Opinion
No. 4-057 / 03-1043
April 14, 2004.
Appeal from the Iowa District Court for Bremer County, Bryan H. McKinley, Judge.
Debra Hoeger appeals the order which modified the child support provisions of the decree dissolving her marriage to Gary Hoeger. AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Gaylen Hassman of Engelbrecht, Ackerman Hassman, Waverly, for appellant.
Dale Goeke of Hagemann Goeke, Waverly, for appellee.
Considered by Huitink, P.J., and Vogel and Mahan, JJ.
Debra Hoeger appeals the order which modified the child support provisions of the decree dissolving her marriage to Gary Hoeger. We affirm in part, reverse in part, and remand
I. Background Facts and Proceedings.
Debra and Gary were married on October 25, 1980, and had three children, Brandon, Brooke, and Blake. At the time of the dissolution, Brandon had reached the age of majority. In January of 2001, their marriage was dissolved. In pertinent part, the dissolution decree ordered that the parties have joint legal custody of Blake and Brooke, but that Debra be the children's physical caretaker. The court also ordered Gary to pay child support to Debra in the amount of $468 while supporting two children, and $351 per month when he is only obliged for the support of one child.
On September 29, 2002, Debra filed a petition to modify the dissolution decree, seeking an increase in child support, a post-secondary education subsidy for Brooke, a change in health insurance coverage, and attorney fees. Gary responded by filing an answer and an application to modify, in which he sought a reduction in child support and attorney fees. Following a hearing, the court among other things reduced Gary's child support obligation from $351 to $298 and awarded him $2,400 in attorney fees. Debra appeals this order, challenging only the court's reduction of Gary's child support obligation and its attorney fee award. Gary cross-appeals, contending the court erred by not reducing his child support obligation further.
II. Scope of Review.
We review a district court's modification of a dissolution decree de novo. In re Marriage of Jacobo, 526 N.W.2d 859, 864 (Iowa 1995). We give weight to the district court's findings of fact but they do not bind us. In re Marriage of Sjulin, 431 N.W.2d 773, 776 (Iowa 1988).
III. Modification of Child Support Obligation.
At the time of the modification, Debra was working as a bank teller earning $8.00 per hour, having recently left her previous job for medical reasons where she was earning $10.00 per hour. Gary was engaged in farming, had various rental income properties, and owned a business called Sumner Extruding. The district court reduced Gary's child support obligation from $351 to $298. In reaching this figure, the court found Debra's income to be $18,620 and Gary's income to be $18,479. Debra's income was based on her 2002 income tax return and Gary's was based on a three-year average of income. The court apparently averaged Gary's income because of the fluctuating nature of his farm and business incomes.
Debra offers various arguments on appeal as to why the district court under-calculated Gary's income level: (1) he under-reported his farm income; (2) he manipulated his farm and corporate income; (3) the accelerated depreciation used on his tax returns skewed his income figures; and (4) his wage payments to his new wife were improperly intended to reduce his own income.
A. Depreciation Deductions.
We first address Debra's primary contention, that the court's determination of Gary's income is improperly based on methods of depreciation which were intended to manipulate and thereby under-report his income. She argues that had straight-line depreciation been utilized, Gary's net income and thereby his child support obligation would have been increased.
Although the Iowa child support guidelines do not specifically provide for a deduction for depreciation expenses, see In re Marriage of Gaer, 476 N.W.2d 324, 326 (Iowa 1991), our supreme court has adopted the view that "depreciation should not categorically either be deducted as an expense or treated as income, but rather that the extent of its inclusion, if any, should depend on the particular circumstances of each case." Id. at 328 (citing Stoner v. Stoner, 307 A.2d 146, 151 (1972)).
Here we think adjustments relative to depreciation are necessary to provide for the needs of the child and to do justice between the parties. Under the circumstances of this case, Gary should indeed be allowed a deduction for depreciation; however it should be determined by using the straight line method of depreciation rather than an accelerated method or allowing for same-year expense deductions pursuant to 26 U.S.C.A. § 179 (2003). See Gaer, 476 N.W.2d at 329; In re Marriage of McKamey, 522 N.W.2d 95, 99 (Iowa Ct.App. 1994) (recognizing that a non-custodial parent electing to expense certain depreciable assets should have that amount of expenses allocated over a reasonable depreciation period). As noted, the district court allowed Gary's accelerated depreciation and expensing before calculating net income for child support purposes. We conclude this was improper and artificially reduced his net income. With this guidance in mind, we therefore remand for a redetermination of Gary's net income using straight-line, rather than any accelerated form of depreciation and expensing employed on any of his farming or other business ventures, including his rental properties. The court should then again average those income figures for tax years 2000, 2001 and 2002. See In re Marriage of Knickerbocker, 601 N.W.2d 48, 52 (Iowa 1999) (recognizing that when a parent's income is subject to substantial fluctuations, it may be necessary to average the parent's income over a reasonable period when determining income levels). The court may wish to set this matter for the taking of further evidence.
B. Payments to Current Wife.
After Gary married his new wife, Ruth, he employed her as a bookkeeper for Sumner Extruding. In 2001, the company paid Ruth $8,282, while in 2002 it paid her $7,200. On appeal, Debra maintains this salary was simply a means to reduce the company's taxable income and thus reduce Gary's net income for child support purposes.
Based on our de novo review of the record, we agree with the district court's refusal to consider the income paid to Ruth by Sumner Extruding in its calculation of Gary's income level. Gary testified that Ruth worked every day at Sumner Extruding, keeping the books, answering phones, preparing accounts payable, and figuring payroll taxes. Ruth testified that she typically worked a total of fifty-six to sixty hours per month at Sumner Extruding, either working from 1:00 p.m. until 2:30 p.m. or from 10:30 a.m. until 2:30 p.m. Thus, other than the speculation placed on this arrangement by Debra, the uncontroverted record supports that Ruth works substantial hours for and fully earns the salary paid by Sumner Extruding.
We also affirm on this issue based on an additional ground. In In re Marriage of Aronow, 480 N.W.2d 87 (Iowa Ct.App. 1991), our court was faced with a similar scenario. There, we stated:
Where a husband or wife is obligated to pay child support or alimony, and he or she is the principal in a business that employs his or her spouse, we will look to the salary paid to his or her spouse to determine whether the allocation is fair or if it results in a salary to the spouse that is larger than average salaries for comparable employment. If the salary is in excess of salaries for comparable employment, then we will assume the portion of the salary that is in excess of comparable salaries is being paid in an attempt to show a reduced level of income for the obligor.
Aronow, 480 N.W.2d at 90. See also In re Marriage of Mueller, 400 N.W.2d 86, 88 (Iowa Ct.App. 1986) (applying this analysis and determining the salary paid to the spouse was fair). Here, we have no basis in the record for determining whether the salary paid to Ruth is "larger than average salaries for comparable employment." See id. Debra introduced no evidence of the typical salary other bookkeepers earn, other than to claim that the other bookkeeper employed by the business could maintain the books without the additional employment of Ruth. While this assertion raises some questions as to the necessity of Ruth's employment with the company, there is no evidence to support the claim.
C. Gary's Contentions.
Gary generally argues "the trial court erred by not properly reducing child support." In particular, he asserts the court erroneously calculated his income from tax years 2000, 2001, and 2002. In light of our decision to remand for a redetermination of Gary's income employing the straight-line depreciation method, we find it unnecessary to further address this contention.
In his brief, Gary also appears to argue the district court improperly required him to pay the annual medical deductible limit up to $200 for Blake in the event Debra takes him to see a non-network provider physician. However, this assertion is not separately set forth and is merely included under the subdivision discussing child support. Moreover, Gary does not cite any authority for this issue. We therefore consider it waived, see Iowa R. App. P. 6.14(1)( c), and do not address it.
We note that both parties' briefs appear to include a variety of complaints that are not adequately set forth under separate designations. Iowa R. App. P. 6.14(1)( c). It is thus difficult to determine what issues are actually being raised on appeal. We have addressed only those issues properly raised and presented for our review.
IV. Trial Attorney Fees.
Debra argues the district court erred in awarding Gary $2,400 in attorney fees. An award of attorney fees rests in the sound discretion of the trial court and will not be disturbed on appeal in the absence of an abuse of discretion. In re Marriage of Wessels, 542 N.W.2d 486, 491 (Iowa 1995). In light of our remand on the issue of child support, we vacate the court's award of trial attorney fees and order the district court, upon remand, to reconsider its award, taking into account its re-calculated child support award after the straight-line depreciation method is employed.
V. Appellate Attorney Fees.
Both parties request appellate attorney fees on appeal. An award of attorney fees is not a matter of right, but rests within the court's discretion and the parties' financial positions. In re Marriage of Roberts, 545 N.W.2d 340, 345 (Iowa Ct.App. 1996). We are to consider the needs of the party making the request, the ability of the other party to pay, and whether the party making the request was obligated to defend the district court's decision on appeal. In re Marriage of Miller, 524 N.W.2d 442, 445 (Iowa Ct.App. 1994). We award Debra $1000 in attorney fees. Costs of this appeal are assessed to Gary.