Opinion
No. 5-713 / 05-0285
Filed November 23, 2005
Appeal from the Iowa District Court for Linn County, Denver D. Dillard, Judge.
Timothy R. Biertzer appeals the district court's decision to deny his application to modify his dissolution decree. Jodi L. Dloughy (f/k/a Biertzer) cross-appeals the district court's reduction of Timothy's child support obligations. AFFIRMED ON APPEAL AND REVERSED ON CROSS-APPEAL.
David Thinnes of Thinnes Liesveld, Cedar Rapids, for appellant.
Karen Volz of Ackley, Kopecky, Kingery, Cedar Rapids, for appellee.
Considered by Huitink, P.J., and Mahan and Hecht, JJ.
Timothy R. Biertzer appeals the district court's decision to deny his application to modify his dissolution decree. Specifically, he appeals the district court's denial of (1) additional visitation with his daughter, (2) the tax dependency exemption for his daughter, and (3) attorney's fees. We affirm on appeal and reverse on cross-appeal.
I. Background Facts and Proceedings
Timothy and Jodi stipulated to a dissolution decree in April 1998. According to the stipulation, both parents have legal custody of their only daughter. Jodi has primary physical care of the girl while Timothy has reasonable and liberal visitation. If the parents cannot agree on visitation, the stipulation sets out a minimum visitation schedule. The schedule provides Timothy with visitation every other weekend from Friday evening to Sunday evening, one overnight each week, two weeks in the summer, and on various holidays. The stipulation also provided that Jodi receive child support payments of $322 per month for one year. After that year, the child support increased to $415 per month. The stipulation is silent with regard to the tax exemption.
Since the dissolution, both parties have remarried, had additional children, and changed residences. They currently live approximately twenty minutes driving time from one another. Further, Timothy has changed jobs and income levels four times. At the time of the dissolution, he had just quit his job at Pepsi. He began working for American Leasing, with the expectation that he would be earning more money. Approximately three to four years later, he quit his job at American Leasing and began working at Aegon. His salary at Aegon was $35,000 per year.
Jodi testified that he changed jobs frequently while they were married.
Timothy filed this application to modify the dissolution decree in March 2003. In June 2004 he quit his job at Aegon and began working as an apprentice electrician at Gleason Electric. He did not discuss his change of occupation with Jodi. While an apprentice, his salary is ten dollars per hour, or roughly $20,800 per year. He also claims on-the-job educational expenses of $1,094.40 per year. Testimony at the modification hearing in December 2004 showed he will remain an apprentice until he acquires 4,000 hours on the job and passes requisite proficiency certification tests. He will then become a residential journeyman, allowing him to make fifteen to twenty-one dollars per hour. After another 4,000 hours and more certification testing, he will claim the status of master journeyman. He will also be able to claim yet higher wages. Timothy testified that once he attains the level of master journeyman, he plans to leave Gleason to start his own business. In doing so, he will realize his dream of being self-employed. He estimated the process would take approximately six years.
We simply note this fact and do not imply he was required to do so.
Both Jodi and Timothy testified that their daughter is happy, well adjusted, and doing extremely well in school. She has a good relationship with both of her parents and all of her half-siblings. She is currently twelve years old.
The district court denied Timothy's requests for additional visitation, the tax exemption for his daughter, and attorney's fees. It also retroactively lowered his child support obligations beginning June 1, 2004, from $415 per month to $245 per month. His payments will continue at that level until June 2006, then increase to $370 per month. In June 2008 his payments will increase to $425 per month. Timothy appeals the denial of additional visitation, the tax exemption, trial attorney's fees, and requests appellate attorney's fees. Jodi cross-appeals the reduction in child support and requests appellate attorney's fees.
II. Standard of Review
We review de novo. Iowa R. App. P. 6.4. De novo review requires that we examine the record anew. In re Marriage of Salmon, 519 N.W.2d 94, 95 (Iowa Ct.App. 1994). Though they do not bind us, we will give weight to the district court's credibility findings. Iowa R. App. P. 6.14(6)( g).
III. Merits
First, Timothy argues the district court erred when it failed to expand his visitation rights. He claims that his remarriage, change in residence, new children, ailing parents, and daughter's need for orthodontia constitute the change required for modification of visitation. Second, he argues that because he has paid child support and provided his daughter with toys, clothes, life insurance, a mutual fund, a savings account, and health insurance, he should be awarded her tax dependency exemption. Third, he argues that because Jodi is unreasonably refusing him additional visitation and she earns a higher salary, he ought to be awarded attorney's fees. Jodi cross-appeals, arguing the district court erred when it reduced Timothy's child support obligation based upon his voluntary reduction in salary.
A. Visitation
In order to modify visitation, Timothy must show a change in circumstances justifying the modification. In re Marriage of Thielges, 623 N.W.2d 232, 235 (Iowa Ct.App. 2000). He is required to establish by a preponderance of the evidence both that the change is material and that increased visitation is in his daughter's best interest. Salmon, 519 N.W.2d at 94-95. This burden is substantially less than the burden required to modify custody. In re Marriage of Malloy, 687 N.W.2d 110, 113 (Iowa Ct. App. 2004). We will usually only disturb the district court's decision regarding visitation if the record shows it is inequitable. Salmon, 519 N.W.2d at 95.
We cannot conclude that the changes Timothy puts forth constitute the change necessary to disturb the dissolution decree. As the district court concluded, both Timothy and Jodi would have reasonably anticipated all of the changes at the time they stipulated to the decree. Given their ages, remarriage and additional children were likely. Their changes in residences only moved them twenty minutes driving distance apart. Timothy's parents' ageing and declining health could also be expected. The decree already provides for their daughter's orthodontic needs. Finally, both parents testified that their daughter is happy, bright, and extremely well adjusted. We hesitate to disturb a situation that has obviously worked so well to the child's benefit. Therefore, we conclude there is not a change in circumstances that warrants a modification of visitation.
B. Tax Exemption
Generally, the custodial parent is allowed to claim a dependency exemption. 26 U.S.C. § 152(e)(1) (2004); see also Treas. Reg. § 1.152-4 (as amended in 1979). There are, however, three exceptions. First, the dissolution decree or separation agreement may provide that (1) the noncustodial parent is entitled to the deduction or (2) the custodial parent must sign a written declaration that the custodial parent will not claim the child as a dependent. 26 U.S.C. § 152(e)(2)(A); see In re Marriage of Staton, 511 N.W.2d 418, 421 (Iowa Ct.App. 1993). Second, the general rule does not apply when the noncustodial parent furnishes at least $600 in support and a pre-1985 instrument provides that the noncustodial parent is entitled to the deduction. 26 U.S.C. § 152(e)(2)(B); Staton, 511 N.W.2d at 421. Third, the general rule does not apply where a multiple-support agreement provides the child is to be claimed as a dependent by a taxpayer other than the custodial parent. 26 U.S.C. § 152(e)(4); Staton, 511 N.W.2d at 421; In re Marriage of Kerber, 433 N.W.2d 53, 54 (Iowa Ct.App. 1988).
Both the stipulation and the dissolution decree are silent on the matter. Timothy claims he wrongly believed at the time of the dissolution he would receive the exemption. He never, however, filed a motion under Iowa Rule of Civil Procedure 179(b) (now known as Iowa Rule of Civil Procedure 1.904) to enlarge the court's findings and conclusions with regard to the decree. We recognize that the tax exemption may be adjusted based on both equity and the general rules regarding child support modification. See In re Marriage of Rolek, 555 N.W.2d 675, 677-680 (Iowa 1996); In re Marriage of Okland, 699 N.W.2d 260, 269-270 (Iowa 2005). However, for the reasons listed below as well as those listed above, we conclude that Timothy is not entitled to the tax exemption.
C. Support Modification
Pursuant to Iowa Code section 598.21(8) (2003), we are to modify support orders if there is a substantial change in the parties' circumstances. One of the factors we may evaluate is "changes in the employment, earning capacity, income or resources of a party." Iowa Code § 598.21(8)( a). The Code further defines "substantial change" to be "when the court order for child support varies by ten percent or more from the amount which would be due pursuant to the most current child support guidelines." Iowa Code § 598.21(9). Further, our case law instructs that
a parent may not rely on a claim of decreased income to obtain a modification of a support order if the parent's reduced earning capacity and inability to pay support is self-inflicted or voluntary. Therefore, parents who reduce their income through an improper intent to deprive their children of support or in reckless disregard for their children's well-being are not entitled to a commensurate reduction in child support payments.
In re Marriage of Swan, 526 N.W.2d 320, 323-24 (Iowa 1995) (citations omitted).
When Timothy quit his job at Aegon and began his career as an electrician, he voluntarily reduced his income from $35,000 per year to roughly $20,800 per year. This reduction amounts to a forty-one-percent cut in his yearly income. Timothy testified that he was willing to take such a substantial cut in pay to pursue his dream to be self-employed. He testified rather introspectively about his desire to manage his own business:
[W]hen we bought our house our basement was unfinished, and I had a friend of mine helping with the wiring and I thought it was pretty intriguing. And so I would go to his house and help him. And working at Aegon, the company I was basically in front of a computer 8 to 10 hours a day, and that's all I would do. And I thought to myself, you know, can I do this for 25 more years? Can I sit in front of a computer? Basically for me I was getting, you know, getting more out of shape and injuries, different things, just not really enjoying it. And with the electrical career that I was helping out with friends, and I thought to myself this is something that I can really do for the rest of my life and it would give me more freedom to free me up to do things that I needed to do. . . .
What troubles us about Timothy's justifications is not that we think he intended to deprive his child or burden his former wife, but that he apparently gave them no thought whatsoever. As a result of his change in income, his child support obligations were also reduced by forty-one percent, or nearly half of his obligation under the stipulation. In addition, Timothy did not appear to consider whether Jodi would be able to provide for Jordan absent his support.
Furthermore, this is not the first time Timothy has changed careers. In the seven years since his divorce, he has switched jobs four times. We are not persuaded by the argument that he will increase his income and his support obligations as a result of his training. His support payments will increase, but only after four years of being reduced. By 2008, (1) the payments will only increase ten dollars over the amount he was paying under the stipulation, and (2) he will have less than three years to continue paying child support. As a result of the support recalculations, his daughter will lose nearly $6,000 in child support. Additionally, by Timothy's own estimation, he will reach the status of master journeyman two years later, in 2010. At that time, he plans to quit his job yet again.
Finally, though we sympathize with Timothy's desire to follow his dreams, we fear the precedent we would set if we allowed the district court's ruling with regard to his child support obligations to stand. We read the admonition in Swan to mean that a voluntary reduction in income like Timothy's does not allow a parent to modify a support decree. Iowa case law supports our conclusion. See In re Marriage of Walters, 575 N.W.2d 739, 741-44 (Iowa 1998) (reducing child support to maintain equity between the parties where incarcerated father voluntarily participated in criminal activity, but child support payments nearly equaled his net monthly pay); Swan, 526 N.W.2d at 323-25 (concluding resignation was involuntary and reducing child support where father sustained work-related injury, could not continue in current employment, and made reasonable decision to seek vocational training); In re Marriage of Foley, 501 N.W.2d 497, 500 (Iowa 1993) (concluding loss of income was involuntary after father was terminated for insubordination); In re Marriage of Dawson, 467 N.W.2d 271, 275-76 (Iowa 1991) (concluding loss of income was self-inflicted and refusing to reduce child support obligations where father quit job to pursue education); In re Marriage of Vetternack, 334 N.W.2d 761, 763 (Iowa 1983) (refusing to reduce child support where incarcerated father had equity that could satisfy his obligation); Ellis v. Ellis, 262 N.W.2d 265, 267-68 (Iowa 1978) (concluding income reduction was self-inflicted and refusing to reduce child support where father with remaining earning capacity retired); Reed v. Reed, 260 Iowa 1166, 1168-69, 152 N.W.2d 190, 191 (1967) (refusing to reduce child support where father voluntarily terminated employment to pursue education); In re Marriage of Fidone, 462 N.W.2d 710, 712 (Iowa Ct.App. 1990) (concluding loss of income was involuntary and reducing child support where father would have to move 1200 miles to maintain employment).
Given the above factors, we must conclude that Timothy's loss of income was voluntary. Additionally, because his income dropped so drastically, we reluctantly conclude he acted with reckless disregard for the well being of his child. The legal terminology is harsh; we think the record shows Timothy to be a kind and loving father who is proud of his daughter. However, because his actions had such severe consequences on his child support obligations, we refuse to uphold the district court's decision to reduce his child support payments.
D. Attorney's Fees
An award of attorney's fees is within the court's discretion. In re Marriage of Scheppele, 524 N.W.2d 678, 680 (Iowa 1994). The award should be reasonable and fair and based on the parties' respective abilities to pay. Id. We conclude the district court did not abuse its discretion in not awarding attorney's fees. We decline to award appellate attorney's fees. Court costs are taxed one-half to each party.
AFFIRMED ON APPEAL AND REVERSED ON CROSS-APPEAL.
Hecht, J., concurs; Huitink, P.J., concurs in the result only.