Opinion
No. 59668-3-I.
November 13, 2007.
In child support adjustment proceedings, a trial court does not abuse its discretion by imputing income based on relevant factors beyond historical earnings. Because Jeffrey Pruitt fails to identify any abuse of discretion in the trial court's order adjusting child support, we affirm.
FACTS
In August 1999, the King County Superior Court entered orders dissolving the marriage of Jeffrey Drake Pruitt and Susanne Smith Pruitt and providing for parenting and support of their two children. The order of child support lists monthly net incomes as $54,453.18 for Susanne and $18,661.71 for Jeffrey and directs Jeffrey to pay $600 per month in child support to Susanne. The order also directs Susanne to pay 75 percent and Jeffrey to pay 25 percent of certain additional child care expenses.
In November 2006, Susanne filed a motion for adjustment of child support. In her declaration, Susanne stated that in the years since the dissolution, she was diagnosed with and treated for breast cancer, she sold her interest in her institutional brokerage firm and left the brokerage industry; and she purchased an ownership interest in a fragrance business. Because she was not yet drawing a salary for her work in the new business, Susanne asked the court to impute to her an annual income of $50,000 based on salary estimates for a product marketing analyst in the fragrance business.
In an attempt to discredit her estimate, Jeffrey offered a salary range estimate for work similar to that Susanne claimed to perform as $55,452 to $83,437. Jeffrey contended that the court should not estimate the salary that Susanne could potentially earn in the fragrance business for the purposes of child support calculations. Instead, Jeffrey argued that the court should impute income to Susanne based on an average of three years of Susanne's salary as reflected in tax returns filed for years she was engaged in the brokerage business. Jeffrey also argued that the $284,000 Susanne was scheduled to receive in March 2007 as a final installment payment for the sale of her interest in her brokerage firm should be included in the child support worksheets as income.
The court commissioner imputed an income of $80,000 to Susanne, did not include the $284,000 as income on the worksheet, and ordered that Jeffrey "may request a review in one year or may extend that review until after the 2007 business tax returns are filed. . . ." Clerk's Papers (CP) at 316.
Jeffrey appeals.
DISCUSSION
In reviewing decisions setting child support, we defer to the sound discretion of the trial court unless that discretion is exercised in an untenable or manifestly unreasonable way. In re Marriage of Griffin, 114 Wn.2d 772, 776, 791 P.2d 519 (1990).
Jeffrey contends that the trial court abused its discretion in its determination of the amount of income to impute to Susanne. In particular, he argues that the determination must be based on her income history in the brokerage business rather than an estimate of the salary she could expect to obtain for the work she was actually doing in the fragrance business at the time of the adjustment motion. His reliance on In re Marriage of Dewberry, 115 Wn. App. 351, 366, 62 P.3d 525 (2003) and In re Marriage of Sievers, 78 Wn. App. 287, 305, 897 P.2d 388 (1995) is misplaced because neither case limits the trial court's exercise of discretion to a particular methodology for determining the level of imputed income. Rather, when calculating child support obligations, "a court may consider all relevant factors, including current and future income." In re Marriage of Payne, 82 Wn. App. 147, 152, 916 P.2d 968 (1996) (rejecting argument that statute limits trial court to consideration of past earnings).
In Sievers, where the trial court failed to complete worksheets and failed to make a finding as to the father's income at the time of trial, this court remanded the case for preparation and entry of the worksheets. Sievers, 78 Wn. App. at 306. Noting that the father failed to provide credible information regarding his income, this court stated that the trial court could choose the figure for a particular year, or an average of documented income for three tax years, "or devise some other rational means of determining" his income. Sievers, 78 Wn. App. at 305. In Dewberry, the father was a former sales and marketing executive working part-time while attempting to start a new career as a longshoreman. Dewberry, 115 Wn. App. at 365. He contended on appeal that it was improper for the trial court to impute his income at a higher level than he could earn from 40 hours of longshore work. Dewberry, 115 Wn. App. at 368. This court rejected his argument because the trial court's decision to base the imputed income on the salary levels he maintained during the 1990s was reasonable. Dewberry, 115 Wn. App. at 386.
Here, Susanne presented evidence that her departure from the brokerage business was based in part on (1) her breast cancer diagnosis and treatment, (2) a multi-million dollar judgment against her business partner, (3) the deterioration of her relationship with her business partner, (4) the sale of her interest in the firm and the resulting noncompete agreement, and (5) the lapse of her license during the term of the noncompete agreement. She also presented evidence that her past earnings resulted from her work in an "extremely specialized" business that depended on the maintenance of client contacts and relationships. Jeffrey fails to demonstrate that the trial court's decision not to impute income to Susanne based solely on her past income levels as a broker was untenable or manifestly unreasonable under the circumstances.
Jeffrey next contends that the trial court erred by failing to include the $284,000 Susanne was scheduled to receive in March 2007 in the determination of "gross monthly income" under RCW 26.19.071. The trial court refused to include the payment as income because "it is not income, it's a payment for her interest in the corporation." Verbatim Report of Proceedings (Jan. 5, 2007) at 28. The record reveals that Susanne sold her shares in her investment firm to her former partner for $940,000 in September 2005 and a promissory note requires a final installment payment of approximately $284,000 in March 2007. Susanne's 2005 tax return lists the sale of her shares in the business for $940,000 and a cost basis of $940,000 for a capital gain of $0.
Jeffrey contends that In re Marriage of Ayyad, 110 Wn. App. 462, 475, 38 P.3d 1033 (2002) demonstrates the error in failing to include the March 2007 $284,000 in Susanne's gross monthly income on the support worksheet. In Ayyad, the trial court excluded cash received from the exercise of stock options from income because the result was a mere redistribution of wealth that was previously considered in establishing the original child support order. Ayyad, 110 Wn. App. at 469. This court held that the "proceeds from the exercise and cashing in of stock options" should have been included in the income calculation but acknowledged that to avoid double counting, other stock options, those not exercised, were to be considered as wealth for deviation purposes. Ayyad, 110 Wn. App. at 469.
Here, it is undisputed that Susanne's shares in her firm were considered in the dissolution and the original child support order. In fact, Susanne paid Jeffrey $750,000 for his community interest in the stock. To the extent that Susanne's later sale of the shares resulted in capital gains, such gains would have been properly included in gross monthly income. RCW 26.19.071(3)(m). But based on the record before the trial court, there is no evidence that the sale actually resulted in capital gains. Jeffrey fails to demonstrate that the trial court erred by refusing to include the final installment under the promissory note in its calculation of Susanne's gross monthly income.
Finally, Susanne requests attorney fees on appeal under RCW 26.09.140, based on her need and Jeffrey's ability to pay, and under RAP 18.9(a), claiming that Jeffrey's appeal is frivolous. An appeal is frivolous if there are no debatable issues upon which reasonable minds may differ and it is so devoid of merit that there is no possibility of reversal. In re Marriage of Wagner, 111 Wn. App. 9, 18, 44 P.3d 860 (2002). Viewed as a whole, the appeal is not frivolous. Regarding RCW 26.09.140, although Susanne is not currently earning a salary and she reports extensive expenses, she fails to demonstrate need in light of her significant wealth as revealed in the record.
Affirmed.