In re: Steven Anthony Ehlen, Appellant, vs. Patricia Kathleen Putz, Respondent.
This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALSC4-02-2147
Steven Anthony Ehlen,
Patricia Kathleen Putz,
Filed July 22, 2003
Stearns County District Court
File No. F49952099
Mark A. Olson, Olson Law Office, 2605 East Cliff Road, Burnsville, MN 55337 (for appellant)
Patricia Kathleen Putz, 531 Wilson Avenue Southeast, St. Cloud, MN 56304 (pro se respondent)
Considered and decided by Kalitowski, Presiding Judge, Randall, Judge, and Schumacher, Judge.
U N P U B L I S H E D O P I N I O N
On appeal from the child support magistrate's amended order issued following a remand from the district court, appellant argues that the child support magistrate (1) violated the district court's instructions on remand by understating the amount appellant previously paid to respondent on the child's behalf; (2) overstated appellant's net monthly income; (3) failed to use current figures in setting appellant's support obligation; and (4) failed to support an above-the-guidelines support obligation with adequate findings. We affirm.D E C I S I O N
This court reviews a district court's order confirming a child support magistrate's (CSM) decision on child support under an abuse-of-discretion standard. Ludwigson v. Ludwigson, 642 N.W.2d 441, 445-46 (Minn. App. 2002). Likewise, determinations of past support due under Minn. Stat. § 257.66, subd. 4, are reviewed under an abuse-of-discretion standard. LaChapelle v. Mitten, 607 N.W.2d 151, 166 (Minn. App. 2000), review denied (Minn. May 16, 2000).
The CSM reduced appellant's past obligations according to his past expenditures for the benefit of T.A.E. pursuant to Minn. Stat. § 257.66, subd. 4, which states:
The court shall limit the parent's liability for past support of the child to the proportion of the expenses that the court deems just, which were incurred in the two years immediately preceding commencement of the action.
Minn. Stat. § 257.66, subd. 4 (2002). Because the paternity action was commenced 22 months after T.A.E.'s birth, past support and expenditures were computed from the time of his birth.
In the CSM's first order, the CSM credited appellant with $10,000 in back support. The district court confirmed the $10,000 credit, concluding that it was a reasonable amount. In the CSM's amended order, appellant was given a credit of $12,000. Appellant contends that he should have received a credit of approximately $20,000, arguing that the initial $10,000 credit should have been awarded in addition to any additional credits awarded by the CSM in the amended order. We disagree.
The CSM determined the total amount of back support owed, $29,988.65, by calculating appellant's net income for each of the relevant time periods, according to appellant's tax returns, and applying the appropriate guidelines amount, plus the 15% upward deviation. The CSM then credited appellant for $12,000 because appellant paid $6,919 to respondent through Benton County, paid $2,520 directly to respondent, and paid part of the costs of medical insurance, uncovered medical and dental expenses, and school/daycare costs. Thus, the CSM determined that the total amount appellant owed for back support was $17,988.65.
We conclude the district court did not abuse its discretion in confirming the decision of the CSM to grant appellant a credit of $12,000. First, the district court merely stated in its order that the $10,000 credit applied by the CSM in the first judgment was reasonable. The court did not order the CSM to apply the $10,000 credit in addition to any other applicable credits. Second, the district court agreed with the CSM that the expenditures appellant made for life insurance for T.A.E., the Gifts to Minor Account, and the educational IRA were voluntary gifts and should not affect past support. Third, the district court noted in its first order that appellant would have had a responsibility to pay for a large part of T.A.E.'s healthcare separate from the amounts paid for child support, and thus, appellant was not given a credit for the entire amount he claimed he paid for T.A.E.'s medical and dental care.
Appellant also argues the CSM failed to follow the directive of the district court to disregard appellant's partnership income in computing his support obligation. After the CSM amended her order, the district court again reviewed the CSM's decision and approved it, except for correcting the social security and Medicare withholding rate.
A district court order confirming a CSM's decision on child support is reviewed under an abuse-of-discretion standard. Ludwigson, 642 N.W.2d at 445-46. Moreover, a district court's findings on net income for purposes of child support will be affirmed on appeal if those findings have a reasonable basis in fact and are not clearly erroneous. State ex rel. Rimolde v. Tinker, 601 N.W.2d 468, 470 (Minn. App. 1999).
In the CSM's first order, the CSM included all of appellant's partnership income in computing his net income. Upon review, the district court directed the CSM to "[c]ompute [appellant's] income excluding the sums reported on [appellant's] tax returns as partnership income * * * ." The district court did not order the CSM to exclude dividend income, capital gains, or pension income. After the district court ordered the exclusion of the partnership income, the CSM ignored Line 17 on appellant's tax returns in computing appellant's net income. Line 17 is labeled as income from, "Rental real estate, royalties, partnerships, S corporations, trusts, etc." Thus, the CSM followed the district court's directive and excluded appellant's partnership income.
Moreover, both the CSM and the district court commented on the difficulty in determining appellant's precise income, and the district court approved the CSM's application of the standards under Roatch v. Puera, 534 N.W.2d 560 (Minn. App. 1995). These standards allow courts to compute income based on several factors, including business records, tax returns, expert testimony, and examination of the parties' lifestyles. Id. at 565. The CSM found that: (1) appellant leads a relatively extravagant lifestyle that includes fishing trips and vacationing in Mexico; and (2) appellant pays $1,000 per month for car payments. Thus, although appellant testified that he has no savings account and his checking account is basically at zero, the CSM found that there is evidence that he has money available to him. We cannot say the CSM erred in concluding that appellant's lifestyle is more luxurious than his claimed income could support.
Appellant also contends that the CSM improperly reduced several of appellant's claimed business expenses because respondent never challenged any of his claimed business deductions. See Minn. Stat. § 518.551, subd. 5b(f) (2002) ("The person seeking to deduct an expense, including depreciation, has the burden of proving, if challenged, that the expense is ordinary and necessary."). But the record indicates that at the time of the hearing before the CSM, Benton County Human Services was also a party to the action, and Benton County Human Services challenged virtually every aspect of appellant's claimed income.
Appellant further argues that the CSM should have subtracted $20,172 from his income for 2000 to reflect his reduction in commissions for that year. But the record indicates that in the CSM's amended findings, the CSM deducted $1,681 from appellant's gross monthly income. Thus, the CSM gave due regard to the loss of appellant's commissions.
Appellant argues that there is "no rhyme or reason" to the CSM's disallowance of deductions. But in the CSM's amended findings, the CSM points out that on appellant's 2000 tax return, he claimed $15,315 for travel expenses while in 1999, he claimed $1,297 for travel expenses and in 1998, he claimed $0.00. Because the travel expenses for 2000 appear excessive, it was reasonable for the CSM to be critical of all of appellant's claimed travel expenses, and we cannot say it was error to count 2/3 of his travel expenses as income. Likewise, in 2000 appellant claimed $19,384 for home-office expenses, and in 1999, he only claimed $8,400. Thus, it was also reasonable for the CSM to count 1/2 of all claimed office expenses as income. Further, because net income may be different from taxable income, it was within the district court's discretion to count parts of appellant's claimed business deductions as income. Minn. Stat. § 518.551, subd. 5b(f) (stating that ordinary and necessary expenses do not include business expenses determined by the court to be inappropriate for calculating income for child support).
Moreover, the CSM had the benefit of seeing appellant testify regarding his income. Any credibility determinations made by the CSM were entirely within her discretion, and on this record, we will defer to them. See Fontaine v. Hoffman, 359 N.W.2d 692, 694 (Minn. App. 1984) (stating that appellate courts give due regard to the district court's opportunity to judge the credibility of witnesses).
Because appellant's precise income is difficult to determine and his lifestyle does not fit with his claimed income, we conclude the district court did not abuse its discretion in approving the CSM's exclusion of partnership income only and the disallowance of certain business deductions.
Current net income must be determined for purposes of setting child support. Thomas v. Thomas, 407 N.W.2d 124, 127 (Minn. App. 1987). And a district court's findings on net income for purposes of child support will be affirmed on appeal if those findings have a reasonable basis in fact and are not clearly erroneous. State ex. rel. Rimolde, 601 N.W.2d at 470.
Appellant argues that the CSM erred in using his 2000 tax returns for determining net income. But when the record closed on February 27, 2002, appellant's tax returns for 2001 had not yet been prepared, as the partnership information from the family partnerships was not yet available. Rather, appellant provided the court his commission statements from July 2001 to January 2002.
As previously discussed, the district court directed the CSM to exclude partnership income from appellant's income. But the district court did not instruct the CSM to exclude capital gains and dividend income. Without appellant's 2001 tax return reporting capital gains and dividend income, the CSM was unable to accurately determine appellant's income in 2001 using only his commission statements. Thus, we conclude that the CSM did not abuse her discretion in using appellant's 2000 tax returns to compute appellant's ongoing child-support obligation.
A district court has broad discretion to provide for the support of the parties' children. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). The district court abuses its discretion when it establishes child support in a manner that is against logic and the facts on the record. Id.
Appellant argues that the CSM and the district court failed to make sufficient findings to support the 15% upward deviation from the guidelines to his child-support obligation.
To grant a deviation from the guidelines, the court must make findings addressing the criteria in Minn. Stat. § 518.551, subd. 5(c). Minn. Stat. § 518.551, subd. 5(i) (2002). Those criteria include the parents' income and resources, the child's financial and educational needs, and the child's standard of living. Minn. Stat. § 518.551, subd. 5(c) (2002).
Here, there were findings regarding the parties' respective incomes and resources. Specifically, the district court found that appellant's net monthly income was $2,478.30. And the CSM found that respondent's net monthly income was approximately $1,212 and that she receives public assistance in the form of medical assistance. The CSM also found that respondent's monthly household expenses were approximately $1,230, as opposed to appellant's monthly household expenses of approximately $6,000. In addition, the CSM found that the parties and T.A.E. lived together for approximately one year from September 1998 to July 1999. A court may deviate upward from the guidelines if the custodial parent is unable to sustain a child's accustomed standard of living, and the obligor has the ability to do so. McNulty v. McNulty, 495 N.W.2d 471, 473 (Minn. App. 1993), review denied (Minn. Apr. 12, 1993). Here, the record supports the finding that respondent, the custodial parent, is unable to sustain T.A.E.'s standard of living. Therefore, it was within the court's discretion to order an upward deviation from the guidelines.
Appellant argues that the court erred because this case is similar to the circumstances in State v. Hall, 418 N.W.2d 187 (Minn. App. 1988), review denied (Minn. May 4, 1988). We disagree. In contrast to Hall, respondent here is not asking the court to place her and her family in a better financial position, but only to maintain T.A.E.'s standard of living. See McNulty, 495 N.W.2d at 473.
We conclude that the CSM and the district court made findings addressing the relevant statutory factors, that the findings were sufficient for meaningful review of the upward deviation, and that the upward deviation was not an abuse of discretion.