State of Minnesota ex rel. Kandiyohi County Family Services, Respondent, Keri Lynn Loftness as mother and natural guardian of MacKenzie K. Loftness, a minor child, Respondent, vs. Yasser Samin Elmahdy, Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C3-02-2091

 

 

State of Minnesota ex rel.

Kandiyohi County Family Services,

Respondent,

 

Keri Lynn Loftness as mother and natural guardian of

MacKenzie K. Loftness, a minor child,

Respondent,

 

vs.

 

Yasser Samin Elmahdy,

Appellant.

Filed July 29, 2003

Affirmed

Lansing, Judge

 

Kandiyohi County District Court

File No. F39850262

 

 

Boyd Beccue, Kandiyohi County Attorney, John Kallestad, Assistant County Attorney, 415 Southwest Sixth Street, Willmar, MN  56201 (for respondent State)

 

Ann M. Gustafson, Waechter & Gustafson, 328 Fifth Street Southwest, P.O. Box 567, Willmar, MN  56201 (for respondent Loftness)

 

Scott J. Strouts, 1008 Plymouth Building, 12 South Sixth Street, Minneapolis, MN  55402 (for appellant)

 

            Considered and decided by Lansing, Presiding Judge, Peterson, Judge, and Wright, Judge.

U N P U B L I S H E D   O P I N I O N

LANSING, Judge

            In a consolidated motion hearing, the district court denied Yasser Elmahdy's motion to reduce his child support obligation and found him in contempt for failure to pay arrearages.  Elmahdy appeals the denial of his reduction motion and challenges the court's evidentiary ruling that allowed his 2001 bank records into evidence.  Because the district court did not misapply the law, abuse its discretion, or make a decision against logic and the facts of record, we affirm.

F A C T S

            Keri Loftness and Yasser Elmahdy are the parents of a child born in September 1996.  Elmahdy's paternity was adjudicated in 1999, and judgment was entered against him for $53,528 in past due child support.  The court ordered Elmahdy to pay $1,200 a month in continuing child support.  A cost-of-living adjustment in May 2002 increased this amount to $1,291.

Elmahdy made regular child support payments from February 2000 to April 2001.  At that point Elmahdy unilaterally reduced his payments to $750 a month.  Between April 2001 and February 2002, he made seven payments of $750 and made no voluntary payments after February 24, 2002.  His arrearages, together with the original unpaid judgment, total $86,927.73.

Elmahdy is the sole owner and employee of Enterprise Systems Consulting, Inc., a subchapter S corporation that provides computer-consulting services.  In 1999 when the child support amount was first calculated, Elmahdy's annual net income was $57,600, and his monthly net income was $4,800.  In 2000 Elmahdy's gross income was $52,280.  In 2001 Elmahdy's consulting business reported income of $70,400, with a net income of $49,269.  At the October 2002 hearing, Elmahdy testified that he had received $20,000 in income in 2002 and anticipated an additional $20,000 before the end of the year.  Loftness is employed at Logical Garage with a gross income of $800 biweekly and a net monthly income of $1,174.17.

In July 2002 Elmahdy moved to modify his child support obligation because the income from his consulting business had declined.  The motion was consolidated with the state's motion to hold Elmahdy in contempt for failure to pay child support.  At the motion hearing, the state presented testimony from a child support officer and introduced six exhibits that included Elmahdy's child-support-payment history and Elmahdy's bank statements, cancelled checks, and other financial records obtained through the discovery process.  Elmahdy also testified.

The district court found that some change had occurred in Elmahdy's earned income but that he had not had a substantial reduction in his total income.  The court considered "all of the earnings and resources," including $70,000 equity in his home and "the substantial amount of unaccounted deposits and withdrawals from his bank accounts."  The court concluded that the existing child support order was not unreasonable or unfair.

The court denied Elmahdy's modification motion and ordered him to continue his monthly child support in the amount of $1,291, plus twenty percent to be credited toward arrearages.  Based on an agreement among the parties, the court also entered a finding of civil contempt with specified conditions for purging.  Elmahdy appeals, arguing that the district court erred in (1) finding that he had not demonstrated a substantial change in circumstances that made his child support obligation unreasonable or unfair, and (2) admitting evidence of his 2001 bank transactions.

D E C I S I O N

The district court has broad discretion in determining whether to modify child support orders.  Gully v. Gully, 599 N.W.2d 814, 820 (Minn. 1999).  A reviewing court will reverse the determination only if the district court "abused its broad discretion by making a clearly erroneous conclusion that is against the logic and the facts on [the] record."  Id. (quotation omitted).  A ruling on the admissibility of evidence is reversible only if the district court abused its discretion and that abuse of discretion resulted in prejudice to the objecting party.  Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990).

I

Modification of child support is warranted if the moving party shows a substantial change in circumstances that makes the existing child support obligation unreasonable and unfair.  See Minn. Stat. § 518.64, subd. 2(a) (2002).  In considering a motion for modification, the court is required, under Minn. Stat. § 518.64, subd. 2(c)(1)(2002), to consider the factors listed in section 518.551, subdivision 5, which include "all earnings, income, and resources of the parents, including real and personal property."  Minn. Stat. § 518.551, subd. 5(c) (2002).

A district court has broad discretion in determining the income of self-employed individuals because "the opportunity for a self-employed person to support himself yet report a negligible net income is too well known to require exposition."  Ferguson v. Ferguson, 357 N.W.2d 104, 108 (Minn. App. 1984).  The district court may consider cash flow in determining an individual's income.  Schelmeske v. Veit, 390 N.W.2d 309, 312 (Minn. App. 1986).  We defer to the district court's credibility determinations.  Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).

Elmahdy submitted minimal evidence to enable the district court to calculate his 2002 income.  He testified that at the time of the motion hearing, he had earned $20,000 and that he would "maybe" earn another $20,000 by the end of the year.  But the record shows that Elmahdy had a substantial cash flow in 2002.  In 2002 he made multiple deposits of large sums of money, which were not adequately explained.  For example, Elmahdy deposited $22,000 in June; he identified only $5,000 of this amount as earnings. In July Elmahdy received $9,000 from refinancing his home, which is valued at $350,000, with equity of $70,000 at the time of the hearing. 

Elmahdy argues that the district court's findings are inconsistent because the order recognizes that his 2002 gross income would only be $40,000.  The court, in its findings, listed Elmahdy's received and anticipated 2002 income, which totaled $40,000.  But Elmahdy confuses earnings with income.  The court found that "[c]onsidering all of the earnings and resources of Mr. Elmahdy, including the $70,000 equity in his home and the substantial amount of unaccounted deposits and withdrawals from his bank accounts, * * * [Elmahdy's] existing child support order is neither unreasonable or unfair." 

The record shows that beyond the equity in his home and his significant cash deposits, Elmahdy maintains two life-insurance policies with his sister as the beneficiary, that the monthly payments on the policies are $1,100, that he is current on monthly mortgage payments of $2,400, that he has withdrawn significant amounts of money at ATMs located in gambling establishments, that he has recently taken vacations in the Wisconsin Dells, Chicago, and Las Vegas, and that his girlfriend, who lives with him, does not contribute to household expenses even though she is employed.

The district court did not abuse its discretion by considering Elmahdy's resources, unexplained deposits to his bank account, and his substantial living expenses.  We conclude that the district court acted within its discretion and the applicable law in finding that Elmahdy's monthly child support payment of $1,291 is not unreasonable and unfair and in denying Elmahdy's motion to reduce that amount.

II

 

All relevant evidence is admissible.  Minn. R. Evid. 402.  Relevant evidence is evidence having any tendency to make the existence of any fact that is one of consequence to the determination of the action more probable or less probable than it would be without the evidence.  Minn. R. Evid. 401.

Elmahdy argues that the district court abused its discretion by admitting his 2001 bank statements, over his objection, because the amount of money he had in 2001 was not relevant to determining how much child support he could afford to pay in 2002.  He argues that the 2001 bank statements were prejudicial because they "clearly and substantially influenced" the district court in deciding that Elmahdy's child support order was reasonable and fair.

In furtherance of his motion to modify child support, Elmahdy maintained that his income declined in "mid-2001" and he could only afford to make sporadic $750 child support payments starting in May 2001.  He provided the court with his 1999, 2000, and 2001 federal and state tax returns to support this argument.

Elmahdy's bank statements were admissible as relevant evidence for three reasons.  First, because Elmahdy argued that his income began declining in 2001, his bank records for 2001 were relevant to test the accuracy of that claim.  The only income listed on Elmahdy's 2001 federal tax return is the $49,200 he attributed to his business earnings.  Therefore, based on earnings alone, Elmahdy showed a decrease from his $57,000 income in 1999.  But the bank statements show that Elmahdy deposited more than $90,000 in cash between March 2001 and December 2001.  Elmahdy did not attribute any of this money to earnings from his business.  Thus the bank statements show that although Elmahdy's earnings may have decreased, the income reflected in his 2001 bank deposits increased from his 1999 income.

Second, as a self-employed individual, Elmahdy's future earnings and income can be predicted to some extent by his past earnings and income.  Consequently, Elmahdy's entire 2001 income is relevant to what earnings and income could be anticipated in 2002.

Third, the motion hearing was a consolidated hearing on contempt and support reduction.  Although a part of the contempt determination was stipulated, the court was asked to make a determination on the amount of arrearages Elmahdy was required to pay.  The court was also asked to enter judgment for $17,048 in unpaid support from April through December 2001.  For these reasons, the district court did not abuse its discretion in admitting the 2001 bank statements.

            Affirmed.