This opinion will be
unpublished and
may not be cited except as
provided by
Minn. Stat. § 480A.08, subd. 3
(1998).
IN COURT OF APPEALS
C1-99-1249
In Re the Marriage of:
Bernadette L. Florey, petitioner,
Respondent,
vs.
Richard L. Florey,
Appellant.
Hennepin County District Court
File No. 143216
Bernadette L. Florey, 211 21st Avenue North, Hopkins, MN 55343 (pro se respondent)
Ronald B. Sieloff, Sieloff and Associates, P.A., 938 Minnesota Building, 46 East 4th Street, St. Paul, MN 55101 (for appellant)
Considered and decided by Kalitowski, Presiding Judge, Willis, Judge, and Halbrooks, Judge.
HALBROOKS, Judge
Appellant appeals from an order modifying his child-support obligation. Appellant contends that (1) the ALJ erred by overstating his income; (2) there has not been a substantial change in circumstances; and (3) the ALJ erred by failing to enforce the parties’ 1987 stipulation as it relates to child support. Because it was error not to make a finding as to whether appellant was entitled to a deduction from his income for a portion of his deferred compensation, we reverse the ALJ’s computation of income and remand this issue. But we hold that there has been a substantial change in circumstances warranting a modification and that the ALJ did not err in refusing to enforce the 1987 stipulation. We, therefore, affirm on those issues.
Appellant Richard L. Florey and respondent Bernadette L. Florey are the parents of four children born during their marriage. The parties’ marriage was dissolved in 1987 by the Iowa district court. The order dissolving the marriage incorporated a stipulation regarding child support. The agreement indicated that child support would be $400 per month and that it would be reduced proportionally as each child became emancipated. The agreement provided that when only one child remained under age 18, the amount of child support would be reduced to $150 per month. The child-support stipulation also contained a provision stating that child support would continue for a child between the ages of 18 and 22 if enrolled in post-secondary education.
By the fall of 1987, Hennepin County was providing public assistance for respondent and the children. On November 9, 1987, a Hennepin County child-support-payment counselor filed the parties’ Iowa decree in Hennepin County to facilitate collection of child support. Appellant continues to pay child support through the county.
In 1991, respondent brought a motion to modify appellant’s child-support obligation. The district court granted this motion and set appellant’s monthly child-support obligation at $499.50. The monthly obligation was again modified by the district court in 1993 to $649 per month. Biennial cost-of-living adjustments were made in 1995 and 1997. These cost-of-living adjustments included a reduction between 1993 and 1995 based on the emancipation of one of the parties’ children.
Although the record is unclear, at some point in time, presumably when the parties’ second youngest child turned 18, respondent began paying only $150 per month in child support. This is the amount provided for by the original stipulation. The county apparently interpreted the 1987 stipulation and subsequent court orders to provide for this reduction.
Respondent filed the modification motion that is the subject of this appeal on October 1, 1998, and the motion was heard by an administrative law judge on November 3, 1998. On December 1, 1998, the ALJ issued findings of fact, conclusions of law, and an order granting respondent’s motion based on a substantial change in circumstances. Appellant was ordered to pay guideline child support of $541 per month.
On January 12, 1999, appellant filed a motion for amended findings. The reviewing ALJ considered that motion after receiving written submissions from the parties. Appellant argued that the original ALJ erred in calculating his monthly income, that there had not been a substantial change in circumstances, and that it was error to fail to enforce the original stipulation. The reviewing ALJ denied appellant’s motion on February 22, 1999, and this appeal followed.
D E C I S I O N
1. Determination of appellant’s net monthly income
An appellate court will not reverse a trial court’s determination of net income used to calculate child support if it has a “reasonable basis in fact.” Hicks v. Hicks, 533 N.W.2d 885, 886 (Minn. App. 1995). Net income for the purposes of child support is total monthly income minus certain items specified by the child-support statute, including “[r]easonable [p]ension [d]eductions.” Minn. Stat. § 518.551, subd. 5(b) (1998).
The ALJ found appellant’s net monthly income to be $2,313. This figure included deductions for taxes, social security, mandatory pension contributions, medical expense account contributions, and medical and dental insurance premiums for appellant’s child. Appellant contends that the ALJ erred by not allowing a large enough pension deduction in calculating his net income.
Appellant argues that he should be permitted a deduction for the portion of his income that he contributes to a voluntary deferred-compensation plan. Although the ALJ deducted appellant’s mandatory PERA contributions from his gross income, she did not make any findings regarding the reasonableness of his deferred-compensation contribution. Appellant contends that a total deduction of 8% of his gross income, i.e., 4.75% for PERA plus 3.25% for deferred compensation, is “reasonable” and that the ALJ erred by not permitting it.
Neither the child-support statutes nor
Minnesota caselaw define the term “pension” as it is used in Minn. Stat. §
518.551, subd. 5(b). But this court has
previously noted that “[a] deferred compensation plan is more analogous to a
pension plan than to income.” Marshall v.
Marshall, 350 N.W.2d 463, 466 (Minn. App. 1984). Further, we have previously implied that
both 401(k) plans and IRAs fall within the meaning of the term “pension” as
used in the statute. See State ex
rel. Rimolde v. Tinker, 601 N.W.2d 468, 471 (Minn. App. 1999)
(remanding for finding of whether 401(k) contribution was a reasonable pension
deduction);
Mueller v. Mueller, 419 N.W.2d 845, 847 (Minn. App. 1988) (remanding
for finding on whether IRA contribution was a reasonable pension deduction).
We find our recent holding in Rimolde controlling in this case. In Rimolde, the district court permitted a pension deduction for the obligor’s mandatory contributions to his employer’s pension plan but failed to make any findings regarding the obligor’s voluntary contributions to a 401(k) plan. Rimolde, 601 N.W.2d at 471. Likewise, in the instant case, the ALJ permitted a deduction for appellant’s mandatory contributions but failed to make any findings regarding his voluntary contribution to his deferred-compensation plan. In Rimolde, this court stated:
The district court * * * appears to have accepted [obligee’s] argument that voluntary pension contributions that supplement an employer’s separate pension plan are not appropriate deductions when determining net income. Such an assumption is erroneous: pension deductions, whether voluntary or mandatory, must be excluded when determining net income if those deductions are reasonable.
Id. (citing Minn. Stat. § 518.551, subd. 5(b)). Because reasonable pension deductions must be excluded, the ALJ’s failure to make a finding in this case regarding whether appellant’s claimed deduction was a reasonable pension deduction mandates a remand. On remand, the district court should make the finding required by our holding and, if necessary, recalculate appellant’s net income and make any necessary adjustment in appellant’s guideline child-support obligation.
2. Substantial change in circumstances
Appellant contends that there has not been a substantial change in circumstances justifying a modification of his child-support obligation. A court’s modification of a child-support obligation is reviewed under an abuse-of-discretion standard. Rouland v. Thorson, 542 N.W.2d 681, 683 (Minn. App. 1996). The same standard applies to modifications ordered by an ALJ. Id.[1]
A court can modify a child-support obligation when the party seeking the modification establishes that a substantial change in circumstances has occurred. Gorz v. Gorz, 552 N.W.2d 566, 569 (Minn. App. 1996). A substantial change in circumstances is presumed and the existing order is rebuttably presumed to be unreasonable and unfair when the moving party establishes that
the application of the child support guidelines in section 518.551, subdivision 5, to the current circumstances of the parties results in a calculated court order 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).
The initial ALJ concluded that a substantial change in circumstances had occurred but failed to expressly identify the basis for this conclusion. The reviewing ALJ noted that the statutory presumption found in Minn. Stat. § 518.64, subd. 2(b)(1), had been met and refused to amend the findings for this reason. In spite of appellant’s contention to the contrary, the current situation does give rise to presumptive unreasonableness and unfairness.
We hold that the “current support order,” as phrased in the statute, is $150. See id. Hennepin County interpreted the previous orders and the parties’ 1987 stipulation to require appellant to pay $150 per month when only one minor child remained, and neither party appears to have challenged this interpretation. Rather, respondent, based on the $150 she was receiving, brought the current modification motion. It is clear, given the current circumstances of the parties, that the ALJ’s order, i.e., the guideline child-support amount of $541 per month, is more than 20 percent and more than $50 per month higher than the $150 respondent is currently receiving.
Additionally, we find that appellant failed to rebut the statutory presumption. In fact, at the motion hearing the ALJ asked him what was his “basis for requesting a departure from the guidelines?” and appellant admitted, “If — if all we’re going to do is look at black and white, I have no case here.” He did contend that if he were ordered to pay guideline support he would have to take money from a college fund he claimed he had created for his children. But appellant stated that he recognized that the existence of a college fund was not an appropriate basis for a departure from the guidelines.
Because appellant has not contested his ability to pay guideline support, he cannot credibly argue that he has rebutted the presumption in favor of the guidelines. The ALJ did not abuse her discretion in concluding that a substantial change in circumstances had occurred.
3. Refusal to enforce the original stipulation
The law is well settled on this issue. A child’s interest in child support cannot be bargained away by that child’s parents. Aumock v. Aumock, 410 N.W.2d 420, 421 (Minn. App. 1987). The parties’ 1987 stipulation does include a provision regarding the reduction of child support, but a court need not enforce such a stipulation. See Moylan v. Moylan, 384 N.W.2d 859, 865 (Minn. 1986).
When the stipulation includes child support, however, it is afforded less weight. Child support requirements, relating as they do to the non-bargainable interest of the children, are less subject to restraint by stipulation. * * * [T]his court [has] held that merely showing an increase in the noncustodial parent’s income, without any evidence of a change in circumstances for the custodial parent and child, was insufficient grounds on which to alter the parties’ stipulation. We have stressed that the welfare of the child takes precedence even if the case involves a stipulation.
Id. (quotation
omitted) (citations omitted). In this
case, the modification is not based solely on appellant’s increased
income. Rather, it is based on the
disparity between what the appellant is paying, i.e., $150 per month, and what
he has the ability to pay. See
Minn. Stat. § 518.551, subd. 5(c)(3) (1998) (in setting support, the court
shall consider the standard of living that the child would have enjoyed had the
marriage not been dissolved); Desrosier v. Desrosier, 551 N.W.2d 507,
509 (Minn. App. 1997) (same).
Perhaps if a substantial change in circumstances had not been shown, appellant’s argument to enforce the original stipulation would have more merit. But because there has been a substantial change in circumstances, we find no error by the ALJ in refusing to enforce the stipulation and its provision limiting child support to $150 per month.
Affirmed in part, reversed in part, and remanded.
[1] The administrative process under which this case was decided was ruled unconstitutional effective July 1, 1999. Holmberg v. Holmberg, 588 N.W.2d 720, 727 (Minn. 1999). But because the ALJ’s order was filed before July 1, 1999, we review this case under the previous administrative process.