health care costs are those which exceed five percent of the basic support obligation. RCW 26.19.080(2). They are to be paid by each parent in the same proportion as their basic support obligation. RCW 26.19.080(1). Generally these expenses are calculated on a monthly basis. Here, the trial court ordered that these expenses be paid on an "annualized" basis. The result of annualization, as Michael demonstrates in a hypothetical, is significant. According to the hypothetical, the children would accrue $1,031 over the course of a year in uninsured medical expenses. If paid monthly, Kimberly would have to pay $85.65 from basic support each month before the expenses become extraordinary which requires that the remainder be split proportionally between the parents. Michael would pay $196.59 over the course of a year with Kimberly paying the first $85.65 of the uninsured expenses each month. But if the uninsured expenses accumulated and are paid on an annual basis, Kimberly would pay the first $85.65 of the total uninsured amount accruing over the course of the year along with her proportionate share of the remainder ($186.35), while Michael must pay $759.85.
Although Michael acknowledges that this annual calculation method is not unheard of, citing 20 Kenneth W. Weber, Washington Practice: Family and Community Property Law section 37.9, at 438 (1997), he argues that it is surely inequitable. It appears to us that inherent in the definition of extraordinary medical expenses is the notion that basic support includes ordinary medical expenses and sets a baseline for uninsured medical expenses like co-pays. Thus, the annualization method is not what the legislature intended. But Michael does not cite, and we have not found, any cases expressly holding that annualizing extraordinary medical expenses is improper and, given Michael's financial manipulation and testimony, we cannot say that the trial court abused its discretion by applying this computation method here. Distribution of Liabilities and Debts
Michael contends that the trial court failed to distribute numerous marital debts listed in Kimberly's pretrial information form. He specifies the Mitsubishi Lancer debt which the court listed at a zero value but on which payments are still owed. According to our reading of the record, the trial court ordered that each party be responsible for their own credit card debts; it then made Kimberly responsible for the Mitsubishi Lancer payments and Michael responsible for the dump truck and the Corliss debt. Although these separate debt obligations were interlineated in Appendix A to the decree, the record does not support Michael's claim that the trial court did not allocate the Mitsubishi Lancer debt to Kimberly. Attorney Fees
We review the trial court's award of attorney fees for an abuse of discretion. In re Marriage of Bobbitt, 135 Wn. App. 8, 29-30, 144 P.3d 306 (2006). In making this discretionary award of attorney fees, the trial court balances the requesting party's needs against the other party's ability to pay. RCW 26.09.140; In re Marriage of Shui and Rose, 132 Wn. App. 568, 589, 125 P.3d 180 (2005), review denied, 158 Wn.2d 1017 (2006). Here, the trial court ordered Michael to pay $1,000 in attorney fees for the temporary order and $2,000 in fees for the four-day trial. The record shows that Michael was meeting his financial needs, including payment of attorney fees on his felony charges, and had not supported his family since January 2005. The family home was rescued from foreclosure by Kimberly's father and sold. The proceeds from the sale of the home were the community's sole significant asset. The trial court did not abuse its discretion by requiring that $3,000 of Kimberly's $8,500 attorney fees be paid from Michael's share of that asset.
We affirm.
A majority of the panel having determined that this opinion will not be printed in the Washington Appellate Reports, but will be filed for public record pursuant to RCW 2.06.040, it is so ordered.
ARMSTRONG, P.J., and HUNT, J., concur: