IN RE THE MARRIAGE OF PEGGY JEAN NIELSEN AND RANDALL EUGENE NIELSEN Upon the Petition of PEGGY JEAN NIELSEN, Petitioner - Appellant, And Concerning RANDALL EUGENE NIELSEN, Respondent - Appellee.
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IN THE COURT OF APPEALS OF IOWA
No. 8-789 / 08-0381
Filed November 13, 2008
IN RE THE MARRIAGE OF PEGGY JEAN NIELSEN AND RANDALL EUGENE
NIELSEN
Upon the Petition of
PEGGY JEAN NIELSEN,
Petitioner-Appellant,
And Concerning
RANDALL EUGENE NIELSEN,
Respondent-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Cerro Gordo County, David R.
Danilson, Judge.
Wife appeals a district court order modifying the provisions of the parties’
dissolution decree. REVERSED AND REMANDED.
David L. Brown of Hansen, McClintock & Riley, Des Moines, for appellant.
Randall E. Nielsen, Mason City, appellee pro se.
Considered by Huitink, P.J., and Vogel and Eisenhauer, JJ.
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EISENHAUER, J.
Peggy and Randall Neilsen, the parents of three sons, divorced in January
1998.
In May 2006, Randall sought a modification which was granted in
February 2008. Peggy appeals three issues. First, Peggy argues the court erred
in utilizing her earning capacity instead of her actual earnings when determining
Randall’s child support obligation. Second, Peggy appeals the court’s placement
of a judicial lien on her house. Finally, Peggy argues the court should have
granted her request for one-half of her trial attorney fees.
We reverse and
remand with instructions.
I.
Background Facts and Proceedings.
In 1998, Peggy, a homemaker without a college degree, was awarded
physical care of the children and desired to remain in the family home. Randall,
an attorney, was ordered to pay child support. Randall paid the child support to
the clerk of court by providing two checks each month. One check was payable
to the bank for the home’s mortgage principal, mortgage interest, taxes, and
insurance. Randall received child support credit for this check and the clerk of
court mailed this check to the bank. Randall has been living with Jill Fortney in
her mortgage-free home since 1998. Randall utilized the income tax deductions
for the mortgage interest and taxes he paid through the child support process.
The second child support check, payable to Peggy, was for the difference
between the child support obligation and the bank’s payment.
For five years Peggy worked for the Mason City school system as a
paraprofessional in the special education classroom. During this time her sons
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became old enough to be home alone, so Peggy continued her full-time work
while also attending college classes on Monday and Thursday nights. After two
and one-half years, in December 2003, she obtained an elementary education
degree with a middle school endorsement from Buena Vista University. Peggy
testified she would obtain a special education endorsement when she was able
to complete the student teaching requirement for that specialty.
Although Peggy applied for full-time teaching positions in Mason City and
nearby communities, she was not hired. Meanwhile, Peggy obtained a substitute
teaching license and worked as a substitute teacher hoping those connections
would lead to a full-time teaching position. Peggy testified full-time positions are
difficult to obtain due to Mason City’s declining school enrollment. In October
2007, however, Peggy obtained a full-time position teaching in the head start
preschool program within the Mason City schools.
The head start position
allowed her to meet the benchmark requirements for a regular teaching license
which she applied for in November 2007, one month after obtaining full-time
employment. She now holds a regular teaching license.
The dissolution decree also ordered Randall to provide health insurance
for the boys. Jill provides health insurance and dental insurance for both Randall
and the boys through her employer. Jill has the $55.09 per month health and
$12.75 per month dental premiums deducted from her paycheck.
At the time of the modification, the two oldest boys were nineteen and
twenty-one and had graduated from high school. The court ruled a substantial
change of circumstances was shown and terminated child support for the oldest
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boys. The court also ended Randall’s payment of the mortgage and other home
expenses through the clerk of court’s child support collection process. Using the
minimum statewide salary for beginning teachers in Iowa as Peggy’s income, the
court modified the support for the youngest child. The court declined Randall’s
requests to make the child support reduction retroactive and to retroactively
impose college subsidies.
We review this equity action de novo. Iowa R. App. P. 6.4.
II.
Child Support Obligation.
The district court averaged five years of Randall’s income to arrive at a
gross income of $85,160. Randall claimed entitlement to an income deduction
for dependent health insurance.
The district court disallowed the deduction
noting Jill is not the parent of the three boys and Jill and Jill’s employer are
paying the health insurance premiums. Randall has not appealed this ruling.
Peggy’s annual gross income from her head start teaching position is
$17,117.
Randall asked the court to utilize $26,500, the minimum statewide
salary for beginning teachers in Iowa, as Peggy’s gross income. The district
court agreed, stated Peggy “could be described as underemployed” and ruled:
Although Randall failed to identify employment opportunities in the
teaching field to which Peggy may qualify, this court believes that
the significant length of time, since Peggy obtained her teaching
degree in 2003, and the stringent geographical limitation Peggy
imposed on her job search, support the conclusion that the earning
capacity of a new teacher should be used rather than Peggy’s
actual earnings.
Peggy testified she was unwilling to relocate due to the importance of
maintaining a stable environment for their sixteen-year-old son, Corbin. Corbin
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has been diagnosed with chronic fatigue, has pain in his knees, hips and back,
and takes numerous medications. Corbin has not been able to function in a
traditional school setting for many years. Currently Corbin is working part-time
and taking classes at a community college. His goal is to obtain his GED through
the community college.
If a parent voluntarily reduces income or decides not to work, the court
may consider earning capacity rather than actual earnings. In re Marriage of
Nelson, 570 N.W.2d 103, 106 (Iowa 1997).
However, before using earning
capacity the court must “make a finding that, if actual earnings were used,
substantial injustice would result or that adjustments would be necessary to
provide for the needs of the child and to do justice.” In re Marriage of Flattery,
537 N.W.2d 801, 803 (Iowa Ct. App. 1995). In making this determination, the
court examines the employment history, present earnings, and reasons for the
current employment. Nelson, 570 N.W.2d at 106.
Upon our de novo review, we do not think it is appropriate to use earning
capacity in place of Peggy’s actual earnings. There is no evidence Peggy has
not been actively looking for employment and has voluntarily reduced her
income. To the contrary, while raising three sons and working full-time as a
classroom aide she obtained a college degree to improve her employment
prospects. Peggy then networked by taking substitute teaching positions and
has recently started her first full-time teaching position. Peggy’s career path
shows a determined and consistent effort to be employed and to improve her
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employment situation. We will not penalize Peggy because the Mason City area
has declining student enrollment.
Additionally, Peggy’s desire to remain in the same general area is
reasonable in light of Corbin’s special health concerns and in light of Corbin’s
current success in attending a community college at this location.
Randall
presented no evidence of other positions for which he believed Peggy was
qualified. Under these circumstances and on this record, we find it reasonable
for Peggy to work full-time in the head start job. We do not conclude the use of
Peggy’s actual earnings will result in a substantial injustice. Accordingly, we
remand for a recalculation of child support using Peggy’s actual earnings of
$17,117 and Randall’s average earnings of $85,160.
III.
Unreimbursed Medical Expenses.
The 1998 dissolution decree instructed Randall to pay seventy-five
percent and Peggy to pay twenty-five percent of uncovered medical expenses.
However, Randall paid 100 percent of the uncovered medical. On August 9,
2006, approximately two months after Randall filed his petition for modification
and over eight and one-half years after the decree; Randall sent Peggy a letter
reminding her she was obligated to pay twenty-five percent.
At the hearing Randall stated Jill had paid up to eighty-five percent of the
uncovered expenses while he paid the remainder.
Randall testified their
payments of 100 percent of the uncovered expenses were not voluntary. Rather,
the expenses were paid “because the children need health care and
pharmaceuticals and they weren’t going to get them unless the bills were paid
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and that’s why they were paid.” Additionally, Randall stated the payments were
necessary to “maintain our [Randall’s and Jill’s] personal credit histories.”
Randall stated originally the medical providers sent the bills to Peggy and
“she would send them over to us.” However, “[i]n the last two or three years,
because of the difficulty in passing bills around the neighborhood, Jill has asked
the health care providers to simply send the bills to her.” Randall acknowledged
he did not provide Peggy an itemized accounting of the unpaid expenses.
Randall explained he and Jill analyzed the medical bills the night before the
hearing and calculated they paid $21,229.61 out-of-pocket and calculated Peggy
owed $5307.47.
Randall testified he had not sought contempt for nonpayment and testified
he did not think Peggy was intentionally or willfully violating the decree. Rather,
“I think it would have been difficult for her to make those payments that I’m
asking for credit and I don’t know how she would do it except by paying me
someday out of the house.” Randall sought a judicial lien on Peggy’s house for
$5307.47, which the district court awarded.
Peggy first argues Randall’s overpayments of medical expenses were
voluntary and need not be reimbursed unless equity demands it.
See In re
Marriage of Pals, 714 N.W.2d 644, 650-51 (Iowa 2006). Second, Peggy argues
the waiver theory of estoppel by acquiescence applies barring Randall’s
recovery. Because we conclude waiver by estoppel is applicable, we need not
address Peggy’s first claim.
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“Estoppel by acquiescence occurs when a person knows . . . of an
entitlement to enforce a right and neglects to do so for such time as would imply
an intention to waive or abandon the right.” Markey v. Carney, 705 N.W.2d 13,
21 (Iowa 2005). This waiver “does not require a showing of detrimental reliance
or prejudice.” Id. Estoppel by acquiescence is applicable when:
(1)
a party has full knowledge of his rights and material facts;
(2)
remains inactive for a considerable time; and
(3)
acts in a manner that leads the other party to believe the act
[now complained of] has been approved.
Id. We conclude all three elements have been established. First, Randall, an
attorney, knew he was only obligated to pay seventy-five percent and knew
Peggy was ordered to pay twenty-five percent.
Second, the record shows
Randall did not seek to have Peggy pay her twenty-five percent of the expenses
and was inactive for over eight and one-half years after the decree.
Third,
Randall did not even calculate the amount Peggy owed until the night before the
hearing and he never provided her with an accounting of the expenses.
Randall’s consistent payment of 100 percent for over eight years without an
accounting led Peggy to reasonably believe he was waiving her twenty-five
percent contribution.
Randall argues estoppel by acquiescence does not apply because mere
silence, even for a long period of time, “is insufficient evidence . . . to bar
recovery of child support based on estoppel by acquiescence. . . . [W]e require
some kind of affirmative act, inconsistent with the intention to collect child
support” in order to imply waiver. Id. at 22.
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Here the record shows more than prolonged silence because Randall took
the affirmative action of arranging for the medical bills to be sent directly to his
household and also took the affirmative action of actually paying Peggy’s twentyfive percent for over eight years. When this affirmative action is combined with
silence in providing an accounting and/or requesting payment, waiver is implied.
All Randall had to do was pay seventy-five percent of the uncovered medical
expenses and then send the remainder of the bill to Peggy. He never did.
For all of the above reasons, we vacate the judicial lien imposed by the
district court.
IV.
Trial Attorney Fees.
On appeal, Peggy seeks to have Randall pay $2500 of her $5000 trial
attorney fees. The district court ordered Randall to pay $750 and Peggy to pay
$4250. An award of attorney fees rests in the sound discretion of the trial court
and will not be disturbed on appeal in the absence of an abuse of discretion. In
re Marriage of Wessels, 542 N.W.2d 486, 491 (Iowa 1995).
We conclude the court’s award is an abuse of discretion.
Peggy’s
earnings at the time of trial and at all times were significantly less than Randall’s
earnings. Paying $4250 to defend Randall’s modification action will consume
over twenty-four percent of Peggy’s gross income. However, Randall paying
$2500 will use less than three percent of his gross income. Randall filed for the
modification and represented himself. Peggy was successful in defending many
of the modification issues. For these reasons, we reverse the district court’s
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attorney fee award and conclude Randall should pay one-half of Peggy’s trial
attorney fees: $2500. Costs on appeal are assessed to Randall.
REVERSED AND REMANDED.
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