Opinion
No. A-11 -073.
12-06-2011
GARY WRIGHT, APPELLANT, v. JACQUELINE S. WRIGHT, APPELLEE.
Brent M. Kuhn, of Harris Kuhn Law Firm, L.L.P., for appellant. Jesse S. Krause, of Lieben, Whitted, Houghton, Slowiaczek & Cavanagh, P.C., L.L.O., for appellee.
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).
Appeal from the District Court for Douglas County: GERALD E. MORAN, Judge. Affirmed.
Brent M. Kuhn, of Harris Kuhn Law Firm, L.L.P., for appellant.
Jesse S. Krause, of Lieben, Whitted, Houghton, Slowiaczek & Cavanagh, P.C., L.L.O., for appellee.
INBODY, Chief Judge, and SIEVERS and PIRTLE, Judges.
INBODY, Chief Judge.
INTRODUCTION
Gary Wright appeals the order of the Douglas County District Court's modification of the parties' decree of dissolution by ordering a modification of child support, awarding a child support arrearage, ordering payment of noncovered medical and dental expenses, ordering payment of clothing expenses, and awarding attorney fees to Jacqueline S. Wright.
STATEMENT OF FACTS
Gary and Jacqueline were married on October 24, 1987, and had four children. A decree of dissolution was entered on January 15, 1998. Jacqueline retained physical custody of all four children, and the parties shared joint legal custody. Gary was ordered to pay $729 per month in child support for four children, $669 for three children, $558 for two children, and $388 for one child. Gary was further ordered to pay one-half of the children's annual clothing expenses not to exceed $1,000 and 100 percent of nonreimbursed medical and dental expenses. The decree was first modified on July 8, 2002, and Gary's child support obligation was increased to $1,488 per month for four children. The decree was then again modified on November 13, 2003, by stipulation of the parties, to reflect that one of the children had moved in with Gary, that Gary's child support obligation was modified to $903 per month for three children, and that Gary's responsibility for nonreimbursed medical and dental expenses was modified to 64 percent.
In April 2007, the child living with Gary reached the age of majority and his child support obligation increased to $1,115.71 per month. In that same month, Gary filed an application to modify the decree, alleging that circumstances warranted a reduction in his child support obligation. Jacqueline filed an answer and an amended counterclaim alleging that in 2005, all four children were back in her custody and had remained there. The record indicates that the case remained on the docket for several years without any further activity by either party.
In November 2007, Gary became employed with a credit union in the consumer loan services division earning a base pay of $132,000. Gary lost his job with the credit union in April 2010, at which time he also lost health insurance benefits for the two children. Gary maintained COBRA insurance coverage for several months until Gary's current wife placed the two children, who were still minors, on her insurance policy through her employment. Gary also began receiving $363 a week in unemployment benefits from the State of Wisconsin, which benefits would be paid through April 2011.
Prior to his employment with the credit union, Gary was the president and chief executive officer of a mortgage company, where he earned approximately $80,000 a year. During this time, Gary was required to sign promissory notes on behalf of the business, and he was later sued with respect to those personal guaranties. A judgment of $4.1 million was entered against Gary, and as a result of the judgment, Gary filed for chapter 7 bankruptcy relief on October 12, 2010.
With regard to Jacqueline, in 2007, she was employed as a sales representative for a pharmaceutical company, earning $85,000 a year. Jacqueline was terminated from that employment after a driving under the influence conviction. In August 2009, Jacqueline became employed as an outside sales representative earning a base salary of $34,000 and additional earnings for commissions and bonuses.
On May 1, 2009, Gary's child support obligation decreased to $743 per month when their second child reached the age of majority. In October 2010, Gary requested that the matter be set for trial, which was subsequently held on November 30, 2010, at which time there were still two minor children in the home and Gary's child support obligation remained at $744 per month. Gary testified that he currently had monthly expenses in the amount of $6,000 and had been unable to obtain employment. Gary indicated that, in order to keep up with those expenses, his current wife paid some of those expenses, he utilized funds from his retirement account, and he borrowed $55,000 from his parents.
At the conclusion of the trial, the district court denied Gary's application to modify, finding that Gary had failed to prove a material change in circumstances that would warrant a reduction in his child support obligation. The district court granted in part and denied in part Jacqueline's counterclaim. The district court determined that there was a material change in circumstances from January 1, 2009, through March 2010, specifically warranting an increase in child support for January 1 through December 2009 to $1,991 for two children and for January 1 through March 31, 2010, to $1,418 for two children. The court determined that Gary's total child support arrearage was $18,520. The court ordered that, for the time before those dates and beginning again in April 1, 2010, the child support obligation for the two minor children would remain at the currently calculated amount of $744 per month. The court also found that Gary owed Jacqueline $5,084 for noncovered medical and dental expenses and clothing expenses. The district court set forth a schedule for repayment of those arrearages and expenses, ordering Gary to pay Jacqueline $491 per month for 48 months commencing December 1, 2010. Jacqueline was ordered to maintain health insurance coverage for the children, and the district court terminated Gary's obligation to do the same. The district court also ordered Gary to pay $2,000 for Jacqueline's attorney fees. It is from this order that Gary has now appealed.
ASSIGNMENTS OF ERROR
Gary assigns that the district court erred in (1) determining the amount of child support; (2) finding that Gary owed Jacqueline reimbursement for medical, dental, and clothing expenses; (3) determining a child support arrearage of $18,250 and ordering a schedule for payment of the arrearage; (4) changing the provider of health insurance for the two minor children from Gary to Jacqueline; and (5) awarding Jacqueline attorney fees.
STANDARD OF REVIEW
Modification of child support is entrusted to the discretion of the court. Rutherford v. Rutherford, 277 Neb. 301, 761 N.W.2d 922 (2009). An appellate court reviews proceedings for modification of child support de novo on the record and will affirm the judgment of the trial court absent an abuse of discretion. Id.
In an action for modification of a marital dissolution decree, the award of attorney fees is discretionary with the trial court, is reviewed de novo on the record, and will be affirmed in the absence of an abuse of discretion. Finney v. Finney, 273 Neb. 436, 730 N.W.2d 351 (2007).
ANALYSIS
Child Support.
Gary argues that the district court erred by failing to decrease the child support obligation for the period beginning after April 1, 2010, based upon the material change in circumstances that he lost his job.
A party seeking to modify a child support order must show a material change in circumstances which (1) occurred subsequent to the entry of the original decree or previous modification and (2) was not contemplated when the decree was entered. Incontro v. Jacobs, 277 Neb. 275, 761 N.W.2d 551 (2009). The party seeking the modification has the burden to produce sufficient proof that a material change of circumstances has occurred that warrants a modification. Id.
Courts may consider various factors to determine whether a material change of circumstances has occurred. Among the factors to be considered are (1) changes in the financial position of the parent obligated to pay support, (2) the needs of the children for whom support is paid, (3) good or bad faith motive of the obligated parent in sustaining a reduction in income, and (4) whether the change is temporary or permanent. Incontro v. Jacobs, supra. But the paramount concern in child support cases, whether in the original proceeding or subsequent modification, remains the best interests of the child. Id.
In general, child support payments should be set according to the Nebraska Child Support Guidelines. Incontro v. Jacobs, supra. According to the guidelines, "[i]f applicable, earning capacity may be considered in lieu of a parent's actual, present income and may include factors such as work history, education, occupational skills, and job opportunities. Earning capacity is not limited to wage-earning capacity, but includes moneys available from all sources." Neb. Ct. R. § 4-204.
In considering the factors to determine whether a material change in circumstances has occurred, the record reveals that there have been changes in the financial position of the parent obligated to pay support. Over the pendency of this case, the parties have undergone substantial increases and decreases in their incomes. At the time of the decree, Jacqueline's monthly income was $1,040 and Gary's monthly income was $1,663. At the time of the second modification in 2003, Jacqueline's monthly income was $2,500 and Gary's was $4,378. Since the most recent modification was filed, Jacqueline has made as much as $5,000 to $6,000 per month, while Gary has made from $8,800 to $14,384 per month. Gary testified that, at the time of trial, his only income was $363 per week in unemployment benefits. The record reveals that Gary has other sources of money from his current wife, parents, and retirement accounts.
The record indicates that Gary was confident that his period of unemployment was only temporary and that he would be gainfully employed again in a similar position as he had held previously. Gary testified that he was in the interview process, and the district court received into evidence a sizeable exhibit which traced Gary's diligent efforts in trying to obtain a new job. There is nothing in the record to suggest that Gary's unemployment was a result of unfavorable or adverse conditions in the economy, his health, or other circumstances which affected his earning capacity. See Schulze v. Schulze, 238 Neb. 81, 469 N.W.2d 139 (1991).
Gary filed an application for modification in 2007, and subsequently, he did not act upon that application because he received a new position at a job which paid a significantly higher amount of monthly income than he was receiving which, as evidenced by the district court's determination, resulted in a drastic increase in child support. It was only after 7 months of unemployment and falling behind in child support that Gary decided to again pursue this application.
The Nebraska Child Support Guidelines indicate that, if applicable, earning capacity may be considered in lieu of a parent's actual income and that "[e]arning capacity is not limited to wage-earning capacity, but includes moneys available from all sources." § 4-204. The Nebraska Supreme Court has not set forth a rigid definition of what constitutes income; rather, the court has relied on a flexible fact-specific inquiry that recognizes the wide variety of circumstances that may be present in child support cases, because child support proceedings are, despite the child support guidelines, equitable in nature. See Gangwish v. Gangwish, 267 Neb. 901, 678 N.W.2d 503 (2004).
The $744 per month of child support that the district court ordered Gary to pay beginning in April 2010 was based upon the 2003 modification of child support in which the parties stipulated that Gary's monthly income was $4,378.46, which is significantly less than his income earned in his previous two jobs. Clearly, the record indicates that Gary has the capacity to earn at least $4,378.46 per month. After our de novo review of the record presented, we conclude that the district court did not abuse its discretion by refusing to reduce Gary's child support as of April 1, 2010.
Furthermore, having determined that the district court did not err in this determination, it follows that we reject Gary's argument that the calculation of arrearages caused by this determination was also error.
Nonreimbursed Medical and Dental Expenses and Clothing Expenses.
Gary argues that the district court erred in determining that he owed Jacqueline $5,084 for nonreimbursed medical and dental expenses, as well as for clothing expenses, because there was no evidence of those expenses.
According to the most recent modification, Gary was required to pay 64 percent of the nonreimbursed medical and dental expenses, and clothing expenses not to exceed $1,000 per year. Jacqueline testified that approximately every 3 months, she sent Gary copies of the bills for those expenses, and at trial, the district court received, without objection, 46 pages of documentation of medical and dental expenses and clothing expenses that Gary owed totaling $6,354.54, approximately 80 percent of which Jacqueline testified were incurred after the 2003 modification order. Gary testified that he did not receive any documents from Jacqueline. The district court determined that Gary owed Jacqueline 80 percent of the $6,354.54 received by the court, which totaled $5,084. Upon our de novo review of the record, we find that there was sufficient evidence to support this order and that, as such, the district court did not abuse its discretion. This assignment of error is without merit.
Schedule for Repayment.
Gary argues that the district court erred by ordering a schedule for repayment of the child support obligations owed because the payment, coupled with the amount of ordered child support, leaves Gary with only $325 per month upon which to live and is below the poverty guidelines. After determining child support, the district court determined that Gary owed $23,604 in arrearages and nonreimbursed medical and dental expenses, as well as clothing expenses. The district court then determined that those arrearages shall be paid off in installments of $491 per month for 48 months.
As discussed above, the district court properly imputed Gary with an earning capacity and income of $4,378.46 in the child support calculation. Section 4-204 sets forth that the determination as to "[e]arning capacity is not limited to wage-earning capacity, but includes moneys available from all sources." Gary testified that his wife receives an income of approximately $60,000 a year with which she supports herself and Gary, that he has utilized money from his retirement accounts, and that he has the ability to borrow funds from his parents. Furthermore, the record reflects that Gary has significant assets which he has chosen to maintain before paying his child support obligations. Gary currently resides in a $500,000 home and also owns an approximately $400,000 home in Wisconsin. Although Gary has filed for bankruptcy, the record reflects that he has elected to exercise exemptions for many other assets, including a pontoon boat, a Harley Davidson Sportster, a Harley Davidson Shovelhead motorcycle, and a four-wheeler. Support of one's children is a fundamental obligation which takes precedence over almost everything else. Gangwish v. Gangwish, 267 Neb. 901, 678 N.W.2d 503 (2004).
Thus, taking into account the imputed monthly income of $4,378.46, minus Gary's child support obligation of $744 and the scheduled repayment obligation of $491, Gary would have $3,143.46 remaining, which places him well above the poverty guidelines. Furthermore, Gary testified that he is confident that this period of unemployment is only temporary and is diligently searching for new employment. Taking into account that testimony and evidence, we find that the district court did not abuse its discretion by setting forth a schedule for the repayment of those funds owed. This assignment of error is without merit.
Health Insurance.
Gary contends that it was also error for the district court to change the provider of health insurance for the two minor children from Gary to Jacqueline, arguing that there was no material change in circumstance to warrant the change.
Gary testified that, previously, he provided health insurance coverage through his employer as ordered through the decree. Gary explained that when he lost his job, he immediately applied for COBRA benefits to continue coverage until his current wife placed the children on her policy through her employment. Jacqueline testified that, at the most recent enrollment period at her place of employment, she had elected to enroll in health insurance coverage for the children, and she requested that the court order her to maintain that coverage in the future.
Contrary to Gary's arguments that this was an abuse of discretion, we find nothing in the record to suggest that the district court abused its discretion by ordering Jacqueline, at her request, to maintain health insurance coverage of the children. This assignment is wholly without merit.
Attorney Fees.
Gary also argues that the district court abused its discretion by awarding Jacqueline attorney fees in the amount of $2,000 because such an award was unsupported by the record and was unjust and inequitable.
The award of attorney fees depends on multiple factors, including the nature of the case, the services performed and results obtained, the earning capacity of the parties, the length of time required for preparation and presentation of the case, customary charges of the bar, and general equities of the case. Emery v. Moffett, 269 Neb. 867, 697 N.W.2d 249 (2005). Customarily in dissolution cases, attorney fees and costs are awarded only to prevailing parties or assessed against those who file frivolous suits. Noonan v. Noonan, 261 Neb. 552, 624 N.W.2d 314 (2001).
We do not find that Gary's complaint to modify the dissolution decree was frivolous, nor has that been alleged. However, Gary's complaint was dismissed entirely, while Jacqueline was successful in a portion of her cross-complaint. It is clear that the proceedings in this case were prolonged due to Gary's inaction, and over that time, Jacqueline testified that she incurred approximately $6,000 in attorney fees. Therefore, upon our review of the record, we do not find that the district court abused its discretion by granting Jacqueline's request for attorney fees in the amount of $2,000.
CONCLUSION
Having rejected each of Gary's assignments of error, we find that the district court did not abuse its discretion and affirm the order in its entirety.
Affirmed.