In re the Matter of: Sandi Kay Thomas, petitioner, Respondent, vs. Ricky Dale Thomas, Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A03-1172

 

 

In re the Matter of:

Sandi Kay Thomas, petitioner,

Respondent,

 

vs.

 

Ricky Dale Thomas,

Appellant.

 

 

Filed June 1, 2004

Affirmed in part, reversed in part, and remanded

Huspeni, Judge*

 

 

Dakota County District Court

File No. F5-02-12808

 

 

 

John T. Burns, Jr., 115 Midway Bank Building, 14300 Nicollet Court, Burnsville, MN  55306 (for respondent)

 

Dennis J. Felix, Felix Law Office, P.A., Suite 120, 12400 Portland Avenue South, Burnsville, MN  55337 (for appellant)

 

 

 

 

            Considered and decided by Halbrooks, Presiding Judge, Toussaint, Chief Judge, and Huspeni, Judge.

U N P U B L I S H E D   O P I N I O N

HUSPENI, Judge

            In challenging the decisions of the district court, appellant argues that (1) it was error to establish a child-support obligation without first determining that there had been a substantial change in circumstances rendering the prior order unreasonable and unfair; (2) it was error to impute income to appellant where the record shows he was not voluntarily unemployed or underemployed; (3) child support was erroneously commenced retroactively; (4) appellant was entitled to have an evidentiary hearing on the question of parenting time; (5) it was error to require appellant to pay the travel costs incurred in regard to the parenting time schedule; and (6) the district court erred in denying appellant his rights to certain stock options and personal property awarded to him in the dissolution decree, and to other property as listed in an agreement entered into subsequent to the decree.  Respondent, by notice of review, argues that the district court abused its discretion by failing to award her full attorney fees.  We affirm in part, reverse in part, and remand.

FACTS

Appellant Ricky Thomas and respondent Sandi Thomas dissolved their 22-year marriage in March 2002.  The dissolution decree incorporated a stipulation addressing custody of the parties' two children and property division.  Legal custody was granted to the parties jointly; sole physical custody was granted to respondent, subject to reasonable and liberal parenting time by appellant.  Appellant's child-support obligation was reserved.  Each party was awarded one-half of respondent's stock options, received through her employment, available as of June 1, 2003.  In order to exercise these options, appellant was required to submit a written request to respondent and, within 24 hours of receiving the request, respondent was to exercise the options unless there was a restriction on the sale due to her status as an employee.  Respondent was required to estimate the appropriate tax liability and forward appellant the estimated net proceeds within ten days of appellant's request.  Respondent was awarded the marital homestead subject to a $25,000 lien in favor of appellant.  Appellant was also awarded certain personal property located in the homestead. 

In May 2002, the parties entered into a post-decree agreement, under the terms of which appellant was to receive additional personal property and $20,000 instead of the $25,000 homestead lien awarded him in the decree.  The post-decree agreement also allowed appellant to reside in the marital home until June 1, 2002, instead of the March 31, 2002 date listed in the decree. 

In December 2002, respondent moved the court for permission to move the residency of the minor children to Georgia because her job required relocation.  After a hearing, respondent's motion was granted, and the parties were directed to devise a parental access schedule for appellant, and to determine payments of travel costs associated with appellant's parenting time.  The court noted in its order that it appeared as though appellant agreed to sole physical custody in respondent in exchange for a reservation of child support, and while this agreement may have settled the case, it was not in the best interests of the children.  As a result of the court's observation regarding custody and support, the parties were ordered to address appellant's child-support obligation.  If the parties could not reach agreement, they were to submit their proposals in writing to the court.

On March 12, 2003, respondent moved the court for establishment of a parental access schedule and child-support obligation for appellant, and for an award of attorney fees for her.[1]  Appellant, unrepresented, appeared at the hearing on respondent's motions.  The order resulting from this hearing established a parental access schedule for appellant, required that he pay costs of travel in connection with the access schedule, and set child support at $1,250 per month.  In setting support, the district court imputed $50,000 per year income to appellant, because the court was unable to determine actual income.[2]  Support was to commence in December 2002.

The court's order was stayed until March 24, 2003, to enable appellant to consult with his attorney.  After appellant obtained new counsel, a second stay was granted; at the expiration of that stay, appellant's motion to reconsider the order was denied.

Appellant subsequently filed a motion to reopen and review the issues of child support, parenting time, and travel costs.  In addition, appellant asked that respondent pay him one-half of her exercised stock options as directed in the decree, return his personal property as listed in the decree, and return personal property as outlined in the agreement the parties entered into subsequent to the decree.  Respondent moved the court to deny appellant's motions in their entirety and to award her $5,000 in attorney fees.

Appellant, in his motion regarding the stock options, indicated that he had made a written request to respondent to exercise those options on April 15, 2002, but that respondent stated appellant's request was not in compliance with the decree.  Respondent stated that she had provided information to him about the requirements of a proper request.  Appellant made a second request to respondent to exercise stock options on June 18, 2003.  Appellant claims (and on the record respondent does not deny) that the options were, in fact, exercised, but no funds were ever forwarded to him.

The district court affirmed its previous order regarding child support, parental access schedule, and responsibility for travel expenses, denied all of appellant's motions summarily, and ordered him to pay $500 in attorney fees for requiring respondent and her attorney to make three appearances when one would have sufficed.  The court also noted that appellant's motions and court activity bordered on harassment.  This appeal follows.

D E C I S I O N

I.

            Appellant's initial challenge to the decisions of the district court is that an erroneous standard was applied in establishing an order for child support.  Appellant insists that the provisions of Minn. Stat. § 518.64 (2002) require that the court find that there has been a substantial change of circumstances rendering the existing order unreasonable and unfair before any modification of the existing order may occur.  While appellant is generally correct, because the dissolution judgment reserved support "a subsequent establishment of a support obligation is treated as an initial matter rather than a modification of a prior support order."  Anderson v. Anderson, 470 N.W.2d 719, 721 (Minn. App. 1991); see Mulroy v. Mulroy, 354 N.W.2d 66, 69 (Minn. App. 1984) (holding that the district court may establish an amount of child support following reservation of support in a dissolution decree without a showing of change in circumstances).  The district court applied the correct standard for establishing child support.

II.

Appellant next argues that the district court abused its discretion by imputing income to him for purposes of establishing child support, because under Minn. Stat. § 518.551, subd. 5b(d) (2002), he was neither voluntarily unemployed or underemployed.  The district court did not, however, rely on appellant's voluntary underemployment or unemployment in establishing child support.  Instead, the court found that it was unable to ascertain appellant's income because he failed to provide necessary information.  The court relied on respondent's testimony about appellant's earnings history and his current earning capability in calculating the amount of income to impute to him.  Although appellant argues that he supplied additional information regarding his income between the hearings in this matter, the district court continued to find the information inadequate.    

District courts "may properly consider earning capacity and earnings history to determine a party's ability to comply with a child support order."  LeTendre v. LeTendre, 388 N.W.2d 412, 416 (Minn. App. 1986); see also Fruen v. Fruen, 228 Minn. 391, 399, 37 N.W.2d 417, 421 (1949) (district courts may consider past earnings "to determine whether because of extraordinary reasons [an obligor's] income for a particular year was no guide").  We recognize, however, that as a guideline for support, "earning capacity is not an appropriate measure of income unless (1) it is impracticable to determine an obligor's actual income or (2) the obligor's actual income is unjustifiably self-limited."  Beede v. Law, 400 N.W.2d 831, 835 (Minn. App. 1987).  The use of earning capacity findings often involves obligors who are self-employed or who have improperly reduced their income.  See Minn. Stat. § 518.551, subd. 5b(d) (requiring district court to impute income where obligor is voluntarily unemployed or underemployed); see also LeTendre, 388 N.W.2d at 416 (because of the difficulty in determining the net income of self-employed persons, the district court's finding on income, based on earning capacity, was not clearly erroneous); Ferguson v. Ferguson, 357 N.W.2d 104, 108 (Minn. App. 1984) ("the opportunity for a self-employed person to support himself yet report a negligible income is too well known to require exposition").

Appellant worked for cash, was self-employed, and had been evasive and misleading in reporting his income.  He provided his 2002 personal tax return, in which he claimed no income, the parties' joint tax return from 2001, and the returns for a small Internet business, which reported net losses.  A tax return is not the only document the court uses in assessing income for purposes of child support, however.  See Minn. Stat. § 518.551, subd. 5b(a) (noting that documentation of earnings and income include statements of receipts and expenses if self-employed, recent federal tax returns, and "all other documents evidencing income").  Determining income for self-employed individuals is difficult and tax returns alone may be insufficient.  County of Morrison ex rel. Gutzman v. Watland, 448 N.W.2d 71, 74 (Minn. App. 1989); see Thomas v. Thomas, 407 N.W.2d 124, 127 (Minn. App. 1987) (holding that because district court must determine current net income use of obligor's companies' financial records in addition to his income tax return was necessary).

Moreover, although during his deposition appellant testified that he had only two bank accounts, one personal and one business, he later mentioned a third business account.  He stated that he transferred money from one business account to his personal account and used money from the other business account for personal expenses.  Appellant testified that one of his businesses generates monthly income but he had no idea how much.  In addition, appellant's affidavit submitted to the district court stated that "[he] contributed over $465,000 to [the parties'] financial position from real estate and business sales" over several years prior to the divorce, which is contrary to his earlier testimony that he had no income since approximately 1994.  On this contradictory record, we find no error in the district court's determination that it was unable to calculate appellant's actual income.

III.

Appellant next argues that because respondent's motion seeking a child-support order was filed on March 12, 2003, the district court abused its discretion by ordering child support to commence in December 2002.  Appellant did not raise this issue before the district court; he raises it for the first time in his reply brief.  See Thiele v. Stich, 425 N.W.2d 580, 582-83 (Minn. 1988) (holding generally only issues not presented to and considered by district court will not be reviewed); McIntire v. State, 458 N.W.2d 714, 717 n.2 (Minn. App. 1990) (stating issues not raised and argued in appellant's brief cannot be reviewed in reply brief), review denied (Minn. Sept. 28, 1990).  We will, however, review this issue in the interests of justice.  See Minn. R. Civ. App. P. 103.04 (an appellate court may review any matter that the interest of justice requires); Putz v. Putz, 645 N.W.2d 343, 350 (Minn. 2002) (noting rule recited in Thiele "is not . . . an ironclad rule") (citing Minn. R. Civ. App. P. 103.04).

Generally, if no prior order of child support existed, it is improper to give a support order retroactive effect.  Eisenschenk v. Eisenschenk, 668 N.W.2d 235, 243-44 (Minn. App. 2003), review denied (Minn. Nov. 25, 2003); Paulson v. Paulson, 381 N.W.2d 53, 55 (Minn. App. 1986); see Davis v. Davis, 631 N.W.2d 822, 827 (Minn. App. 2001) (holding initial award of child support made in a post-dissolution proceeding could not be made retroactive, where dissolution decree reserved issue and stated child support would be established when mother's income reached certain amount). 

Respondent defends the December 2002 commencement of child support by arguing that from the time the district court raised the issue in connection with the motion to remove the children's residence to Georgia, the parties contemplated that child support would be an issue.  We reject the December 2002 effective date of the support obligation, and respondent's defense of that effective date, for three reasons.  First, the existence and amount of an obligation may be known to be at issue does not necessarily mean that the date the obligation becomes effective is also known to be at issue, especially where there is a presumption that the obligation will become effective as of a particular date.  Second, respondent does not explain how, three months before a request for support was presented to the district court, the parties could have contemplated that the effective date of that obligation would be at issue.  Third, the reason that it was appropriate to rebut the presumption that the support obligation would become effective as of the date of the request for support[3] is not adequately explained by either the district court or respondent.  Therefore, on this record, child support should have become effective no sooner than the date of the request for support:  March 12, 2003.  We remand to enable the district court to amend the child-support order appropriately.

IV.

            Appellant next argues that the district court abused its discretion in not granting him a hearing on the parenting time schedule.  We note initially that the district court has broad discretion in determining what is in the best interests of the child in regard to parenting time and its decisions will not be overturned absent an abuse of discretion.  Olson v. Olson, 534 N.W.2d 547, 550 (Minn. 1995).  Evidentiary and procedural rulings are also reviewed under an abuse-of-discretion standard.  Braith v. Fischer, 632 N.W.2d 716, 721 (Minn. App. 2001), review denied (Minn. Oct. 24, 2001).

            If a child is moved to another jurisdiction, terms of visitation are required to be modified.  Danielson v. Danielson, 393 N.W.2d 405, 407 (Minn. App. 1986).  Such a modification, even though it will result in a reduction of visitation time, is not necessarily a "restriction" of visitation.  Id.  When removal is permitted, reasonable and necessary modifications of parenting time shall be made "to maintain a good relationship between the noncustodial parent and child."  Auge v. Auge, 334 N.W.2d 393, 400 (Minn. 1983). 

            Respondent brought a motion to create a parenting time schedule based on the fact that she and the children were moving to Georgia and because the parties could not agree on a schedule.  At the first hearing, appellant was allowed to testify on the issue of a parenting time schedule.  In his subsequent motion, appellant did not request an evidentiary hearing and instead only requested that the issue be reopened and reconsidered.  The court granted that request.  The court also considered appellant's proposed alternative schedule.  Appellant has not argued that the new parenting time schedule will adversely affect his good relationship with his children.  The change in the parenting time schedule occurred because the children were moving to Georgia and was not a restriction that required an evidentiary hearing.  The district court did not abuse its discretion by not granting appellant another hearing.

Appellant also argues that he has no current income and the district court abused its discretion by requiring him to pay for the costs of travel associated with the parenting time schedule.  If removal is permitted, the district court may adjust child support to allocate the cost of travel in an equitable manner.  Id. at 400.  The choice to make such an adjustment is within the district court's discretion.  Danielson, 393 N.W.2d at 407. 

As we concluded earlier, the district court properly imputed income to appellant when a child support order was established.  Consistent with the propriety of imputation of income, we conclude that requiring the cost of travel to fall solely on the noncustodial parent is not automatically an abuse of discretion.  See Stewart v. Stewart, 373 N.W.2d 856, 858 (Minn. App. 1985) (holding that district court did not abuse its discretion by not lowering noncustodial parent's child-support obligation due to travel costs).  We see no abuse of discretion in the decision of the district court placing upon appellant the responsibility to pay for transportation costs associated with the parenting time schedule. 

V.

Appellant moved the district court to require respondent to pay him for stock options she exercised, to return personal property awarded to him under the decree, and to return property listed in a subsequent agreement that the parties entered into.  The district court denied all of appellant's motions without further explanation, finding only that respondent had generally complied with all orders of the court that she was able to perform.  Appellant challenges the denial of his requested relief.

A district court may issue orders to enforce the provisions of a judgment, so long as it does not alter either party's substantive rights.  Kornberg v. Kornberg, 542 N.W.2d 379, 388 (Minn. 1996).  This court will reverse a district court's refusal to grant a motion to enforce the property division of a dissolution decree only on a showing of clear abuse of discretion.  See O'Connor v. O'Connor, 386 N.W.2d 395, 399 (Minn. App. 1986) (holding that district court did not abuse its discretion in failing to order party to vacate homestead to make it easier to sell).

Respondent does not dispute that she exercised stock options in June 2003 and that she has not paid appellant, but she argues that appellant owes more than $10,000 in child support.  We note, however, that respondent brought no motion in district court seeking an offset for child support or for any other relief from her obligation to pay stock option proceeds to appellant.  Without intending to diminish respondent's right to seek relief regarding appellant's child-support obligations, we remand the issue of appellant's right to recover certain stock option funds under the decree to enable the district court to determine the exact amount due.

Appellant also claims that he was unable to retrieve items of personal property awarded to him under the decree because respondent changed the locks to the house and disabled the garage doors.  But appellant occupied the homestead for several months after the decree, and should have had access during that time to the items he now claims.  The district court made no reference to this issue in denying appellant's motions.  While we would be reluctant to remand if this were the only issue raising a question on appeal, it is not, and we conclude that on remand appellant's arguments on this issue should be considered.  If, indeed, items of personal property are found to be still due appellant under the terms of the decree, the district court is directed to provide for their delivery to him.  If those items are in Georgia, appellant should bear the expense of shipping them back to Minnesota.  

Appellant also argues that the district court abused its discretion by failing to enforce the parties' subsequent agreement, or in the alternative, that the district court should require respondent to pay $5,000 that appellant forfeited as a result of that agreement.  We note initially that in the district court appellant appeared to seek only enforcement of the parties' subsequent agreement; on appeal, he raises also the alternative argument regarding $5,000.  But the agreement appellant refers to is one entered into solely between the parties without any incorporation into a court order or decree.  Cf. Kielley v. Kielley, 674 N.W.2d 770, 777-79 (Minn. App. 2004) (addressing enforceability of extra-judicial agreements).  We conclude that the district court was well within its discretion in denying a motion based upon the unrecorded post-decree agreement between the parties.

VI.

Respondent, in her notice of review, argues that the district court abused its discretion by awarding her only $500 in attorney fees, because appellant acted in bad faith.  Appellate courts review a district court's decision to impose conduct-based attorney fees for an abuse of discretion.  Gully v. Gully, 599 N.W.2d 814, 820, 825 (Minn. 1999).  Under Minn. Stat. § 518.14, subd. 1 (2002), a court may award "additional fees, costs and disbursements against a party who unreasonably contributes to the length or expense of the proceeding."  An allocation of conduct-based attorney fees may only be based on conduct that occurs during the litigation process.  Geske v. Marcolina, 624 N.W.2d 813, 819 (Minn. App. 2001).

The district court did not find that appellant acted in bad faith.  The court noted that appellant's motions and court activity "border on harassment" but also noted that an award of attorney fees was not made on that basis.  The district court awarded respondent attorney fees because she and her counsel had to appear in court several times due to appellant's failure to have counsel appear with him at the first hearing.  Also, in addition to the $500 in attorney fees awarded to respondent in the order now on appeal, she received $1,500 in attorney fees from an earlier order.  The district court did not abuse its discretion in failing to make a more substantial attorney fee award to respondent.   

            Affirmed in part, reversed in part, and remanded.

*  Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10. 

[1]  Respondent's motion included several additional requests, none of which are at issue on appeal.  We note, also, that all issues now on appeal were heard and decided by a district court judge other than the judge who first raised the question of a possible connection between custody and reservation of child support.

[2]  For several years during the marriage, appellant had been primarily a stay-at-home parent.  The parties dispute whether they agreed to this arrangement.  Respondent argued that she repeatedly "begged [appellant] to get a job" but he refused to do so, and that "was a major reason for [the] divorce."  During the pendency of the proceeding now the subject of this appeal, appellant's deposition was taken.  He testified that he has no income, has one personal bank account and two business accounts, owns two companies, and lives off a line of credit.  The record reflects that appellant has experience as an independent painting contractor, and is now involved in rehabilitation of buildings.

[3]  Under Minn. Stat. § 518.64, subd. 2(d), a district court may modify support effective on the date the petitioning party served notice of the motion to the responding party.  We recognize that we have determined section 518.64 to be inapplicable in other respects when support has been reserved in the decree.  We conclude, however, that concerns of fundamental fairness are satisfied more fully when the notice requirements of this section are applied to the establishment of a child-support order, as here, as well as to modifications of support.