This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
In Re the Marriage of:
Stephen Kenneth Behnke, petitioner,
Deidre Lee Green-Behnke,
County of Dakota,
Filed March 7, 2000
Affirmed as modified, reversed in part, and
Dissenting, Schumacher, Judge
Dakota County District Court
File No. F4-96-7217
Ronald B. Sieloff, Sieloff & Associates, P.A., 938 Minnesota Building, 46 E. Fourth St., St. Paul, MN 55101 (for appellant)
Gregory D. Dittrich, 7650 Currell Blvd., Suite 300, Woodbury, MN 55125 (for respondent Green-Behnke)
James C. Backstrom, Dakota County Attorney, Tonya D. F. Berzat, Assistant Dakota County Attorney, Dakota County Judicial Center, 1560 W. Highway 55, Hastings, MN 55033 (for respondent Dakota County)
Considered and decided by Crippen, Presiding Judge, Schumacher, Judge, and Klaphake, Judge.
In 1997, the district court dissolved the marriage between appellant Steven Kenneth Behnke and respondent Deidre Lee Green-Behnke, awarded custody of five minor children to respondent, and ordered appellant to pay child support and spousal maintenance.
In its findings and conclusions of law supporting the judgment, the court: (1) found that appellant was voluntarily underemployed in 1996 and 1997 when his reported income was less than that in 1995; (2) imputed income to appellant for 1996 and 1997 equal to his reported 1995 income of $35,609; (3) set monthly child support retroactive to June 1, 1996, in the amount of $1,256.21 and maintenance at $600 retroactive to October 1997, based on that imputed income; (4) found appellant was in contempt for arrearages on both child support and maintenance in the sum of $18,705.57; and (5) found appellant was entitled to $16,082 as a share of his interest in the homestead real estate, but “offset” $16,082 of the $18,705.57 arrearage by transferring the entire homestead property to respondent, leaving an arrearage. In May 1998, at the request of respondent Dakota County (the county) and without a hearing, the district court revised the child support arrearage through 1997 to $10,367 in favor of the county and to $8,338 in favor of respondent and changed the “offset” against appellant’s homestead interest to $8,338, even though full title to the homestead had already been transferred to respondent by the judgment on December 8, 1997. The district court also entered judgment against appellant for an $8,338 arrearage, even though that amount had been satisfied by the “offset” and title transfer. Appellant took no appeal in response to either the 1997 judgment or the 1998 amendment change. During 1998, appellant attempted to clarify his obligations and responded to the county’s request for information. Appellant sought to settle his obligations, but the county had difficulty in calculating the amount owed to either party. After failing to resolve the matter, in September 1998, the county sought a contempt finding against appellant by an administrative law judge, claiming appellant failed to pay a $10,367 arrearage, failed to pay child support and maintenance since January 1, 1998, and owed interest on the $10,367 arrearage, for a total claim of $25,586.
Appellant responded, seeking, among other things: (1) a continuation until 1998 tax documents were available; (2) modification of maintenance and support based on appellant’s actual income; and (3) tax exemption for the five minor children.
In March 1999, the district court found: (1) appellant was in contempt for failure to pay child support and maintenance; (2) appellant had not rebutted the presumption that he had sufficient income to pay his support and maintenance as previously ordered; and (3) appellant had failed to show inability to comply with previous court orders. The court also awarded judgment and ordered automatic withholding. By separate order, appellant’s motion for modification was dismissed with a memorandum statement that “insufficient information is available to the court to conclude that an adequate change in circumstances exists that warrants a modification of the child support.” No findings or memoranda address the motions to modify maintenance or to change the tax exemptions.
Appellant challenges the contempt determination and denial of his motions. This court previously dismissed as premature the contempt challenge. We affirm the district court’s ruling on the child tax exemptions and the income withholding. We affirm as modified the judgment in favor of respondent Dakota County. Because we cannot ascertain the basis for the denial of the modification motions as to both child support and maintenance, and the basis for the arrearages determination in favor of respondent, we reverse and remand for further consideration consistent with this opinion.
1. Appellant first argues that the district court erred by failing to find a substantial change in circumstances. Modification of child support is within the district court's broad discretion, and we will not reverse absent an abuse of that discretion. Moylan v. Moylan, 384 N.W.2d 859, 864 (Minn. 1986). Such an abuse occurs when the district court resolves the matter in a manner "that is against logic and the facts on record." Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).
The terms of a child-support order may be modified upon a showing of "substantially increased or decreased earnings of a party." Minn. Stat. § 518.64, subd. 2(a)(1) (1998); see Kuronen v. Kuronen, 499 N.W.2d 51, 53 (Minn. App. 1993) (child support modification allowable when obligor shows substantial change of circumstances making terms of an existing order unreasonable and unfair), review denied (Minn. June 22, 1993). The party seeking modification bears the burden of establishing a substantial change in circumstances. Gorz v. Gorz, 552 N.W.2d 566, 569 (Minn. App. 1996).
By affidavit and oral testimony, appellant claimed that, but for 1995, he never had earned, nor could earn, the amount of income previously imputed to him for 1996 and 1997. He further claimed that as of January 1999, he did not have completed tax returns for 1998 and requested a continuance until his usual accountant completed them. Appellant testified that he was late in paying his accountant in the past and because of the accountant’s demand for prompt payment, arrangements had not yet been made for preparation of the W2, a Form 1099, and other forms. Appellant did, however, present a “pro forma” tax return, completed with the assistance of his counsel, showing wages of $23,371 for 1998. He further testified that: (1) he was a self-employed architectural drafter, not an architect, held no professional license, and is not a college graduate; (2) he works 50-60 hours per week as the sole employee of his own business; (3) he has no income other than earnings from his business, has no bonds, stocks, investments, real estate, certificates of deposit, or mutual funds, and has a checking account balances of $100 in one account and $50 in another; (4) “no monies * * * came into the company or to himself that were not paid into the checking account”; (5) he has three regular builder clients and about six “one-site plans” over the course of a year; and (6) in 1998 he tried to add more clients but lost them because he was unable to maintain the increased work.
Appellant produced a computer printout summary of his checkbook transactions based on his bank statements for 1998. The summary showed business receipts totaling $33,980. He also produced a check register for September through December 1998. That register showed deposits of $8,017 for four months, a little more than one-fourth of the year’s gross for 1998 shown on the summary. The checkbook register also included a “job expense sheet,” and the summary included expenses cataloged by category, including payroll.
Appellant testified that (1) of the $33,980 gross business receipts, $24,814 was paid to him, and, after deducting some auto expenses, his gross wages for the 1998 tax year were $23,371, and (2) the difference between $33,980 gross and the payroll of $24,018 represented other business expenses, such as a new computer, storage, rents, legal services, business securities, education, insurance, “job expenses,” and a cell phone.
A 1996 Minnesota salary survey compiled by the Minnesota Department of Economic Security and introduced by the county showed that drafters range in annual gross income from $23,400 to $27,559. Appellant claimed his 1998 gross income after expenses was $23,371. He also claimed that his personal needs remained unchanged from 1996 in the sum of $1,448 per month.
Under Minnesota law, a child support amount is presumed unreasonable and unfair if application of the guidelines to current circumstances results in a sum that is at least 20 percent and at least $50 per month higher or lower than the current support order. Minn. Stat. § 518.64, subd. 2(b)(1) (1998). Here, appellant offered evidence of his 1998 gross income of $23,371, resulting in guidelines child support of $649.73 per month. Compared to the existing obligation of $1,256.21, the $649.73 triggers the rebuttable presumption under Minn. Stat. § 518.64, subd. 2(b)(1). Yet, the district court denied appellant’s motion to modify child support, noting that “insufficient information is available for the court to conclude that an adequate change in circumstances existed.” Given the evidence presented, the district court's explanation of "insufficient information" provides an inadequate basis for its ruling and for our review on appeal. Haman v. Haman, 479 N.W.2d 751, 753 (Minn. App. 1992) (district court must make findings when it considers support modification issues). Thus, we must remand the modification issue for further consideration. See DonCarlos v. DonCarlos, 535 N.W.2d 819, 821 (Minn. App. 1995), review denied (Minn. Oct. 18, 1995).
2. Appellant further argues that the district court erred by continuing to impute income without finding voluntary unemployment or underemployment. A court may impute income for child support purposes if it finds that a parent is voluntarily unemployed or underemployed during the period for which past support is being sought. Minn. Stat. § 518.551, subd. 5b (d) (1998). In the underlying order, the district court found that appellant was underemployed in 1996 and 1997. Accordingly, the court used appellant's 1995 income of $35,609 to set monthly child support at $1,256.21 and maintenance at $600 per month.
While the underlying order is not subject to current review, we are nonetheless concerned about ongoing income imputation to a child support and maintenance obligor in the face of a modification motion. We recognize that appellant has the burden of proof on a modification motion. See Bruner v. Bruner, 429 N.W.2d 679, 683 (Minn. App. 1988), review denied (Minn. Nov. 30, 1988). The imputation here was only for the years 1996 and 1997; it did not extend beyond 1997. The question then remains whether appellant is currently voluntarily underemployed. Continuation of an existing child support obligation based on a prior imputed income finding is reversible error where the record demonstrates that the basis for imputing income no longer exists. Gorz, 552 N.W.2d at 569-70. The district court never found that appellant was voluntarily underemployed for 1998 or would be for 1999. Indeed, appellant testified that he worked 50 to 60 hours per week. If the district court finds, based on the credibility of appellant or otherwise, that appellant is currently voluntarily underemployed, it may impute income and then conclude that based on that income, a substantial change in circumstance has not been established. Moreover, the standard for imputing income for maintenance purposes is a higher standard than for child support purposes and requires “underemployment in bad faith” to avoid payment of maintenance. Bourassa v. Bourassa, 481 N.W.2d 113, 116 (Minn. App. 1992). No finding of bad-faith underemployment was made in 1997 when the maintenance awarded was based on imputed income, nor was there any finding of bad-faith underemployment in the court’s denial of the current maintenance modification motion. The district court cannot continue to impute income without the necessary and appropriate supporting findings. Even where the basis for imputation is present, Minn. Stat. § 518.551, subd. 5b(d) requires the amount to be based on prior earnings history, education, job skills, and availability of jobs within the community with the obligor’s qualifications. Kuchinski v. Kuchinski, 551 N.W.2d 727, 728 (Minn. App. 1996). As the district court findings showed neither a basis for imputation in 1999 nor a basis for its calculation of the amount of imputed income, the court’s continued imputation of $35,609 income to appellant was error, and the court’s failure to modify support and maintenance was an abuse of discretion.
3. Appellant argues that the district court erred by failing to award him the unconditional right to claim the children as income tax exemptions. Appellant suggests that because respondent is unable to use the children as income tax exemptions, the court may not deny him that right. Allocation of tax dependency exemptions is within the discretion of the trial court. Wopata v. Wopata, 498 N.W.2d 478, 486 (Minn. App. 1993). In the December 1997 order, the district court awarded appellant the right to claim the exemptions, conditioned on his being current in his support obligations. Appellant continues to be in arrears on child support, has contributed little to the children’s care, and, consequently, the district court's denial of appellant's request for an unconditional right was not an abuse of discretion.
4. Appellant asserts the district court erred in entering a judgment in favor of the county for $14,921.87, representing child support owed for the 1998 calendar year, and judgment in favor of respondent for $9,000 in maintenance arrears. First, he argues that the district court should have awarded a portion of the county’s amount in favor of respondent. This argument ignores that her right to child support was assigned to the county. Second, appellant argues that he had paid $1,000 towards child support in 1998, rather than the $600 reflected in the judgment. But other than appellant's assertion, nothing in the record reflects that he paid $1,000, rather than the credited $600.
Appellant also argues that the judgment erroneously includes $447.35 in interest, effectively requiring him to pay interest on interest. By statute, interest begins to accrue as soon as the amount of unpaid child support is greater than the current support due. Minn. Stat § 548.091, subd. 1a(a) (1998). Appellant was so notified in the appendix of the underlying order, in accordance with Minn. Stat. § 518.585 (1998). Appellant owes the simple interest that accrues by operation of law. But it was improper for the court to include the 1998 interest in the March 1999 judgment, because of the potential for awarding interest on interest. Accordingly, we modify the judgment to $14,474.52.
Appellant also claims that the maintenance arrearage for 1998 is $7,200, not $9,000, and that the $1,800 arrearage for 1997 was offset against the homestead real estate. While the $1,800 was not originally offset against the homestead real estate, the status of the offsets is totally unclear after the May 1998 modification. Because the district court reduced the offset in May 1998 from $16,082 to $8,338, it would appear appellant should have an additional offset or credit of $7,744. Accordingly, it appears that the judgment of $9,000 is incorrect and we reverse and remand for the district court to determine what, if any, judgment or offset continues to remain appropriate.
5. Without argument, appellant asserts that the court erred in entering an order for income withholding. See Schoepke v. Alexander Smith & Sons Carpet Co., 290 Minn. 518, 519-20, 187 N.W.2d 133, 135 (1971) (“assignment of error based on mere assertion and not supported by any argument or authorities in appellant’s brief is waived and will not be considered on appeal unless prejudicial error is obvious on mere inspection”) (citations omitted). Contrary to appellant's assertion, however, automatic income withholding is appropriate under Minn. Stat. § 518.6111 (1998). The district court properly ordered income withholding.
On remand, the court may either reconsider this matter on its existing record or may, in its sole discretion, reopen the record.
Affirmed as modified, reversed in part, and remanded.
SCHUMACHER, Judge (dissenting)
I respectfully dissent. The record here before us mandates an affirmance of the district court’s denial of appellant's motion to modify his support obligation.
1. In December 1997 the district court held appellant in contempt for failing to pay child support, found appellant's arrears to be $18,706.57, found appellant voluntarily underemployed, imputed income to appellant, and set his monthly support obligation at $1,256.21. By September 1998, appellant had paid none of his arrears and made only a single $200 child support payment. For this reason, Dakota County moved to have appellant found in contempt again. The district court ordered appellant to appear at a December hearing with a verified statement of his earnings, as well as his 1997 tax forms and supporting documentation, and serve any responsive pleading no later than five days before the hearing. When appellant did not appear at the hearing, the district court continued the hearing. Appellant appeared at the continued hearing, but without his financial information. The district court then continued the hearing again.
Ten days before the third hearing date, appellant moved to reduce his support obligation. With his motion, appellant, who is self-employed, submitted an unsigned 1998 tax return suggesting that his 1998 income was $23,371. Also, regarding whether his financial circumstances would allow modification of his obligations, appellant's assertions were essentially reassertions of allegations the district court had rejected in 1997 when it imputed income to him or assertions that the previously-alleged circumstances continued to exist in 1998. Thus, not only did appellant's assertions not satisfy the requirement of Minn. Stat. § 518.64, subd. 2 (1998) that he allege changed circumstances, but his motion resembles a collateral attack on the 1997 order, an order appellant failed to appeal. See Nussbaumer v. Fetrow, 556 N.W.2d 595, 599 (Minn. App. 1996) (stating "Minnesota law does not permit the collateral attack on a judgment valid on its face") (citing Northwest Holding Co. v. Evanson, 265 Minn. 562, 569, 122 N.W.2d 596, 601 (1963)), review denied (Minn. Feb. 26, 1997). Also, while the record indicates that appellant had previously offered some evidence of his 1996 and 1997 incomes, he has never produced verified statements of his incomes for 1996, 1997, or 1998.
The district court assumed without conceding that appellant's motion to reduce his support and maintenance obligations was timely. And it did so despite the requirement of its prior order that appellant respond to the contempt motion at least five days before the hearing and despite the fact that appellant did not move to reduce obligations until after his delays had caused the hearing to be continued twice. The district court denied appellant's motion on the merits, ruling appellant failed to provide sufficient information to allow a finding of substantially changed circumstances.
A moving party's failure to show substantially changed circumstances is fatal to a motion to modify child support. See Heaton v. Heaton, 329 N.W.2d 553, 554 (Minn. 1983) (stating burden of proof in child support modification proceeding is on moving party); Daily v. Daily, 433 N.W.2d 152, 153-54 (Minn. App. 1988) (reversing modification of child support where substantially changed circumstances did not exist). Thus, the finding that appellant failed to show substantially changed circumstances is sufficient to support a denial of appellant's motion and additional findings were not necessary. See Taflin v. Taflin, 366 N.W.2d 315, 319 (Minn. App. 1985) (stating party "will not be heard to complain" if his own failure to provide documentation leads, in part, to denial of motion to modify support); see also Tuthill v. Tuthill, 399 N.W.2d 230, 232 (Minn. App. 1987) (stating, in maintenance context, that because finding of no substantial change in circumstances is fatal to modification, other findings not required).
The majority faults the district court for not making findings explaining why it ruled that there was "insufficient information" to find substantially changed circumstances. I initially note that what was presented to the district court in January 1999 was an arguably late motion to reduce child support and maintenance based not only on previously rejected allegations that do not satisfy Minn. Stat. § 518.64, subd. 2, but also on a record that, despite a district court order that appellant produce financial information, lacked verified statements of appellant's income for any year after 1995. Moreover, at the hearing, appellant testified that he had paid his child support in full and that he lacked the ability to pay his obligations despite working 50 to 60 hours per week.
Appellant's first assertion is flatly inconsistent with the record, and the evidence he offered to support his alleged inability to pay his obligations is incomplete and unverified. On such a record, the district court was free to disbelieve appellant's allegations that he was working 50 to 60 hours per week. See Varner v. Varner, 400 N.W.2d 117, 121 (Minn. App. 1987) (stating district court need not accept even uncontradicted testimony if surrounding circumstances afford reasonable grounds for doubting its credibility). Indeed, here, because Minn. Stat. § 518.551, subd. 5b(d) (1998) allows a district court to impute income to a support obligor if the obligor is voluntarily unemployed or underemployed, and because this district court imputed income to appellant for 1998 despite appellant's testimony that he worked 50-60 hours per week, this court must infer that the district court found appellant's testimony to be not credible. See Loth v. Loth, 227 Minn. 387, 392, 35 N.W.2d 542, 546 (1949) (stating appellate courts cannot assume district court error). As an appellate court, we "must" defer to district court credibility determinations. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).
Also, that the district court made this credibility determination implicitly does not render that determination defective. See Auer v. Scott, 494 N.W.2d 54, 58 (Minn. App. 1992) (deferring to what was "functionally" the district court's credibility determination); see also Hennessy v. Stelton, 302 Minn. 550, 550, 224 N.W.2d 926, 927 (1974) (stating "[a]lthough the record is not a model of either completeness or clarity, a review of what is presented establishes no abuse of judicial discretion"). For these reasons I respectfully dissent from the majority's determination that the district court failed to adequately explain why the information appellant presented was "insufficient" to show substantially changed circumstances.
2. The majority also erroneously asserts that, in rulings on modification motions, courts should not continue to impute income without a finding that the basis for the imputation continues to exist. Such a requirement would reverse the burden of proof in cases like this one. The burden of proof in modification proceedings is on the moving party; here, appellant. E.g., Heaton, 329 N.W.2d at 554. Absent satisfaction of that burden, a moving party's motion is to be denied and, as a result, income imputation continues. To preclude continued imputation without a finding that the reason for the imputation continues would put the burden of proof on the non-moving party (here, respondent) to show that maintenance and support should not be modified. In addition to being contrary to case-law, such a placement of the burden of proof would encourage spurious motions as well as other gamesmanship in modification proceedings.
3. The statutory provision addressing imputation of income to a voluntarily unemployed or underemployed obligor is in the child-support statutes. Minn. Stat. § 518.551, subd. 5b(d). Therefore, I agree with the majority's observation that there are different thresholds for imputing income to maintenance and support obligors. See Walker v. Walker, 553 N.W.2d 90, 95 n.1 (Minn. App. 1996) (noting that under Minn. Stat. § 518.551, subd. 5b(d) finding of bad faith is "no longer required" to impute income to support obligor but that "bad faith remains a prerequisite" to imputing income to maintenance obligor). I also agree that neither the 1997 order nor the order currently being reviewed explicitly states that appellant acted in bad faith. Because appellant did not appeal the 1997 order, however, any defects in it are not relevant here. See Dieseth v. Calder Mfg. Co., 275 Minn. 365, 370, 147 N.W.2d 100, 103 (1966) (stating "[e]ven though the decision of the trial court in the first order may have been wrong, if it is an appealable order it is still final after the time for appeal has expired").
In the current proceeding, appellant failed to produce his financial information as ordered, failed to support his motion with allegations that satisfy the statutory standard for modification, and failed to testify accurately at the hearing. A finding of bad faith may be inferred on a clear record. See Warwick v. Warwick, 438 N.W.2d 673, 677-78 (Minn. App. 1989) (inferring finding that obligor reduced income in bad faith based on referee's statements that obligor's conduct was "egregious," "outrageous," and merited sentence to the workhouse). Because this record clearly shows appellant's bad faith, any error by the district court in imputing income to appellant for maintenance purposes without explicitly finding that appellant acted in bad faith is harmless. See Minn. R. Civ. P. 61 (harmless error to be ignored).
I would affirm the district court.