Opinion
No. FA93-0103245-S
June 25, 2010
MEMORANDUM OF DECISION RE RESPONDENT'S MOTION No. 140 TO MODIFY CHILD SUPPORT
FACTUAL AND PROCEDURAL BACKGROUND
This decision is occasioned by the petitioner's motion, filed November 5, 2009, to reargue the respondent's motion No. 140 to modify child support, which was originally heard and decided by this court in the petitioner's absence on October 22, 2009. The motion to reargue was granted on November 25, 2009 and the matter was heard again on February 26, 2010.
The respondent father's motion to modify seeks to reduce an unallocated order of $965.00 per week for two minor children, which entered on April 3, 2001, to reflect the emancipation of one of the boys and alleging that the respondent's ability to pay has diminished. The motion was served upon the petitioner mother on July 18, 2009 and first came before this court on August 19, 2009. Both parties were present. The respondent was represented by counsel. The court, Oliveira, FSM, entered a temporary order of $265.00 per week for the one child who was still a minor, based on the net incomes as stated in the parties' financial affidavits, ordered Support Enforcement Services (SES) to perform a complete audit on the account from the entry of the first order on September 30, 1992, ordered a transcript of the August 19 proceedings and continued the case for a special hearing on Thursday October 22, 2009 at 2:00 PM. On September 30, 2009, petitioner's counsel filed his appearance.
Hearing of October 22, 2009
On October 22, 2009, the court made the entire afternoon available for the special hearing. The respondent appeared with his attorney at the assigned time but neither the petitioner nor her attorney was present. Plaintiff's counsel reported having unsuccessfully exchanged phone calls with the petitioner's attorney the preceding day. The petitioner was present at the July hearing at which the special hearing was scheduled and respondent's counsel reported having received a notice by mail confirming the special assignment date and time. No motion for continuance had been filed nor did either the clerk's office or SES report receiving any notice that the petitioner or her attorney expected to be late. The court offered the respondent the option to proceed without the petitioner, which he elected to do.
The transcript of the August hearing which had been ordered by Magistrate Oliveira was not available. Counsel reported that his client's earning capacity had been an issue in that hearing and that the respondent had offered a temporary order of $265.00 which the court adopted over the petitioner's objection. SES submitted its audit and reported that the respondent was current with the temporary order but for a $62.00 arrears. The respondent submitted an updated financial affidavit together with a guideline worksheet indicating a presumptive current support amount of $195.00 per week. The SES officer reported the absent mother's position to be that the court should deviate upward to reflect the respondent's substantial assets of more than $1.5 million.
The court conducted a fairly extensive inquiry into the respondent's earnings, assets and earning capacity as reflected in a 66-page transcript. The income of both parties appeared on their affidavits from August 2009. The respondent's updated affidavit disclosed a total weekly gross income of $2,043.00, comprised of a monthly "incentive" payment from the Mashantucket Pequot Tribal Nation of $6503, ($1,512 per week) plus $296 of investment income and $235 in net rents.
The court questioned the respondent and his counsel closely regarding the basis for the respondent's proposed modification, including his employment and business history since the existing order entered and his substantial assets. The respondent's tribal incentive payments had indeed declined but he had also resigned from a $150,000 per year ($2,884 per week) position as a gaming commissioner at the casino in order to take charge of a struggling building construction business which he had established a short time before, then under another person's unsuccessful management. He testified that he loses money consistently in that business. He thereby reports no net income from his current principal line of work. Nevertheless, the respondent's testimony and his affidavit revealed that the construction business has contributed to the growth of his real estate investments.
The respondent owned three mortgage free residences, two of which he used personally while renting the third. He had withdrawn his entire $124,000 deferred tribal income account, when the tribe ended contributions to the program and liquidated its assets, and invested it in the construction of a new home on the reservation (Fox Trail) together with the proceeds ($265,000) from the sale of 4 Old Pequot Trail, a total investment of $389,000.
He owned four unencumbered motor vehicles which he valued at $89,000, a checking account with an approximate balance of $30,000 and a Merrill Lynch retirement account valued at $337,676.
The court concluded that the respondent's resignation from his gaming commission membership to operate a business at a consistent loss in house construction constituted a self-imposed income limitation which should not be considered as an adverse change of circumstances for the purpose of reducing child support. The court therefore imputed $150,000 per year additional earning capacity to the respondent which, when added to his income as reported on his affidavit of $2,134, gave him a total gross income for guideline purposes of $5,019 per week, yielding a presumptive current support order of $334 per week for the 17-year-old son.
The more correct total would have been $4,928. The court used $5,019 because it adopted the respondent's gross income of $2,134 as stated on his affidavit, without objection, which figure included gross rentals instead of net while subtracting $91 a week for real estate rental costs elsewhere. Including only net rentals would have yielded $2,885 + $2,043 = $4,928 instead of $2,885 + $2,134 = $5,019.
The respondent also claimed credit for overpayment for eight weeks following the older son's emancipation on June 23, 2009 at $965 per week. Because the motion to modify was not served on the petitioner until July 18, 2009, the court's authority to make the order retroactive was limited to that date, allowing the respondent credit for only four weeks of overpayment. CGS § 46b-215(e). The court made the new permanent order effective retroactively from July 18, 2009.
The court at first set the effective date of the new permanent order for $334 per week at October 22, 2009 and made the temporary order retroactive to July 18, 2009, leaving the temporary order in effect for the entire period prior to October 22, 2009. Later in the hearing the court revised the effective dates so the new order took effect retroactively from July 18, 2009.
The retroactive effect of the order was found to produce a credit of $2,524 which the court ordered to be amortized by offsetting it against the new current order at the rate of $70 per week.
The $2,524 credit finding failed to account for the retroactive effect of the new order in its final form resulting in an underpayment of the $69 per week difference between the $265 temporary order and the $334 final order for the nine weeks between August 19 and October 22, 2009. Comparing the amount owed under the permanent order and the amount paid for the entire period, the retroactive effect of the order should have yielded a credit due to the respondent of $1,903 instead of $2,524. At $70 per week the credit should have been fully amortized in 28 weeks. Under the court's new final order the credit is even smaller and the respondent may, therefore, now have an arrearage as of the date of this order.
The following day, Friday October 23, 2009, the petitioner and her attorney appeared at the calendar of paternity and support petitions expecting to participate in the hearing of the respondent's motion to modify, pointing out that a printed assignment calendar had been published and mailed to counsel and all parties for that date and time, which the petitioner and her attorney had interpreted, without inquiry, as superseding the special assignment for the previous afternoon. After a discussion with the court, the petitioner resolved to file an appropriate motion to pursue a hearing on the merits. The petitioner's timely motion to reargue was filed on November 5, 2009.
On November 25, the petitioner appeared with her attorney and further explained the circumstances surrounding her failure to attend the special hearing on October 22, 2009. The respondent did not attend or oppose the motion to reargue. The court, having been satisfied that the error was made in good faith, granted the motion to reargue. A transcript of the October 22 hearing was ordered for a re-hearing on January 26, 2010, which hearing was continued to February 24, at which time the matter was not reached due to the length of the docket. It was ultimately assigned for a special on Friday February 26, 2010 at 2:00 PM.
Hearing on Re-argument February 26, 2010
On February 26, 2010, neither party filed a new financial affidavit but both parties submitted guideline calculation worksheets which incorporated new income information for the respondent as reflected in a new tribal incentive payment invoice, which was submitted into evidence by the respondent, revealing a further reduction of the tribal stipend to $5,148 per month. The respondent also argued that the court, at the least, should not increase the order entered on October 22, 2010, stressing that the court had already imputed $150,000 of income to the respondent in addition to the income reflected on his affidavit and that his tribal stipend had been reduced again as of January 1, 2010. The petitioner argued that the court should deviate upward to reflect the respondent's substantial assets and to moderate the impact of the presumptive reduction of the order from $965 per week which she argued had a disproportionate and inequitable impact upon her.
The respondent calculated weekly presumptive amounts of $166 per week excluding imputed income and $325 when including the court's finding of imputed income; the petitioner claimed $345 per week and included imputed income.
ANALYSIS
Because the motion to modify No. 140.00 was heard anew on February 26, and not confined to the record of the October proceedings, the court is called upon to make the necessary findings of fact and conclusions of law anew, based on the record as of February 26, 2010.
Having fully heard from both parties, the court concludes that, with the exception of the reduced tribal stipend, the facts remained essentially the same on February 26, 2010 as they were on October 22, 2009.
Without a new affidavit reflecting current information on all components of the respondent's financial condition, the court hesitates to allow him to cherry pick the changes on which he wants to rely in new guideline calculations. However, both parties seem to have proceeded on the assumption that their affidavits on file were still vital and that, except for the single change proposed by the respondent, their guideline calculations would be based on the affidavits and the updated stipend information. The court has no note or memory of any objection to admitting the new information. Because both parties submitted guideline worksheets based on the new stipend amount and because the new information enables the court to use the most current and accurate information available, the court adopts the respondent's "gross cash income" of $4,704 per week as stated on the worksheets submitted by both parties which incorporate imputed income of $150,000 per year.
The primary issue now, as in October, is the respondent's income or earning capacity. CGS § 46b-215(a)(7)(B); Child Support and Arrearage Guidelines of the Regulations of Connecticut State Agencies (the guidelines) §§ 46b-215a-1(11); 46b-215a-3(a) and (b)(1)(B). The petitioner's stated income of $1,096 per week is not in dispute.
The respondent's income as expressed on both parties' guideline worksheets is comprised of a monthly "incentive" payment from the Mashantucket Pequot Tribal Nation, shown on the most recent monthly invoice as $5,148 per month ($1,189 per week), plus $296 of investment and $235 in net rental income — a total weekly gross cash income of $1,720.
Compared to $6,503 per month and $1,512 per week at the October 22 hearing.
Compared to $2,043 per week at the October 22 hearing.
The burden of proof of a material change of circumstances is on the party seeking modification. Connolly v. Connolly, 191 Conn. 468, 473 (1983). Furthermore, "[i]t is axiomatic, that the change of circumstances cannot be because of some action by the moving party which has created or added to said party's burden. Miller v. Miller, 181 Conn 610, 612, 436 A.2d 470 (1980); Schmidt v. Schmidt, 180 Conn. 184, 189, 429 A.2d 470 (1980); McKay v. McKay, 174 Conn. 1-2, 381 A.2d 527 (1977). "It is particularly appropriate to base a financial award on earning capacity where there is evidence that the payor has voluntarily quit or avoided obtaining employment in his field." Hart v. Hart, 19 Conn App 91, 94-95 (1989) citing Miller and Schmidt.
The court finds that the respondent chose to resign his $150,000 per year ($2,884 per week) position as a gaming commissioner at the casino in order to take charge of his struggling building construction business. The resulting loss of income is self-imposed and is not an appropriate basis for a reduction of child support, especially where, as here, the respondent retains adequate means to pay an order based on calculations which include the imputed income.
Accordingly, this court deviates upward from the presumptive current support order of $166 per week, as indicated by the version of the respondent's guideline calculations which are based on the parties' stated incomes, and imputes $150,000 per year ($2,885 per week) additional earning capacity to the respondent which, when added to his gross income as stated on his guideline worksheet of $1,818, yields a total gross income for guideline purposes of $4,702 per week. Because both parties used $4,704 per week in their calculations, the court adopts that amount as the respondent's total gross income.
The respondent's guideline worksheet calculates a presumptive current support order of $325 per week for the 17-year-old son. The petitioner's worksheet yields a presumptive current support amount of $345 per week. The difference results from conflicting estimates of the respondent's social security tax obligation. The respondent claims $311 per week. The petitioner claims the tax is $127 per week. The court agrees with the petitioner. Only the income which the court has imputed to the respondent would be earned income and subject to social taxes in 2010 in the maximum amount of $6,621.60 or $127.34 per week. The respondent's stipend, interest and dividends and net rents are not earned income and are not subject (yet) to the employee's portion of the FICA tax or the self-employment tax.
The correct presumptive current support amount, when including the imputed income, is $345 per week, as claimed by the petitioner. The court finds that $166 per week would be an inequitable and inappropriate amount of current child support under the circumstances of this case.
In light of the foregoing findings, the extent of the change of circumstances can be evaluated. The most obvious change is the emancipation of the older boy on June 22, 2009. Based on the court's determination of the respondent's earning capacity, it can also be determined that, over the intervening eight years, the petitioner's income has increased about 35% while the respondent's has decreased to an earning capacity of $4,704 a week or 49%. The impact of these changes is reflected in the guidelines table which yields $345.00 per week for one minor child ($17,940 per year) which will presumably expire upon the emancipation of the young man at his 18th birthday on July 29, 2010.
The court finds a substantial change of circumstances and a deviation of more than 15% between the existing order and the presumptive current support amount indicated by the guidelines, with or without the upward deviation.
The petitioner urges the court to deviate upward also in consideration of the respondent's substantial assets and net worth compared to her net worth of $257,000. The respondent's most recent affidavit discloses gross and net asset values (with no debt beyond a current charge card balance) of $1,981,676. The bulk of this total ($1,525,000) derives from three homes, the values of which reflect the respondent's own estimates. He is not unversed in home values but it would be surprising if his estimates were high. For example, he testified that the $300,000 value he assigned to his new home on Fox Trail reflects his out of pocket costs as a building contractor without imputing any cost to his own labor. He also testified that he re-invested the Old Pequot Trail sale proceeds and his deferred income account, together totaling $389,000, in building the new house. He further admitted to a replacement cost of $450,000 to $500,000. He points out, in mitigation of the foregoing facts, that the house stands on tribal land to which he can never obtain or convey fee title and that the ownership of the land is restricted to tribal members. However, he also agrees that he has an unfettered right to occupy the land and to convey title to the house and to the right to occupy the land to other tribal members without any limit on his tenure. It is enough to say that, regardless of its free market value, the Fox Trail house constitutes an asset with a value to him in use at least equal to its replacement cost when new of $500,000. Furthermore, the $900,000 value assigned to the Mystic summer home invites caution. The court views the resulting total net asset value of $2,181,000 as conservative.
After a bit of study her financial affidavit which mixes gross and net values in the same column.
One of his properties, 49 Eastwood Road, Groton, is a rental property, the net income from which is included in his statement of income from other sources and the income earning capacity of which, therefore, is reflected in the guideline calculations on the worksheets. Fox Trail is his principal residence and Quarry Road in Mystic is a summer vacation home which has a pool and to which, he testified, he invites his kids. Neither is primarily rental property. This court does not consider the ownership of the two owner occupied houses by an obligor with an earning capacity of $5,000 per week to be so unbalanced in favor of the assets as to require an upward deviation of the child support order to reflect additional earning capacity. Furthermore, some portion of the respondent's assets represents capital accumulation derived from the operation of his construction business, even though he earns no taxable ordinary income from that source. To that extent, some of his net worth is the product of the voluntarily reduced earning capacity as a contractor, which the court has disregarded in favor of imputed income he could have earned had he not resigned as a casino gaming commissioner. There is no proof that he could successfully do both. Therefore, a further upward deviation to reflect additional earning capacity of his assets would include some double counting. In other words, such earning capacity is already subsumed in the court's decision to deviate upward by $150,000.
There is no doubt that the respondent is far better off materially than the custodial mother. But the court is not directed or authorized to divide the parties' property or equalize or rebalance their incomes. These parties were never married. The court is cautioned in our case law against allowing a child support award to become alimony in disguise. Maturo v. Maturo, 296 Conn 80, 2010 WL 1713820 (2010); Brown v. Brown, 190 Conn 345, 349, 460 A.2d 1287 (1983).
The principal purpose of Connecticut's child support laws, according to our courts, is to address the needs of the child. Need is to be interpreted broadly enough to include maintaining the parents' lifestyle or the style in which the child would be reared were the family united, but the child is not entitled to a share of the noncustodial parent's assets and the child support order cannot be "grossly disproportionate to the child's needs." Maturo, citing Brown at 349.
The guideline calculations which this court has adopted estimate the weekly cost to support the parties' son at $442.00 — not an inconsiderable sum — to be shared by both parents. The petitioner, although certainly not flush, is far from a low income party. She is apparently able to contribute her share of the normal cost of rearing her son and has not claimed otherwise. There is nothing in particular in the record before this court to indicate that the child support amount derived from the guidelines based on the income and earning capacity of the parties is insufficient to maintain this young man in the manner to which he is or should be accustomed or that his needs will not be met if the court fails to further deviate upward.
ORDERS
The respondent's motion to modify child support is granted, the current support order is reduced to $345 per week and the respondent's share of unreimbursed medical and dental expenses shall be 68%, all effective as of the date of service on July 18, 2009.
The other component of the court's decision which requires a different result than that of October 22, 2009 is the calculation of the credit to which the respondent was entitled for the retroactive effect of the order, which the court found on that date to be $2524 and ordered to be amortized at $70 per week from that date. Thirty-four weeks have since passed, almost fully amortizing the credit. However, at $345 per week, which the court has now ordered, that credit as of October 22, 2009 would have been only $1,760 and would by now have been more than fully recovered, leaving a theoretical arrearage of $994, assuming all payments have been made as ordered. Support Enforcement is directed to recalculate the respondent's total obligations against the total amount owed since July 18, 2009 and adjust his account accordingly. Any arrearage balance owed to the petitioner as a result shall be paid at the rate of $172 per week commencing the week following the expiration of the current order, if any balance remains at that time.
Four weeks at $965 = $3,860, plus nine weeks at $265 = $2,385, plus 34 weeks at $334 minus 70 or $264 per week = $8,976 a grand total of $15,221. At the new order of $345 per week for 47 weeks, the respondent will have owed $16,215, leaving him $994 short as of June 25, 2010.