IN RE THE MARRIAGE OF SHANNON MICHELLE SEU AND MANH LHY SEU Upon the Petition of SHANNON MICHELLE SEU, Petitioner-Appellee, And Concerning MANH LHY SEU, Respondent-Appellant.
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IN THE COURT OF APPEALS OF IOWA
No. 9-797 / 08-2037
Filed November 12, 2009
IN RE THE MARRIAGE OF SHANNON MICHELLE SEU
AND MANH LHY SEU
Upon the Petition of
SHANNON MICHELLE SEU,
Petitioner-Appellee,
And Concerning
MANH LHY SEU,
Respondent-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Warren County, Gary G. Kimes,
Judge.
Manh Seu appeals from the district court’s denial of his application to
reduce his child support payments to his former wife, Shannon Seu. AFFIRMED.
Donna Beary, Des Moines, for appellant.
Roscoe Ries, Des Moines, for appellee.
Considered by Vogel, P.J., and Doyle and Mansfield, JJ.
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VOGEL, P.J.
Manh Seu appeals from the district court’s denial of his application to
reduce his child support payments to his former wife, Shannon Seu. As we
agree with the district court there was no substantial change in circumstances
warranting a reduction, we affirm.
The original dissolution of marriage decree was entered on October 5,
2007, after Findings of Fact and Conclusions of Law were filed June 13, 2007.
Manh then petitioned for modification on March 28, 2008, claiming his net income
had dramatically declined. The matter came on for hearing on September 26,
2008.
We review modification of child support orders de novo. In re Marriage of
Maher, 596 N.W.2d 561, 564 (Iowa 1999). Nevertheless, “the district court has
reasonable discretion in determining whether modification is warranted, and we
will not disturb that discretion unless there is a failure to do equity.” Id. at 565
(citing In re Marriage of Vetternack, 334 N.W.2d 761, 762 (Iowa 1983)). A party
seeking modification of child support orders must prove there has been a
substantial change in circumstances of the parties since the entry of the
dissolution decree. Id. at 564-65.
On November 16, 2006, Shannon filed the original petition for dissolution.
Manh owns a cleaning service which reported gross income in 2006 of $100,003,
and net income of $57,724. For the first time since the parties were married in
1993, Manh chose to report his company’s income for 2006 through a federal
income tax Form 1065, partnership return, with Shannon as a fifty-percent
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partner. The Form K-1 then reflected Manh’s and Shannon’s net income from
the partnership each to be $28,862. On June 13, 2007, the decretal court found:
Always before the business income was reported on a Schedule C
as a sole proprietorship owned by Manh. Although Manh and his
tax preparer, who incidentally has prepared the parties’ tax returns
for the last nine years, claim that the change in filing status results
from increased participation by Shannon, the Court is not
persuaded that that is the reason for the change. The more likely
reasons for the change were to transfer in excess of $4000.00 of
Social Security tax liability to Shannon and to reduce Manh’s
income for the purpose of calculating child support. Financial
experience prior to a dissolution proceeding is a far better indicator
of future income than speculation based on what has happened
during the short period that the dissolution proceedings are
pending.
Finding Manh’s actual net profit from his business to be $57,724, child support
was then set at $1218 per month for the parties’ three minor children. Manh did
not appeal from that decree.
The modification court found the gross income from Manh’s business
actually increased in 2007, exceeding $102,000. As reflected on his income tax
form Schedule C, Manh reported $102,422 in gross income, and $79,279 in
expenses, netting him $23,143. It is this purported reduced income upon which
Manh seeks to lower his child support obligation.
Manh’s testimony at trial was sketchy as to his income and expenses, and
he was either unable or unwilling to produce requested supporting documents to
Shannon’s counsel prior to trial. On our review of the testimony, it is clear that
Manh pays his other financial obligations, whether business or personal, ahead
of paying for the care of his children. It is also clear that his record keeping
system hindered the district court from discerning Manh’s actual net income.
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On appeal, our task is equally difficult. Neither the decretal court nor the
modification court placed any credibility on Manh’s reported net income. Manh’s
own testimony acknowledged that during the marriage, Shannon acted as a “fillin” when Manh needed extra help at his business. For that limited help, he
attributed one-half of the business’s 2006 gross income to Shannon.
On
modification, Manh testified that he had to make up for the loss of Shannon’s
help by hiring and paying his brother $37,740 in 2007. The district court simply
found this explanation not credible, in spite of Manh’s production of a Form 1099
showing nonemployee compensation to his brother. We agree. While income
tax forms are generally a reliable source to utilize in assessing a person’s
income, it appeared to the district court and to us that in an effort to reduce his
child support obligation, Manh was able to manipulate his tax returns to minimize
his actual net income. Iowa Code § 598.13 (2007) (stating that parties to a
dissolution are required to make a full and fair disclosure of their financial status);
In re Marriage of Will, 602 N.W.2d 202, 204 (Iowa Ct. App. 1999) (stating
completed federal and/or state income tax returns are the best evidence of
income and tax liability); In re Marriage of Williams, 421 N.W.2d 160, 164 (Iowa
Ct. App. 1988) (“A party who has not been fair and accountable with property
under his or her control during the dissolution process must be charged
accordingly.”).
Manh testified in vague terms to money he was repaying to both his
brother and a sister and was unable to track his income and expenses, or
produce records to substantiate his claims. His 2008 projected gross income
from his business continued to rise above both the 2006 and 2007 levels. We
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agree with the district court there is no credible evidence upon which to find a
substantial change of circumstances, such that Manh’s child support obligation
should be reduced.
Shannon requests attorney fees on appeal.
We have discretion in
awarding appellate attorney fees. In re Marriage of Krone, 530 N.W.2d 468, 472
(Iowa Ct. App. 1995). Whether attorney fees should be awarded depends on the
respective abilities of the parties to pay and whether the party making the request
was obligated to defend against the district court’s decision on appeal.
Id.
Having considered the appropriate factors, we award Shannon $1000 in
appellate attorney fees. Costs on appeal assessed to Manh.
AFFIRMED.
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