Opinion
NO. 2014-CA-000411-ME NO. 2014-CA-000804-ME
06-05-2015
DERRICK WHITT APPELLANT v. STACEY WHITT APPELLEE
BRIEF FOR APPELLANT: William D. Tingley Louisville, Kentucky BRIEF FOR APPELLEE: Gordon B. Long Salyersville, Kentucky
NOT TO BE PUBLISHED APPEALS FROM MORGAN CIRCUIT COURT FAMILY COURT DIVISION
HONORABLE DAVID D. FLATT, JUDGE
ACTION NO. 09-CI-00137
OPINION VACATING AND REMANDING APPEAL NO. 2014-CA-000411-ME AND AFFIRMING APPEAL NO. 2014-CA-000804-ME
BEFORE: COMBS, NICKELL, AND TAYLOR, JUDGES. TAYLOR, JUDGE: Derrick Whitt brings Appeal No. 2014-CA-000411-ME from a March 8, 2013, order of the Morgan Circuit Court, Family Court Division, directing Whitt to pay child support of $1,387 per month retroactive to June of 2009, and brings Appeal No. 2014-CA-000804-ME from an April 14, 2014, order denying his motion to modify child support. We vacate and remand Appeal No. 2014-CA-000411-ME and affirm Appeal No. 2014-CA-000804-ME.
Derrick and Stacey Whitt were married on October 7, 1995. Two children were born of the parties' marriage. On June 2, 2009, Stacey filed a petition for a decree of dissolution of marriage and also filed a motion for temporary child support and maintenance. By agreed order entered August 30, 2010, Derrick was required to deposit $810 per month into a bank account utilized to pay the mortgage and other expenses upon the marital residence. This agreed order further provided that the $810 was being paid "in lieu of child support and maintenance."
Derrick and Stacey operated under the August 30, 2010, agreed order for almost two years. Then, on April 17, 2012, Stacey filed a motion to increase/set child support. Therein, Stacey alleged that Derrick had drastically underreported the amount of income he received from a family-owned trucking company. According to Stacey, she propounded interrogatories upon Derrick, and in response, he averred that his monthly income was $2,000 per month.
The family court subsequently appointed Calvin Cranfill, a certified public accountant, to appraise the trucking company for purposes of this litigation. The accountant apparently determined that Derrick's actual income from the trucking company was $9,940 per month. By order entered May 9, 2012, the family court granted Stacey's motion to increase/set child support. Citing to the expert opinion of the accountant, the family court concluded that Derrick's income was $9,940 per month. The family court directed Stacey to prepare a child-support worksheet based upon Derrick's monthly income of $9,940. Then, by order entered July 9, 2012, the family court ordered that Derrick pay child support of $1,387 per month based upon monthly income of $9,940.
On September 26, 2012, Derrick filed a motion requesting the family court to "reconcile" the August 30, 2010, agreed order requiring him to pay $810 monthly and the July 9, 2012, order setting child support at $1,387. By order entered March 8, 2013, the family court ruled upon Derrick's motion to "reconcile." Therein, the family court found that Derrick committed fraud in the reporting of his income for purposes of calculating child support. As a result of the fraud, the family court ordered child support of $1,387 per month retroactive to the date Stacey initially filed her motion for child support on June 2, 2009. The family court gave Derrick credit for the $810 per month previously paid per the August 30, 2010, agreed order. Derrick filed a notice of appeal (Appeal No. 2014-CA-000411-ME) in this Court from the March 8, 2013, order.
Stacey Whitt and Derrick Whitt entered into a Marital Settlement Agreement. Therein, it was agreed that Derrick would pay child support of $1,387 per month. The settlement agreement further provided that "[t]he parties cannot agree on whether any child support arrears exist at this time. The parties acknowledge that [Derrick] has pending a Motion to Reconcile Orders where he is essentially claiming a credit or offset for child support paid during the period in question. Therefore, the issue is reserved for trial." Marital Settlement Agreement at 12. This settlement agreement was incorporated into an amended decree of dissolution entered December 17, 2012.
On October 7, 2013, Derrick filed a motion to modify his child support obligation. Derrick contended that his income had been reduced; thus, a modification of child support was mandated. By order entered April 14, 2014, Derrick's motion to decrease his child support obligation was denied. Derrick then filed a notice of appeal (Appeal No. 2014-CA-000804-ME) in this Court from the April 14, 2014, order. We will address each of Derrick's appeals seriatim.
APPEAL NO. 2014-CA-000411-ME
Derrick contends that the family court erred by finding that he committed fraud when reporting his income for purposes of calculating child support. Derrick asserts that the family court is prohibited from making a finding of fraud without conducting an evidentiary hearing.
To prevail upon a claim for fraud, the party alleging fraud must establish:
1) [A] material misrepresentation; 2) which is false; 3) that is known to be false or made recklessly; 4) that is made with inducement to be acted upon; and 5) that is acted upon, causing injury.Calfee v. Com., Cabinet for Health and Families, 230 S.W.3d 601, 604 (Ky. App. 2007) (citations omitted). And, the elements of fraud must be proven by clear and convincing evidence. Farmers Bank and Trust Co. v. Willmott Hardwoods, Inc., 171 S.W.3d 4 (Ky. 2005).
In the case sub judice, Derrick filed a motion to "reconcile" the orders of August 30, 2010, and July 9, 2012. In response, Stacey alleged that Derrick had "intentionally mislead" or fraudulently underreported his income for purposes of calculating child support. Stacey argued that Derrick answered interrogatories and reported income of only $2,000 per month when his actual income was nearly $10,000 per month. However, after an extensive search of the record, we are unable to locate the interrogatory where Derrick allegedly misled Stacey and reported an income of $2,000 per month.
Upon consideration of the whole, we think the family court should have conducted an evidentiary hearing upon the allegation of fraud. While there may be "facts" contained in the record to support the family court's finding of fraud, the court only hears evidence upon conducting a hearing or trial, and it is important to include evidence of fraud in the official court record. The family court effectively granted a summary judgment in favor of Stacey on the fraud issue where the underlying facts are clearly in dispute regarding the fraud allegations. And, as previously noted, this Court was unable to locate in the record on appeal the pivotal interrogatory where Derrick reported income of $2,000 per month. A finding of fraud has serious consequences, and in this case, an evidentiary hearing per Kentucky Rules of Civil Procedure (CR) 52.01 should have been conducted and appropriate findings made by the family court. See Anderson v. Johnson, 350 S.W.3d 453 (Ky. 2011).
Although not cited to by the parties, this Court is aware of the Kentucky Supreme Court's decision in Mauldin v. Bearden, 293 S.W.3d 392 (Ky. 2009) and views it as distinguishable. In Mauldin, the Supreme Court held that the family court did not commit reversible error by failing to hold an evidentiary hearing before dismissing appellant's Kentucky Rules of Civil Procedure (CR) 60.02 motion, which was grounded in allegations of fraud. In Mauldin, the family court rejected the fraud allegation; whereas, in our case, the family court affirmatively found fraud to be present by clear and convincing evidence. And, in Mauldin, the family court was ruling upon a CR 60.02 motion to set aside a previous order; conversely, in our case, the family court was ruling upon a motion of Derrick as to his child support obligation.
For these reasons, we are compelled to vacate the family court's order of April 14, 2014, and remand for the family court to conduct an evidentiary hearing upon whether Derrick committed fraud in the reporting of his income for child support purposes. This hearing should be conducted pursuant to CR 52.01. Upon conducting the hearing, if the family court rules that Derrick committed fraud, we believe that child support may be ordered retroactive to the date of Stacey's initial motion for child support on June 2, 2009.
Our opinion should not be misconstrued as passing upon the merits of Stacey's claim that Derrick committed fraud. We merely hold that the family court erred by not conducting an evidentiary hearing upon the claim of fraud. We recognize that the facts contained in the record suggest that Derrick committed fraud by attempting to conceal and falsely reporting his true income, but an evidentiary hearing should be conducted.
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APPEAL NO. 2014-CA-000804-ME
Derrick contends that the family court erred by denying his motion to modify child support. Derrick argues that the family court erroneously calculated his income by including "additional monies" to arrive at his income for purposes of calculating child support. Specifically, Derrick claims the family court improperly included in his monthly income funds paid by the trucking company for Derrick's personal living expenses.
Modification of child support is governed by KRS 403.213 which provides, in relevant part:
(1) . . . The provisions of any decree respecting child support may be modified only as to installments accruing subsequent to the filing of the motion for modification and only upon a showing of a material change in circumstances that is substantial and continuing.Simply put, child support may be modified only upon a showing of a material change in circumstances that is substantial and continuing. Goldsmith v. Bennett-Goldsmith, 227 S.W.3d 459 (Ky. App. 2007). And, there is a rebuttable presumption of a material change in circumstances if the amount of child support due is equal to or greater than 15 percent. Tilley v. Tilley, 947 S.W.2d 63 (Ky. App. 1997). The modification of child support is within the sound discretion of the family court and will not be disturbed on appeal absent an abuse of that discretion. Plattner v. Plattner, 228 S.W.3d 577 (Ky. App. 2007).
(2) Application of the Kentucky child support guidelines to the circumstances of the parties at the time of the filing of a motion or petition for modification of the child support order which results in equal to or greater than a fifteen percent (15%) change in the amount of support due per month shall be rebuttably presumed to be a material change in circumstances. Application which results in less than a fifteen percent (15%) change in the amount of support due per month shall be rebuttably presumed not to be a material change in circumstances. . . .
In his appellate brief, Derrick is not arguing that his income decreased resulting in a reduction of his child support obligation equal to or greater than 15 percent. Rather, Derrick maintains that the family court erroneously calculated his monthly income by including funds paid by the trucking company on his behalf for personal expenses. We do not believe Derrick's argument is proper upon a motion to modify child support pursuant to KRS 403.213. Thereunder, a parent must demonstrate that a material change in circumstances that is both substantial and continuing resulting in a 15 percent or greater change in the child support obligation. Derrick has not argued nor has he demonstrated such a change in circumstances as required by the statute.
As to the family court's initial determination that Derrick's income was $9,940 per month, we believe the family court did not abuse its discretion and that such was supported by substantial evidence in the record. The family court relied upon the expert opinion of an accountant, who opined that Derrick's income was nearly to $10,000 per month. The family court also relied upon additional facts:
The checking account of Pure Gold LLC [trucking company] was admitted into evidence at the December 16, 2013[,] hearing and the Petitioner Stacey Whitt filed with this Court a list of monthly personal expenses from this checking account that should be added to the Respondents [Derrick Whitt's] income. The Respondent has not filed any pleading disputing this summary of personal expenses paid by Pure Gold LLC on behalf of the Respondent.April 14, 2012, Order. Hence, we are of the opinion that the family court properly denied Derrick's motion to modify child support.
For the foregoing reasons, Appeal No. 2014-CA-000411-ME is vacated and remanded for proceedings consistent with this opinion, and Appeal No. 2014-CA-000804-ME is affirmed.
ALL CONCUR. BRIEF FOR APPELLANT: William D. Tingley
Louisville, Kentucky
BRIEF FOR APPELLEE: Gordon B. Long
Salyersville, Kentucky