Opinion
No. 2005AP2776.
Opinion Filed: September 27, 2006.
APPEAL from an order of the circuit court for Ozaukee County: JOSEPH D. McCORMACK, Judge. Affirmed and cause remanded with directions.
Before Snyder, P.J., Brown and Anderson, JJ.
Paula Motte appeals from the circuit court's reduction of child support arrearages owed by her former husband David Motte. The court credited David for the time that one of the Mottes' sons had lived with him. The parties dispute whether the court could do so in view of a stipulation they had previously entered stating that placement changes would not affect child support. The circuit court held the stipulation void as contrary to public policy because it purported to remove child support issues from the jurisdiction of the courts. We agree and affirm on this issue. However, we also hold that a second term of the parties' agreement, which waived David's arrearages from an earlier period, is likewise void since it is forbidden by statute. We therefore remand for calculation of those earlier arrearages so that they may be added to David's total.
¶ 2 Paula and David were divorced in 1995. Their divorce settlement awarded joint custody of their two sons, then aged nine and seven, with both to reside primarily with Paula. David is a sales representative and works on commission, so his monthly income varies. Child support was therefore set at 25% of his income with a floor of $1500 per month, to be paid through income assignment by his employer. It was later changed to 22%, still with a floor of $1500 per month, to account for David's business expenses.
¶ 3 In September 1998, the parties entered into two stipulations which were adopted as orders of the circuit court. The first waived any arrearages that David had accumulated prior to that time. We have been unable to determine from the record what that amount of arrearages was; it appears that it was not calculated. The second stipulation maintained David's child support obligation at 22% of income with a $1500 floor but provided that it would decrease to 15.5% of income with a $1200 floor when the Mottes' oldest son graduated from high school in June 2004. The second stipulation also included the following language in the third paragraph:
3. Such payments shall continue regardless of the present placement of the minor children and regardless of any change in placement which may occur in the future as long as the Respondent is employed in his current or similar occupation; further, the parties agree they are estopped from objection to enforcement of this stipulation and order.
Paula testified that she requested this stipulation so that child support issues would not affect the placement schedule and to prevent further litigation over child support.
¶ 4 In 2004, Paula realized that David had, since 1998, been making his own child support payments, rather than having them paid by income assignment. She believed that David had been paying into the court on his own, rather than by income assignment, because then he could pay only the floor amount of $1500 instead of 22% of his actual income. She filed an order to show cause for contempt of court seeking payment of any arrearages. The family court commissioner found that David had underpaid child support, found him in contempt, and ordered him to pay arrearages and interest of $136,864.67. David moved for de novo review in the circuit court, disputing the calculation of arrearages. He also moved for a credit against the arrearages under WIS. STAT. § 767.32(1r) (e) (2003-04), based on the fact that the couple's oldest son had lived with him for the past four years, rather than with Paula.
All references to the Wisconsin Statutes are to the 2003-04 version unless otherwise noted.
WISCONSIN STAT. § 767.32(1r) reads in relevant part:
In an action under sub. (1) to revise a judgment or order with respect to child support . . . the court may grant credit to the payer against support due prior to the date on which the petition, motion or order to show cause is served for payments made by the payer other than payments made as provided in s. 767.265 or 767.29, in any of the following circumstances:
. . . .
(e) The payer proves by a preponderance of the evidence that the child lived with the payer, with the agreement of the payee, for more than 60 days beyond a court — ordered period of physical placement. Credit may not be granted under this paragraph if, with respect to the time that the child lived with the payer beyond the court — ordered period of physical placement, the payee sought to enforce the physical placement order through civil or criminal process or if the payee shows that the child's relocation to the payer's home was not mutually agreed to by both parents.
¶ 5 Paula argued before the circuit court that David had agreed, in paragraph three of the second 1998 stipulation, that a change in residence would not diminish his support obligation. She therefore claimed that he could not receive credit under WIS. STAT. § 767.32(1r) (e) for the time that their son had lived with him. The circuit court rejected this argument and held that paragraph three was void as against public policy because it purported to remove decisions about child support from the jurisdiction of the court, contrary to established law.
¶ 6 Paula further argued that she had never agreed to the placement of the oldest son with David, one of the requirements for credit under WIS. STAT. § 767.32(1r) (e). The court found that though she had attempted to provide a living space for the son, she "did not really resist" his moving in with David.
¶ 7 Paula finally claimed that David should be equitably estopped from receiving the credit. The court rejected this argument as well and granted David the credit by recalculating his child support at the lower "one-child" rate beginning in July 2000, resulting in an arrearage of $53,906.56. Paula appeals the circuit court's grant of the credit to David.
¶ 8 We first address the applicability of the credit before moving on to the waiver of arrearages in the 1998 stipulation. WISCONSIN STAT. § 767.32(1r) sets forth the circumstances under which a court may grant credit against past-due child support. Paragraph (e) allows a court to grant credit where a payer proves that the payer's child lived with the payer for more than sixty days beyond the court-ordered physical placement period. The credit may not be granted, however, if the payee attempted to enforce the court-ordered placement or otherwise did not agree to the child's stay with the payer.
¶ 9 The circuit court found that Paula "did not really resist" her son's move to David's house. Paula claims on appeal that this finding is insufficient to support the court's grant of the credit since the statute requires that the payee parent "agree" to the change in placement. See WIS. STAT. § 767.32(1r) (e). She points to her testimony that she asked David repeatedly to send the son back to live with her. However, David testified that it was fine with him if the son went to stay with Paula and that the son was a "handful." It appears from the testimony of both parties that the decision on where to live was ultimately left up to the son.
¶ 10 Whether Paula agreed to the placement arrangement is a question of fact, and we must uphold the circuit court's finding unless it is clearly erroneous. WIS. STAT. § 805.17(2). Though it is clear that Paula was not enthusiastic about her son's living arrangement, we hold that the circuit court was entitled to conclude that her actions and words demonstrated agreement with it.
¶ 11 Having upheld the circuit court's finding that the statutory criteria for granting the credit were met, we next address Paula's claim that the 1998 stipulation nevertheless bars David from receiving the credit. The circuit court held paragraph three of the stipulation void as contrary to public policy. We agree.
¶ 12 Ondrasek v. Tenneson , 158 Wis. 2d 690, 462 N.W.2d 915 (Ct.App. 1990), guides our decision in this case. In Ondrasek , we held that a stipulation to permanently waive or set a ceiling on child support is contrary to public policy and unenforceable. Id. at 692. We reasoned in that case that "[t]he paramount goal of the child support statute is to promote the best interests of the child" and that therefore "the child's best interests transcend an agreement or stipulation of the parties." Id. at 695. The court's continuing duty to ensure appropriate child support cannot be abrogated by the agreement of the parties because the right to child support does not belong only to the divorcing parties; it belongs primarily to the child. See id. at 695. Correlatively, the right to seek modification when circumstances change is simply not the former husband's or the former wife's to give or negotiate away.
¶ 13 Paula presents several interrelated arguments as to why the stipulation here does not involve an abrogation of the court's power and why it is not contrary to public policy. Her strongest claim is that the Mottes' agreement did not create an unmodifiable waiver or ceiling on child support; it merely estopped the parties from requesting a support modification based upon a change in placement. The point of the agreement was to insulate placement decisions from the influence of monetary issues. It would take away any financial incentive for a parent to try to keep the children from spending time at the other parent's home and would allow the children to move freely between houses and, in Paula's words, "have their full lives."
¶ 14 At first blush, this argument is appealing. Ondrasek 's overarching concern was with protecting the best interest of the child, and Paula contends that the parties agreed to paragraph three with the same object in mind. However, we recognized in Ondrasek that the best interest of the child may change over time. Id. at 695. That is why the courts must retain the power to adapt child support to changing circumstances, and parties may not abrogate that power, even by court-approved stipulation. See id. at 692, 695. Even though the stipulation in Ondrasek was broader than the one here since it purported to specify the allowable grounds for modification and to bar all others, id. at 694, the same reasoning applies to this case.
¶ 15 This is because a child's placement situation is clearly relevant to what child support is appropriate. In this case, for example, the Mottes' children at first lived primarily with their mother, and the father paid money to her to provide for their needs. One of the sons later moved in with his father, which presumably means that the father was spending more money to provide for the child directly. It makes little sense for the father to keep sending the same amount of money to the mother under these circumstances; if the father has limited income, the fact that he must send some of it to the mother will actually harm the financial interest of the child living with him. This is precisely the type of changed circumstance that a court needs to retain the power to address. The good intentions of the parties do not change this fact. See id. at 696 ("Even if the stipulation was fair when it was created, making a child support provision unmodifiable does not necessarily make the stipulation fair in the future. Provisions preventing future determination of the best interests of the child may leave the child inadequately protected."). The stipulation in this case, if enforced, would prevent a court from adapting child support to fit the needs of the child, just as the stipulation in Ondrasek did. For this reason, it is against public policy and void.
The shared- and split-placement formulas for child support reflect this reality — that the parent with whom the child lives will incur the basic costs of caring for the child — by establishing formulas whereby support is paid in proportion to the time each child spends with each parent. WIS. ADMIN. CODE § DWD 40.04(2) and (3) (Dec. 2003).
¶ 16 Paula makes two further arguments against this conclusion. She first notes that a court may only modify child support if it finds a "substantial change in circumstances." WIS. STAT. § 767.32(1)(a). She argues that a change in placement is not a substantial change in circumstances; therefore, paragraph three did not affect a court's power to modify child support.
¶ 17 Paula relies on Beaudoin v. Beaudoin , 2001 WI App 42, ¶ 4, 241 Wis. 2d 350, 625 N.W.2d 619, in which a former wife sought a child support modification based upon her former husband's failure to take physical placement of the child for four out of the court-ordered 148 days. We rejected the claim that this four-day lapse constituted a substantial change in circumstances. Id. , ¶ 12. But we did not hold that a change in placement could never amount to a substantial change in circumstances. See id. Further, the list of factors quoted in Beaudoin as relevant to whether a change of circumstances exists is not exhaustive. Id. , ¶ 6 (the events listed are " among the relevant factors to be considered" (citation omitted; emphasis added)). The statute explicitly states that the court may consider "[a]ny other factor that the court determines is relevant." WIS. STAT. § 767.32(1)(c)4.
Further, we note that the circuit court here granted creditunder WIS. STAT. § 767.32(1r) (e), which does not contain the "substantial change in circumstances" language that is found in § 767.32(1)(a).
¶ 18 Paula also claims that Severson v. Severson , 71 Wis. 2d 382, 387-88, 238 N.W.2d 116 (1976), held that a stipulation agreed to by the parties to a divorce and recommended to the trial court cannot be contrary to public policy. If Severson in fact stood for this proposition, it would be flatly contrary to Ondrasek and would force us to view this case differently; however, it quite clearly does not. The court in Severson was discussing a stipulation that would reduce child support automatically as each child attained majority; it stated that the provision was not contrary to public policy. While the court also commented that this was so "particularly . . . where it was recommended to the trial court in a stipulation of the divorcing parties," the main point was that the stipulation did not violate public policy. Severson , 71 Wis. 2d at 388. The Severson court did not hold, as Paula argues, that no stipulation entered into by divorcing parties and adopted by a court can be contrary to public policy. It is Ondrasek that governs this case, and so we affirm the circuit court's holding that paragraph three is void as contrary to public policy.
¶ 19 Further, we agree with the circuit court that equitable estoppel is not appropriate in this case. Paula argues that David should be estopped from benefiting from the fact of paragraph three's nullification since he received the benefit of having his previous arrearages waived in exchange. However, equitable estoppel cannot be based upon an agreement that is contrary to public policy. See Rintelman v. Rintelman , 118 Wis. 2d 587, 596, 348 N.W.2d 498 (1984). Moreover, as we shall next discuss, David's so-called "benefit" is about to be extinguished for exactly the reason that it itself violates public policy.
¶ 20 Paragraph three is not the only aspect of David's and Paula's September 1998 stipulations to run afoul of the law. Paula's contribution to the bargain was the forgiveness of any arrearages that David had accrued up until that point. WISCONSIN STAT. § 767.32(1m) states plainly: "the court may not revise the amount of child support . . . or an amount of arrearages in child support . . . that has accrued, prior to the date that notice of the action is given to the respondent, except to correct previous errors in calculations." Section 767.32(1r), under which David received credit for the time his son lived with him, thus lays out the exceptions to the general rule, which is that child support arrearages cannot be reduced or eliminated. Our supreme court summarized the judicial and legislative history of this rule in Barbara B. v. Dorian H. , 2005 WI 6, ¶¶ 9-15, 277 Wis. 2d 378, 690 N.W.2d 849. As that discussion makes clear, the rule against reducing child support arrearages, regardless of when they accrued, has been in effect since 1994. Id. , ¶ 14. The waiver of David's pre-1998 arrearages was thus plainly contrary to statute and void.
¶ 21 David may object that we have reached out to discuss this issue even though neither of the parties addressed it before the circuit court or on appeal. We reject this. This court may consider issues sua sponte in order to correct errors of law. Tempelis v. Aetna Cas. Sur. Co. , 169 Wis. 2d 1, 8, 485 N.W.2d 217 (1992). This is particularly so where it appears that an agreement is void as contrary to public policy. Shea v. Grafe , 88 Wis. 2d 538, 545-46, 274 N.W.2d 670 (1979). We will not close our eyes to the fact that the agreement David properly insisted is void as against public policy was agreed to in consideration of an interlocking agreement forgiving David's past arrearage, itself a violation of public policy.
¶ 22 We therefore uphold the circuit court's determination of David's post-September 1998 arrearages and remand for a recalculation of David's arrearages that accrued before the 1998 stipulation, along with interest under WIS. STAT. § 767.25(6).
¶ 23 No costs awarded to either party.
By the Court. — Order affirmed and cause remanded with directions.