Jeanne Murphy v. Bruce Murphy

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September 15, 2004



APPELLANT [DV-97-4789]





Olly Neal, Judge

Appellant Jeanne Murphy appeals from an order of the Pulaski County Circuit Court denying her motion for an increase in child support. On appeal, she argues that the trial court abused its discretion in denying her motion to increase child support and in deviating from the Arkansas Family Support Chart in determining appellee Bruce Murphy's child support obligation. We affirm.

Appellee is a cardiologist. He is an owner/managing partner of Little Rock Cardiology Clinic, P.A. Appellant is an internal medicine physician with a Ph.D. in pharmacology. The parties were married in December of 1977. They have two daughters, Natalie, born March 1, 1986, and Hannah, born August 31, 1988. In 1997, appellant chose to leave her medical practice. The parties divorced in March of 2001. In their divorce decree, appellee was ordered to pay child support in accordance with the family support chart in the amount of $16,747 per month. On November 16, 2001, an agreed order was entered modifying appellee's support obligation to $13,750 based on twenty-one percent of appellee's net income of $785,714 for the 2000 tax year. Appellee subsequently filed a Petition for Reduction of Child Support on July 2, 2002. This was followed by appellant filing a Motion for Increase in Child Support on August 30, 2002. Both issues were heard jointly on December 18, 2002.

At the hearing, appellee admitted that he had agreed to pay $13,750 per month in child support. He said that he does not have a relationship with his daughters. He said that they do not respond to his cards and letters. Appellee testified that he has provided life insurance in the event of his death and has additional policies with Merrill Lynch. He admitted that, since the divorce, he has not purchased any life insurance that names his daughters as beneficiaries. He said that he was in the process of purchasing life insurances policies on each of his daughters. Appellee explained that he has a life insurance policy with John Hancock that has a death benefit of $4.5 million. Upon his death it will go to his estate. Appellee said that his will provides that his estate pours over into a revocable trust in which his daughters are to received two-thirds of the proceeds. Appellee testified that his sister will administer the trust. He explained that until his daughters reach age fifty, his sister will give them what she feels is appropriate. Appellee said that he has an additional $500,000 term life policy that lists his estate as the beneficiary. Appellee testified that he has also established retirement plans for his daughters. He estimated that, when his daughters reach age twenty-one, the plan will have a cash value of $250,000 each, and when they reach age sixty-five, it will provide each of them with $3.5 million. Appellee also testified that he has provided his daughters with health insurance.

Appellee testified that he and appellant had established a Gift Trust to cover their daughters' college educations. He conceded that the last time he contributed to the trust was sometime prior to 1997. Appellee said that appellant was the trustee of the trust. He stated that at one point the trust had a value of close to $200,000; however, in the past three to four years he had not seen the balance.

Appellee estimated that during the last year he made $1.3 million as a physician. He explained that after taxes this left $650,000. After paying $200,000 in child support and $250,000 toward a $2.4 million personal loan, he had only $200,000 for living expenses. Appellee testified that, since the divorce, he has spent $150,000 on a twenty-nine day trip to Tanzania for himself, his father, and two brothers. He said that he had spent $75,000 to take himself and his girlfriend on a twenty-three-day big game safari trip. He had also taken his girlfriend's family to the Cayman Islands. Appellee testified that his daughters have refused his travel offers. In addition to his pleasure trips, appellee testified that he also takes numerous business trips.

Appellant testified that she was board certified and had not ruled out returning to the practice of medicine. She said that she volunteered in the free clinic at St. Vincent Hospital. She said that she also spends time making online stock investments. Appellant testified that she had a $3 million portfolio. She was not sure as to whether the amount in her accounts was $1.8 million or $1.5 million. Appellant testified that she receives $13,750 per month in child support. She said that in 2001, she earned $257,061 from interest, dividends, and the sale of investments. During her testimony, appellant asserted that she and her daughters cannot live on the child support being provided. Appellant said that, because finances are not what they used to be, Natalie missed an opportunity to spend the summer at Cambridge. She did say that she had managed to lease Natalie a BMW as a birthday present for her sixteenth birthday. She explained that, in order to survive and cover her daughter' expenses, she must dip into her property settlement on a monthly basis. She also explained that if she had more child support, she could do other things with her daughters. Appellant stated that she wants an increase in child support and asked that it be awarded back to April 2002. She listed her daughters' monthly expenses as follows:

School tuition $1,097

School supplies & software $300

Lunch money $200

Allowance $300

Clothing $1,600

Medical, Dental, Drugs $500

Vitamins $10

Barber/Beauty parlor $140

Cosmetics/Toiletries $100

Gifts for Holidays/Birthdays $1,300

Camp $415

Extra Curricular $950

Cell phones $233.33

Daughter's BMW lease $550

Projected College expenses $7,500

She stated that, excluding the projected college expense, this totaled $7,695.33 per month. She said that this did not include housing, utilities, travel expenses, food, country club membership, athletic club membership, and car insurance. Appellant did not believe that the current child support exceeded her daughters' monthly expenses.

Appellant testified that appellee had not provided for their daughters' college education. She said that the Gift Trust contained only stock and had a value of $72,000. She said that their intention was not to provide for their daughters' education, but to hold for long-term growth. She stated that the last time appellee had contributed to the trust was sometime before 1997.

Appellant also said that appellee had failed to procure a life insurance policy that would secure his child-support obligation. She testified that appellee does have a life insurance policy with Sun Life. She explained that the policy was a "second-to-die" policy worth about $500,000 and that this would not cover appellee's child support obligation.

During her testimony, appellant explained that appellee's revocable trust presently held only five dollars and that when he died, their daughters would receive no direct benefit because appellee's sister would control any distributions made toward their daughters' support. She said that at age fifty her daughters would receive what was left; however, if they had any children this would go to them.

Bruce Engstrom testified as appellee's expert. He said that he was employed by Engstrom, Grayson, Green, and Patterson. Engstrom testified that he had reviewed appellee's tax return for the year 2001, as well as the 2001 tax returns for Little Rock Cardiology Clinic, P.A, Bruce Murphy M.D., P.A., and select data from the tax returns of Little Rock Heart Hospital of Arkansas, L.L.C. He said that appellee's total income for 2001 was $1,600,036 and that, after deductions for Medicare and social security, his remaining income equaled $925,665. He said that using Administrative Order Number 10, he calculated that appellee should pay $16,120 per month in child support for two children.

Richard Schwartz testified as appellant's expert. He said that he reviewed appellee's 2001 income tax returns, the corporate tax returns for "LRCC Heart Hospital, LRCC Building, Bruce Murphy, M.D., P.A., and BEM Leasing." He testified that he found that in 2001appellee had net income of $3,084,160, with an annual take home pay of $1,956,078.20. Schwartz said that in 2000, appellee's income was only $800,795. He said that under Administrative Order Number 10, appellee's child support obligation would be $34,156.62 per month. He explained that his calculations included a capital fee income from the sale of stock. He said that using Engstrom's analysis and excluding the capital fee income, appellee had an annual income of $994,109.20 and, if health insurance for the children is excluded, this amount equals $82,842 per month. He said that, using this method, appellee would owe $17,318 per month in child support. Schwartz believed that 2000 and 2001 were anomalies. He projected that in 2003, appellee's support obligation would only be $8,243 per month.

In an order dated January 29, 2003, the trial court found that appellee had a change in circumstances in that his circumstances had improved. The trial court thereby denied his motion for a reduction of child support. The trial court also denied appellant's motion for an increase in child support. On February 12, 2003, appellant filed a motion for reconsideration and new trial. Following a hearing on her motion, the trial court rendered an order denying the motion for reconsideration and new trial. Appellant has now brought this appeal.

We review child support awards de novo on the record. Paschal v. Paschal, 82 Ark. App. 455, 117 S.W.3d 650 (2003). In de novo review cases, we will not reverse a finding of fact by the trial judge unless it is clearly erroneous. Id. A finding is clearly erroneous when the reviewing court, on the entire evidence, is left with the definite and firm conviction that a mistake has been committed. Akins v. Mofield, Ark. , S.W.3d (Dec. 4, 2003). We give due deference to the trial court's superior position to determine the credibility of the witnesses and the weight to be given their testimony. Id. In a child-support determination, the amount of child support lies within the sound discretion of the trial court, and the trial court's finding will not be reversed absent an abuse of discretion. Id; Ford v. Ford, 347 Ark. 485, 65 S.W.3d 432 (2002). The trial court is required to make reference to the child-support chart, and the amount specified in the chart is presumed to be reasonable. Akins v. Mofield, supra; Ford v. Ford, supra. However, the presumption that the chart is correct may be overcome if the trial court provides written findings that the chart amount is unjust or inappropriate. Akins v. Mofield, supra; Ford v. Ford, supra.

On appeal, Appellant argues that the trial court abused its discretion in denying her motion to increase child support and in deviating from the Arkansas Family Support Chart in determining appellee's child support obligation. At the time of the parties' divorce, the child support guidelines provided that:

It is a rebuttable presumption that the amount of child support calculated pursuant to the most recent revision of the Family Support Chart is the amount of child support to be awarded in any judicial proceeding for divorce, separation, paternity, or child support. The court may grant less or more support if the evidence shows that the needs of the dependents require a different level of support.

It shall be sufficient in a particular case to rebut the presumption that the amount of child support calculated pursuant to the Family Support Chart is correct, if the court enters in the case a specific written finding within the Order that the amount so calculated, after consideration of all relevant factors, including the best interest of the child, is unjust or inappropriate. Findings that rebut the guidelines shall state the payor's income, recite the amount of support required under the guidelines, recite whether or not the Court deviated from the Family Support Chart and include a justification of why the order varies from the guidelines as may be permitted under SECTION V. hereinafter.

In Re: Administrative Order No. 10: Arkansas Child Support Guidelines, 331 Ark. 581 (1998). Section V of the guidelines sets out the following factors that the trial court must consider when it deviates from the amount of child support required by the chart:

1. Food;

2. Shelter and utilities;

3. Clothing;

4. Medical expenses;

5. Educational expenses;

6. Dental expenses;

7. Child care (includes nursery, baby sitting, daycare or other expenses for supervision of children necessary for the custodial parent to work);

8. Accustomed standard of living;

9. Recreation;

10. Insurance;

11. Transportation expenses; and

12. Other income or assets available to support the child from whatever source.

It also provides that the trial court may consider the following additional factors:

1. The procurement and maintenance of life insurance, health insurance, dental insurance for the children's benefit;

2. The provision or payment of necessary medical, dental, optical, psychological or counseling expenses of the children (e.g., orthopedic shoes, glasses, braces, etc.);

3. The creation or maintenance of a trust fund for the children;

4. The provision or payment of special education needs or expenses of the child;

5. The provision or payment of day care for a child;

6. The extraordinary time spent with the noncustodial parent, or shared or joint custody arrangements;

7. The support required and given by a payor for dependent children, even in the absence of a court order; and

8. Where the amount of child support indicated by the chart is less than the normal costs of child care, the court shall consider whether a deviation is appropriate.

In its January 29 order, the trial court stated that it was denying appellant's motion for the following reasons:

It is the court's opinion that this is a case that was contemplated when Administrative Order Number 10 was promulgated, and that it is the opinion of the court that the lifestyle of the parties' daughters, Natalie and Hannah, is lavish. The chart requires the court to presume that [appellee] should pay 21 percent of his net pay as support for two children, unless the payor rebuts that presumption. It is the court's opinion that defendant has conclusively rebutted that presumption.

Under the deviation consideration of Section 5(a) of Administrative Order Number 10, items one through seven, food, shelter and utilities, clothing, medical expenses, educational expenses, dental care and child care, are all basic subsistence, and clearly, both Natalie and Hannah more than enjoy basic subsistence.

On their accustomed standard of living, it appears to the court, with Natalie getting a new BMW for her birthday and taking trips to Cambridge, that the children have not suffered any relaxation in their standard of living.

The court does not recall in the previous litigation between the parties in this case any discussion of an agreement to send the girls to private colleges, and the court finds that such expenses cannot be used to raise the standard of living if that, in fact, is what is happening, although the court does not find that it is.

For recreation, the court finds that the children have more than adequate allowance. The court finds that the allowance is not for clothing or any of their subsistence needs, but is purely for recreation.

The court finds that the children's transportation expenses are well provided for.

That as far as any other income or assets available for the support of the children, [appellee] has mentioned that [appellee] would be willing to be more generous with his daughters, but that he does not have a chance to talk to them. For whatever reason, the court does not know. The court finds that the court will take [appellee] at his word that if he is able to establish a good relationship with the children, that he would be more generous.

The court also considers that the [appellant], is a multi-millionaire in her own right.

The additional factors in subparagraph (b) in Number 1 of Administrative Order Number 10 is the procurement or the maintenance of life insurance, health insurance, and dental insurance for the children's benefit. The court finds that the health and dental benefits are provided for the children by the [appellee]. The court finds that the court sees nothing wrong with the way [appellee] has structured the mechanism to comply with the order of the court that he provide life insurance to cover the child support payments. The court does find, however, that in the event that the policy provided by [appellee] is indeed a second to die policy as [appellant] testified that it was, then there will be no steady flow of income on behalf of Natalie and Hannah in case of the death of the [appellant]. The court finds that since that matter is not before the court directly today, that matter will be reserved until motion and hearing requested by either party. Pursuant to section (b)-2 of Administrative Order Number 10, the provision or payment of necessary medical, dental, optical, and psychological counseling expenses of the children, the court finds that the children are receiving all of these benefits.

The court finds that through the creation or the maintenance of a trust fund for the children, that [appellee's] testimony shows that the children are going to be more than adequately cared for all the way through their long and happy lives. The court finds that number 4 of the factors for deviation does not really apply, and that number 5 no longer applies, as the children are old enough now that daycare is not required. The court finds that number 6 really does not apply in this case, in that the minor children are not spending any time with the [appellant]. Number 7 regarding the support required or given by a payor for dependent children even in the absence of court order, the court takes [appellee] at his word that he has done that in the past and will be glad to continue to do so if he establishes a relationship with the children.

The reasons enumerated by the trial court justify its deviation from the child-support guidelines. Appellant is unable to show an abuse of discretion by the trial court in denying her motion for an increase in child support; therefore, we affirm.


Pittman and Gladwin, JJ., agree.