Opinion
No. 4-074 / 03-0184
April 28, 2004.
Appeal from the Iowa District Court for Polk County, Ronald H. Schechtman, Judge.
Jeffrey Woods appeals the district court's ruling on his application to modify the dissolution decree. AFFIRMED.
Joseph Bertogli, Des Moines, for appellant.
Alexander Rhoads and Stacey Warren of Babich, Goldman, Cashatt Renzo, P.C., Des Moines, for appellee.
Heard by Vogel, P.J., and Hecht and Vaitheswaran, JJ.
A party to a dissolution decree appeals the district court's ruling on his application to modify the decree. We affirm.
I. Background Facts and Proceedings
Jeff and Terri Woods married and had one child, Kyle, born on February 6, 1986. The parties divorced in 2000. Under the terms of a stipulated decree, Jeff was to pay Terri alimony of $5,000 per month for five years and a lump sum payment of $150,000 on September 1, 2005. This amount was not subject to modification "based on any future change in the marital status of either party" or "based on any future change in the earning capacity of either party." The decree also provided that Terri would have physical care of Kyle, and Jeff would pay her $1,750 per month in child support. Terri was granted "permission to claim the minor child as a tax deduction for tax year 2000 and all subsequent years."
Jeff applied to modify the alimony and support provisions of the decree based on a reduction in his income. He also sought to have the dependent exemption reallocated to him. The district court refused to alter the alimony provision but reduced Jeff's child support obligation from $1,750 per month to $1,100 per month. The court also ordered Jeff to pay Terri $6,000 toward her trial attorney fees. Jeff's motion for enlarged findings and conclusions was denied. He appealed. Our review is de novo. Iowa R. App. P. 6.4.
Shortly after the decree was entered Jeff petitioned to have it vacated or modified, claiming it was obtained "through threat, coercion and duress." The district court dismissed the petition on procedural grounds and denied Jeff's motion to reconsider the ruling.
II. Alimony
The primary issue is whether the district court acted equitably in declining to modify the alimony award. Jeff claims that a reduction in his income amounted to a substantial change of circumstances not contemplated when the decree was entered, justifying a modification. See In re Marriage of Rietz, 585 N.W.2d 226, 229 (Iowa 1998). Terri counters that a reduction in income was expressly contemplated. We agree with Terri.
For most of the marriage, Jeff was employed as a salesperson for a document and print management company. From 1995 through 2000, he earned between $351,945 and $455,757 annually. Some of this compensation was not reported to Jeff's company, although it was derived from company business.
Toward the end of the parties' marriage, Jeff's employer sued him for breach of a covenant not to compete. As a result, Jeff left his job. He later returned to his old job, but left again. One month after the stipulated decree was entered, Jeff's former employer sued him a second time for again missappropriating company business. Pursuant to a settlement agreement, Jeff again returned to his original employer at an annual salary of $120,000 but was restrained from conducting his lucrative side business.
There is no question that Jeff's post-dissolution reduction in earnings was contemplated at the time of the decree. The parties' divorce attorneys testified as much. They extensively negotiated the language of the stipulated decree. They were free to do so. See In re Marriage of Phares, 500 N.W.2d 76, 79 (Iowa Ct.App. 1993).
Jeff additionally argues that his financial circumstances were so extraordinary as to justify a change in his alimony obligations. See In re Marriage of Wessels, 542 N.W.2d 486, 489 (Iowa 1995) (stating "there are some rare situations where, notwithstanding an agreement and decree to the contrary, later occurrences are so extreme in their nature as to render the initial understanding grossly unfair and therefore subject to change."). We are unpersuaded by this argument. As the district court stated,
Equity requires clean hands, particularly for this extraordinary remedy. Jeff cannot meet that test which can only arise in rare and uncommon situations. This is not one.
Jeff finally claims he was coerced into the alimony stipulation. Although the record reflects his concern about the effect of financial disclosures in his divorce case, we note that he was represented by counsel who conducted extensive negotiations with Terri's attorney before concluding that the stipulation was in Jeff's best interests. Accordingly, we reject this argument. See In re Marriage of Melton, 256 N.W.2d 200, 206 (Iowa 1977).
III. Child Support
Jeff next argues that, in refiguring his child support obligation, the district court (1) improperly included in Jeff's gross annual income $50,000 reflecting a debt forgiven by his employer and (2) allowed Jeff a $40,000 deduction for alimony "paid" instead of a $60,000 deduction ($5,000 alimony obligation X 12 months = $60,000) for alimony "ordered." Jeff also claims entitlement to the income tax exemption for the couple's minor child.
The parties do not dispute that Jeff's reduction in income amounted to a substantial change of circumstances warranting a recalculation of child support. See Iowa Code § 598.21(9) (2001).
With respect to his first argument, the record reflects that Jeff agreed to pay his employer $150,000, but this debt was to be forgiven in $50,000 annual increments if Jeff complied with the terms of his employment agreement. We do not find this income too speculative to be included in the child support calculation, as Jeff received it for 2002 and 2003 and there was no indication he would forfeit it in 2004. See In re Marriage of Nelson, 570 N.W.2d 103, 105 (Iowa 1997) (finding, for child support purposes, that exclusion of bonus not likely to recur and inclusion of annual Christmas bonus was proper).
As for Jeff's second argument that the entire alimony amount ordered should be deducted from income, we believe the district court acted equitably in deducting only the amount actually paid. See Iowa Ct. R. 9.5(9) (authorizing deduction for "[p]rior obligation of child support and spouse support actually paid pursuant to court or administrative order.").
Finally, we reject Jeff's claim that he is entitled to the income tax exemption for the couple's son, as Jeff has not explained how reallocation of the exemption would affect his child support obligation. See In re Marriage of Axmear, 529 N.W.2d 304, 306 (Iowa Ct.App. 1995).
IV. Attorney Fees
Jeff contends that the district court abused its discretion in awarding Terri $6,000 in trial attorney fees. The district court reasoned:
Terri clearly prevailed on the alimony issue which was the one where the most time was devoted. And Jeff did not entirely prevail on the child support issue, as he was proposing lesser sums. Balancing the equities, the Court concludes that Jeff should pay Terri $6,000 for her attorney fees and pay his own.
We find no abuse of discretion in this ruling.
Terri requests appellate attorney fees. As she has prevailed, we order Jeff to pay $1,000 toward those fees. See In re Marriage of Wood, 567 N.W.2d 680, 684 (Iowa Ct.App. 1997) (citing factors to consider in awarding attorney fees).