Opinion
No. C6-00-1495
March 6, 2001.
Appeal from the District Court, Le Sueur County, File No. F1-97-642.
Julia C. Corbett, (for respondent)
Kenneth R. White, (for appellant)
Considered and decided by Lansing, Presiding Judge, Anderson, Judge, and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
In an appeal from a district court order approving a child-support magistrate's decision to increase child support, Robert Traxler challenges the findings on changed circumstances and current income. By notice of review, Elizabeth Traxler appeals the denial of her requested reimbursement for child-related expenses and conduct-based attorneys' fees. We affirm the finding of changed circumstances but, because the income findings are not based on current income and double-count some rental income, we reverse and remand for calculation of current income and for reconsideration of conduct-based attorneys' fees. We affirm the denial of expense reimbursement and decline to grant fees on appeal.
FACTS
By stipulated judgment, Elizabeth and Robert Traxler ended their 22-year marriage in December 1998. Each was represented by counsel in the dissolution proceedings. The Traxlers stipulated that Robert Traxler's net monthly income from self-employment was $2,927 per month. They further stipulated that, rather than paying the statutory guidelines amount of $732 a month for the two minor children, Robert Traxler would share joint physical custody of the older minor child and have a reduced child-support obligation of $500 a month.
Robert Traxler is self-employed as a truck driver, drives a school bus, and receives rental income from inherited property. The amount of rental income he received during the marriage increased in late 1998, when his mother's death terminated her life estate that had encumbered part of the inherited property. At the time of the stipulated judgment, it was anticipated that his rental income might increase as a result of his mother's death three months earlier. But because his mother's will was contested, the judgment only referred to the anticipated increase and required Robert Traxler to notify Elizabeth Traxler of any actual increase in the rental income.
In April 2000, Robert Traxler objected to a child-support cost-of-living adjustment. In response, Elizabeth Traxler moved for a child-support modification, citing two changed circumstances: (1) Robert Traxler's increased rental income and (2) her de facto physical custody of both minor children when the anticipated shared physical custody of the older minor child did not eventuate. She also requested $2,038.49 as reimbursement for half the school and car expenses she had incurred for the older minor child. Claiming that Robert Traxler failed to comply with a court order to provide information on his increased rental income, she also requested $1,600 in conduct-based attorneys' fees.
Following a hearing, a child-support magistrate concluded that a substantial change in circumstances required modification of child support. The magistrate found that Robert Traxler had a net monthly income of $2,927 from self-employment, anticipated $17,000 gross rental income in 2000, and from all sources had a net monthly income of $4,010. Using that figure, the magistrate ordered that Robert Traxler pay the guideline support amount of $1,203 a month. The magistrate denied Elizabeth Traxler's request for child-related expenses as unauthorized "retroactive child support" and declined to award attorneys' fees for Robert Traxler's failure to provide inheritance and rental-income information.
Robert Traxler appealed the magistrate's order, and the district court approved the findings in an order and memorandum. Robert Traxler appeals the findings of changed circumstances and the calculation of current income. By notice of review, Elizabeth Traxler appeals the denial of her request for reimbursement of child-related expenses and conduct-based attorneys' fees. She also requests attorneys' fees on appeal.
DECISION I
A child-support obligation may be modified if the moving party shows a substantial change in circumstances making the existing support award unreasonable and unfair. Minn. Stat. § 518.64, subd. 2(a) (2000). The district court has broad discretion in granting or denying modification, and, on review, that decision will not be reversed unless it is contrary to logic or the facts in the record. Moylan v. Moylan, 384 N.W.2d 859, 864 (Minn. 1986).
"[S]ubstantially increased or decreased earnings of a party" constitutes a change in circumstances. Minn. Stat. § 518.64, subd. 2(a)(1) (2000). Robert Traxler testified that he anticipated an increase in rental income from approximately $6,000 in 1999 to $17,000 in 2000. This increase supports the magistrate's finding of changed circumstances requiring modification. Id. The change in custodial circumstances also supports the determination of changed circumstances. Minn. Stat. § 518.64, subd. 2(a)(2) (2000) (defining changed circumstances to include increased need of party for support of child). Consequently, we reject Robert Traxler's argument that the district court erred in finding changed circumstances.
But upon finding changed circumstances, the district court must then determine the amount of the modification. Moylan, 384 N.W.2d at 864. Robert Traxler argues that the magistrate erred in setting the amount of the modification by miscalculating his income. For two reasons, we agree. First, the magistrate found that Robert Traxler's current net monthly income from self-employment is $2,927, the same amount that the parties stipulated to in 1998. In affirming the magistrate's order, the district court indicated that it was "bound by the stipulation of the parties." Robert Traxler argues that he never earned $2,927 per month from self-employment and currently earns less. His 1998 and 1999 federal income tax returns show gross income of $25,351 in 1998 and $20,881 in 1999 and gross business receipts of $39,601 in 1998 and $69,900 in 1999. Although he stated in his affidavit that "[d]uring [his] entire working career, [he has] made approximately what [he is] making now or less," it is unclear whether he is referring to gross or net income and from which sources.
We conclude that the magistrate's use of the 1998 stipulated income amount as the current employment income does not comply with the requirement that child support be calculated based on current net income. See Minn. Stat. § 518.64, subd. 2(c)(1) (2000) (requiring that the court apply the standards in section 518.551, subd. 5b, to support modification determinations); Thomas v. Thomas, 407 N.W.2d 124, 127 (Minn.App. 1987) (child support must be determined based on current net income). By incorrectly concluding that it was bound by the 1998 income stipulation, the court failed to make a determination of current income. Although the parties' 1998 stipulation has evidentiary value, it is not a substitute for a determination of current income.
Second, the record indicates the magistrate double-counted part of Robert Traxler's rental income. In the modified order, the magistrate found that Robert Traxler's 1998 net monthly income of $2,927 did not include any rental income. But the stipulated dissolution judgment indicates otherwise. The judgment states that Robert Traxler is "self employed as a truck driver and also employed by Johnson Bus Service as a bus driver. He also receives income in the form of rental payments for farmland and from [another source]. [His] net income after deducting appropriate taxes, is $2,927 * * *." We read this total income amount to include self employment, bus driving, and rental income.
During the marriage, Robert Traxler earned about $6,000 a year in rental income and, beginning in 2000, anticipated earning an additional $11,000 in rental income. Relying on Robert Traxler's testimony that he anticipated earning $17,000 in total rental income in 2000, the magistrate added $17,000 to the 1998 stipulated income to calculate current income. Because the $17,000 included $6,000 already included in total income, that amount was double-counted.
Because the increased child support is based on an income calculation that is not current income and double-counts some rental payments, we remand to the district court to calculate Robert Traxler's current income. We do not address Robert Traxler's claim that the magistrate failed to subtract increased rental expenses other than property taxes from his rental income. The record does not demonstrate that he presented evidence of additional expenses other than property taxes.
II
Elizabeth Traxler raises two issues by notice of review: (1) reimbursement for expenses of the older minor child and (2) attorneys' fees for Robert Traxler's failure to provide information on the increased rental income.
The requested reimbursement expenses amount to $2,038.49 and represent one-half of payments Elizabeth Traxler incurred for their older minor child's car, car expenses, and incidental school expenses. The child-support magistrate denied her motion, finding that these payments would constitute retroactive child support. See Minn. Stat. § 518.64, subd. 2(d) (2000) (prohibiting retroactive child-support adjustments except in certain limited circumstances). We agree. We recognize that a court may grant retroactive modification on a finding that the party seeking modification was precluded from serving a motion by a material misrepresentation or fraud. Id.; see also Gully v. Gully, 599 N.W.2d 814, 824 (Minn. 1999) (concluding that one party's failure to disclose financial information can preclude the other party from bringing a modification motion at an earlier time). But Elizabeth Traxler's claimed reimbursement is based on the failure to share joint physical custody, and not on Robert Traxler's failure to disclose his rental income. The issues are separate, and we do not see a causal connection between Robert Traxler's failure to disclose his increased rental income and Elizabeth Traxler's failure to bring a motion to adjust support for the older minor child before incurring the expenses. The magistrate did not abuse its discretion in denying Elizabeth Traxler's request for reimbursement of expenses.
III
The magistrate also denied Elizabeth Traxler's request for conduct-based attorneys' fees. We review decisions on attorneys' fees under an abuse-of-discretion standard. Solon v. Solon, 255 N.W.2d 395, 397 (Minn. 1977). The court may award fees when a party unreasonably contributes to the length or expense of the proceeding. Minn. Stat. § 518.14, subd. 1 (2000).
The magistrate found that Robert Traxler failed to provide timely information on his increased rental income following his mother's death. During the dissolution negotiations, he stated that because his mother's estate was to be contested, he did not know what his rental income would be and could not provide information about it. Instead, the parties stipulated that "[a]t such time as the will contest concerning [his] parents' estate is completed, [Robert Traxler] will provide documentation of the will contest results and income from any inherited property in order for [Elizabeth Traxler] to determine whether she may request an increase in child support."
Although the estate was contested, the rental income was not part of that dispute; thus Robert Traxler likely knew of his increased rental income at the time of the stipulation. He does not dispute that he failed to disclose any direct information until the fall of 1999. The increased rental income is not readily ascertainable on the copies of his 1998 and 1999 income tax returns that he provided Elizabeth Traxler. Because the failure to provide the information appears to have unnecessarily added to the expense and length of this proceeding, we reverse and remand the denial of conduct-based attorneys' fees to allow the district court to reconsider this issue on remand.
IV
By motion, Elizabeth Traxler seeks an award of $6,329.10 in conduct-based attorneys' fees and costs incurred on appeal. Attorneys' fees may be awarded for bad-faith appeal of a dissolution judgment. Kitchar v. Kitchar, 553 N.W.2d 97, 104 (Minn.App. 1996), review denied (Minn. Oct. 29, 1996). But colorable arguments on difficult issues are not considered bad-faith arguments. Id. Because we find that Robert Traxler's appeal was meritorious, we deny Elizabeth Traxler's motion for attorneys' fees incurred on appeal.