Opinion
No. C1-01-2046.
Filed July 9, 2002.
Appeal from the District Court, Kandiyohi County, File No. F9-94-778.
Jon Saunders, (for respondent)
John E. Mack, (for appellant)
Considered and decided by Klaphake, Presiding Judge, Halbrooks, Judge, and Hanson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant father challenges the district court order denying his motion to modify his child-support obligation, arguing that the district court erred by (a) averaging his business income but not his rental income; (b) ignoring his newly filed information; (c) not conducting an evidentiary hearing; (d) issuing an unclear order; and (e) affirming the magistrate's modification of the parties' tax dependency exemptions. Because the district court did not abuse its considerable discretion in determining father's child-support obligation, we affirm.
FACTS
Appellant Steven Jerome Ahmann and respondent Cynthia Ann Olson dissolved their marriage in 1995. At the time of the dissolution, mother was earning a net income of approximately $21,882 annually. Father, a self-employed carpenter, was earning a net income of approximately $43,331 annually.
The decree awarded mother physical custody of their three minor children, subject to reasonable visitation. Father was granted dependency tax exemptions for all three children, subject to timely child-support payments. Father's initial child-support obligation was the statutory guideline amount of $982 per month, based on averaging father's income over three years and adding back 50% of an accelerated depreciation deduction, less tax and health insurance, to reach a net monthly income of $2,806.50. Upon emancipation of the parties' eldest child, father's child-support obligation was to be $882 per month.
In March of 1999, father moved to modify child support based on a decline in his business. The child support magistrate (CSM) granted father's motion and his support obligation was reduced to $461 per month based on his average net monthly income of $1,535.15, which also included rental income. The CSM did not use a three-year average because father's reduction was deemed a "temporary reduction in support" reflecting the uncertainty in his business. The CSM continued father's motion to allow further review after father's business stabilized.
In March 2001, father again moved to modify his child-support obligation, seeking a further reduction from $461 per month. Mother opposed the motion and moved to modify the dependency tax exemptions for the parties' minor children.
In April 2001, the cost-of-living adjustment increased father's support obligation to $497 per month.
Father's motion to reduce his child-support obligation was based on his testimony of a work-related shoulder injury he suffered in 1972. Father claimed his injury became progressively worse and began affecting his ability to earn income in 2000. However, father provided no medical evidence to establish that his physical injury prevents gainful employment or that the injury results in a reduction of work hours. In fact, from April 1 to August 2000, father built a house for himself. Father also claimed his mental depression impacted his ability to work, but he provided no medical evidence to support this claim. The CSM discredited father's testimony. The CSM found that father has the ability to generate net-monthly income of $1,535 and, to the extent he was not doing so, he voluntarily limited his income. The CSM concluded that father's net-monthly income, thus determined, did not result in a substantial change from that found in the 1999 order.
The CSM denied father's request to modify his child support obligation. But the CSM granted mother's motion for authorization to claim the parties' children as dependency tax exemptions for the 2000 tax year, finding that father would not benefit from claiming the children in 2000. The CSM concluded that in subsequent years it would be reasonable for both parties to claim one child as a dependent for income-tax purposes. Father's ability to claim the exemption was contingent on his being current with his child-support obligation.
Father filed a motion requesting review by the district court. The district court found that the evidence in the record was sufficient for the court to review the order without an evidentiary hearing. The district court denied father's motion to modify his child-support obligation, finding no substantial change in circumstances. The court's conclusion, however, was not based on the finding that father was self-limiting his income. The district court made no explicit findings on the issue of dependency tax exemptions. Father appeals.
DECISION
This court will reverse a district court's order regarding the modification of child support "only if we are convinced that the court abused its broad discretion" by reaching a "clearly erroneous conclusion that is against the logic and the facts on [the] record." Gully v. Gully, 599 N.W.2d 814, 820 (Minn. 1999) (alteration in original) (quotation omitted).
District courts review a child-support magistrate's decision de novo. Blonigen v. Blonigen, 621 N.W.2d 276, 280 (Minn.App. 2001), review denied (Minn. Mar. 13, 2001). We review the district court's order confirming a magistrate's decision regarding child support under an abuse-of-discretion standard. Davis v. Davis, 631 N.W.2d 822, 826 (Minn.App. 2001). An abuse of discretion occurs when "the order is arbitrary or unreasonable or without evidentiary support." Smith v. Smith, 282 Minn. 190, 193, 163 N.W.2d 852, 856 (1968) (citations omitted).
The burden rests with the party seeking modification to (1) demonstrate that there has occurred a substantial change in circumstances, and (2) show that the substantial change has the effect of rendering the original award unreasonable and unfair. Minn. Stat. § 518.64, subd. 2 (2000). To establish a presumption of a substantial change in circumstances and a rebuttable presumption that the existing child-support order is "unreasonable and unfair," the moving party must show a change in earnings that would result in a new guideline support obligation of at least 20% and $50 a month higher or lower than that contained in the current order. Minn. Stat. § 518.64, subd. 2(b)(1) (2000).
I
Father argues that the district court erred in calculating his net income. The district court averaged father's construction business income over the past three years but used only one year to determine father's rental income. Father argues that the district court should have used three-year income averaging on his rental income because it did so with his construction business income.
We conclude that the district court did not abuse its discretion by using income averaging for business income but not for rental income. The seasonal nature of father's construction business means that his business income fluctuates. In such situations, an income averaging method takes into account fluctuations and more accurately measures income. Veit v. Veit, 413 N.W.2d 601, 606 (Minn.App. 1987) (holding that where self-employed business income fluctuates, income averaging more accurately measures obligor's net income). See Minn. Stat. § 518.57, subd. 2 (2000) (addressing seasonal income). The same is not true of father's rental income, however, which is not prone to seasonal fluctuations and is readily ascertainable. Therefore, averaging father's rental income is not necessary.
Father argues that the CSM erred in finding that he voluntarily limited his income. But that finding of the CSM is not on appeal because father appeals only from the district court's September 2001 order. Because the district court did not find that father is voluntarily limiting his income, we need not address the question.
Father argues that the income-averaging method is inappropriate where there is evidence of new circumstances, such as his claim of disability. But, the district court rejected father's claim of disability and we will defer to the district court's credibility determinations. See Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988) (stating appellate courts must defer to district court's credibility determinations).
We conclude that the district court did not clearly err in determining father's net income.
II
Father attempted to submit new information to the district court on August 10, 2001, accompanying his motion for review of the decision of the CSM. Father argues that the district court erred by not considering that information, or by failing to indicate whether or not the information was considered.
First, it is evident from the record that the district court did not consider father's late submissions, as evidenced by the court's finding that: "[t]he evidence presented at the April 19, 2001 hearing is sufficient for this Court to review the May 16, 2001 child-support order." Clearly, the evidence presented at the April 19, 2001, hearing does not include the evidence filed by father on August 10, 2001.
Second, father's argument, that the petition for review by the district court specifically permits an appellant to "submit new information which I was unable to obtain at the time of the prior hearing," is without merit. Father's contention, that the district court cannot reject the new evidence without some contrary evidence upon which to base such a rejection, is equally without merit. The rule for motions to review an order of the CSM clearly provides:
When bringing * * * a motion for review * * * the parties shall not submit any new evidence unless the * * * district court judge * * * requests additional evidence.
Minn.R.Gen.Pract. 377.09, subd. 4. None of the new evidence submitted by father was requested by the district court for its review of the CSM's order. The district court did not abuse its discretion by declining to consider father's late submission.
III
Father argues that the district court abused its discretion by not conducting an evidentiary hearing. However, a party has no right to a hearing. "The court need not hold an evidentiary hearing on a motion for modification of * * * support." Minn. Stat. § 518.64, subd. 2(f) (2000). Further, the new rules of expedited child support state:
A hearing shall not be held unless ordered by the * * * district court judge. The * * * district court judge may order a hearing upon motion of a party or on the court's own initiative. A party's motion shall be granted only upon a showing of good cause.
Minn.R.Gen.Pract. 377.09, subd. 5. The district court specifically found that there was no showing of good cause to hold an evidentiary hearing. The court also found that the evidence presented at the hearing before the CSM was sufficient for the court to review the order without an evidentiary hearing. The district court did not abuse its discretion by declining to grant an evidentiary hearing.
IV
Father argues that the district court's order is unclear because the court did not address every issue in his motion for review. However, the rules do not require the district court to do so:
If any findings or other provisions of the child support magistrate's * * * decision and order are approved without change, the * * * district court judge shall specifically state in the order that those findings and other provisions are affirmed but need not make specific findings or conclusions as to each point raised in the motion. If any findings or other provisions of the child support magistrate's * * * decision and order are modified, the * * * district court judge need only make specific findings or conclusions with respect to the provisions that are modified.
Minn.R.Gen.Pract. 377.09, subd. 2(b)(3). The district court specifically stated that "[a]ll other provisions for the prior order that are not specifically modified herein are to remain in full force and effect."
V
The order of the CSM gave mother the right to claim the minor children as dependents for state and federal income tax purposes in the year 2000, finding that father could not benefit from the exemption for that year. Commencing in taxable year 2001, the order of the CSM gave father and mother each one tax exemption, contingent on father being current with his child-support obligation. Minnesota law requires the court to consider which parent receives the income taxation dependency exemption and what financial benefit the parent receives from it. Minn. Stat. § 518.551, subd. 5(c)(4) (2000). The CSM made the appropriate findings. In its review of the CSM's order, the district court made no explicit findings on the issue of tax exemptions, thereby affirming the findings of the CSM. Minn.R.Gen.Pract. 377.09, subd. 2(b)(3).
Father argues that the CSM sua sponte addressed the dependency tax exemption issue, but in a footnote later admits that mother did make a motion to obtain "one or more of the child tax credits." Father questions whether the CSM had the authority to address the exemptions. The rules clearly provide the CSM with such power, stating that the CSM "shall have the powers and authority necessary to perform their duties in the expedited process pursuant to statute and rule." Minn.R.Gen.Pract. 367.03. Additionally, the advisory committee comment states [i]t is the intent of the Committee that [CSMs] have the authority to decide all issues permitted in the expedited process, including, but not limited to, awarding and modifying tax dependency exemptions.
Id., 2001 advisory comm. cmt. Accordingly, the district court did not clearly err in affirming the order of the CSM on the dependency tax exemptions.
Affirmed.