may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
IN COURT OF APPEALS
Kenneth S. Engel, petitioner,
Marjorie Engel, n/k/a Marjorie Schneider,
Hennepin County District Court
File No. DC101950
Esther M. Lerman, McLagan & Lerman, P.A., 2025 Centre Pointe Boulevard, Suite 260, Mendota Heights, MN 55120 (for respondent)
Considered and decided by Toussaint, Chief Judge, Schumacher, Judge, and Holtan, Judge.*
*Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. Art. VI, § 10.
On appeal from an order modifying child support, appellant Kenneth S. Engel (father) contends the administrative law judge (ALJ) abused her discretion when she calculated his net monthly income, increased his child support obligation, and extended the term of child support. We affirm.
Upon dissolution of the marriage in 1983, the parties shared custody of their one child. Father had a child support obligation of $200 per month. In 1986, that obligation increased to $350 per month. The trial court temporarily suspended father's child support obligation in February 1993, due to his unemployment, and periodically reviewed his status. Over the next 18 months, the court threatened sanctions against father to motivate him to find employment.
By August 8, 1994, father reported work with Sharon Properties, earning $500 per month. At the next status review hearing in October 1994, however, the court found father (1) was not making a good-faith effort to find employment because he had been unemployed or underemployed for over two years; and (2) had obtained the Sharon Properties job simply to avoid sanctions. Based on that finding, the court reinstated father's child support obligation at $108 per month. The obligation later increased to $116 to reflect a cost-of-living adjustment.
In March 1997, father informed the court that he had graduated from law school, passed the bar examination, and was employed at a large law firm. He disclosed that his monthly gross income was $4,833.33. He claimed deductions of $2,734, $941.83 of which were student loans, which resulted in a monthly net income of $2,099.33. He sent a copy of this letter to the attorney for respondent Marjorie Engel, n/k/a Marjorie Schneider (mother).
Mother claims this letter was her first notice that father had attended law school and incurred student loans.
Mother then requested review of father's child support status. The child support officer drafted a proposed order for an increase to $760 per month in child support, based on the parties' financial data. Father requested an administrative hearing before an administrative law judge.
At the hearing, father presented his 1996 tax returns, pay check stubs, cancelled checks from his student loans, a revised list of his claimed monthly expenses, and a claimed net monthly income of $1,798.97. The ALJ, however, found father had a net monthly income of $2,888.69, which constituted a substantial change in circumstances that rendered the prior child support obligation of $116 per month unreasonable and unfair. The ALJ reduced guideline child support from $772 per month to $622 per month, given that father has another child to support from a subsequent marriage. The ALJ also extended the term of support for father and mother's child until the child turns 20, should she still be in high school.
Father then moved for amended findings or a new trial, contending that he lost his job only days after the contested hearing. He claimed error in calculation of his income and the amount and duration of his child support obligation. In denying the motion, the ALJ reconfirmed her calculations of income and child support and questioned father's good faith in losing his job, given that he had acted in bad faith in the past. The ALJ informed father that his option under the law was to move for modification if a change of circumstances has rendered the court's order unreasonable and unfair. Father appeals.
This court defers to the trial court's discretion in modifying child support and will not overturn such a decision absent an abuse of discretion. Hennessy v. Stelton, 302 Minn. 550, 551, 224 N.W.2d 926, 927 (1974). We will not reverse a determination of net income used to set child support so long as it has a reasonable basis in fact. Strauch v. Strauch, 401 N.W.2d 444, 448 (Minn. App. 1987). These standards apply to the review of an ALJ's child support decision as well as a trial court's decision. Lee v. Lee, 459 N.W.2d 365, 369 (Minn. App. 1990), review denied (Minn. Oct. 18, 1990). This court defers to the trial court's discretion in modifying child support and will not overturn such a decision absent an abuse of discretion. Hennessy v. Stelton, 302 Minn. 550, 551, 224 N.W.2d 926, 927 (1974). We will not reverse a determination of net income used to set child support so long as it has a reasonable basis in fact. Strauch v. Strauch, 401 N.W.2d 444, 448 (Minn. App. 1987). These standards apply to the review of an ALJ's child support decision as well as a trial court's decision. Lee v. Lee, 459 N.W.2d 365, 369 (Minn. App. 1990), review denied (Minn. Oct. 18, 1990).
1. Father contends the ALJ abused her discretion by reducing his statutory deductions and student loan deduction when calculating his net income. Minn. Stat. § 518.551, subd. 5(b) (1996), allows these deductions to calculate net income: federal and state income tax, social security, pension, union dues, health insurance, and child support/maintenance.
Father presented his pay stubs, which reflected his federal and state income tax and FICA deductions of $1,766.36. The ALJ, however, found father's total state/federal tax deduction plus FICA to be $1,237. Father claims error because the ALJ did not explain her calculation. But father did not present his W-4 as evidence of his level of withholding or any evidence of his tax liabilities other than his pay stubs. See Rouland v. Thorson, 542 N.W.2d 681, 685 (Minn. App. 1996) (affirming ALJ's calculation of net income where record contained evidence of father's pay stubs, employer's affidavit, federal/state tax tables, tax guide on income withholding, W-4 form, federal 1040 income tax return instructions, and father's testimony). Without further evidence to substantiate father's paycheck deductions, the ALJ could not accurately assess the deductions father claimed. Given that absence of evidence, it is reasonable to conclude the $1,237 deduction is based on the tax tables. See Minn. Stat. § 518.551, subd. 5(b) (recommending use of tax tables when calculating standard deductions). Under the circumstances, the ALJ did not abuse her discretion.
Father also argues that he was entitled to a full deduction from gross income for his student loan payments. The statute allows the court to consider an obligor's debts to private creditors and depart from child support guidelines only under certain conditions as set forth in Minn. Stat. § 518.551, subd. 5(d). To receive relief, an obligor must provide the necessary documentation under the statute. Margeson v. Margeson, 376 N.W.2d 269, 274 (Minn. App. 1985) (refusing to reduce gross income by debt where obligor failed to provide necessary documentation), review denied (Minn. Dec. 30, 1985).
Father presented a list of all his student loans along with balances due, monthly payments, lenders, and interest rates. At the time of hearing, his outstanding balances were: $37,412.26, $18,500, and $6,000. He attached copies of cancelled checks for his monthly payments and contends this evidence was sufficient to entitle him to deduct the full amount of $941.83 each month.
Father apparently used these loans to attend law school. As such, the debt may be essential to the continuing generation of income, as required for the debt to be considered under Minn. Stat. § 518.551, subd. 5(d). Father has failed to substantiate, however, that the full amounts of these loans were dedicated to his academic tuition and fees; he is not entitled to deduct the full amount of the debt simply because he labeled it a student loan. The amount of money from a student loan in excess of the academic tuition and fees is a periodic and reliable source of income that the court may use when calculating an obligor's net income. Gilbertson v. Graff, 477 N.W.2d 771, 774 (Minn. App. 1991). Any excess loan money that contributed to his daily living constituted income and need not be deductible as a debt. Id. The ALJ did not abuse her discretion when she used the limited data father provided to estimate a reasonable student loan payment of $200 per month and estimated father's net monthly income.
2. Father alleges the ALJ abused her discretion in increasing his child support obligation. The ALJ found that father's guideline support obligation was $722, but reduced the obligation to $622 in light of father's subsequent child. The ALJ supported this determination with a finding regarding the best interests of father and mother's child. Mother has not contested this award. This below-guideline support obligation was not an abuse of discretion.
Father also challenges the ALJ's decision not to amend the findings to alter child support after he reported losing his job. The ALJ refused to allow him to argue for modification when he had actually moved for amended findings. This decision was reasonably within the ALJ's discretion in light of the fact that father was apparently terminated from employment only six days after the parties' initial August 12 hearing, yet he made no mention of that fact until after the court ruled against him on September 17. Father's motion papers were dated October 6. The ALJ also informed father of his right to move for modification of his child support obligation. The ALJ did not abuse her discretion in increasing child support.
3. Father argues the ALJ abused her discretion when she set support to continue until the child reaches the age of 20, if she is still in high school. The ALJ noted that the law at the time of the parties' February 1983 judgment and decree of dissolution (and at present) defined child as a person under age 20 who is still in secondary school. Minn. Stat. § 518.54, subd. 2. To provide added protection to the child, the ALJ included this clarification in its order because mother testified that the child would not be able to be self-supporting while attending high school. We conclude the ALJ did not abuse her discretion.
 In his reply brief, father contends that Esther Lerman has provided no evidence that she is authorized to appear for mother in this appeal. The record shows, however, that father knew Lerman was representing mother over one year ago, when he sent her a copy of this letter on March 10, 1997. Any objection at this stage is untimely.