Opinion
No. 6-022 / 05-0752
Filed March 15, 2006
Appeal from the Iowa District Court for Polk County, Douglas F. Staskal, Judge.
A father appeals from a district court ruling that directed him to reimburse his former wife for certain uncovered medical expenses incurred on behalf of the parties' children. AFFIRMED AS MODIFIED AND REMANDED.
Barry S. Kaplan and Melissa A. Nine of Kaplan Frese, L.L.P., Marshalltown, for appellant.
Patricia A. Shoff of Belin Lamson McCormick Zumbach Flynn, P.C., Des Moines, for appellee.
Considered by Zimmer, P.J., and Miller and Hecht, JJ.
James Goodman appeals from the district court ruling that directed him to reimburse his former wife, Dorothy Goodman, for uncovered medical expenses incurred on behalf of the parties' children. We conclude the court properly required James to reimburse Dorothy for certain uncovered medical expenses. However, we agree with James that the court erred in its apportionment of the uncovered medical expenses incurred by Dorothy in 2003. We accordingly remand this matter to the district court for reapportionment of those expenses in a manner consistent with our opinion.
I. Background Facts and Proceedings.
The marriage of James and Dorothy was dissolved in 1992. The decree awarded the parties joint legal custody of their three children: Kellaney, born in 1978; Abigail, born in 1982; and Molly, born in 1984. Kellaney's physical care was placed with James, and Abigail and Molly's physical care was placed with Dorothy. The decree required James to maintain health insurance coverage for the children and provided that any uncovered medical expenses "shall be paid equally by the parties." Beginning in 1993 James provided health insurance coverage through his second wife's employer.
In 1999 James and his second wife divorced. Dorothy and James informally agreed that Dorothy would maintain the children's health insurance coverage through the employer of Dorothy's new husband. In 2002 the district court modified the medical support provisions of the parties' dissolution decree "to require Dorothy to maintain the health insurance plan through her [present] husband's employment [and] . . . to provide that uncovered medical expenses shall be paid in accordance with" the Child Support Guidelines, specifically Iowa Court Rule 9.12. This rule requires the custodial parent to pay the first "$250 per year per child of uncovered medical expenses up to a maximum of $500 per year for all children," and provides that "[u]ncovered medical expenses in excess of [that amount] shall be paid by the parents in proportion to their respective net incomes." In the modification decree the court also noted the parties had stipulated, "for child support purposes, [Dorothy's] income is $41,000 per year."
At the time the modification decree was entered medical support orders were governed by rule 9.10. Although it has been renumbered, the substance of the rule is unchanged.
The history of this case is extensive. For the sake of clarity we note the following: In 1996 the district court entered a modification decree that set James's and Dorothy's obligation for Kellaney's post-secondary education expenses, and James's child support obligation for Abigail and Molly. In 2002 the court entered a modification decree that set the parties' obligation for Abigail's post-secondary education expenses, and James's child support obligation for Molly. After each party filed an Iowa Rule of Civil Procedure 1.904(2) motion, the district court further modified the decree to include the above-noted change in the medical support provisions. James appealed. Our supreme court modified provisions relating to Abigail's college expenses, but affirmed the medical support provisions of the modification decree. In re Marriage of Goodman, 690 N.W.2d 279 (Iowa 2004). In February 2004 the district court entered a ruling setting the parties' obligations for Molly's post-secondary education expenses, which we affirmed on appeal. In re Marriage of Goodman, No. 04-0705 (Iowa Ct.App. Aug. 31, 2005).
In August 2004 Dorothy filed a petition to enforce the medical support provisions of the dissolution and modification decrees, requesting the court order James to reimburse her for uncovered medical expenses she had incurred on behalf of Abigail and Molly. Following hearing, the district court found James owed Dorothy $6,552.55 in reimbursement for his share of uncovered medical expenses incurred between 1994 and 2003. The court rejected James's assertion that he and Dorothy had entered into an oral agreement whereby he would be responsible for Kellaney's uncovered medical expenses and Dorothy would be responsible for Abigail's and Molly's uncovered medical expenses.
Dorothy also asked the court to modify the dissolution decree to require James to provide the children's medical insurance coverage. However, Dorothy dismissed this count of her petition after the court granted James's motion to compel and required Dorothy to produce "copies of her and her present husband's un-redacted tax returns. . . ." The court noted that "[t]he parties did agree during the hearing that if [Dorothy] dismisses her Application to Modify to require that [James] . . . pay for the children's health insurance . . . [the] tax returns would be irrelevant and not need to be produced." In light of this agreement, any claim by James that he was unfairly denied access to or that the district court failed to properly consider this information is without merit.
The court limited its ruling to expenses "for which Dorothy produced documentary proof at trial of the nature of the service, the provider, the amount and proof of payment." The court ordered James to reimburse Dorothy for one-half of the expenses she incurred between 1994 and 2002, in accord with the initial decree. For those expenses incurred in 2003 the court applied Iowa Court Rule 9.12, in accord with the modification decree. After deducting Dorothy's required initial contribution of $500, the court directed James to pay the remaining uncovered medical expenses. Although the court found Dorothy had an earning capacity of at least $40,000 a year, it concluded that because she had no actual income her net income for medical support purposes was zero. The court did not allow James a credit for claimed expenses for Kellaney, determining "there is no satisfactory evidence of what these expenses were for or the amount."
James appeals. He contends he and Dorothy orally agreed that he would pay any uncovered medical expenses for Kellaney and Dorothy would pay any uncovered medical expenses for Abigail and Molly. James asserts that even if no agreement is found to exist, the doctrines of laches and equitable estoppel should be applied to preclude Dorothy from recovering James's share of the uncovered medical expenses. Alternatively, James contends that in allocating the uncovered medical expenses, the court should have imputed a net income to Dorothy and given him credit for uncovered medical expenses he incurred on behalf of Kellaney.
James also asserts that Dorothy's request for reimbursement is barred by the doctrine of estoppel by acquiescence. However, James does not point to where in the record he raised such a defense before the district court. Moreover, if the defense was raised, it was not addressed in the district court's ruling, and James did not file a post-ruling motion to bring the omission to the court's attention. Accordingly, we do not address it on appeal. See Benavides v. J.C. Penney Life Ins. Co., 539 N.W.2d 352, 356 (Iowa 1995).
II. Scope and Standard of Review.
Our scope of review is de novo. Iowa R. App. P. 6.4. Although not bound by the district court's factual findings, we give them weight, especially when assessing the credibility of witnesses. Iowa R. App. P. 6.14(6)( g).
III. Oral Agreement.
James contends the district court erred in requiring him to reimburse Dorothy for any uncovered medical expenses because he and Dorothy entered into an oral agreement to the contrary. The evidence regarding the existence of any such agreement was limited to the testimony of the parties. The court expressly found that James's testimony on this issue was not credible. We defer to the court's assessment in this regard, given its opportunity to directly observe witness demeanor. See In re Marriage of Forbes, 570 N.W.2d 757, 759 (Iowa 1997). Like the district court, we conclude James has failed to establish the existence of a separate oral agreement.
IV. Estoppel.
James next asserts that Dorothy is barred from seeking reimbursement for uncovered medical expenses under the doctrines of laches and equitable estoppel. James bore the burden of proving these defenses by clear, satisfactory, and convincing evidence. State ex rel. Holleman v. Stafford, 584 N.W.2d 242, 245 (Iowa 1998) (laches); In re Marriage of Halvorsen, 521 N.W.2d 725, 728 (Iowa 1994) (equitable estoppel).
James also contends Dorothy should be barred from seeking reimbursement because her requests were not "timely," relying on the recent supreme court case of In re Marriage of Oklund, 699 N.W.2d 260, 268 (Iowa 2005). However, in that case the decree specifically required a request for reimbursement be made within thirty days after documentation of the debt was received. Oklund, 600 N.W.2d at 262. Here, the decrees did not provide any time frame for making the requests for reimbursement.
"Laches is an equitable doctrine premised on unreasonable delay in asserting a right, which causes disadvantage or prejudice to another." Stafford, 584 N.W.2d at 245 (citations omitted). Prejudice is an essential element, id., and will not be inferred from the mere passage of time, State v. Seager, 571 N.W.2d 204, 209 (Iowa 1997). To establish equitable estoppel James must also demonstrate prejudice. Halvorsen, 521 N.W.2d at 728. However, the prejudice must arise from reliance on a false representation or concealment of a material fact made by Dorothy where Dorothy intended James, who was ignorant of the true facts, to act upon the representation or concealment. Id. For the reasons that follow, we agree with the district court's conclusion that James did not establish either defense.
James contends he was prejudiced because he had no notice of the uncovered expenses, and because he had no opportunity to object to the children's medical treatment or participate in the health care decisions. However, as previously noted, James provided health insurance for the girls until 1999. Like the district court, we find no merit in James's contention that he should not be charged with knowledge of benefit statements or terms of the insurance coverage because the coverage was through his wife's employer. Moreover, Dorothy notified James of uncovered medical expenses incurred in 2002 and 2003, and sought reimbursement for those expenses, in a timely manner. Thus, the only years for which James can credibly argue a lack of notice are 2000 and 2001.
We do not find Dorothy's delay in seeking reimbursement for these expenses to be an unreasonable delay that worked to James's prejudice. James offered no persuasive evidence that the charges incurred or the treatments sought during these times, or in fact at any point between 1994 and 2003, were unreasonable or unnecessary. Nor can we credit his contention that he is prejudiced because he is forced to pay a "very substantial sum of money all at one time." Finally, we reject James's assertion that his failure to keep adequate documentation of and to seek reimbursement for Kellaney's medical expenses was the result of Dorothy's failure to seek reimbursement at the time uncovered medical expenses were incurred on behalf of Abigail and Molly — the record demonstrates that James was capable of asserting his rights under the dissolution decree at any time.
The record indicates James has a yearly income in excess of $95,000.
The doctrine of laches "will be applied only where it is necessary to prevent injustice." Chadek v. Alberhasky, 253 Iowa 32, 39, 111 N.W.2d 297, 301 (1961). Under the facts of this case, the application of the doctrine would cause rather than prevent injustice. Moreover, James has not shown that Dorothy concealed any uncovered medical expenses with the intent that James, in ignorance of the true facts, would rely on her concealment. The district court did not err in rejecting these defenses.
V. Amount of Reimbursement.
The district court properly required James to pay one-half of the uncovered medical expenses for 1994 to 2002, in accordance with the terms of the dissolution decree. However, we agree with James that the court erred when it ordered him to reimburse Dorothy for those uncovered medical expenses incurred in 2003 which exceeded $500. The court reasoned that, because Dorothy had no actual income in 2003, she had no net income under rule 9.12, and thus her proportionate share of the expenses was zero. We believe the district court has interpreted rule 9.12 too strictly.
Net income for purposes of rule 9.12 is income as defined in rule 9.5. Although rule 9.5 contemplates use of a party's actual income, it is well established that if a strict application of the guidelines would be unjust or inappropriate, a court may deviate from the guidelines if "necessary to provide for the needs of the children and to do justice between the parties under the special circumstances of the case." Iowa Code § 598.21(4)(a); see also Iowa Ct. R. 9.4.
As recently noted by our supreme court,
One of the factors we consider in determining if we will use a parent's earning capacity, rather than a parent's actual earnings, in order to meet the needs of the children and do justice between the parties is whether the parent's inability to earn a greater income is self-inflicted or voluntary. See In re Marriage of Duggan, 659 N.W.2d 556, 562 (Iowa 2003) (citation omitted) (stating "[u]nder our case law, `a party may not claim inability to pay child support when that inability is self-inflicted or voluntary'"). We may also consider [the] combined income [of a party and the party's present spouse] to determine whether a strict application of the guidelines would result in a substantial injustice. See State ex rel. Reaves v. Kappmeyer, 514 N.W.2d 101, 104-05 (Iowa 1994) (determining parents' incomes for purposes of the child support guidelines without regard to the incomes of others, and then only considering such additional funds in evaluating "whether awarding the guideline amount would result in a substantial injustice" warranting departure from the guidelines).
In re Marriage of McKenzie, ___ N.W.2d ___, ___ (Iowa 2005).
The record in this case clearly demonstrates Dorothy's lack of employment is a voluntary choice and that she and her present husband live a comfortable lifestyle. Moreover, the modification decree contains Dorothy's stipulation that, for the purpose of rule 9.5, she has the ability to earn a gross yearly income of $41,000. Under the circumstances, it would inequitable and unjust to require James to pay the entire amount of uncovered medical expenses that are subject to allocation between the parties. Rather, the court should have imputed to Dorothy a gross yearly income of $41,000, and required her to pay a share of the 2003 expenses proportionate to her resulting net income.
Contrary to Dorothy's contention, this does not constitute a retroactive modification of her medical support obligation. The modification decree established only that medical support was payable pursuant to rule 9.12. While the modification decree recognized Dorothy had no actual income, it did not establish that Dorothy had no net income for medical support purposes.
Finally, we turn to James's contention that he should be allowed a credit for uncovered medical expenses he incurred on behalf of Kellaney. James failed to provide documentation of these expenses and testified only that he had paid at least $2,000, but less than $3,000, "in the low 2,000s," for Kellaney's braces and that he had paid for regular dental visits and gynecological exams. The district court determined that this testimony did not constitute "satisfactory evidence of what these expenses were for or the amount." We give weight to and concur in this assessment, particularly as the court limited James's reimbursement obligation to those expenses for which Dorothy had provided detailed documentation.
VI. Appellate Attorney Fees.
Finally, each party seeks an award of appellate attorney fees. Such an award is discretionary and is determined by assessing the needs of the requesting party, the opposing party's ability to pay, and whether the requesting party was forced to defend the appeal. In re Marriage of Gaer, 476 N.W.2d 324, 330 (Iowa 1991). Upon consideration of these factors, we decline to award either party appellate attorney fees. The costs of this appeal are assessed one-half to each party.
VII. Disposition.
We have considered all the contentions and arguments of each party. We conclude the district court erroneously determined Dorothy had no net income for the purpose of apportioning uncovered medical expenses incurred in 2003. We accordingly modify the portion of the court's ruling that ordered James to pay the entire amount of the 2003 uncovered medical expenses subject to allocation between the parties. We remand this matter to the district court for an apportionment of those expenses in light of our determination that Dorothy's gross annual income in 2003, for medical as well as child support purposes, was $41,000. The remainder of the district court's ruling is affirmed.