Opinion
No. C3-99-233.
Filed September 21, 1999.
Appeal from the District Court, Olmsted County, File No. F892663.
Rita M. Letsos, (pro se respondent)
Raymond F. Schmitz, Olmsted County Attorney, Julie S. Voigt, Assistant County Attorney, (for respondent Olmsted County)
Michael R. Inglimo, (for appellant)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Pursuant to Minn. Stat. § 256.87 (1998), Olmsted County commenced an action for public assistance reimbursement and an ongoing child support order. Appellant Louis J. Letsos challenges the order establishing his reimbursement and ongoing support obligations on the bases that (1) the reimbursement amount exceeded the actual amount disbursed to obligee; (2) the child support obligation ordered by the administrative law judge (ALJ) predated the commencement of the action; (3) the ALJ erred in her calculation of income attributable to appellant; and (4) the ALJ abused her discretion when she declined to order a support obligation from respondent Rita M. Letsos. Because we conclude that the ALJ properly applied the law to the facts of the case and did not abuse her discretion, we affirm.
FACTS
In the stipulated 1992 judgment dissolving the marriage of appellant Louis J. Letsos and respondent Rita M. Letsos, they waived child support and stipulated to joint physical custody of their two minor children. At the time of dissolution, respondent had physical custody of both R.L. and J.L. and was unemployed. Following the dissolution, respondent had physical custody of R.L. and appellant had physical custody of J.L., except during the summers, when J.L. resided with respondent.
From June 1, 1997, through September 30, 1997, respondent received public assistance grants, including food stamps and medical assistance on behalf of R.L. From November 1997 through May 1998, respondent used a $19,000 personal injury settlement for living and other expenses. In June 1998, respondent went back on public assistance. At the time of the hearing, she was a full-time college student and worked part time.
On January 29, 1998, respondent Olmsted County brought an action against appellant under Minn. Stat. § 256.87 (1998) seeking public assistance reimbursement and ongoing support. The ALJ issued an order for reimbursement of public assistance and for ongoing support, from which appellant appeals.
DECISION
This court reviews an ALJ's determination as it would one by the district court. Lee v. Lee, 459 N.W.2d 365, 368-69 (Minn.App. 1990), review denied (Minn. Oct. 18, 1990). The appellate court will not reverse an ALJ's decision under Minn. Stat. § 256.87 (1998) absent an abuse of discretion. See Anderson v. Anderson, 470 N.W.2d 719, 721 (Minn.App. 1991) (setting out the standard of review with reference to a substantially similar section of the 1990 statute). An abuse of discretion occurs when an ALJ improperly applies the law to the facts. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).
I.
Appellant argues that the reimbursement amount is excessive and that there is no basis for the ALJ's granting of reimbursement in an amount exceeding the public assistance actually paid. He also notes that the parties waived child support in their stipulated dissolution judgment. Waivers of child support are contrary to public policy. Aumock v. Aumock, 410 N.W.2d 420, 421-22 (Minn.App. 1987). Also, this court has held less evidence of a substantial change in circumstances is necessary to support a modification of a stipulated child support agreement where the support payments were less than half the guideline amount. Compart v. Compart, 417 N.W.2d 658, 662 (Minn.App. 1988) (stating where appellant had met the needs of the parties' children on less than one-half the recommended guidelines support "almost any change in circumstances would have been substantial" and supported modification); Murray v. Murray, 425 N.W.2d 315, 317 (Minn.App. 1988) (noting a relaxed standard for reviewing whether a substantial change in circumstances supporting modification had occurred where the original stipulated child support agreement was less than the statutory guidelines). An ALJ has the discretion under Minn. Stat. § 256.87 to determine whether reimbursement should be ordered and the amount to be reimbursed. State ex rel. Miller v. Miller, 446 N.W.2d 199, 200 (Minn.App. 1989).
Under the reimbursement statute, a parent is liable for the public assistance paid to and on behalf of a child "which the parent has had the ability to pay." Minn. Stat. § 256.87, subd. 1. "[A]bility to pay" is determined under chapter 518 and the child support guidelines. Id.; see Ver Kuilen v. Ver Kuilen, 578 N.W.2d 790, 792 (Minn.App. 1998) (stating ability to pay is determined by applying child support guidelines of Minn. Stat. § 518.551, subd. 5 (1998), to parent's net monthly income). If, when setting a reimbursement amount, the guidelines would require a reimbursement amount exceeding the support obligation recited in a dissolution judgment, the ALJ need not restrict the reimbursement amount to the amount of the obligation in the judgment. See Miller, 446 N.W.2d at 199-200 (holding ALJ erred by setting obligation at stipulated sub-guideline amount plus public assistance amount and remanding for entry of child support order that considered the statutory guidelines). If a county is awarded a reimbursement amount exceeding the public assistance the county actually paid, the difference is remitted to the support recipient. Minn. Stat. § 518.551, subd. 1(b) (1998).
Here, respondent received $1,316 in public assistance between June 1, 1997, and September 30, 1997, and the ALJ set appellant's reimbursement obligation at $3,904 based on what she found appellant was able to pay. This is appropriate under Minn. Stat. § 256.87. It is also consistent with Minnesota's "strong state policy of assuring that children have the adequate and timely economic support of their parents." Schaefer v. Weber, 567 N.W.2d 29, 33 (Minn. 1997); see Tammen v. Tammen, 289 Minn. 28, 30, 182 N.W.2d 840, 842 (1970) (concluding minor children have a basic right to support from their parents). Because the ALJ properly considered the child support guidelines and appellant's ability to pay when setting the reimbursement amount, we conclude the ALJ did not abuse her broad discretion in setting reimbursement in an amount greater than the amount of public assistance paid.
II.
Appellant also contends that the ALJ abused her discretion when she awarded child support for a period predating the commencement of the action. Appellant improperly characterizes the proceeding as one for modification of child support, which generally allows a retroactive modification only "from the date of service of notice of the motion." Minn. Stat. § 518.64, subd. 2(d) (1998). The county, however, sought reimbursement under Minn. Stat. § 256.87, which is not analogous to a modification of a dissolution decree's child support provisions. See State ex rel. Hendrickson v. Hendrickson, 403 N.W.2d 872, 874 (Minn.App. 1987) (stating "an order entered pursuant to Minn. Stat. § 256.87 does not modify the child support provisions of a dissolution decree.").
Because this case is a reimbursement proceeding rather than one to modify the dissolution judgment, the retroactivity limitation imposed by Minn. Stat. § 518.64 (1998) is inapplicable. In a reimbursement proceeding, the noncustodial parent's liability for child support "may include up to the two years immediately preceding the commencement of the action." Minn. Stat. § 256.87, subd. 5. Because the period from October 1, 1997 to January 31, 1998, falls within the statutory two-year window, we conclude that the ALJ did not abuse her discretion in awarding ongoing child support for that period.
III.
Appellant also challenges the ALJ's calculation of his income for child support purposes. "A determination of net income for the purpose of calculating child support will be affirmed if it has a reasonable basis in fact." Strauch v. Strauch, 401 N.W.2d 444, 448 (Minn.App. 1987) (citations omitted). In determining income, an ALJ should include net corporate profits and should impute personal expenses paid by the corporation. Roth v. Roth, 406 N.W.2d 77, 79 (Minn.App. 1987). Appellant testified that he is the sole shareholder of three corporations, which own three restaurants: Zorba's of Rochester, Louis Café of Duluth, and Akropolis of Superior.
Acknowledging that the calculation is inexact "[b]ecause of the nature of [appellant's] employment and ownership of three restaurants," the ALJ nonetheless was able to calculate income based on employment income and corporate income for 1997. Because the ALJ found that appellant no longer received income from Zorba's, the ALJ excluded this restaurant from the calculation. The ALJ correctly imputed corporate income from Louis Café and Akropolis to appellant as the corporations' sole shareholder. See id. (reversing for failure to include corporate profits in the income of sole shareholder). The ALJ did not consider other personal benefits and expenses paid by the corporations, which she could have imputed to appellant's income. See id. (remanding the case for a determination of the personal expenses paid for by the corporation). The ALJ's calculation is reasonably based in fact; hence, we conclude that she did not abuse her discretion in calculating appellant's income.
IV.
Finally, appellant challenges the ALJ's order claiming an abuse of discretion for the failure to impute income to respondent. Minnesota child support guidelines allow a district court to "order a reasonable or necessary amount of child support from either or both parents." Sefkow, 427 N.W.2d at 217 (calculating the amount of child support due as the difference between child support for one child based on father's monthly income and child support for one child based on mother's monthly income, as provided in the child support guidelines). Public assistance grants are not considered income for purposes of determining child support. Weihe v. Hendley, 389 N.W.2d 754, 756 (Minn.App. 1986). Respondent has been on and off public assistance since June 1997. At the time of the hearing, she was a full-time student, working part-time. Her net monthly income was $144; a level for which the statutory guidelines do not provide a presumed support obligation. Minn. Stat. § 518.551, subd. 5(b). Also, respondent's expenses, including her tuition and support of R.L., exceed her income by $1,360 per month.
Appellant further argues that the ALJ should have imputed income to respondent pursuant to Minn. Stat. § 518.551, subd. 5b(d), because she was voluntarily unemployed. But a party is not voluntarily unemployed or underemployed if the unemployment or underemployment is temporary and will ultimately lead to increased income. Id. Here, respondent testified that she returned to school to increase her income potential. The record supports both the ALJ's refusal to find respondent voluntarily unemployed or underemployed and her finding that respondent was unable to contribute to the support of J.L. Therefore, the ALJ's refusal to order respondent to contribute to the support of J.L. does not go against logic and the facts on record. Accordingly, we conclude that the ALJ did not abuse her discretion in declining to order a child support contribution from respondent.