Opinion
No. C4-03-148.
Filed August 26, 2003.
Appeal from the District Court, Ramsey County, File No. DMFX911499.
Linda R. Allen, Butler, Huson Allen, P.A., (for appellant)
Mary Antonia Wilmes, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
On appeal from an order denying his petition for modification of his child-support obligation, appellant argues that the child-support magistrate (1) erred by applying an incorrect legal standard to determine his net income, (2) abused her discretion by finding that he had not shown that his business deductions were ordinary and necessary, (3) abused her discretion by determining that he had the ability to pay his child-support obligation, and (4) abused her discretion by determining that appellant failed to show that the existing child-support obligation was unreasonable and unfair. Because we find neither error nor abuse of discretion, we affirm.
FACTS
In 1992, the marriage of appellant Bruce A. Peterson and respondent Stacie S. Linnell was dissolved, and the parties were granted joint legal custody of their three children; Linnell was granted sole physical custody.
In July 2002, Peterson petitioned for modification of his child-support obligation, which was last determined by the district court in 1996, on two grounds: (1) that T.P., the oldest of the parties' children, had reached the age of majority and was no longer attending high school, and (2) that Peterson was self-employed and had suffered a sharp reduction in his net monthly income. The child-support magistrate found that T.P.'s age was not a basis for relief because the existing order anticipated that he would reach majority, and, consequently, Peterson's child-support obligation had automatically been reduced in May 2002 from $2,236 to $1,916.
With regard to Peterson's claim of reduced income, the child-support magistrate found that Peterson was the sole owner and sole employee of PurposePoint Consulting, which in July 2002 entered into a contract with Egg Solution, Inc., a California company, whereby Egg paid PurposePoint $10,500 per month for business-development services. As of July 2002, Egg was PurposePoint's only client and on October 9, 2002, Egg terminated its contract with PurposePoint.
But in a November 2002 letter brief to the magistrate, Peterson represented that his income was $10,500 per month, and based in part on that representation, the child-support magistrate determined that he had not met his burden of establishing that there had been a significant change of circumstances that made the then current child-support order unreasonable and unfair. This appeal followed.
DECISION
Generally, a party seeking modification of a child-support order must show a substantial change in circumstances that renders the existing support obligation unreasonable and unfair. Minn. Stat. § 518.64, subd. 2 (2002); Gorz v. Gorz, 552 N.W.2d 566, 569 (Minn.App. 1996). This court recognizes the district court's "broad discretion" in support matters and will not alter a district court's decision unless the court abused that discretion by resolving the matter in a manner that is "against the logic and the facts on record." Gully v. Gully, 599 N.W.2d 814, 820 (Minn. 1999) (quotation omitted).
Because Peterson appeals directly from the child-support magistrate's order, our scope of review is limited. Under Minn.R.Gen.Pract. 378.01, a party can appeal directly from a child-support magistrate's order without first moving for review of the magistrate's order under Minn.R.Gen.Pract. 376.01, but when a party does so, our review is limited to whether the evidence supports the findings of fact and whether the findings of fact support the conclusions of law and the judgment. Davis v. Davis, 631 N.W.2d 822, 825-26 (Minn.App. 2001).
I.
Peterson argues that in determining his net monthly income, the child-support magistrate erred by applying the generally applicable statutory method to determine net income rather than the method used to determine net income for a self-employed person. See Minn. Stat. § 518.551, subd. 5(b) (providing generally applicable method used to determine net income for child-support purposes), subd. 5b(f) (2002) (providing method used to determine net income for child-support purposes for a self-employed person). Application of the proper statutory standard is a legal issue, which we review de novo. Dabrowski v. Dabrowski, 477 N.W.2d 761, 764 (Minn.App. 1991).
The child-support magistrate's order simply does not support Peterson's argument. The magistrate specifies in her order that she was computing Peterson's income by applying section 518.551, subdivision 5b(f), and she excluded from his gross income bookkeeping expenses and a portion of his claimed travel expenses, which are expenses deducted from gross income only for a self-employed obligor. See Minn. Stat. § 518.551, subd. 5b(f). Thus, the magistrate did not apply the incorrect statutory provision in determining Peterson's net monthly income.
II.
Peterson also argues that the child-support magistrate "abused her discretion" by not deducting all of his claimed business expenses in calculating his net income. The child-support magistrate found that Peterson had
not established that his claimed deductions from his gross income for housing, a per diem allowance, and vehicle are necessary and ordinary business expenses and has failed to establish a legal basis for the deductions, particularly in light of the fact that the Petitioner no longer has the employment contract that gave rise to those expenses.
For child-support purposes, income from self-employment "is equal to gross receipts minus ordinary and necessary expenses." Minn. Stat. § 518.551, subd. 5b(f). Generally, the decision to allow business expenses or deductions is within the child-support magistrate's discretion. Keil v. Keil, 390 N.W.2d 36, 39 (Minn.App. 1986) (applying abuse-of-discretion standard to district court's decision to not allow claimed business expenses); see Brazinsky v. Brazinsky, 610 N.W.2d 707, 710 (Minn.App. 2000) (applying same standard of review to magistrate's order when case is directly appealed to this court).
Here, however, the disallowed expenses were for housing, per diem, airline travel, and other expenses related to Peterson's work in California. It is undisputed that at the time of the hearing, PurposePoint no longer had a contract with its California client. The child-support magistrate therefore did not clearly err by finding that Peterson had not established that he continued to have business expenses associated with employment in California.
III.
Peterson also argues that the magistrate (1) misapplied the law by ruling that his stock in a company called EntrePort and the proceeds of his sale of an automobile in 2002 were "assets of his estate" and (2) abused her discretion by imputing income to him in the amount that he earned in 2001.
A. Peterson's Resources
The child-support magistrate found that Peterson's stock in EntrePort, valued at approximately $100,000, and the $26,000 he received from the sale of one of his automobiles, were "assets of his estate" that could be used to "pay his bills." Peterson argues that these are not periodic payments and that the assets cannot, therefore, be considered in determining his income for purposes of calculating his child-support obligation. See Minn. Stat. § 518.54, subd. 6 (2002) (defining income for purposes of determining child-support obligation as any form of periodic payment).
But Minnesota law requires that the court consider both income and parental resources in determining a child-support obligation. Minn. Stat. § 518.551, subd. 5(c)(1) (requiring court to consider all earnings, income, and resources of the parent when determining his or her child-support obligation); see Sieber v. Sieber, 258 N.W.2d 754, 757 (Minn. 1977) (concluding that proper investment of one-time proceeds from sale of $118,000 business "could certainly be a source of considerable income"). Because Minnesota law provides that in determining a parent's child-support obligation parental resources as well as income must be considered, the child-support magistrate did not misapply the law by considering Peterson's stock in EntrePort and the automobile sale proceeds as resources available to Peterson in determining his ability to pay child support.
Peterson makes a related argument that the magistrate erred by considering his holdings in EntrePort in determining his ability to pay child support because the stocks are subject to Rule 144 of the Securities Exchange Act, 15 U.S.C. § 78a-78mm (2000), which restricts the sale of stocks held by individuals under defined circumstances. But Peterson cites no law in support of his position that restricted stock holdings cannot be considered in determining a parent's resources; therefore, this argument is waived. See State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn.App. 1997) (stating that assignment of error in brief based on "mere assertion" and not supported by argument or authority is waived unless error is obvious on mere assertion).
B. Imputed Income
Peterson argues that because he was unemployed in October 2002, the child-support magistrate abused her discretion by imputing income to him in the amount he earned in 2001. The magistrate acknowledged that as of the time of hearing Peterson "considered himself unemployed" but noted that in a letter brief dated November 19, 2002, Peterson represented to the magistrate that his gross monthly income was $10,500. On that basis, the magistrate determined that Peterson "continues to demonstrate that he has the ability to earn an income commensurate with his ongoing child support obligation of $1,916.00 per month." Because the magistrate did not impute income but merely relied on Peterson's representation that his gross monthly income was $10,500, she did not clearly err in determining his monthly income.
IV.
Finally, Peterson argues that because his income had decreased involuntarily since the previous child-support order was issued in 1996, the magistrate clearly erred by finding that there was not a significant change in circumstances that makes the current order unreasonable and unfair.
Under Minnesota law, "[t]he terms of an order respecting * * * support may be modified upon a showing of * * * substantially increased or decreased earnings of a party." Minn. Stat. § 518.64, subd. 2(a)(1) (2002). There is a rebuttable presumption that the obligor has had a substantial change in circumstances and that his obligation was unreasonable and unfair when
the application of the child support guidelines in section 518.551, subdivision 5, to the current circumstances of the parties results in a calculated court order that is at least 20 percent and at least $50 per month higher or lower than the current support order.
Id., subd. 2(b)(1) (2002).
The child-support magistrate determined that Peterson's net monthly income was $6,751 and that guidelines child support would be $2,025.30. Peterson's current child-support obligation is $1,916 per month. Because Peterson's current child-support obligation is 5.7% lower than the application of the guidelines would require, the child-support magistrate did not clearly err by finding that Peterson's current child-support obligation is not unreasonable and unfair.