In re the Marriage of: Pamela Jean Hoppe, petitioner, Respondent, vs. Kevin Dean Hoppe, Appellant, County of Anoka, intervenor, Respondent.

In re the Marriage of: Pamela Jean Hoppe, petitioner, Respondent, vs. Kevin Dean Hoppe, Appellant, County of Anoka, intervenor, Respondent. A06-98, Court of Appeals Unpublished, January 30, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-98

 

In re the Marriage of:

 

Pamela Jean Hoppe, petitioner,

Respondent,

 

vs.

 

Kevin Dean Hoppe,

Appellant,

 

County of Anoka, intervenor,

Respondent.

 

 

Filed January 30, 2007

Affirmed Worke, Judge

 

Anoka County District Court

File No. F6-98-1250

 

Robert M.A. Johnson, Anoka County Attorney, Dorrie Estebo, Assistant County Attorney, Anoka County Government Center, 2100 Third Avenue, 7th Floor, Anoka, MN  55303 (for respondent)

 

Thomas B. James, 440 North Broadway Avenue, Cokato, MN  55321 (for appellant)

 

            Considered and decided by Worke, Presiding Judge; Klaphake, Judge; and Ross, Judge.

U N P U B L I S H E D   O P I N I O N

WORKE, Judge

            On appeal in this child-support contempt proceeding, appellant argues that, without determining or imputing his current income, the district court erred by (1) denying his motion to modify his child-support obligation, and (2) executing his contempt sentence absent support for the findings that his failure to comply with the purge conditions was willful and that he had the ability to satisfy the purge conditions, and incarceration was likely to produce compliance.  We affirm.

FACTS

Appellant Kevin Dean Hoppe and respondent Pamela Jean Hoppe's marriage was dissolved in 1999.  The amended judgment and decree established appellant's net-monthly income for child-support purposes to be $2,735.43, and ordered him to pay $957.40 per month in child support and $62.43 per month for the children's health insurance.  The support order was modified several times between 1999 and 2002. 

In 2002, appellant was terminated from his 15-year employment, and he and his girlfriend started a well-sealing business, H & H Services, LLC.  Appellant's monthly child-support obligation was $1,083.64, including health insurance.  In 2003, the district court found appellant in contempt for failing to comply with child-support orders.  The district court imposed a 90-day sentence, stayed on the conditions that appellant pay $500 per month toward his ongoing support obligations and keep current with the children's health insurance.  Appellant was ordered to provide copies of bank statements, business records, tax returns, and records of all income, payments, and transfers received by him, his company, and business partners. 

In 2004, respondent Anoka County moved the district court to hold appellant in contempt for failing to pay child support.  Appellant moved to modify child support.  During a hearing on the motions, appellant invoked his Fifth Amendment privilege against self-incrimination and refused to answer questions about his business, whether he owns any property, whether he has any bank accounts, and whether he received loans or inheritance from family.

The district court denied the motion to modify child support and held appellant in contempt.  The district court found that appellant's testimony was not credible, he failed to rebut the presumption that he had sufficient income to pay the support ordered and failed to rebut evidence concerning his, H & H's, and his girlfriend's ownership and acquisition of assets.  The district court imposed a 180-day sentence, stayed on the conditions that appellant pay his ongoing monthly child-support obligation of $1,055 and monthly health-insurance obligation of $113.90.  Appellant was also ordered to pay an additional $211 per month toward the amount in arrears.  The district court's order was affirmed on appeal.  See Hoppe v. Hoppe, No. A04-1279 (Minn. App. Mar. 22, 2005), review denied (Minn. June 14, 2005).

Between June 2004 and July 2005, appellant paid $300 toward his child-support obligation, and the amount in arrears increased to over $30,000.  Additionally, appellant failed to comply with the district court's orders to provide financial records, other than his tax returns.  Respondent Anoka County moved to have appellant's sentence executed.  Appellant moved to modify his child-support obligation.  During the hearing on the motions, appellant testified that he works 60 hours per week and that his 2004 adjusted-gross income from H & H, his only source of income, was $1,982.  On its 2004 tax return, H & H reported gross revenue of $112,351 and a profit of $4,354.  Appellant testified that his girlfriend supports him financially and that he had to relinquish all of his investments to start H & H.  Appellant claimed that he transferred all of his assetshis interest in their home, his boat, his ATV, and all but two of his gunsto his girlfriend because she provided the funding to start H & H.  Appellant also claimed that he still owed his girlfriend close to $100,000, but failed to provide the court with any financial records. 

In October 2005, the district court executed appellant's 180-day sentence and denied his modification motion, but eliminated his child support for the parties' emancipated child.  The district court ruled that appellant failed to show a substantial change in circumstances that would warrant a decrease in his remaining child-support obligation.  The district court found that appellant's testimony regarding his income was not credible, and that he was either voluntarily underemployed or not truthfully reporting his income.  The court concluded that appellant's failure to comply with the child-support orders was willful, that he had the ability to meet the purge conditions of his sentence, and that incarceration was likely to produce compliance.  This appeal follows.

D E C I S I O N

            Appellant argues that the district court erred in denying his motion to modify his child-support obligation.  Whether to modify support is discretionary with the district court and its decision will be altered on appeal if it resolved the matter in a manner that is against logic and the facts on record.  Putz v. Putz, 645 N.W.2d 343, 347 (Minn. 2002); Moylan v. Moylan, 384 N.W.2d 859, 864 (Minn. 1986).  

A child-support order may be modified if the moving party shows a substantial increase or decrease in the earnings of a party.  Minn. Stat. § 518.64, subd. 2(a)(1) (2004).  "The moving party has the burden of proof in support-modification proceedings."  Bormann v. Bormann, 644 N.W.2d 478, 481 (Minn. App. 2002).  The district court must make particularized findings to demonstrate that it considered the relevant statutory factors.  See Erickson v. Erickson, 385 N.W.2d 301, 303 (Minn. 1986) (stating or stressing the importance of having findings of fact demonstrating that the district court considered all relevant factors). 

Appellant contends that the district court erred in finding that he is voluntarily underemployed or not truthfully reporting his income.  A parent is not considered voluntarily underemployed for child-support purposes if the parent shows that the underemployment: "(1) is temporary and will ultimately lead to an increase in income; or (2) represents a bona fide career change that outweighs the adverse effect of that parent's diminished income on the child[ren]."  Minn. Stat. § 518.551, subd. 5b(d) (2004).  The record supports the finding that appellant is voluntarily underemployed.  First, appellant has not shown that H & H will ultimately provide an increase in income sufficient to support his children.  In 2002, H & H lost $32,035.  Appellant asserted that the loss was temporary, but in 2003 the company lost $13,453.  In 2004, appellant claimed to have worked 60 hours per week, yet his total income was only $2,133.  The district court considered the necessary statutory factors and did not clearly err in determining that appellant's testimony, if true, indicates that he is voluntarily underemployed.

Next, the record also fails to show that appellant's self-employment represents a bona fide career change that outweighs the adverse effect his diminished income has on his children.  Appellant testified that prior to his self-employment he earned approximately $35,000 to $38,000.  When appellant became self-employed, it had an adverse effect on his children:  he earned approximately $2,000 in 2004 and he paid only $300 in child support between June 2004 and July 2005.  The district court considered that appellant is licensed by the Minnesota Department of Health and that H & H is one of five contractors that perform 90% of the well-sealing jobs in this geographic area.  And despite H & H's lack of meaningful profitability, appellant testified that he does not intend to pursue other career opportunities.  Based on these facts the district court reasonably concluded that appellant's self-employment does not represent a bona fide career change and did not clearly err in finding that appellant is voluntarily underemployed.

Alternatively, the record supports the district court's finding that appellant was not credible and that he is not truthfully reporting his income.  See Minn. R. Civ. P. 52.01 (stating that "due regard shall be given to the opportunity of the [district] court to judge the credibility of the witnesses").  The district court found appellant's testimony suspect with respect to the high number of hours he claimed to work for so little income, his high expenses, and his intent behind transferring his assets to his girlfriend.  Despite the district court's orders to do so, appellant failed to provide any financial records, other than his tax returns.  Additionally, appellant was not initially truthful regarding how his previous employment terminated and he was not forthcoming in answering questions.  The district court did not clearly err in finding appellant's testimony not credible.

Appellant also argues that the district court abused its discretion in denying his motion without first determining his current income or imputing a specific income to him.  When the district court finds that a parent is voluntarily underemployed, child support must be calculated based on a determination of imputed income.  Minn. Stat. § 518.551, subd. 5b(d).  "Imputed income means the estimated earning ability of a parent based on the parent's prior earnings history, education, and job skills, and on availability of jobs within the community for an individual with the parent's qualifications."  Id.

            Here, the district court did not make a specific finding of appellant's current income, nor did it impute income.  But the district court's order demonstrates that it considered the relevant statutory factors in determining that appellant may be voluntarily underemployed.  The district court also found that appellant was not credible.  It was not necessary for the district court to impute a specific income to appellant in order to conclude that appellant had not met his burden of showing a change in circumstances.  The district court had previously determined appellant's available monthly income for child-support purposes and appellant provided no reasonable basis for the court to arrive at a new income.  Therefore, the district court did not abuse its discretion in denying appellant's motion. 

Finally, appellant argues that the district court erred in executing his sentence.  The factual findings of a contempt order are subject to reversal only if clearly erroneous, and we review the district court's decision for an abuse of discretion.  Mower County Human Servs. v. Swancutt, 551 N.W.2d 219, 222 (Minn. 1996).  If an obligor disobeys a child-support order, it is prima facie evidence of contempt.  Minn. Stat. § 518.24 (2004).  Before a party may be held in contempt for failure to abide by an order, the district court must determine that the obligor had the ability to pay the obligation, set purge conditions, determine whether the contemnor has the ability to meet the conditions, and determine that confinement is likely to produce compliance.  Mahady v. Mahady, 448 N.W.2d 888, 890 (Min. App. 1989).   Appellant contends that without a determination or imputation of income, the district court clearly erred in finding that his failure to comply with the purge conditions was willful, that he had the ability to satisfy the purge conditions, and that incarceration was likely to produce compliance.  We disagree.

First, the district court reasonably inferred that appellant's failure to comply with the contempt order was willful, based either on appellant's voluntary underemployment or concealment of financial resources.  Appellant repeatedly avoided answering questions until he was ordered to do so, and he did not provide any documentation, other than his tax returns, to support his contention that he was not in contempt for failing to comply with child-support orders.  See Bollenbach v. Bollenbach, 285 Minn. 418, 428, 175 N.W.2d 148, 155 (1970) (stating that in dissolution proceedings, the district court is justified in making an adverse inference against a party who conceals assets or evades disclosure).  Additionally, as an indication of appellant's willful disregard of the contempt order, the district court cited appellant's testimony that child-support payments he made were wasted because respondent spent the money on herself.

Next, the district court did not need to determine or impute appellant's income before deciding that appellant had the ability to comply with the contempt order and its purge conditions, and that, consequently, execution of appellant's sentence was likely to produce his compliance.  Although respondent argues that this issue is moot because appellant has served the sentence, it is not moot, because a civil-contempt order may be used in subsequent proceedings against appellant, e.g., criminal non-support prosecution under Minn. Stat. § 609.375 (2004).  Appellant's failure to meet his child-support obligation is prima facie evidence of contempt, and he failed to rebut that presumption.  Appellant's actions prevented the district court from having a basis to determine an income different from the one it determined at the time it established appellant's child-support obligation.  See id. (allowing adverse inferences against party failing to make adequate disclosure).  Further, appellant's actions show bad faith with respect to his ability to pay child support.  See Eisenschenk v. Eisenschenk, 668 N.W.2d 235, 241 (Minn. App. 2003) (stating that whether a party acts in bad faith is a question of credibility), review denied (Minn. Nov. 25, 2003).  Based on the information the district court had concerning appellant's job skills, his income potential, and his available assets, the district court did not clearly err in determining that appellant had sufficient resources to comply with the conditions of the contempt order.  Therefore, the district court did not abuse its discretion in executing the contempt order.

            Affirmed.