Case Title: KAREN D. RODENBOUGH, f/k/a KAREN D. MILLER V. MATTHEW B. MILLER

Citation: 

Docket Number: 05-94

State: wyoming

Court: Wyoming Supreme Court

Date: 2006-02-02T00:00:00Z

Document:
KAREN D. RODENBOUGH, f/k/a KAREN D. MILLER V. MATTHEW B. MILLER2006 WY 19127 P.3d 800Case Number: 05-94Decided: 02/02/2006
OCTOBER TERM, A.D. 2005

 
 
KAREN D. 
RODENBOUGH, f/k/a

KAREN D. 
MILLER,

 
 
Appellant

(Petitioner),

 
 
v.

 
 
MATTHEW 
B. MILLER,

 
 
Appellee

(Respondent).

 
 

Appeal from theDistrictCourtofTetonCounty

The 
Honorable Nancy J. Guthrie, Judge

 
 
Representing 
Appellant:

 
 
James K. 
Lubing of James K. Lubing Law Office, Jackson, Wyoming

 
 

Representing 
Appellee:

 
 
Jill 
Dean LaRance of LaRance & Syth, P.C., Billings, Montana

 
 
Before 
HILL, C.J., and GOLDEN, KITE, VOIGT, and BURKE, 
JJ.

 
 

HILL, 
Chief Justice.

 
 
[¶1]      Appellant, Karen 
D. Rodenbough, f/k/a Karen D. Miller (Mother), challenges the district court's 
order that denied her petition to modify child support.  The district court concluded that Mother 
had failed to prove the existence of a change of circumstances, i.e., Mother did 
not present facts to establish a 20% or more increase in child support over that 
established in the existing order.  
Appellee, Matthew B. Miller (Father), contends that the district court's 
denial of Mother's petition was within its discretion.  We reverse and remand for further 
proceedings consistent with this opinion.

 
 
ISSUE

 
 
[¶2]      Mother poses this 
issue:

 
 
            
Did the district court abuse its discretion when it determined that a 
substantial change of circumstances warranting a modification of child support 
did not exist when it did not examine [Father's] cash flow, ability to pay, and 
total financial situation?

 
 
In 
response, Father simply contends that the district court did not abuse its 
discretion.

 
 
FACTS 
AND PROCEEDINGS

 
 
[¶3]      On December 10, 
2003, Mother filed a Notice of Filing Foreign Judgment in the district court and 
caused it to be served on Father.  
On that same date, Mother's attorney also filed an affidavit concerning 
the filing of the foreign judgment, a copy of which was sent to Father.  Attached to the Notice was a copy of the 
Decree of Dissolution of Marriage entered on November 18, 1991, in the Montana 
Fifteenth Judicial District Court, RooseveltCounty.  The decree noted that the parties had 
two children (born March 15, 1988 and January 10, 1991), provided for joint 
custody of the children in accordance with the parties' wishes, and set child 
support at $125.00 a month per child, payable from Father to Mother.  Also attached to the Notice were the 
following:  A July 2, 1993 
modification of the decree, indicating the court did not have enough information 
before it to consider child support; a January 20, 1994 modification, indicating 
that the parties stipulated to child support in the amount of $250.00 per month 
per child,1 a June 22, 1998 Order Modifying 
Decree and Adopting Stipulations (the stipulations are not included in the 
record); and a December 6, 1999 order which noted that venue was moved to 
Phillips County (Seventeenth District) in 1997, by consent of the parties, and 
which modified the existing parenting plan.  That last order from the Montana court noted that Mother had moved to Wyoming.2  With respect to child support it 
provided:

 
 
            
By March 1, 2000, parties shall exchange tax returns for the last two 
calendar years and financial affidavits for calculation of current child support 
obligation.  By March 1st of each year thereafter, parties shall 
exchange tax returns for the past calendar year with updated financial 
affidavits.  Either party may seek 
modification of support obligation based on these documents and modification of 
the parenting plan as stated herein.

 
 
So far 
as the record shows, this provision was not followed by the parties during the 
time period 2000 through 2004.

 
 
[¶4]      On January 22, 
2004, Mother filed a petition in the Wyoming 
district court, to modify the Montana decree.  It was served on Father on January 26, 
2004.  Mother asked to modify the 
visitation provisions of the decree, as well as child support.  By order entered on January 23, 2004, 
the district court ordered each party to file a Verified Financial Affidavit on 
or before February 20, 2004.  Mother 
filed such an affidavit on February 17, 2004.  By order entered on February 27, 2004, 
the district court extended Father's time to file a financial affidavit until 
March 15, 2004.

 
 
[¶5]      On March 19, 
2004, Father filed an answer to Mother's petition, which included a challenge to 
the jurisdiction of the Wyoming court.  On that same date, Father filed a motion 
to dismiss the petition based on jurisdiction.  The jurisdictional question was 
eventually resolved in favor of the Wyoming court exercising jurisdiction, 
although the record does not fully reflect those 
proceedings.

 
 
[¶6]      On April 12, 
2004, Father filed an affidavit in response to Mother's petition which was 
largely devoted to the issue of visitation.  On August 16, 2004, Father filed a 
financial affidavit indicating he earned $5,400.00 per year, and lost an 
undisclosed sum of money on a "self-employed" venture.  He also included 2002 and 2003 tax 
returns that he jointly filed with his new wife.  By the time the dust had settled, and 
after several revisions of his financial circumstances, Father conceded that his 
monthly income (for purposes of the child support calculation) was at least 
$1,852.12.  In his testimony to the 
district court, Father was evasive and short on "straight answers," but he did 
concede that as of January 26, 2004, his total assets amounted to $2,474,599.00, 
and his net worth was $1,713,498.00.

 
 
[¶7]      At the hearing 
into this matter, the district court heard testimony from the parties and 
received a significant amount of documentary evidence.

 
 
STANDARD 
OF REVIEW

 
 
[¶8]      Of course, the 
keystone of our process of review when child support is the issue is abuse of 
discretion:

 
 
A 
district court has broad discretion in determining the correct amount of a child 
support award.  This Court will 
disturb a district court's ruling only upon a showing that the district court 
abused its discretion.  
Jordan v. Brackin, 992 P.2d 1096, 1098 
(Wyo.1999).  We have stated that: " 
'Judicial discretion is a composite of many things, among which are conclusions 
drawn from objective criteria;  it 
means a sound judgment exercised with regard to what is right under the 
circumstances and without doing so arbitrarily or capriciously.' "  Vaughn v. State, 962 P.2d 149, 151 
(Wyo.1998) (quoting Martin v. State, 
720 P.2d 894, 897 (Wyo.1986)).

 
 

Watson 
v. Watson, 2002 
WY 180, ¶4, 60 P.3d 124, 125 (Wyo. 2002); also see Groenstein v. Groenstein, 2005 WY 6, 
¶10, 104 P.3d 765, 768-69 (Wyo. 2005).

 
 
[¶9]      In Steele v. Steele, 2005 WY 33, ¶¶10-12, 
108 P.3d 844, 848-49 (Wyo. 2005) we noted that the district court's discretion 
is limited in very significant ways by the statutes governing this process (and 
enacted by the legislature largely for the purpose of ensuring that the best 
interests of the affected children are at the center of this difficult 
process):

 
 
The 
applicable standard of review is well known and we will not repeat it in detail 
here.  See Ready v. Ready, 2003 WY 121, ¶11, 76 P.3d 836, ¶11 (Wyo.2003).  However, 
with respect to the issue at hand we include this refinement of the more general 
standard:

 
 
      The child support 
guidelines identify a base from which the judge must invoke the exercise of 
discretion.  In the absence of an 
agreement with respect to child support, the guidelines will have a more 
significant controlling impact.  
When an agreement as to child support is involved, however, more weight 
may be given to the agreement.  
Child support agreements entered into by the parties are favored by the 
courts.3  

 
 

Smith v. 
Smith, 895 P.2d 37, 41 (Wyo.1995);  also see Sharpe v. Sharpe, 902 P.2d 210 
(Wyo.1995);  and Wright v. Wright, 5 P.3d 61, 62-63 
(Wyo.2000).

 
 
            
We also have noted "... the child support guidelines manifest a 
presumption that the typical welfare and needs of children will be met by the 
minimum child support levels given the earning ability of the parent."  Madison v. Madison, 859 P.2d 1276, 1279 
(Wyo.1993).  Further, we have 
opined:

 
 
A trial 
court should give serious consideration to the support guidelines.  However, strictly following the 
guidelines blindly would nullify the court's traditional discretion and would 
not be in the interest of justice in all circumstances.  The guidelines set out in the statute 
were not crafted to give any special protection or advantage to a parent owing 
support.  Guidelines are just 
that--guidelines, and do not accommodate to all circumstances or cases.  As a matter of policy, we are hesitant 
to impinge on the trial court's historic discretion.  

 
 

Holtz v. 
State ex rel. Houston, 847 P.2d 972 (Wyo.1993).

 
 
            
The inescapable conclusion, however, is that the presumptive support 
table set out in Wyo. Stat.  Ann. § 
20-2-304(a) (LexisNexis 2003) does have the effect of circumscribing the trial 
court's discretion in calculating child support awards.

 
 
[¶10]   There are several statutes that 
play an important role in reaching a decision such as that at issue here.  Unfortunately, it is not altogether 
clear that the parties or the district court were focused upon the applicable, 
much less the correct mix, of statutes.  
In particular, Mother relied on statutes that were amended and renumbered 
in 2000, but with changes that are of significance to this case.  For instance, former Wyo. Stat. Ann. § 
20-6-306(a), which is the centerpiece of the argument in Mother's brief, is now 
found at Wyo. Stat. Ann.§ 20-2-311 (LexisNexis 2003 and 2005).4  It provides:

 
 
§ 
20-2-311. Adjustment of child support orders

 
 
            
(a) Any party, or the department of family services in the case of 
child support orders being enforced by the department, may petition for a 
review and adjustment of any child support order that was entered more than six 
(6) months prior to the petition or which has not been adjusted within six (6) 
months from the date of filing of the petition for review and 
adjustment.  The petition shall 
allege that, in applying the presumptive child support established by this 
article, the support amount will change by twenty percent (20%) or more 
per month from the amount of the existing order.  The court shall require the parents to 
complete a verified financial statement on forms approved by the Wyoming supreme 
court, and shall apply the presumptive child support set out in this article in 
conducting the review and adjustment.  
If, upon applying the presumptive child support to the circumstances 
of the parents or child at the time of the review, the court finds that the 
support amount would change by twenty percent (20%) or more per month from the 
amount of the existing order, the court shall consider there to be a change of 
circumstances sufficient to justify the modification of the support 
order.  The provisions of this 
section do not preclude a party or assignee from bringing an action for 
modification of a support order, based upon a substantial change of 
circumstances, at any time.  Every three (3) years, upon the request of 
either parent or, if there is a current assignment of support rights in effect, 
upon the request of the department, the court, with respect to a support order 
being enforced under this article and taking into account the best interests of 
the child involved, shall review and, if appropriate, adjust the order in 
accordance with the guidelines established pursuant to this article.  Any adjustment under the three (3) year 
cycle shall be made without a requirement for a showing of a change in 
circumstances.  The commencement 
of aid under the personal opportunities with employment responsibilities (POWER) 
program, medical benefits under Title XIX of the Social Security Act, food 
stamps and supplemental security income (SSI) shall be considered a substantial 
change of circumstances requiring modification of child support.  [Emphases added.]

 
 
[¶11]   The amount of child support owed by 
a parent is calculated by examining each parent's "income" and, thereafter 
determining that parent's "net income."  
Wyo. 
Stat. Ann. § 20-2-304 (LexisNexis 2003 and 2005).  The statutory definition of "income" is 
found in Wyo. Stat. Ann § 20-2-303(a)(ii) (LexisNexis 2003 and 
2005):

 
 
(ii)  "Income" 
means any form of payment or return in money or in kind to an individual, 
regardless of source.  Income 
includes, but is not limited to wages, earnings, salary, commission, 
compensation as an independent contractor, temporary total disability, permanent 
partial disability and permanent total disability worker's compensation 
payments, unemployment compensation, disability, annuity and retirement 
benefits, and any other payments made by any payor, but shall not include any 
earnings derived from overtime work unless the court, after considering all 
overtime earnings derived in the preceding twenty-four (24) month period, 
determines the overtime earnings can reasonably be expected to continue on a 
consistent basis.  In determining 
income, all reasonable unreimbursed legitimate business expenses shall be 
deducted.  Means tested sources of 
income such as Pell grants, aid under the personal opportunities with employment 
responsibilities (POWER) program, food stamps and supplemental security income 
(SSI) shall not be considered as income.  
Gross income also means potential income of parents who are voluntarily 
unemployed or underemployed.

 
 
[¶12]   "Net income," is used in 
calculating child support.  It is 
defined by Wyo. Stat. Ann. § 20-2-303(a)(iii) (LexisNexis 2003 and 
2005):

 
 
(iii)  "Net 
income" means income as defined in paragraph (ii) of this subsection less 
personal income taxes, social security deductions, cost of dependent health care 
coverage for all dependent children, actual payments being made under 
preexisting support orders for current support of other children, other 
court-ordered support obligations currently being paid and mandatory pension 
deductions.  Payments towards child 
support arrearage shall not be deducted to arrive at net 
income;

 
 
[¶13]   The definition of income is quite 
important in this case because Father asserted that, while he may have a high 
net worth and very significant assets, he did not have much income for federal 
income tax purposes (and presumably for Montana income taxes as well).  The record contains Father's income tax 
returns and they support Father's view in this regard, although those returns 
may not bear the strain of a close audit.  
For instance, Father paid his sons when they worked for him during their 
summer visitation.  Over the years 
2001-2003, Father deducted the sums paid to them (over $12,000), although those 
checks were immediately endorsed by Father or stepmother and deposited into one 
of Father's bank accounts.  Father 
asserted that the two children at issue, therefore, had that much money "in the 
bank."  However, Father had received 
both the benefit of the deduction for tax purposes, and the money 
itself.

 
 
[¶14]   Essential elements in the district 
court's sound exercise of its discretion are reliable and accurate financial 
affidavits and disclosures by the parents.  
To that end, Wyo. Stat. Ann. § 20-2-308 (LexisNexis 2003 and 2005) 
provides:

 
 
§ 
20-2-308. Financial affidavits required; financial 
reporting.

 
 
            
(a)  No order establishing or modifying a child support 
obligation shall be entered unless financial affidavits on a form approved by 
the Wyoming 
supreme court which fully discloses the financial status of the parties have 
been filed, or the court has held a hearing and testimony has been 
received.

            
(b)  Financial affidavits of the parties shall be supported 
with documentation of both current and past earnings.  Suitable documentation of current 
earnings includes but is not limited to pay stubs, employer statements, or 
receipts and expenses if self-employed.  
Documentation of current earnings shall be supplemented with copies of 
the most recent tax return to provide verification of earnings over a longer 
period.

            
(c)  The court may require, or the parents may agree, to 
exchange financial and other appropriate information once a year or less often, 
by regular mail, for the purpose of analyzing the propriety of modification of 
court ordered child support.

            
(d)  All financial affidavits and records required by law to be 
attached to the affidavit shall constitute a confidential file and are subject 
to inspection by persons other than the parties, their attorneys or the 
department of family services to the extent necessary to enforce the Child 
Support Enforcement Act and the Uniform Interstate Family Support Act only by 
court order.

 
 
[¶15]   In Watson, ¶¶16-17, 60 P.3d  at 128-29, we 
said:

 
 
We 
reiterate what we said in both Fleenor and Houston:  the focus should be upon the reasonable 
and legitimate nature of the expense and its impact on the party's actual cash 
flow in the year in question rather than the treatment of the expense by federal 
law in the context of income taxes.  
The rationale of Houston was that 
book depreciation does not reduce actual net income.  Houston, 882 P.2d  
at 244.  The rationale of Roseman was that the child support payor 
had failed to prove that the amounts he claimed were reasonable business 
expenses.  Roseman, 979 P.2d  at 943.  The rationale of Fleenor was that, after the payor 
established that the expenses were reasonable expenses that directly affected 
business cash flow and his own disposable income, the payee failed to prove that 
the payments were unreasonable.  Fleenor, 992 P.2d  at 1070.  That is the type of analysis required in 
cases of this nature.  A central 
question in that analysis is whether the questioned expenses were unreasonably 
excessive or the assets were acquired to depress income to avoid support 
payments.  Id. at 
1069.   The burden of proving 
that an expense was a reasonable unreimbursed legitimate business expense lies 
with the party seeking the deduction.  
Erhart v. Evans, 2001 WY 79, ¶ 
15, 30 P.3d 542, 546 (Wyo.2001);  Fountain v. Mitros, 968 P.2d 934, 938 
(Wyo.1998).

 
 
            
One court has commented that "were we not to treat Section 179 deductions 
as depreciation pursuant to the Nebraska Child Support Guidelines, a 
self-employed parent could distort his or her income in any given year by 
purchasing depreciable property and deducting the cost pursuant to Section 179, 
thereby reducing income available for child support."  Gammel v. Gammel, 259 Neb. 738, 612 N.W.2d 207, 
212 (2000).  That, of course, is 
true;  a scheming non-custodial 
parent could seek to manipulate his or her income in such a manner.  But the opposite is also true;  if in computing child support, a court 
automatically rejects a business expense that has been afforded Section 179 
treatment, that court has not fulfilled its obligation under Wyo. Stat.  Ann. § 20-2-303(a)(ii) to determine 
whether the amount should be deducted as a reasonable and legitimate business 
expense.  Either course is 
wrong.  The proper course is to make 
the statutory determination.

 
 
DISCUSSION

 
 
[¶16]   As we noted above, a significant 
problem in this case is that we are not certain whether the parties and the 
district court were on the right page of the right statutes.  It does not appear that Father's income 
was calculated in the manner required by the governing statutes and applicable 
case law.  It appears, as well, that 
perhaps too much income was attributed to Mother, given the undisputed evidence 
as to her actual earnings, as well as the lack of evidence that she was 
"voluntarily unemployed or underemployed."

 
 
[¶17]   In its order denying any relief to 
Mother, the district court adopted these findings, which are especially 
pertinent to our resolution of this appeal.

 
 
            
1.  The district court recognized the only basis for a 
modification of child support was if the presumptive support amount would change 
by at least 20%.  Based on the 
record extant, it appears that child support has not been reconsidered by any 
court since 1999, and, therefore, this is not a correct statement of the law 
extant.

 
 
            
2.  The district court attributed income in the amount of 
$1,891.34 to Mother.  This was based 
on Mother having earned that amount at one time in her life and that she was not 
employed full-time at the 
time of the hearing.  Mother lived 
at a remote ranch location, had one of the parties' children at home being 
home-schooled, cared for both of the parties' children, and also cared for a 
child she had with her new husband.  
The district court did not credit any of these factual assertions made by 
Mother, even though they were not disputed by Father.  The record will not support the district 
court's finding in this regard, indeed, it is contrary to the great weight of 
the evidence.

 
 
            
3.  The district court accepted that child support had last 
been calculated by the Montana court in 1999 in the amount of a total 
of $400.00 for the two children.  
The district court mentions the sources of Father's income and recognized 
that "all reasonable unreimbursed legitimate business expenses shall be 
deducted."  No detailed findings 
were made in this regard.

 
 
            
4.  The district court found that Mother had not challenged 
Father's reasonable business expenses, and that Father's tax returns "reflect 
his accurate income figures."  These 
findings simply are not supported by the record, and the district court makes no 
mention of the factual basis on which it relies for these conclusions.  The record reflects that Mother 
challenged many of Father's deductions, exemptions, credits, etc.  We do not intend to suggest that 
Mother's challenges were all correct, but based on the district court's 
conclusory findings, we cannot conclude that the required analysis (as described 
more fully above) has been done.

 
 
            
5.  The district court set Father's net monthly income at 
$1,852.12 ("this figure is derived by estimating [Montana income] taxes5 at 20% and adding to [Father's] 
income his employment benefits").  
In reaching this conclusion, the district court purported to rely in part 
upon the fact that Father's stated income was more than the average farmer in 
Montana makes, 
per Montana State Wage Statistics.  
Although that piece of evidence is not included in the record on appeal, 
we are not able to discern how it could possibly be relevant to determining 
Father's actual income for the purposes at hand.  The district court's findings with 
respect to Father's actual income are inadequate given Father's lack of 
credibility and his professed inability to place anything resembling an accurate 
figure on what his actual income, as defined by statute, was.  Although credibility is almost entirely 
a matter in the district court's discretion, in these circumstances the district 
court's findings with respect to credibility are either entirely lacking or 
inadequate given the state of the record on appeal.

 
 
            
6.  The district court then used the presumptive child support 
tables to ascertain that Father's child support obligation was $470.00, and that 
that did not amount to a 20% change.  
Therefore, the district court denied any modification of child 
support.  The calculation would have 
had to come to $480.00 for there to be a 20% change.  Thus, even a relatively minor upward 
adjustment to Father's income, or a relatively minor downward adjustment to 
Mother's income, would result in the necessary 20% figure.  Of course, as noted above, the 20% 
change rule may not be applicable in any event.

 
 
CONCLUSION

 
 
[¶18]   Given the facts and circumstances 
detailed above, we are compelled to conclude that the district court's findings 
of fact and conclusions of law are not supported by the record.  Indeed they are contrary to the great 
weight of the evidence.  The 
district court's conclusions are not drawn from objective criteria, and it did 
not exercise sound judgment with regard to what is correct under the 
circumstances and did so arbitrarily and capriciously.  For these reasons, the order of the district court is reversed with 
respect to its determinations of child support, and the case is remanded to the 
district court with instructions that the matter of child support be 
reconsidered in a manner consistent with this opinion.

       
            
              
           
 

FOOTNOTES

 
 

1The parties 
appear to agree throughout these proceedings that Father was paying $400.00 a 
month in child support (i.e., $200.00 a month per child).  The record is not clear as to how that 
amount was determined.  Our reading 
of the record indicates that the governing order of the Montana district court 
set child support at $250.00 a month per child, for a total of $500.00 a month, 
although it is also apparent that the record may be incomplete in this 
regard.

 
 

2The record 
is not entirely clear in this respect but several years prior to moving from 
Montana to Wyoming, Mother remarried and had a third child.  Father also remarried and now has three 
other children in addition to those at issue in the instant 
case.

 
 

3Here, the 
record does not reflect the existence of such an 
agreement.

 
 

4The district 
court did not make any statutory references in its findings and, thus, it is 
difficult for this Court to ascertain on review whether the district court did 
consider the correct statute(s).

 
 

5Father did not include any Montana income tax 
information with his financial affidavit.  
There is no basis in the record for estimating his      
              
    Montana income tax at 20% 
of his "income" for child support purposes, because he did not have that much 
income for income tax purposes.