BRYAN K. MILLER v. CARLA D. MILLS MILLER
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RENDERED:
DECEMBER 9, 2005; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth Of Kentucky
Court of Appeals
NO. 2004-CA-002008-MR
BRYAN K. MILLER
APPELLANT
APPEAL FROM BATH CIRCUIT COURT
HONORABLE WILLIAM B. MAINS, JUDGE
ACTION NO. 02-CI-00244
v.
CARLA D. MILLS MILLER
APPELLEE
OPINION
AFFIRMING IN PART
AND VACATING AND REMANDING IN PART
** ** ** ** **
BEFORE:
BARBER, MINTON, AND DYCHE, JUDGES.
BARBER, JUDGE:
This appeal stems from a dissolution of marriage
proceeding originating in Bath County, Kentucky.
On October 25,
2002, Appellee, Carla D. Mills Miller (Carla) filed for a
divorce from Appellant, Bryan K. Miller (Bryan).
The parties
were married on December 31, 1997 and had two children.
Both
children were still very young at the time of the parties’
divorce.
During the marriage, the parties enjoyed a comfortable
lifestyle due to their joint efforts.
Carla and Bryan each
testified to working lengthy hours, at least 60 hours a week,
for the family.
They employed a full-time nanny to care for the
children during the week.
At the time of separation, Bryan
owned a successful car lot selling used automobiles while Carla
worked in sales for a printing company.
Bryan always earned
substantially more than Carla during the latter part of the
parties’ marriage.
The parties were continuously before the trial court
over the financial obligations of Bryan to Carla, 1 as well as,
custody and visitation of the parties’ children.
The court held
final hearings on April 6, 2004; June 16, 2004; and August 11,
2004.
Following the hearings of April 6, 2004 and June 16,
2004, a bifurcated decree 2 was entered July 12, 2004, which
dissolved the parties’ marriage and gave Carla sole custody of
the children with Bryan having reasonable visitation.
All
issues relating to the distribution of property, assignment of
1
An agreed temporary order was entered on December 11, 2002, whereby Bryan
agreed to continue paying the mortgage on the marital home while Carla lived
there with the children. Bryan also agreed to pay $1,900 per month in child
support to Carla for the parties’ two children.
2
The decree was prepared by Bryan’s attorney.
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debt, and permanent child support were reserved for the August
11, 2004 hearing. 3
Following the August 11, 2004 hearing, the court
entered a post decree order September 1, 2004.
The post decree
order found that Carla had annual income of $36,000 and imputed
an annual income to Bryan of $89,098 for child support purposes.
Based on these income figures, the court calculated a child
support obligation of $1,624.26 4 per month to Bryan.
All issues
related to the parties’ marital assets and debts were not heard
because Bryan had filed for bankruptcy prior to the hearing.
Bryan now appeals the court’s award of sole custody to
Carla in the decree as well as the calculation of child support
in its post decree order.
Bryan makes four arguments in his
appeal: (1) the trial court erred in awarding sole custody of
the parties’ children to Carla; (2) the trial court abused its
discretion in imputing $89,098 potential annual income to Bryan;
(3) the trial court erred by concluding that Carla has only
$36,000 income; and (4) the trial court erred in its finding
that $667 per month employment-related child care was incurred.
We now turn to Bryan’s first argument.
3
The delay was due primarily to the parties’ impending filings for
bankruptcy.
4
The amount also included Bryan’s pro-rated portion of additional monthly
child care costs of $667 plus the children’s health insurance premium cost of
$198 per month.
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Bryan contends that the trial court erred in awarding
sole custody of the parties’ children to Carla rather than
awarding the parties joint custody.
As part of his argument,
Bryan states that the trial court did not properly consider
certain factors, specifically:
(1) the parties’ communication
with each other during their extended cooperation; (2) the
ability to reach an agreement for joint custody on a temporary
basis; (3) the fact that intermediaries were available to
facilitate exchanges and communication; and (4) no consideration
of the likelihood of future cooperation between the parties that
might result from an award of joint custody.
Bryan failed to file a written request for findings on
these factors he now alleges the court should have considered
pursuant to Ky. CR 52.02.
argument.
Ky. CR 52.04.
Therefore, Bryan waived this
We now turn our attention to the
remainder of Bryan’s argument and examine whether the trial
court erred in its award of sole custody to Carla.
The applicable statute to guide trial courts in
awarding custody is KRS 403.270, which states in pertinent part:
(2) The court shall determine custody in
accordance with the best interests of the child
and equal consideration shall be given to each
parent and to any de facto custodian. The court
shall consider all relevant factors including:
(a) The wishes of the child’s parent or
parents, and any de facto custodian, as to his
custody;
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(b) The wishes of the child as to his
custodian;
(c) The interaction and interrelationship
of the child with his parent or parents, his
siblings, and any other person who may
significantly affect the child’s best interests;
(d) The child’s adjustment to his home,
school, and community;
(e) The mental and physical health of all
individuals involved;
(f) Information, records, and evidence of
domestic violence as defined in KRS 403.720;
. . .
(5) The court may grant joint custody to the
child’s parents, or to the child’s parents and a
de facto custodian, if it is in the best interest
of the child.
The legislature has authorized Kentucky trial courts
to make an award of joint custody 5 if it is in the best interest
of the child.
2003).
Fenwick v. Fenwick, 114 S.W.3d 767, 775 (Ky.
Joint custody must be accorded the same dignity as sole
custody and trial courts must determine which form would serve
the best interest of the child.
Id., (citing Squires v.
Squires, 854 S.W.2d 765 (Ky. 1993)).
In addition to the
statutory considerations, the Kentucky Supreme Court has noted
that the likelihood of future cooperation between the parties
regarding decisions pertinent to raising the child is a relevant
5
In a joint custody arrangement, unless otherwise agreed to by the parties or
decreed by the court, both parties have equal rights and responsibilities for
major decisions concerning their child including, but not limited to,
education, health care, and religious training, and the parents will consult
with each other on these major decisions. Fenwick supra 114 S.W.3d at 778.
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factor in determining whether to award joint custody.
Id. at
775-776.
Which party in the best interest of the children
should have custody is a factual determination to be made by the
court.
Batchelor v. Fulcher, 415 S.W.2d 828, 830-831 (Ky.
1967).
Findings of fact shall not be set aside unless clearly
erroneous, and due regard shall be given to the opportunity of
the trial court to judge the credibility of the witnesses.
CR 52.01.
Ky.
Accordingly, our review is limited to whether the
findings of the trial court are clearly erroneous or whether the
trial court abused its discretion in awarding sole custody to
Carla.
Cherry v. Cherry, 634 S.W.2d 423, 425 (Ky. 1982).
Findings of fact are not clearly erroneous if
supported by substantial evidence.
Black Motor Company v.
Greene, 385 S.W.2d 954 (Ky.App. 1964), (citing Massachusetts
Bonding & Insurance Co. v. Huffman, 340 S.W.2d 447 (Ky. 1960)).
Substantial evidence has been conclusively defined by Kentucky
courts as that which, when taken alone or in light of all the
evidence, has sufficient probative value to induce conviction in
Secretary, Labor Cabinet v.
the mind of a reasonable person.
Boston Gear, Inc., a Div. of IMO Industries, Inc., 25 S.W.3d
130, 134, (Ky. 2000).
Additionally, the test for abuse of
discretion is whether the trial judge’s decision was arbitrary,
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unreasonable, unfair, or unsupported by sound legal principles.
Commonwealth v. English, 993 S.W.2d 941, 945 (Ky. 1999).
In the decree, the trial court found the following:
8. There is considerable testimony
concerning the discord between the parties
including domestic violence and an emergency
protection order entered by the Bath
District Court. As a result of this discord
the parties have been unable to discuss
visitation schedules or be around each other
for visitation exchanges. It is apparent
that the parties’ marriage is irretrievably
broken and that there is no reasonable
prospect of reconciliation.
9. Due to the extended discord between the
parties and lack of communication ability,
it is not in the parties’ best interests for
them to share joint custody.
10. From the testimony given, although
conflicting, [Carla] has served as the
children’s primary care giver to a greater
extent than [Bryan] as reflected by the
testimony in the record.
The trial court then awarded sole custody of the
children to Carla in its judgment.
Judge William B. Mains also
verbally stated his findings to the parties at the end of the
June 16, 2004 hearing.
Judge Mains stated that joint custody
was not an option in this case, because joint custody implies
that the parents can work together and that was not possible in
the parties’ situation.
He did acknowledge that Bryan had a
close relationship with his children.
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Judge Mains further
stated that Carla had been the primary care giver and had shown
a greater interest in the children than Bryan.
After a review of the record and the lengthy trial
videos, we do not believe that the trial court either erred or
abused its discretion in awarding Carla sole custody of the
parties’ children.
her behalf.
Each party had numerous witnesses on his or
The trial court ultimately determined that it would
be in the children’s best interest for their mother to have sole
custody.
We agree.
We believe there was substantial evidence presented by
both parties to support the court’s custody award.
It was
obvious that the parties shared a mutual animosity for one
another.
The parties’ feelings towards one another had been in
that state for at least the entire duration of the divorce
according to the parties’ and witnesses’ testimonies.
Joint custody presumes parties can rise above their
differences for the good of their children.
Cooperation is an
essential element of any joint custody situation and neither
party appeared to be able to do so.
The parties’ relationship
is an element the court should consider before making a custody
determination.
The trial court, in part, felt due to the
parties’ relationship that sole custody to Carla was in the best
interests of the children.
Further, testimony from nearly every
witness supported that Carla had been the primary caregiver for
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the parties’ children.
Therefore, we believe the trial court’s
award of sole custody was not clearly erroneous.
We are also unable to see that the trial court abused
its discretion.
It is clear from the trial video that Judge
Mains actively listened to all testimony given and even asked
his own questions of most of the witnesses presented.
believe he took the custody matter lightly.
it the attention it deserved.
We do not
We believe he gave
We believe Judge Main’s decision
was neither arbitrary, unreasonable, unfair, or unsupported by
sound legal principles.
As such, we do not believe that the
trial court abused its discretion.
Therefore, we find no basis
to reverse the trial court’s award of sole custody of the
parties’ children to Carla.
Bryan next argues that the trial court abused its
discretion in imputing $89,098 potential annual income to him.
Kentucky Revised Statute 403.212(2)(d) 6 allows a court to base
child support on a parent’s potential income if it determines
that the parent is voluntarily unemployed or underemployed.
Polley v. Allen, 132 S.W.3d 223, 226 (Ky.App. 2004).
The court
must consider the totality of the circumstances in deciding
6
Kentucky Revised Statute 403.212(2)(d) states in relevant part: If a
parent is voluntarily unemployed or underemployed, child support shall be
calculated based on a determination of potential income . . . Potential
income shall be determined based upon employment potential and probable
earnings level based on the obligor’s or obligee’s recent work history,
occupational qualifications, and prevailing job opportunities and earnings
level in the community. A court may find a parent to be voluntarily
unemployed or underemployed without finding that the parent intended to avoid
or reduce the child support obligation.
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whether to impute income to a parent.
Id. at 227.
If the court
finds that earnings are reduced as a matter of choice and not
for reasonable cause, the court may attribute income to a parent
up to his or her earning capacity.
Snow v. Snow, 24 S.W.3d 668,
673 (Ky.App. 2000).
The hearing of August 11, 2004 was devoted solely to
the matter of child support.
Each party submitted significant
evidence relating to their respective financial situations.
Bryan had a bachelor’s degree in accounting from
Morehead State University.
Following graduation in 1993, he
sold cars for a few years then turned to the insurance industry.
Bryan began selling insurance in 1998 and was quite successful.
As a result, he purchased an Allstate franchise in 1999.
In
2000, he sold his franchise and focused all of his attention to
a used car lot at the end of that year.
successful with his car lot.
Bryan was also
On his 2000 joint tax return,
Bryan reported a net profit of $42,147 7 for his car lot. 8
The
following year, Bryan reported a net profit of $92,707 from his
car lot on the parties’ joint tax return. 9
In 2002 Bryan filed
7
All net profit figures are from Schedule C, line 31, of the respective tax
returns.
8
Additional income reported on the parties’ 2000 joint tax return was $24,961
for Carla’s printing service company; $4,948 for Bryan Miller Boat Sales; and
$41,334 for wages.
9
Additional income reported on the parties’ 2001 joint tax return was $25,788
for Carla’s printing service company and $36,072 for Bryan Miller Insurance
(buy-out payments).
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separately from Carla and reported a net profit of $125,034 from
his lot. 10
Bryan’s 2003 tax return, however, reflected a
dramatic change.
In 2003, Bryan reported a net income of
$26,563 from the car lot.
At the hearing, Bryan testified that
he had closed his car lot and was working at an auto garage
where he earned $325 per week. 11
Carla presented expert testimony from Harvey Faulkner,
a certified public accountant with thirty-three years
experience, to review Bryan’s financial records for years 2000
through 2003 in order to attribute an appropriate level of
income to Bryan for child support purposes.
Mr. Faulkner did a
retail dealer based analysis on Bryan’s car lot. 12
Based on his
analysis, Mr. Faulkner concluded that Bryan should be imputed an
adjusted profit for child support guidelines of $231,483 per
year. 13
Mr. Faulkner also testified about suspicious dramatic
increases in expenses on Bryan’s 2003 tax return versus prior
years.
Bryan did not produce an expert of his own to refute
Mr. Faulkner’s calculations.
However, Bryan explained the
10
Additional income reported on Bryan’s 2002 separate tax return was $19,360
for Bryan Miller Insurance (buy-out payments).
11
Bryan provided documentation of his current position and pay rate to the
trial court.
12
Mr. Faulkner stated he did a retail dealer based analysis due to
information provided by Bryan at his deposition taken March 5, 2003.
13
Mr. Faulkner’s report was submitted into evidence.
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variances in his 2003 tax return versus prior years to the
court.
He further testified that he no longer operated the car
lot and was employed at an auto garage doing minor repair work.
Bryan provided check stubs showing he earned $325 gross wages
per week.
Bryan testified that he was forced to take the low
paying job in order to properly care for his children. 14
In its post decree order, 15 the trial court found that
Bryan was “capable of earning much more income since he has an
accounting degree and substantial experience in car sales 16 and
life insurance sales” and found he had “an imputed annual income
of $89,098.”
The written order does not go into any further
detail as to how the trial court arrived at this figure.
In the
trial video, Judge Mains verbally gave his findings to the
parties, which included an explanation of the imputed income
figure.
Judge Mains stated he took Mr. Faulkner’s average
business net income of $81,435 17 then added back in deducted
vehicle and meal expenses of $7,663 18 . 19
14
Bryan was referring to not only the parties’ two children, but also a young
daughter from a prior marriage.
15
Carla’s attorney prepared the post decree order.
16
Bryan still had his dealer’s license at the time of the August 11, 2004
hearing.
17
The average was based on the average of 2001 business net income of
$92,707; 2002 business net income of $125,034; and 2003 business net income
of $26,563. These figures were taken directly from Schedule C, line 31 of
each year’s federal tax return.
18
This total came from Mr. Faulkner’s three year average of Bryan’s
deductible meals from Schedule C, line 24d and the IRS add-back amount of
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As stated earlier, findings of fact shall not be set
aside unless clearly erroneous, and due regard shall be given to
the opportunity of the trial court to judge the credibility of
the witnesses.
Ky. CR 52.01.
We believe the findings of the
court related to Bryan’s imputed income are supported by
substantial evidence.
Specifically, the calculations relied
upon by the court were taken from Bryan’s tax returns as well as
the testimony of Mr. Faulkner.
We believe this was appropriate.
Therefore, we affirm the finding of the trial court that Bryan’s
imputed annual income for child support purposes was $89,098.
Bryan’s third argument is that the trial court erred
by concluding that Carla had only $36,000 annual income.
In its
post decree order, the trial court found that Carla had $36,000
annual income but gave no additional explanation.
There was
also no further explanation by Judge Mains when he delivered his
oral findings to the parties on August 11, 2004.
Kentucky Revised Statute 403.212(f) states “Income
statements of the parents shall be verified by documentation of
both current and past income.
Suitable documentation shall
include, but shall not be limited to, income tax returns, pay
$5,600 (amount same for all 3 years) for an employer provided vehicle.
addition was made in accordance with KRS 403.212(2)(c).
19
This
Judge Mains also stated that it was very clear that Bryan was capable of
making more money. He continued by stating Bryan had voluntarily divested
his business, and that it was no coincidence that the decrease in income
occurred at the same time as the divorce.
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stubs, employer statements, or receipts and expenses if selfemployed.”
Neither this subsection nor any other provision of
the guidelines explicitly requires a party to file an income
statement that establishes his or her gross income.
Schoenbachler v. Minyard, 110 S.W.3d 776, 783 (Ky. 2003).
However, the Kentucky Supreme Court has interpreted KRS
403.212(2)(f) as a requirement that parties file fullydocumented income statements in dissolution cases that present
child custody issues.
Id. at 784.
This does not mean that trial courts may consider only
documented income when determining child support.
Id.
A trial
court may consider income not susceptible to documentation if
such income is properly established by the evidence.
Id.
It is
not possible to document some income, such as unreported income,
especially cash income.
Id.
Income calculations for guideline
purposes necessarily must include all income of the parents,
both documented and undocumented.
Id.
Although KRS
403.212(2)(f) imposes a mandatory obligation on the parties to
report and verify their income and earnings with documentation,
if a party fails to comply with this obligation, the burden
remains on the opposing party to prove such income and earnings.
Id. at 785.
The only instance in which Carla’s income was
estimated at $36,000 occurred when Carla testified that she
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hoped to earn between $36,000 to $40,000 in 2004.
We found no
additional support for this figure in the record.
Carla also
testified that her estimated income for 2004 was $1,200 to
$1,500 per month 20 from her employment at VoluForms 21 and an
additional $2,000 to $2,500 per month from Cowboys. 22
Bryan
presented no evidence refuting Carla’s estimates as inaccurate.
Carla testified that her income from Cowboys was paid
in cash.
She did not present any copies of check stubs or
employer statements to the court to support any of her estimated
2004 earnings.
Carla reported gross wages of $26,657 from
VoluForms on her 2003 tax return. 23
Carla’s 2002 tax return was
not a part of the record.
We do not believe that the trial court’s finding that
Carla’s income is $36,000 is supported by substantial evidence
in the record.
Even taking Carla’s lowest estimates of her
monthly income, it is still higher than $3,000 per month.
We
believe it is necessary to remand for additional proof on
Carla’s income.
Carla should provide documentation of her
VoluForms earnings.
It may not be possible for Carla to present
documentation of her income from Cowboys due to it being
20
Carla testified she was paid 40% of any profits made from jobs she sold.
21
Carla testified that she was paid by check but it did not contain her yearto-date information.
22
Carla testified that as of the hearing date she worked Wednesday and
Thursday nights dancing at the club.
23
Carla testified that the income listed on her return was from VoluForms.
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entirely cash based.
We leave the calculation of Carla’s
Cowboys income to the discretion of the trial court.
Therefore,
we vacate and remand to the circuit court to take additional
proof related to Carla’s income and amend its child support
award, if necessary.
Bryan’s final argument is that the trial court erred
in its finding that $667 per month employment related child care
was incurred.
Kentucky Revised Statute 403.211(6) states “The
court shall allocate between the parents, in proportion to their
combined monthly adjusted parental gross income, reasonable and
necessary child care costs incurred due to employment, job
search, or education leading to employment, in addition to the
amount ordered under the child support guidelines.”
There was no explanation in the post decree order
where the amount of child care expenses came from, the same
being simply included in the attached child support worksheet.
Also, Judge Mains did not state the basis of this amount in his
verbal findings on August 11, 2004.
Following a review of the
record, we do not believe that the trial court’s finding of
child care expenses is supported by substantial evidence.
The only proof of child care expenses was Carla’s
testimony that when the children were in school, the fee was $25
per day Monday through Friday and $30 for Thursday evening.
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Carla also testified that she paid in cash and could have gotten
receipts, but had chosen not to do so.
While there is no specific requirement that such
expenses be documented, we believe justice requires parties to
provide proof of such expenses before including it in a child
support calculation.
Therefore, we vacate and remand with
instructions for the trial court to require verification of
child care expenses for the parties’ two children and amend its
child support award, if necessary.
For the reasons set forth above, we believe the trial
court was neither clearly erroneous nor abused its discretion
when it awarded sole custody of the parties’ children to Carla;
the trial court was not clearly erroneous when it imputed annual
income of $89,098 to Bryan for child support purposes; but the
trial court did err in its calculation of Carla’s income and the
parties’ children’s child care expenses for child support
purposes.
Therefore, we affirm the Bath Circuit Court’s award
of sole custody of the parties’ children to Carla as well as the
trial court’s imputation of annual income of $89,098 to Bryan
for child support purposes.
We vacate and remand for additional
proof on Carla’s income and the parties’ child care expenses for
purposes of the child support calculation.
ALL CONCUR.
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BRIEF FOR APPELLANT:
BRIEF FOR APPELLEE:
John H. Rompf, Jr.
Winchester, Kentucky
Brandie L. Hall
Mt. Sterling, Kentucky
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