Opinion
No. C0-02-1786.
Filed June 10, 2003.
Appeal from the Ramsey County District Court, No. F4912809.
John R. Schulz, Jennifer A. Jameson, McGrann Shea Anderson Carnival Straughn Lamb, (for appellant)
Steven T. Hennek, Leigh Jane Klaenhammer, Hennek Klaenhammer Lees, (for respondent)
Considered and decided by Wright, Presiding Judge, Randall, Judge, and Shumaker, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant challenges the child support magistrate's order modifying respondent's current child support obligation, arguing that there has been no substantial change in circumstances that makes the current support obligation unreasonable and unfair. Because the modification of the respondent's child support obligation was appropriate, we affirm.
FACTS
The March 8, 1993, stipulated judgment of dissolution of the marriage of Cindy Fioravanti (mother) and Lawrence Fioravanti (father) awarded joint legal custody of the parties' two minor children and sole physical custody to mother. Based on his net monthly income of $2,500, father's monthly child support obligation was set at $1,200. By March 1998, father's net monthly income had increased to $5,072, and at that time the parties stipulated to a monthly child support increase to $1,522.
Father was involuntarily terminated from his job January 31, 2001, and, from that date until November 2001 he received unemployment benefits while he looked for comparable work. In 2001, father had gross earnings of $12,003, and he received unemployment benefits of $10,248. Despite his reduction in income, father continued to pay child support at the stipulated increased rate. He did this by refinancing his home mortgage, borrowing against his life insurance, increasing his credit-card debt, using tax refunds, redeeming investments, and buying a salvage motor vehicle. He spent approximately $85,000 from these sources for child support and his own budget.
In early 2002, father was hired as vice-president of sales and marketing by Cortron Corporation at an average net monthly income of $1,442. Cortron also gave father 25,000 stock options. The stock options will not vest until December 2004, and father must remain employed through that date to be eligible to exercise the options.
When father received notice of a cost-of-living adjustment (COLA) on March 23, 2002, he moved for a reduction of his child support obligation and a denial of the COLA, arguing that he had a substantial change in his economic circumstances.
Mother opposed the motion. She contended that there had been no substantial change in father's circumstances, that father had self-limited his income, and that father's obligation should be calculated on his earning capacity and should include his part-time sports refereeing income.
After an evidentiary hearing on the motion, a child support magistrate determined that father experienced a substantial change of circumstances that made his existing child support obligation unreasonable and unfair and ordered a modification of father's monthly support obligation to the guidelines amount of $432.60. Mother alleges various errors on appeal directly from the child support magistrate's order.
DECISION
On appeal directly from a child support magistrate's order, our scope of review is narrower than if a party had first sought review by the magistrate or the district court under Minnesota Rule of General Practice 376.01. Our review is limited to
determining whether the evidence sustains the findings of fact (to which the "clearly erroneous" standard of review applies) and whether the findings support the conclusions of law and the judgment.
Minn.R.Gen.Pract. 378.01 advisory comm. cmt (citing Kahn v. Tronnier, 547 N.W.2d 425, 428 (Minn.App. 1996), review denied (Minn. July 10, 1996)).
1. Substantial change in circumstances
The magistrate did not clearly err when she found that father's circumstances had substantially changed because of his reduced salary at Cortron and this change made his existing child support obligation unreasonable and unfair. An obligor's guideline child support obligation is calculated as a percentage of the obligor's net monthly income. Minn. Stat. § 518.551, subd. 5(b) (2002). In general, an obligor's net monthly income is equivalent to the obligor's gross monthly income minus the deductions specified under the guidelines. Id.
Minn. Stat. § 518.64, subd. 2 (2002), governs modification of child support obligations. "The terms of an order respecting * * * support may be modified upon a showing of * * * substantially increased or decreased earnings of a party." Minn. Stat. § 518.64, subd. 2(a)(1). There is a presumption that the obligor has had a substantial change in circumstances, and there is a rebuttable presumption that his obligation was unreasonable and unfair when
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).
The father's current child support obligation was $1,522. The father's net monthly income is $1,442. The child support guidelines in Minn. Stat. § 518.551, subd. 5, provide that a obligor who pays child support for two children and who earns between $1,001 to $5,000 has a presumptive support obligation of $432.60 per month. Applying Minn. Stat. § 518.64, subd. 2(b)(1), the father's child support obligation of $432.60 is at least $50 lower than his current $1,522 obligation and is nearly 70 percent lower than his current obligation. Thus, the father has had a substantial change in circumstances and those changed circumstances presumptively make the current support obligation unreasonable and unfair.
2. Underemployment and self-limiting of income
The presumption that the father's current child support obligation is unreasonable and unfair can be rebutted if the mother can prove that the father is underemployed and self-limiting his income. See Anderson v. Anderson, 450 N.W.2d 384, 386 (Minn.App. 1990) (providing that even if the obligor's income was substantially decreased, the district court "may deny the party's motion to reduce the child support obligation if the party unjustifiably self-limited his income."). The mother contends that the father should have income imputed to him because he is underemployed and is self-limiting his income.
"If the court finds that a parent is voluntarily * * * underemployed * * * support shall be calculated based on a determination of imputed income." Minn. Stat. § 518.551, subd. 5b(d) (2002). The legislature determined that a person is not considered voluntarily underemployed if 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.
Id.
The magistrate found that the father was not voluntarily underemployed and that he was not self-limiting his income because he demonstrated good-faith efforts in seeking comparable employment. This decision is supported by the father's testimony about all the companies he applied to, interviewed with, and looked into purchasing. The magistrate found the father's testimony about his job search credible, and we leave credibility determinations to the magistrate. See Wenndt v. Wenndt, 398 N.W.2d 7, 11 (Minn.App. 1986). The magistrate also found credible the father's testimony that he did not receive a lower salary in exchange for stock options. Again, this is a credibility determination that we will not disturb. See id. Augmenting the father's credibility is the evidence that he depleted substantial assets so that he could pay child support even after he lost his job.
Because the mother did not rebut the presumption that the father's current child support obligation was unreasonable and unfair, the magistrate's decision not to impute income to the father based on his earning capacity was not erroneous.
3. Expectancy interest in stock options
The mother contends that the magistrate should have given her an expectancy interest in the father's stock options or should have reserved the right to review the child support modification issue when the stock options mature. The mother argues that the father took these options in lieu of income that otherwise would have been available for the calculation of child support.
Capital assets can be considered together with an obligor's income when determining a child support obligation. Quaid v. Quaid, 403 N.W.2d 904, 907 (Minn.App. 1987), review denied (Minn. June 30, 1987). But when determining whether capital assets must be invaded to provide a source of child support, courts recognize that parents and children must share in hardships that parents encounter in good faith. Id.
We first note that the father voluntarily invaded approximately $85,000 in capital assets so as to continue paying child support at the stipulated level.
As to the stock options, the magistrate found that the father received stock options in lieu of some salary but that the options have a "phantom" value because they are not exercisable and not tradable. Furthermore, the magistrate found that it is unknown whether the father's employer could pay in salary the value of the stock as to which the options exist. The record supports the magistrate's findings. Because the stock options have no genuine calculable value for child support purposes, there was no error in the magistrate's determination.
The magistrate did not reserve any right to modify the child support obligation in December 2004 when the father's stock options mature. Whether to order such a reservation is within the magistrate's discretion. Considering the contingent nature of the options, the uncertainty as to whether they will ever be exercised, and the unascertainable value of the options, there was little of substance to reserve. The magistrate did not abuse her discretion in declining to reserve this issue.
4. Refereeing income
The magistrate properly declined to include the father's sports-refereeing income as part of his net monthly income when calculating his child support obligation because he met all the requirements of Minn. Stat. § 518.64, subd. 2(c) (2002), that exclude income from an additional, part-time job. Minn. Stat. § 518.64, subd. 2(c), provides that on a motion for modification of support, the court
shall not consider compensation received by a party for employment in excess of a 40-hour work week, provided that the party demonstrates, and the court finds, that:
(i) the excess employment began after entry of the existing support order;
(ii) the excess employment is voluntary and not a condition of employment;
(iii)the excess employment is in the nature of additional, part-time employment, or overtime employment compensable by the hour or factions of an hour;
(iv) the party's compensation structure has not been changed for the purpose of affecting a support or maintenance obligation;
(v) in the case of an obligor, current child support payments are at least equal to the guidelines amount based on income not excluded under this clause; and
(vi) in the case of an obligor who is in arrears in child support payments to the obligee, any net income from excess employment must be used to pay the arrearages until the arrearages are paid in full.
The magistrate did not make specific findings of fact in support of its decision to exclude the refereeing income, but there are sufficient facts in the record to support that outcome. In addition, the mother does not argue that the father fails to meet the requirements of Minn. Stat. § 518.64, subd. 2(c), but instead argues that, in light of the significant decrease in the father's child support obligation, it is unfair not to include this income as part of his net monthly income.
The father's refereeing income meets all of the requirements of Minn. Stat. § 518.64, subd. 2(c), supporting its exclusion from his net monthly income. First, father has a full-time, 40-hours-per-week job at Cortron. Second, the father started refereeing after he lost his job in January 2001, which was subsequent to the entry of the 1998 child support order. Third, this refereeing position is not a condition of his job at Cortron and is voluntary. Fourth, this income results from an additional, part-time employment. Fifth, the father has shown a good-faith effort to pay his child support obligation by depleting his assets, so he has not taken this job for the purpose of affecting his child support obligation. And the father's current child support payment of $432.60 is not less than the child support guidelines amount. Lastly, neither party argues that the father has child support arrears. Because the father meets all the requirements of Minn. Stat. § 518.64, subd. 2(c), the magistrate properly excluded his refereeing income from his net monthly income.