Title: YATES v. YATES

State: wyoming

Issuer: Wyoming Supreme Court

Document:

YATES v. YATES2003 WY 16181 P.3d 184Case Number: 03-19Decided: 12/16/2003
OCTOBER 
TERM, A.D. 2003

 

                                                                                                                                   

 

 

JAMES 
GERARD YATES,

 

Appellant(Defendant),

 

v.

 

JILL 
MARIE YATES,

 

Appellee(Plaintiff).

 

 

 

Representing 
Appellant:

 

            
Mitchell E. Osborn, Cheyenne, Wyoming.

 

Representing 
Appellee:

 

            
Nancy D. Freudenthal, of Davis & Cannon, Cheyenne, 
Wyoming.

 

 

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

 

 

            
VOIGT, Justice.

 

[¶1]      James Gerard 
Yates (Father) appeals the district court's determination that he owes 
$105,700.50 in child support arrearages.  
In 2001, Jill Marie Yates (Mother) filed a Motion for Production of 
Documents because Father had failed to provide her with financial 
information.  Father responded with 
a Petition for Modification of Child Support and Determination of Child Support 
Arrears.  As a shareholder in a 
Subchapter S corporation, Father reported significant amounts of pass-through 
income on his personal federal income tax return.  His primary contention at the 
modification hearing was that this pass-through S corporation income should not 
be included as income when calculating his support and arrearages.  The district court agreed with Father 
and calculated his child support without using his S corporation income.  On appeal, Father asks for an additional 
reduction in his obligation.  The 
district court used Father's gross income in calculating his arrearages.  Father now contends that the district 
court should have used his after-tax income.  Because Father failed to raise this 
issue before the district court, we affirm.

 

 

[¶2]      Father raises 
only one issue on appeal:

 

Did 
the trial court abuse its discretion when it failed to consider the state of the 
law at the time the decree of divorce was entered in defining "gross income" to 
be income before taxes as it applied to the computation of the child support 
arrearage owed by defendant.

 

 

[¶3]      When the parties 
were divorced, in August of 1989, the legislature had recently enacted Wyo. 
Stat. Ann. §§ 20-6-301, et seq. (1989), setting forth the guidelines for 
calculating child support.1  In its divorce decree, the district 
court awarded Mother custody of the parties' two children subject to Father's 
reasonable visitation rights, and ordered that child support be paid as 
follows:

 

Pursuant 
to the child support guidelines set forth in W.S. § 20-6-301 (1989 Supp.) et 
seq, HUSBAND be, and he hereby is, obligated to pay WIFE a contribution for 
the support of CHILDREN in the amount of thirty percent (30%) of his adjusted 
gross income, but in no event less than Three Hundred Ninety Dollars ($390.00) 
per month.  Adjusted gross income is 
defined to be all of HUSBAND's gross income from any and all sources, less a 
living allowance for HUSBAND of Four Hundred Fifty Dollars ($450.00) per month 
which shall not be subject to a child support 
obligation[.]

 

[¶4]      At the time of 
the divorce, Father's annual adjusted gross income, as defined by the divorce 
decree (his gross income minus a $450.00 monthly living allowance), was 
$14,636.00.  For the next five 
years, Father met, or came close to meeting, his child support obligation.  However, in 1995, his income nearly 
doubled, yet he did not increase his child support payments accordingly.  Father was a partner in a relatively 
successful business venture and his income continued to increase during the next 
five years.  In 2000, Father 
reported $310,084.00 of income on his personal income tax return.  However, this included $167,551.00 of 
pass-through S corporation income that was not considered income for child 
support purposes.  Therefore, in 
2000, Father's adjusted gross income was $136,592.00, yet he paid only $6,000.00 
in child support.

 

[¶5]      In August of 
2001, Mother filed a Motion for Production of Documents, in which she asserted 
that Father had failed to provide copies of his annual tax return as required by 
the divorce decree.  She requested 
copies of Father's tax returns from 1989 to 2000, and asked that Father identify 
each and every business venture in which he had an interest.  In response, Father petitioned for 
modification of child support and determination of arrearages.  To his petition, Father attached a 
record of his child support payments, proffered as evidence that he had 
satisfied his obligation.  However, 
after the parties exchanged financial affidavits, Father conceded that he was at 
least $45,000.00 in arrears.

 

[¶6]      In June of 2002, 
the district court heard the case to determine arrearages and address the 
petition to modify.  Father was 
represented by counsel and Mother appeared pro se.  Both Mother and Father testified at the 
hearing.  During Father's testimony, 
he offered into evidence Exhibit C, a chart outlining his child support 
obligation and arrearage amount from 1989 to 2002.  Father described the chart as an "aid 
for the Court in determining [his] arrearages."  The district court's ultimate 
determination of Father's arrearages appears to have been based on this chart, 
as the numbers the district court used are exactly the same as those provided by 
Father.

 

[¶7]      The focal point 
of the hearing was whether the district court should include the S corporation 
income as part of Father's gross income when determining arrearages and future 
child support.  The bulk of Father's 
testimony related to his S corporation income and his role and involvement in 
the business.  Besides Mother and 
Father, the only other witness called was John Howard, Father's accountant.  His testimony also focused on the S 
corporation issue.  Mr. Howard 
testified generally about the nature of S corporation income and the benefits 
and risks of that corporate structure.  
Specifically, he explained that the pass-through income reported on 
Father's personal tax return was not available to Father, but rather was always 
put back into the corporation to facilitate growth and pay taxes and other 
debts.

 

[¶8]      The question of 
whether taxes should be included in determining Father's gross incomethe issue 
Father raises in this appealdid not come up at the hearing until closing 
arguments.  Father's attorney was 
addressing the arrearage amount when the district court 
interrupted:

 

            
THE COURT:  Well, it's been a 
while since I looked at that from earlier hearings, but isn't it at least 
contemplated by the prior documents that gross income meant after taxes and 
after social security deductions?

 

            
[FATHER'S ATTORNEY]:  Your 
Honor, we're in a very precarious part and that's normally the approach that I 
know the Court takes.

 

            
THE COURT:  No, I'm talking 
about when the decree was entered.

 

[FATHER'S 
ATTORNEY]:  What happened with this 
decree, Your Honor, because it was entered in the time between statutes going 
from one formula to another is that rather than using the statutory definition 
of gross income, or using  I guess getting to a net income figure, this decree 
actually says just deduct $450 a month from your gross.  We're not going to worry about what your 
tax is.

 

            
THE COURT:  Wait.  Doesn't it define or contemplate that 
the gross means what he gets from his employer?  Because he was employed at the 
time.  What he got from his 
employer, he had deducted out of it withholding and social security.  So it wasn't based on the top line.  It was based upon what his check 
showed.

 

            
[FATHER'S ATTORNEY]:  Well, 
Your Honor, I would agree that that is a great way and probably the way the 
Court contemplated that to happen.  
That isn't the way we've prepared our Exhibit C.  And I will tell you that we used the 
actual gross without those deductions.  
And if we need to go back and determine what his social security and his 
presumptive tax would have been during those years, I certainly can do 
that.

 

            
But we took gross income to mean gross income.  But I think you're right.  I think that at that time, gross income 
was being defined differently than we define gross income 
today.

 

            
THE COURT:  Well, somehow I 
have the impression that in the file I reviewed some documents that would 
indicate that they were deducting those taxes.  Maybe it was just an exhibit at trial, 
but I see 

 

            
[FATHER'S ATTORNEY]:  And, 
Your Honor, I will tell you I wouldn't have even thought to go to that point to 
try to figure out where they were coming from.  I was going from the literal terms of 
the decree and the statute that existed in 1989.

 

THE 
COURT:  See, those documents must 
have been part of trial exhibits.  
At least that would be consistent with where I got the idea there was an 
Exhibit A that showed some deductions and it contemplated a child support 
estimate of $315.  And that would 
have been the defendant's exhibits.  
So you may be right.  It 
wasn't necessarily in the mind of the Court.  I just remember that when I reviewed the 
file.

 

[FATHER'S 
ATTORNEY]:  Well, Your Honor, I 
certainly, as I said, I could take that Exhibit C and to aid the Court rerun the 
gross income numbers and present an amended exhibit to [Mother] and to the 
Court.  I have those orders 
available to me and my office can do that within a couple of 
hours.

 

THE 
COURT:  All right.  Continue with your argument.  I guess it's important for me to know 
that Exhibit C was based upon gross without taking into consideration any 
taxes.  I didn't realize that when 
it was presented to be honest with you.

 

Go 
ahead.

 

Father's 
attorney then finished her closing argument without further mention of the 
issue.

 

[¶9]      In its decision 
letter and order, the district court modified the child support obligation and 
addressed Father's arrearages.  With 
respect to the arrearages, the district court accepted Father's argument and did 
not use the pass-through S corporation income as part of its calculation.  Based on the language of the divorce 
decree, the district court calculated Father's arrearages at thirty percent of 
his adjusted gross income, and entered a judgment on the arrearage in the amount 
of $105,700.50.

 

[¶10]   Father appeals from that judgment 
and subsequent order.

 

 

[¶11]   Father challenges the district 
court's determination of child support arrearages.  We recently 
stated:

 

Decisions 
related to child support are assigned to the sound discretion of the district 
court. Jordan v. Brackin, 992 P.2d 1096, 1098 (Wyo.1999). We will not 
disturb a district court's ruling unless we are convinced that the court has 
abused its discretion. Id.

 

"In 
determining whether there has been an abuse of discretion, we focus on the 
reasonableness of the choice made by the trial court.'  Vaughn v. State, 962 P.2d 149, 
151 (Wyo.1998). If the trial court could reasonably conclude as it did and the 
ruling is one based on sound judgment with regard to what is right under the 
circumstances, it will not be disturbed absent a showing that some facet of the 
ruling is arbitrary or capricious. Id. (citing Byerly v. 
Madsen, 41 Wash. App. 495, 704 P.2d 1236 (1985)); [(Basolo v. Basolo, 
907 P.2d 348, 353 (Wyo. 1995))]."

 

Cossette 
v. Cossette, 2003 
WY 107, ¶ 10, 76 P.3d 795, 797 (Wyo. 2003) (quoting Jordan v. Brackin, 992 P.2d 1096, 1098-99 (Wyo. 1999)).

 

 

[¶12]   Father argues that the district 
court should have used his after-tax income in calculating his arrearages.  He presents two arguments in support of 
this position.  First, he contends 
that the undefined term "gross income" in the 1989 child support statute should 
be interpreted to mean "disposable income" as defined in the 1989 income 
withholding statute.  Second, he 
asserts that, although the 1989 child support statute required that child 
support be calculated using "gross income," the prior and subsequent versions of 
that statute indicate that the legislature intended "gross income" to mean 
income after taxes.  Father 
presented neither of these arguments to the district court at the modification 
hearing.

 

[¶13]   We have stated that "[w]e strongly 
adhere to the rule forbidding us to "consider for the first time on appeal 
issues that were neither raised in, nor argued to, the trial court," except for 
those issues which are jurisdictional or are fundamental in nature.'"  Hronek v. St. Joseph's Children's 
Home, 866 P.2d 1305, 1309 (Wyo. 1994) (quoting Bredthauer v. TSP, 864 P.2d 442, 446-47 (Wyo. 1993) and Oatts v. Jorgenson, 821 P.2d 108, 111 
(Wyo. 1991)).  "We follow this rule because "it is 
unfair to reverse a ruling of a trial court for reasons that were not presented 
to it, whether it be legal theories or issues never formally raised in the 
pleadings nor argued to the trial court."'"  Hronek, 866 P.2d  at 1309 
(quoting Bredthauer, 864 P.2d  at 446-47 and Oatts, 821 P.2d at 
111); 
see also 5 Am.Jur.2d Appellate Review § 690 (1995).  "We of course must not judge the matter 
of abuse of discretion on the basis of showings made to us on appeal.  We must judge on the basis of showings 
made to the trial court . . .."  
Holly Sugar Corp. v. Perez, 508 P.2d 595, 599 (Wyo. 
1973).  We have articulated and followed this 
principle on numerous occasions.  
See Rock Springs Land and Timber, Inc. v. Lore, 2003 WY 100, ¶ 35, 
75 P.3d 614, 627 (Wyo. 2003); 
State v. Campbell County School Dist., 2001 WY 90, ¶ 35, 32 P.3d 325, 333 
(Wyo. 2001); 
Daley v. Wenzel, 2001 WY 80, ¶ 19, 30 P.3d 547, 552-53 (Wyo. 
2001); 
Robinson v. Pacificorp, 10 P.3d 1133, 1136 (Wyo. 2000); 
Cooper v. Town of Pinedale, 1 P.3d 1197, 1208 (Wyo. 2000); 
WW Enterprises, Inc. v. City of Cheyenne, 956 P.2d 353, 356 (Wyo. 
1998); 
Squaw Mountain Cattle Co. v. Bowen, 804 P.2d 1292, 1296 (Wyo. 
1991); 
Epple v. Clark, 804 P.2d 678, 681 (Wyo. 1991); 
Esponda v. Esponda, 796 P.2d 799, 802 (Wyo. 1990); 
R.O. Corp. v. John H. Bell Iron Mountain Ranch Co., 781 P.2d 910, 913 
(Wyo. 1989); 
U.S. Aviation, Inc. v. Wyoming Avionics, Inc., 664 P.2d 121, 125 (Wyo. 
1983); 
Roush v. Roush, 589 P.2d 841, 844 (Wyo. 1979); 
Thickman v. Schunk, 391 P.2d 939, 943 (Wyo. 1964); 
Gore v. John, 61 Wyo. 246, 157 P.2d 552, 556 (1945); 
and Ideal Bakery v. Schryver, 43 Wyo. 108, 299 P. 284, 293 
(1931).

 

[¶14]   Father does not suggest that this 
newly raised issue is jurisdictional or fundamental in nature; rather, he 
asserts that he properly raised the issue before the district court.  He contends that the issue was raised in 
his Petition for Modification of Child Support and Determination of Child 
Support Arrears where he asked the district court to "review and adjust the 
child support obligation . . .."  He 
maintains that the request to "review" amounts to a request that the district 
court interpret the language of the decree and determine how much child support 
was owed.  Father also asserts that 
merely bringing a matter to the district court's attention has been interpreted 
to preserve the issue for review on appeal.  He quotes Polo Ranch Co. v. City of 
Cheyenne, 969 P.2d 132, 137 (Wyo. 1998):  "[t]hough perhaps the claim was not 
prosecuted with the greatest clarity, especially with regard to the relief 
sought, . . . the matter was broached on several occasions by both parties . . . 
[u]nder these circumstances, we cannot say that the issue was not raised 
below."  He also notes Carlson v. 
BMW Indus. Service, Inc., 744 P.2d 1383, 1387 (Wyo. 1987), 
where we held that an attorney's statements that "[i]f we can't continue the 
matter until such time . . .'" sufficiently raised the issue of abuse of 
discretion in denying a continuance.

 

[¶15]   Father's position is that an issue 
may be raised by implication from the pleadings, or that the mere mentioning of 
an issue is sufficient to preserve it for appeal.  This notion runs contrary to both the 
purpose of the rule and our established jurisprudence.  We have held that we will not consider 
issues that were not "raised below in any meaningful 
manner."  Beaugureau v. State, 2002 WY 160, ¶ 
11, 56 P.3d 626, 631 (Wyo. 2002) (emphasis added).  "It is a basic premise of appellate 
practice that to preserve an issue for appeal, that issue must be called to the 
attention of the trial court in a clear manner."  Elder v. Jones, 608 P.2d 654, 660 
(Wyo. 1980) (emphasis added).

 

[¶16]   Father never clearly called the 
issue of whether to use after-tax income in calculating his arrearages to the 
district court's attention nor was it ever raised in any meaningful manner.  Not until closing argument was the issue 
even mentioned, and then it was the district court judge, not Father, who raised 
it.  No evidence was presented to 
the district court directly regarding this issue.  Moreover, the evidence presented to the 
district court by Father was actually contrary to the position he now takes on 
appeal.  At the hearing, Father 
presented Exhibit C, a chart that he and his attorney prepared as an "aid for 
the Court in determining [his] arrearages."  This chart used his gross, rather than 
after-tax, income to calculate his arrearages.  Father now asks us to do just the 
opposite.  Indeed, Father's 
presentation to the district court appears to have been predicated on his 
attorney's perception that the statute's and the divorce decree's deduction of a 
$450.00 per month living allowance was in lieu of a deduction for taxes 
paid:

 

What 
happened with this decree, Your Honor, because it was entered in the time 
between statutes going from one formula to another is that rather than using the 
statutory definition of gross income, or using  I guess getting to a net income 
figure, this decree actually says just deduct $450 a month from your 
gross.  We're not going to worry 
about what your tax is.

 

(Emphasis 
added.)  In other words, Father 
conceded in district court that he was not entitled to the additional deduction 
that he is now pursuing on appeal.

 

[¶17]   Not only was the issue never 
clearly raised or meaningfully addressed, it appears that the issue did not even 
occur to Father until the district court raised it during closing 
arguments.  After the district court 
interrupted, Father's attorney explained that when preparing the exhibit in 
which they used gross income, they "took gross income to mean gross income.  . . .  Your Honor, I will tell you I wouldn't 
have even thought to go to that point to try to figure out where they were 
coming from.  I was going from the 
literal terms of the decree and the statute that existed in 1989."  Father's attorney offered to amend 
Exhibit C using after-tax income; however, no amendment appears in the 
record.  

 

[¶18]   Father now contends that 
"determination of the legislative intent and the meaning of gross income,' as 
used in the 1989 version of W.S. §20-6-301, et seq. was a 
material factor deserving significant weight' in the case at hand," and that 
the district court "ignored the interpretation of that term within the statute 
and therefore committed an abuse of its discretion."  However, this "factor" was "never 
formally raised in the pleadings nor argued to the trial court.'"  Daley, 2001 WY 80, ¶ 20, 30 P.3d  
at 553 (quoting Bredthauer, 864 P.2d at 446-47); 
see also Oatts, 821 P.2d  at 111.  We cannot decide whether a district 
court abused its discretion by ignoring a factor associated with an issue that 
was never properly raised.  Holly 
Sugar Corp., 508 P.2d  at 599.

 

[¶19]   We acknowledge that we have, in the 
past, considered issues not raised before the district court, despite the fact 
that they did not involve jurisdiction or were not fundamental in nature.  In YellowBear v. State, 874 P.2d 241, 245 (Wyo. 1994), 
we stated, "[a]lthough Appellant properly should have initially raised all his 
claims in the district court, in the interest of judicial economy, we will 
consider the claims which he has raised for the first time on appeal." See 
also Boller v. Western Law Associates, P.C., 828 P.2d 1184, 1187 (Wyo.), 
cert. denied, 506 U.S. 869 (1992).2  We have also addressed issues not raised 
before the district court that are bound to emerge again if left 
unresolved.  See Joyner v. 
State, 2002 WY 174, ¶ 13, 58 P.3d 331, 336 (Wyo. 2002).  Such exceptions to our normal rule are, 
however, rare.

 

[¶20]   Father does not argue nor do we 
find that the new issue he brings before us raises a jurisdictional 
question.  Neither is it so 
fundamental as to require present resolution in the absence of meaningful 
development in the district court.  
We will abide by our long-standing rule forbidding us to consider for the 
first time on appeal an issue that was not raised or argued in the district 
court.  Father, as the appellant, 
bears the burden of presenting a sufficient record upon which a decision can be 
based.  Erhart 
v. Evans, 
2001 WY 79, ¶ 18, 30 P.3d 542, 547 (Wyo. 2001) (citing Wood v. Wood, 865 P.2d 616, 617 (Wyo. 1993)).  Likewise, the burden of demonstrating an 
abuse of discretion rests on the appellant.  Robinson v. Hamblin, 914 P.2d 152, 155 (Wyo. 1996).  Father has not met those 
burdens.

 

 

[¶21]   The issue before the district court 
was whether pass-through Subchapter S corporation income should be included in 
Father's income for child support computation purposes.  The district court resolved that issue 
by relying on the divorce decree and the controlling statute.  Father now asks this Court to decide 
whether income taxes and other expenses should have been deducted from his gross 
income before computing his child support obligation.  That issue not having been raised before 
the district court, we decline to consider it.  The judgment of the district court is 
affirmed.

 

FOOTNOTES

 

1This 
statute, in place only one year, was completely overhauled in the 1990 
legislative session.  The language 
pertinent to this appeal was found in Wyo. Stat. Ann. § 
20-6-303:

 
The 
basic child support obligation may be apportioned between the parents in 
proportion to their incomes.  Four 
hundred fifty dollars ($450.00) income per month per parent shall be considered 
to be a minimum living allowance and shall not be subject to child support 
obligation.

 

2Justice 
Thomas criticized this approach in his dissent stating, "I initially note that, 
despite the claim made in the majority opinion justifying this disposition on 
the basis of judicial economy,' we should not disregard our long-standing rule 
that forbids the consideration of issues that are raised for the first time on 
appeal."  Boller, 828 P.2d  at 
1188.