Kirby Johnson v. Donna Johnson

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DIVISION II  CA07­373  November 7, 2007  KIRBY JOHNSON  APPELLANT  AN APPEAL FROM WASHINGTON COUNTY  CIRCUIT COURT  [NO. DR2006­1157­6]  v.  HONORABLE MARK LINDSAY  CIRCUIT JUDGE  DONNA JOHNSON  APPELLEE  AFFIRMED IN PART; REMANDED  IN PART  Kirby  Johnson  appeals  from  a  divorce  decree  awarding  appellee  Donna  Johnson  $5550 per month in alimony for one year and $2900 per month thereafter. He argues that the  trial court erred in calculating his income, in applying two of the factors set out in Boyles v.  Boyles,  268  Ark.  120,  594  S.W.2d  17  (1980),  and  in  awarding  an  excessive  amount  of  alimony. We affirm in part and remand in part.  Kirby and Donna were married in 1984. During most of their marriage, they owned  and operated Johnson Air, Inc., a heating and air conditioning business, which afforded them  a comfortable lifestyle. Kirby’s annual salary beginning in 2004 was $57,200 (about $4500  per month) and Donna, who kept the books at the business, earned $32,916 annually. Donna  and Kirby also owned the land upon which Johnson Air and other businesses were located  and  received  $6000  per  month  in  rents.  In  addition,  the  business  paid  several  of  their expenses, such as car payments, gas, insurance, maintenance, cell phones, some meals and  entertainment, and even clothing.  On June 20, 2006, Donna filed for divorce seeking alimony and a division of marital  property. Prior to trial, she and Kirby agreed that, with the exception of a few items, each  would receive the personal property in his or her possession; their motor home would be  consigned for sale but that Kirby could maintain possession provided he made payments on  it; Donna would have the use of their home until it sold; Kirby would receive the business  realty, with each party having the option to buy the other out; and Kirby would pay Donna  for her interest in Johnson Air, Inc. This arrangement meant that Kirby would continue to  own  and  operate  Johnson  Air  and  receive  the  rents  that  had  been  paid  on  the  business  property. It also meant that Donna would no longer be employed at the company.  On November 16, 2006, a trial was held to determine the value of the business and  Donna’s claim for alimony. Based on a report by expert Cheryl Shuffield, the trial court  valued the business at $148,000 and ordered Kirby to pay Donna $74,000 for her share. That  ruling is not at issue on appeal. The court also awarded Donna $5550 per month in alimony  for  one  year,  then  $2900  per  month  thereafter  with  termination  and  modification  to  be  1  governed by Arkansas case law and Ark. Code Ann. § 9­12­312 (Repl. 2002).  Kirby appeals  from that order, contending that the court miscalculated his income, erred in applying certain 1  This statute provides that, unless otherwise ordered by the court or agreed to by  the parties, the liability for alimony shall automatically cease upon the recipient’s  remarriage or establishment of a relationship that produces a child or children under  certain conditions.  2  criteria to be considered in awarding alimony as set forth in Boyles, supra, and awarded  excessive alimony.  We review domestic relations cases de novo on the record. Taylor v. Taylor, 369 Ark.  31, ___ S.W.3d ___ (2007). An award of alimony is a question that addresses itself to the  sound discretion of the trial court. Kuchmas v. Kuchmas, 368 Ark.  43,  ___ S.W.3d ___  (2006).  The  trial  court  can  make  an  award  of  alimony  that  is  reasonable  under  the  circumstances. Id. The purpose  of  alimony is to rectify economic imbalances in earning  power and standard of living in light of the particular facts in each case. Id. The primary  factors  that  a  court  should  consider  in  determining  whether  to  award  alimony  are  the  financial need of one spouse and the other spouse’s ability to pay. Id.  Kirby’s  first argument is that the trial court miscalculated his income for support  purposes. The court found that Kirby earned $7500 per month, based on his $4500­per­  month salary; $1000 per month in rents; and $2000 per month in company­paid expenses.  Kirby contends that the rents and company­paid expenses should not have been included in  the calculation.  The evidence at trial revealed that four separate monthly rental payments were made  to Kirby on the business property: $3700 and $500 from Johnson  Air,  Inc.; $1200 from  Johnson Hardware; and $600 from Smith Two­Way Radio. Kirby testified that, from these  rents, he paid the $3887 mortgage on the business property and the $988 payment on the  motor home (in which he was residing at the time of the hearing). There was also testimony  that the $500 rental payment went toward paying an IRS debt. Kirby further states in his 3  brief that the $600 rental payment “will be used to pay off the loan that was required to buy  Mrs. Johnson out of the family business,” although he cites no such testimony in the record.  Kirby contends that, because virtually all of the rental payments were earmarked for specific  purposes, they were not “profit” and should not have been considered income. We disagree.  Of  the  $6000  in  monthly  rentals,  only  $1000,  or  less  than  twenty  percent,  was  considered by the court to be income to Kirby. The court apparently took into account that  part of the rental income went toward paying the $3887 mortgage on the rental property. See,  e.g.,  McWhorter  v.  McWhorter,  346  Ark.  475,  58  S.W.3d  840  (2001)  (allowing,  in  calculating income for child­support purposes, reduction of income for losses or deductions  attributable to the income­producing activity). The court may also have generously made an  allowance for Kirby’s $988­per­month payment on the motor home, given that Donna was  using the marital residence and Kirby was living in the motor home, which, under the terms  of the decree, obligated him to pay for it. These allowances would have reduced Kirby’s  rental income to approximately $1000, and the fact that the court made no further allowances  is not an abuse of discretion. This is especially true in light of the fact that Kirby cites no  authority for his proposition on this point and that trial exhibits showed him using the rental  account to pay some personal expenses.  Likewise, we do not find an abuse of discretion in the court’s imputing $2000 in  income to Kirby in the form of company­paid expenses. Johnson Air, Inc., paid for Kirby’s  use of two vehicles, gasoline, insurance, maintenance, cell phones, life insurance, an IRA  contribution, some entertainment and meals, and some clothing. When calculating an award 4  of alimony, the trial court should consider the total income, from whatever source, of both  parties. See Davis v. Davis, 79 Ark. App. 178, 84 S.W.3d 447 (2002). Income for support  purposes may include company­paid expenses. See Brown v. Brown, 76 Ark. App. 494, 68  S.W.3d 316 (2002); Weir v. Phillips, 75 Ark. App. 208, 55 S.W.3d 804 (2001) (holding that  use of a company vehicle may be considered income for child­support purposes).  Kirby argues that Johnson Air, Inc., is facing financial difficulties and does not have  the funds to pay such expenses. However, there was a conflict in the evidence on this point,  which was the trial court’s prerogative to resolve. See McNamara v. Bohn, 69 Ark. App. 337,  13 S.W.3d 185 (2000). Kirby also questions the $2000 figure used by the court. He refers  to a portion of Shuffield’s report showing that, as of October 2006, the company had spent  far  less  than  $2000  per  month  in  meals  and  entertainment  expenses,  employee­benefits  expenses,  and  miscellaneous  expenses.  We  note  that  the  figures  cited  by  Kirby  do  not  include vehicle expenses, insurance, and telephones, all of which were listed as separate line  items  on  Shuffield’s  spreadsheet,  and  the  total  of  these  accounts  for  a  large  amount  of  monthly  expenses  received  by  Kirby.  Moreover,  Kirby  testified  that  his  income  was  $100,000 per year, which indicates that he was receiving approximately $3500 per month  more than his $57,200 yearly salary. In light of these factors, we find no abuse of discretion  in the court’s calculation of Kirby’s income.  Kirby argues next that, in awarding an increased amount of alimony during the year  following the divorce, the trial court erred in the manner it considered Donna’s health and  her ability to work. A party’s health and the ability to earn income are two of several factors 5  that a trial court may consider in awarding alimony. Boyles, supra. The court here found that  Donna was forty­seven years old; that she was in an “acute state of anxiety and depression”  for  which  she  was  taking  antidepressants  and  attending  counseling;  and  that  the  antidepressants made her sleepy and she was therefore unable to work more than half a day.  Kirby contends first that more attention should have been paid to Donna’s history of  using the antidepressant Prozac for thirteen years prior to the divorce, which did not affect  her ability to work during that time. However, Donna testified regarding her mental state  following  the  parties’  separation.  She  said  that  she  and  Kirby  separated  in  April  2006  because Kirby had not been coming home or would come home late at night and intoxicated.  She stated that she discovered several cell phone calls he made to their next­door neighbor,  and after the separation, he began staying with the neighbor. As a result, Donna said, she was  “torn up” by the situation. She lost thirty to thirty­five pounds, her hands shook, she cried  a lot, and she had difficulty sleeping. Her doctor prescribed two medications to treat her  depression and anxiety, and she began attending counseling, which was recommended to  continue for at least fourteen sessions. Based on this testimony, the trial court may have  concluded that Donna’s depression and anxiety after the separation were more acute than  before the separation and therefore had a greater impact on her ability to function. This was  a credibility determination to be made by the trial court. See generally Taylor, supra.  Kirby also argues that, if Donna’s new medicine was affecting her sleep in such a way  that she could not work, she should see her doctor and change her medication. We find no 6  abuse of discretion  in the trial court’s refusal to interfere with the decisions of Donna’s  medical care providers.  Additionally, Kirby notes that, at the time of the hearing, Donna was looking for a  part­time job. He further points out that the court, in its letter ruling, stated that Donna was  “unable to work more than half a day” and could not “make a significant amount of money  for the next three to six months.” Kirby interprets this to mean that Donna was capable of  working, at least on a part­time basis, far sooner than one year after the divorce. However,  the  court  ultimately  found  that,  at  the  conclusion  of  twelve  months,  Donna  “should  be  working and capable of providing some of her own support in an amount equal to what she  was earning at Johnson Heat and Air.” Obviously, the court did not believe that Donna’s  desire or limited ability to begin earning part­time income within a three­to­six­month period  would rehabilitate  her to the point that she could support herself in the manner she was  capable of prior to the divorce. The court was in the best position to view the needs of the  parties in connection with an alimony award. See Taylor, supra.  We also observe that Donna’s health and earning ability were only two of several  factors considered by the court in making the alimony award. The court also looked to the  length of the parties’ marriage, their standard of living, Kirby’s health and income, the value  of the couple’s property, and the fact that Kirby would retain an income­producing business  while Donna would not. See Boyles, supra; Mearns v. Mearns, 58 Ark. App. 42, 946 S.W.2d  188 (1997). All of these factors weighed in favor of the trial court’s award. 7  Additionally,  Kirby  claims  that  $5550  per  month  was  an  undue  burden  on  him  because it amounted to over seventy percent of his $7500 income (as calculated by the trial  court).  However,  we  adhere  to  no  mathematical  formula  or  bright­line  rule  in  awarding  alimony.  See  Kuchmas,  supra;  Valetutti  v.  Valetutti,  95  Ark.  App.  83,  ___  S.W.3d  ___  (2006).  The  trial  court  can  make  an  award  of  alimony  that  is  reasonable  under  the  circumstances. Kuchmas, supra.  The award was reasonable under these circumstances. Using the parties’ testimony  and their affidavits of financial means, the court calculated Kirby’s income as $7500 per  month and his expenses as $1895 per month, leaving him with expendable income of $5605  and  the  ability  to  pay  the  alimony  award.  See  Kuchmas,  supra  (holding that,  where  the  alimony obligor was left with $275 after expenses and child­support obligations, he had the  ability to pay a $100­per­month alimony  award). Donna lost her job as the result of the  divorce and would not be able to regain her earning power for some time. Yet she had $5450  in  monthly  expenses  to  be  met,  and  the  trial  court  considered  her  financial  need  in  this  regard. As stated previously, the purpose of alimony is to rectify economic imbalances in  earning power and standard of living in light of the particular facts in each case. Id. Further,  the primary factors that a court should consider in determining whether to award alimony are  the financial need of one spouse and the other spouse’s ability to pay. Id. The trial court was  properly guided  by  these factors here. We therefore cannot say that the court abused its  discretion in awarding Donna $5550 per month alimony for one year. 8  Kirby  also  contends  that,  if  the  percentages  listed  for  support  calculations  in  Administrative Order No. 10 are used, a figure of $1575 in alimony would result. While the  language in some cases has indicated that the trial court should consult the chart amounts in  Administrative Order No. 10 in making an alimony award, see Cole v. Cole, 82 Ark. App.  47, 110 S.W.3d 310 (2003); Schumacher v. Schumacher, 66 Ark. App. 9, 986 S.W.2d 883  (1999), those cases involved alimony paid to custodial parents, which is not the situation  here. In the present case, the trial court properly considered the relevant factors listed in  Boyles and made an award accordingly. We consequently find no abuse of discretion.  The court’s award of alimony is affirmed. In reviewing the record, the divorce decree  sets out the parties’ property­settlement agreement but did not mention three particular items  that the parties and their attorneys agreed to divide at trial: an IRA, an annuity, and the cash  value of two life insurance policies. We remand for the limited purpose of allowing the trial  court to include an appropriate order reflecting the division of these items.  Affirmed in part; remanded in part.  GLOVER and MILLER, JJ., agree. 9 

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