Opinion
No. C2-95-1980.
Filed May 28, 1996.
Appeal from the District Court, Swift County, File No. F4821428.
David L. Mennis, Swift County Attorney, (for Respondents).
Robert V. Dalager, Fluegel, Helseth, McLaughlin, Anderson Brutlag, Chartered, (for Appellant).
Considered and decided by Peterson, Presiding Judge, Huspeni, Judge, and Harten, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).
UNPUBLISHED OPINION
This appeal is from an order that increases appellant's child support obligation. We affirm.
FACTS
Respondent Debra Jaeger and appellant Kevin Jaeger have four children. Their 1983 marriage dissolution judgment awarded respondent custody of the children and required appellant to pay $240 per month for child support. Appellant's child support obligation decreased to $217 when the oldest child became emancipated in 1994.
In February 1995, respondent Swift County filed a motion for modification of child support. Based on appellant's tax returns for 1990 through 1993, the county calculated appellant's average net monthly income to be $1,097. After receiving appellant's 1994 tax return, the county filed an amended affidavit recalculating appellant's net monthly income to be $1,699 and requesting that the court set child support pursuant to the guidelines.
Following a hearing on the county's motion, an administrative law judge (ALJ) found appellant's average net monthly income was $1,532. The ALJ stated:
This amount includes [appellant's] depreciation deduction reduced by loan principal repayments. Farm income is also included. [Appellant] placed the farm in his current wife's name for unrelated reasons, but the income remains available to him. [Appellant] pays about $167 per month as the farm payment and this was deducted.
The ALJ increased appellant's monthly child support obligation to $466, the guidelines amount.
DECISION
The district court has discretion to modify a child support order, and its decision will be upheld unless the court reached a "`clearly erroneous conclusion that is against logic and the facts on record.'" Moylan v. Moylan , 384 N.W.2d 859, 864 (Minn. 1986) (quoting Rutten v. Rutten , 347 N.W.2d 47, 50 (Minn. 1984)). The same standard applies when this court reviews an ALJ's order. Lee v. Lee , 459 N.W.2d 365, 368-69 (Minn.App. 1990), review denied (Minn. Oct. 18, 1990); see also Minn. Stat. § 518.5511, subd. 4(h) (Supp. 1995) (ALJ's decision is appealable to court of appeals in same manner as district court's decision).
1. Appellant argues that because his wife owns the farm land, the ALJ erred in including the farm income when calculating appellant's net income. See Minn. Stat. § 518.551, subd. 5(b)(1) (Supp. 1995) (net income does not include obligor's spouse's income). Appellant contends that the farm income can only be imputed to him if he acted in bad faith in transferring the property to his wife. We disagree.
Whether a source of funds is income for child support purposes is a question of law. County of Nicollet v. Haakenson , 497 N.W.2d 611, 614 (Minn.App. 1993). This court need not defer to the district court's decision on a question of law. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n , 358 N.W.2d 639, 642 (Minn. 1984). In August 1991, appellant's mother gave him a one-half interest in an 80-acre parcel of farm land. Appellant later purchased the other one-half interest from his sister. In 1993, appellant transferred the land to his current wife for no consideration. The ALJ found credible appellant's explanation that he transferred the farm land to his wife for estate planning reasons and not to avoid his child support obligation.
If a parent is voluntarily unemployed or underemployed, support shall be based on imputed income. Minn. Stat. § 518.551, subd. 5b(d) (1994). In Franzen v. Borders , 521 N.W.2d 626, 628-29 (Minn.App. 1994), this court did not require a showing of bad faith before permitting a determination of imputed income. This court explained that current law was expressed in Minn. Stat. § 518.551, subd. 5b(d), which does not require a showing of bad faith. Id. The court stated that
imputation of income to a support obligor under current law is appropriate if the support obligor chose to be unemployed or underemployed and neither statutory condition applies.
Minn. Stat. § 518.551, subd. 5b(d) provides that a parent is not voluntarily unemployed or underemployed if the unemployment or underemployment "is temporary and will ultimately lead to an increase in income" or "represents a bona fide career change that outweighs the adverse effect of the parent's diminished income on the child." Neither condition applies to this case.
By transferring the farm property to his wife, appellant chose to reduce his income. Therefore, the ALJ did not err when it based appellant's child support obligation on appellant's imputed income, which included the farm income, pursuant to Minn. Stat. § 518.551, subd. 5b(d).
2. Appellant argues that when computing his net income, the ALJ did not allow a sufficient depreciation deduction for the semi-truck tractor and trailers that he uses in his business. Appellant requested that the court allow him the full amount of depreciation claimed on his tax returns because by the time the tractor and trailers are paid in full, it is time to replace them. Alternatively, appellant requested that the court add back, at most, one-half the difference between the amount of depreciation claimed on his 1994 tax return, and the amount of principal paid in 1994 on the loan for the tractor and trailers. The ALJ allowed depreciation equal to the amount of the principal payments and included the remaining claimed depreciation in appellant's income.
Although a total disregard of depreciation is reversible error, tax returns alone may not accurately show net income. Freking v. Freking , 479 N.W.2d 736, 740 (Minn.App. 1992). The district court must evaluate "claimed depreciation to determine whether it reflects true depreciation or depreciation for tax purposes only." Beltz v. Beltz , 466 N.W.2d 765, 767 (Minn.App. 1991), review denied (Minn. Apr. 29, 1991 May 23, 1991). Since appellant stated that the semi-truck tractor and trailers need replacing about when they are paid in full, the ALJ's allowance of a depreciation deduction equal to the payments on the loan principal was proper.
3. Modification of a child support order is permitted when a substantial change in circumstances has occurred making the existing order unreasonable and unfair. Minn. Stat. § 518.64, subd. 2(a) (Supp. 1995). The statute contains a presumption that a substantial change in circumstances has occurred and establishes a rebuttable presumption that a current support order is unreasonable and unfair
if 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.
Id. When the court sets child support pursuant to the guidelines, it need only make findings on the obligor's income and any other factor affecting the support determination. Minn. Stat. § 518.551, subd. 5(i) (Supp. 1995), cited in Rouland v. Thorson , 542 N.W.2d 681, 684 (Minn.App. 1996) (support modification case).
Appellant argues that Bock v. Bock , 506 N.W.2d 321 (Minn.App. 1993), sets forth a four-part process to be used to calculate support obligations when an obligor has later-born children. Therefore, appellant contends, it was an abuse of discretion for the ALJ to fail to follow the process set forth in Bock . Appellant misconstrues Bock .
Bock did not establish a process to be followed by the district court to calculate child support in every case where an obligor has an obligation to support subsequent children. The process set forth in Bock addresses
what calculations are to occur if the trial court should deviate from the guidelines to consider the needs of subsequent children.
Id. at 325. Here, the ALJ did not deviate from the guidelines.
A party seeking a departure from the guidelines has the burden of presenting evidence to support a departure. Rouland , 542 N.W.2d at 684. To support a departure from the guidelines, appellant had the burden of presenting evidence regarding the parties' financial situations, the children's needs, and the standard of living to which the children are entitled that would justify departure. Id. Appellant failed to present evidence regarding the needs of his children with respondent or the standard of living to which the children are entitled that would support a departure.
4. Finally, appellant argues his child support obligation should be increased to a maximum of $334 per month based on a net monthly income of $1,097. These are the figures used in the county's original motion for modification filed in February 1995. Appellant states the county never amended its motion to seek more than $334 per month child support. But in July 1995, after receiving a copy of appellant's 1994 tax return, the county filed an amended affidavit calculating appellant's net monthly income to be $1,699 and requesting that the court set child support at $517 per month pursuant to the guidelines.