This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. ' 480A.08, subd. 3 (1994).
STATE OF MINNESOTA
IN COURT OF APPEALS
Richard L. Swanson, petitioner,
Sheila M. Burke,
Filed May 28, 1996
Ramsey County District Court
File No. P18452
Rebecca Hanson Frederick, Rebecca H. Frederick Law Offices, 7301 Ohms Lane, Suite 550, Edina, MN 55439 (for Appellant)
Michael D. Dittberner, Kissoon, Clugg, Linder & Dittberner, Ltd., 3205 West 76th Street, Edina, MN 55435-5244 (for Respondent)
Considered and decided by Lansing, Presiding Judge, Schumacher, Judge, and Short, Judge.
U N P U B L I S H E D O P I N I O N
This case arises in the context of a paternity action brought by Richard L. Swanson against Shiela M. Burke in 1989. Believing a final order had been issued in the matter, Burke petitioned for a modification of Swanson's child support obligation and served him with discovery requests in March 1995. After Swanson failed to provide answers to interrogatories and the requested documents, Burke first obtained an order compelling discovery and later moved for sanctions in response to Swanson's noncompliance with the discovery order. Purporting to "strike [his] sole pleading," the referee disregarded Swanson's affidavit, which set forth (1) parts of Swanson's income tax records from 1991 to 1994, and (2) the current monthly expenses for Swanson and his three minor children. The referee then used Swanson's 1993 federal tax return to determine his monthly child support obligation. On appeal, Swanson argues the referee abused his discretion by (1) improperly calculating Swanson's net income for purposes of establishing his child support obligation, and (2) awarding Burke attorney fees in the amount of $1,567. In defending the judgment on appeal, Burke requests additional attorney fees in the amount of $950. We affirm, but deny Burke's motion for attorney fees on appeal.
D E C I S I O N
Trial courts exercise broad discretion in setting child support obligations, which we will not disturb absent a clearly erroneous conclusion that is against logic and the facts of record. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). In determining the level of child support, the trial court must first calculate the obligor's current net monthly income. Roatch v. Puera, 534 N.W.2d 560, 564 (Minn. App. 1995). While this generally requires examination of the most recent evidence concerning the obligor's income, the trial court may rely on older data if the newer information is incomplete or unreliable. See Johnson v. Johnson, 533 N.W.2d 859, 864 (Minn. App. 1995) (refusing to consider the obligor's more recent pay stubs because this would lead to an understatement of his monthly income); County of Nicollet v. Haakenson, 497 N.W.2d 611, 615 (Minn. App. 1993) (considering older data after determining it was more credible than the obligor's testimony regarding his current income). Also, the trial court enjoys a wide latitude in determining the obligor's current income when he or she has not provided the records necessary to make findings in strict conformity with the statute. See County of Ramsey v. Shir, 403 N.W.2d 714, 717 (Minn. App. 1987) (refusing to consider an obligor's complaints about the calculation of his net income because he failed to produce adequate documentation), review denied (Minn. May 28, 1987); Sundell v. Sundell, 396 N.W.2d 89, 91 (Minn. App. 1986) (affording trial courts wide latitude in fashioning child support orders when an obligor has not submitted adequate documentation of income), review denied (Minn. Jan. 16, 1987). If the trial court orders the obligor to pay the guidelines amount of support, it must then make written findings concerning the obligor's net monthly income and "any other significant evidentiary factors affecting the determination of child support." Minn. Stat. ' 518.551, subd. 5(i) (Supp. 1995).
Swanson argues the referee abused his discretion in calculating Swanson's net monthly income because he neglected to consider Swanson's most recent tax records. We disagree. Swanson furnished complete copies of his 1991-1993 federal and state income tax returns and an incomplete copy of his 1994 federal income tax return, with no information regarding his 1994 state income tax obligation. Under these circumstances, we cannot say the referee abused his discretion in calculating Swanson's net monthly income on the basis of his most recent complete (1993) tax records.
Swanson also argues the referee abused his discretion by not considering significant evidentiary factors affecting the determination of child support, including his debts, monthly expenses, and obligation to support three other minor children. See Haakenson, 497 N.W.2d at 615 (affirming a guidelines child support obligation because the ALJ considered significant evidentiary factors affecting the determination of a child support obligation, including the obligor's debts and the needs of his subsequent-born children). While a trial court's findings must generally touch on these points in a child support case, Swanson may not complain because the referee neglected to do so as a direct consequence of Swanson's own failure to submit relevant evidence. See Shir, 403 N.W.2d at 717 (declining to consider an obligor's complaints about the calculation of his net income because he did not produce adequate documentation); Sundell, 396 N.W.2d at 91 (affording trial courts wide latitude in fashioning a child support order when the obligor has not submitted adequate documentation of income). Although Swanson furnished an affidavit detailing significant evidentiary factors, including his debts, monthly expenses, and obligations to other minor children, the referee "str[u]ck [this] sole pleading" and prohibited Swanson from supporting his case with evidence that he should have produced through compliance with the discovery order.
Swanson contends the referee's refusal to consider Swanson's affidavit constitutes an abuse of discretion because striking a party's responsive pleading is justified only if the trial court issued a discovery order that specified both a deadline for compliance and the sanction for the party's failure to heed the order, which the referee neglected to include. See Jadwin v. City of Dayton, 379 N.W.2d 194, 196-97 (Minn. App. 1985) (permitting a trial court to strike responsive pleadings only when its discovery order specified both the deadline and the sanction). However, the record establishes that the referee did not strike Swanson's pleadings. Rather, he declined to receive Swanson's evidence concerning liabilities other than those appearing in his 1993 tax records. Essentially, this is a preclusion order, which is less severe and more readily available than a sanction that ultimately results in default. See Minn. R. Civ. P. 37.02(b)(2) (authorizing the prohibition of certain evidence as a discovery sanction); 2 David F. Herr & Roger S. Haydock, Minnesota Practice ' 37.9, at 200 (2d ed. 1985) (noting that preclusion orders are less severe than dismissal, default, or contempt and recognizing they "have always been readily available").
In fashioning a preclusion order, the trial court should strive to prevent the recalcitrant party from profiting from its discovery violations. See Gebhard v. Niedzwiecki, 265 Minn. 471, 476, 478-79, 122 N.W.2d 110, 114-15 (1963) (recognizing the failure to answer interrogatories truthfully may warrant suppression of evidence and explaining the object of discovery sanctions is to prevent a party from gaining by its own discovery violations). The referee's order, which prohibited Swanson from selectively providing discovery of his liabilities while obstructing scrutiny of his assets, falls within this guiding principle and is not an abuse of discretion. Thus, the referee imposed an appropriate sanction in response to Swanson's misconduct, which prevented the introduction of evidence concerning significant evidentiary factors affecting the determination of child support. Under these circumstances, the absence of findings on these points does not constitute an abuse of discretion. See Shir, 403 N.W.2d at 717 (refusing to evaluate an obligor's complaints about the calculation of his net income because he failed to produce adequate documentation); Sundell, 396 N.W.2d at 91 (affording trial courts wide latitude in fashioning a child support order when the obligor has not submitted adequate documentation of income).
Swanson further argues the referee abused his discretion by neglecting to consider Swanson's 1993 social security, medicare, and state income taxes in calculating his net income. However, self-employed business people like Swanson do not pay social security and medicare taxes in the usual manner. Rather, they (1) pay a self-employment tax equal to the employer's and employee's combined social security and medicare contributions, and (2) receive an "above-the-line" deduction for one-half of the self-employment tax. See 26 U.S.C. ' 1401(a), (b) (1994) (imposing a self-employment tax to cover old-age, survivors, disability, and hospital insurance); see also 26 U.S.C. ' 164(f) (1994) (authorizing an "above-the-line" deduction for one-half of this tax); 4 Fed. Tax Coordinator 2d (Res. Inst. Am.) 12,195 (1996) (explaining this tax embodies the social security and medicare contribution for self-employed people); 11 Stand. Fed. Tax Rep. (CCH) & 33,843.01 (1996) (same). In this case, the referee: (1) began with Swanson's gross adjusted income, which already reflects a deduction for one-half of Swanson's self-employment tax ($4,538), and (2) then subtracted the full amount of Swanson's self-employment tax (another $9,075). Thus, while the referee appears to have made an error in calculating Swanson's net income by subtracting 1.5 times his self-employment tax, Swanson benefitted from this mistake because it artificially reduced his gross income by $4,538.
Despite the referee's use of Swanson's 1993 tax records as the most recent complete body of information regarding his income, the referee improperly considered only Swanson's federal tax liability in determining his net monthly income and did not take into account his $3,092 state tax liability. See Minn. Stat. ' 518.551, subd. 5(b) (Supp. 1995) (requiring consideration of an obligor's state income tax liability when calculating net income). This oversight, when offset with the artificial deflation of Swanson's 1993 income, leaves Swanson's bottom-line net income a bit lower than it should be. Thus, while Swanson has demonstrated the presence of error in the referee's calculation of his net income, it is offset by a countervailing mistake. As a result, Swanson cannot demonstrate prejudice, and we affirm his child support obligation. See Minn. R. Civ. P. 61 (instructing courts not to disturb a judgment on the basis of harmless error); Ruona v. Ruona, 390 N.W.2d 459, 460-61 (Minn. App. 1986) (declining to reverse a child support obligation on the basis of nonprejudicial error).
The award of attorney fees in family matters rests almost entirely within the trial court's discretion and will rarely be disturbed on appeal. See Reif v. Reif, 410 N.W.2d 414, 416 (Minn. App. 1987) (applying this standard in a dissolution action). Swanson argues the referee abused his discretion by awarding Burke $1,567 in fees and costs because: (1) the amount is unreasonably high; (2) Swanson did not act in bad faith; and (3) Burke has no need for assistance in paying her legal bills inasmuch as Swanson's increased child support obligation leaves Burke with more discretionary income. However, Burke's $3,720 legal bill, which represents about 24 hours of combined attorney and legal assistant time over six months, is not unreasonable. Also, the $567 award for approximately four hours of combined attorney and legal assistant time incurred in responding to Swanson's noncompliance with the discovery order is not an abuse of discretion. See Minn. Stat. ' 518.14, subd. 1 (1994) (authorizing an award of attorney fees against a party who has unreasonably contributed to the proceedings' length or expense); Minn. R. Civ. P. 37.02 (permitting an award of attorney fees in addition to other discovery sanctions). While Swanson describes his production of tax returns as substantial compliance with the discovery order, he ignores the fact that his personal and business financial records would have provided a more complete basis on which to calculate his actual net income. See Roatch, 534 N.W.2d at 565 (recognizing the calculation of a self-employed person's income can be difficult); Otte v. Otte, 368 N.W.2d 293, 297 (Minn. App. 1985) (noting that tax returns may not be sufficient to calculate the net income of a self-employed farmer). Furthermore, while Swanson's increased child support obligation might theoretically have augmented Burke's disposable income, it is undisputed that, at the time of the hearing, Burke was a cancer patient who had been terminated from her regular place of employment and who had accepted a temporary position as a legal assistant. Under these circumstances, we cannot say the referee abused his discretion by requiring Swanson, a self-employed attorney with a net monthly income of approximately $4,255, to pay less than one-third of Burke's remaining ($3,153) legal expenses. Cf. Worden v. Worden, 403 N.W.2d 909, 912 (Minn. App. 1987) (stating that a failure to award attorney fees may constitute an abuse of discretion if a wide disparity exists between the financial resources of the parties to a family dispute).
On appeal from a paternity decree, we enjoy the discretion to award attorney fees if a party either (1) has unreasonably contributed to the length or expense of the proceedings, or (2) lacks the financial ability to protect his or her legitimate interests and the other party has the means to defray the needy party's legal bills. See Minn. Stat. ' 518.14, subd. 1 (permitting an award of attorney fees on these grounds at any time in the proceeding); Case v. Case, 516 N.W.2d 570, 574 (Minn. App. 1994) (recognizing that Minn. Stat. ' 518.14 authorizes attorney fees on appeal). Burke argues she is entitled to attorney fees for defending the judgment against Swanson's appeal because Swanson has unnecessarily contributed to the length of these proceedings and because Burke lacks the means to pay her own legal bills. However, in justifying her request for conduct-based fees, Burke chiefly refers to Swanson's recalcitrant behavior in the proceedings before the referee, for which she has already received compensation. See Johnson, 533 N.W.2d at 867 (denying a request for conduct-based attorney fees under these circumstances). Also, Burke does not contend that Swanson's appeal is wholly deficient in merit. See Anderson v. Archer, 510 N.W.2d 1, 5 (Minn. App. 1993) (declining to award conduct-based fees because the appeal had merit). Moreover, Swanson's only colorable "misconduct" on appeal is his failure to file a timely brief. While such behavior is not appropriate, it caused no harm to Burke. Furthermore, we have already responded to Swanson's behavior by denying his request for oral argument. See Minn. R. Civ. App. P. 134.01(b) (disallowing oral argument for parties who have failed to submit timely briefs). Under these circumstances, Burke has not demonstrated the factual predicate necessary to sustain her request for conduct-based attorney fees.
We find Burke's request for need-based attorney fees similarly unavailing. While Burke's position in August 1995 may have been compelling, her affidavit in support of attorney fees on appeal furnishes no specific information regarding her present financial and physical condition. See Johnson, 533 N.W.2d at 867 (requiring a party to demonstrate the need for attorney fees on appeal); J.A.S. v. R.J.S., 524 N.W.2d 24, 27 (Minn. App. 1994) (denying a request for need-based attorney fees on appeal because the record lacked evidence of the parties' current incomes); cf. Case, 516 N.W.2d at 574 (affirming a trial court's refusal to award need-based attorney fees because the requesting party neglected to submit specific financial information and relied on a general assertion of her inability to pay her legal expenses). Thus, while we acknowledge the seriousness of the obstacles facing Burke last summer, we cannot award need-based attorney fees on the assumption that her situation remains unchanged.