Title: Madison v. Madison

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Madison v. Madison1993 WY 120859 P.2d 1276Case Number: 92-168Decided: 09/23/1993Supreme Court of Wyoming
Douglas 
G. MADISON, 

Appellant 
(Plaintiff),

v.

Donna 
Lynn MADISON, n/k/a Donna Lynn Eisele,

 Appellee 
(Defendant).

Appeal 
from The District Court, Laramie County, Larry L. Lehman, 
J.

Rhonda 
Sigrist Woodard, Burke, Woodard & Bishop, P.C., Cheyenne, for 
appellant.

Diane 
M. Lathrop, Wiederspahn, Lummis & Liepas, P.C., Fort Collins, CO, for 
appellee.

Before 
MACY, C.J., and THOMAS, CARDINE, GOLDEN and TAYLOR, 
JJ.

GOLDEN, 
Justice.

[¶1]      In this appeal we 
must determine whether the district court erred in increasing appellant's child 
support based on an average of his income for a four-year period of time and 
whether a district court has authority to modify a child support award, adding 
to it an "escalation clause."

[¶2]      We 
affirm.

ISSUES

[¶3]      Appellant Douglas 
G. Madison raises these issues:

I. 
Whether the court erred in providing that Mr. Madison's child support obligation 
could be increased, and not decreased, automatically each year based solely on 
his adjusted gross income.

A. 
Whether the court erred in not expressing the child support in a specific dollar 
amount as required by W.S. § 20-6-304(a).

B. 
Whether the annual automatic child support adjustments improperly side-step the 
required showing of a material and substantial change of circumstances and the 
consideration of factors other than the obligor's income.

C. 
Whether the court erred in establishing a child support provision which 
automatically increases if Mr. Madison's income exceeds $51,238.20 but does not 
provide for automatic decreases if Mr. Madison's income is less than that 
amount.

D. 
Whether the court erred in not providing for reimbursement to Mr. Madison if the 
increased child support level in any particular year is greater than $1,270 per 
month, but his income actually supports lesser child 
support.

E. 
Whether the requirement that the child support automatically increase based on 
adjusted gross income (with the adjustment to arrive at net income) was error by 
the court.

II. 
Whether the court erred in basing appellant's child support obligation on an 
average of appellant's income over a four-year period.

 

[¶4]      Appellee Donna 
(Madison) Eisele submits this restatement of the issues:

I. 
Whether the court correctly applied the law of the State of Wyoming when it 
averaged Mr. Madison's income over four-years.

II. 
Whether, based upon the facts of this case, the court properly established a 
range of child support, with automatic annual adjustments. Said range is 
specific to the extent necessary to comply with W.S. § 20-6-304(a) and the 
formula provided is equitable in that neither party is precluded from 
petitioning the court for adjustments pursuant to the Wyoming child support 
guidelines.

III. 
Whether the court properly established an increase in child support when Mr. 
Madison's income increases.

IV. 
Whether the court properly considered the issue of "phantom income" when 
determining Mr. Madison's income and subsequent child support 
payments.

FACTS

[¶5]      Madison filed a 
complaint seeking a divorce on December 28, 1982. The parties have two children 
who are now approximately 13 and 15 years of age. A decree of divorce was 
entered on May 11, 1983, and provided for the division of the marital property, 
that Eisele would have custody of the children, and that Madison was to pay a 
total of $700 per month as child support for their two children. He was also 
required to provide health and medical insurance for the children and to pay 
one-half of all medical expenses not covered by insurance. An amended decree, 
entered on June 28, 1983, altered some provisions of the decree and accorded 
Madison the right to claim both children as dependents for income tax 
purposes.

[¶6]      On August 7, 
1990, Eisele filed a petition seeking review and adjustment of Madison's child 
support obligations. After more than a year of bitterly disputed discovery, most 
of which was directed at determining what Madison's income was, he agreed to 
increase his child support to $500 per month per child and to contribute $75 per 
month per child to a college fund. That offer was not accepted. On December 13, 
1991, the district court issued an opinion letter which concluded that Madison 
had experienced an increase in income which warranted modification of his child 
support obligations, even though his income varied dramatically from year to 
year and his income was somewhat difficult to quantify. The district court set 
his child support obligation for the two children at a minimum of $1,270 per 
month and a maximum of $2,000 per month (the minimum and maximum figures for one 
child are $965 and $1,330, respectively)1. The minimum figure is based on 
what the district court found to be Madison's net, average, annual income over a 
four-year period of time. The maximum level was to be reached dependent upon 
future increases in Madison's annual earnings based upon his net income.2 The record gives no indication if 
Madison has been required to pay an amount greater than that. The final order of 
the district court was reduced to a judgment. This appeal 
followed.

DISCUSSION

[¶7]      In significant 
part, Eisele's action was engendered by changes in Wyoming law concerning child 
support which occurred in 1989 and 1990. WYO. STAT. § 20-6-304(a) (Supp. 1992) 
provides:

§ 
20-6-304. Child support guidelines.

(a) 
Child support shall be expressed in a specific dollar amount and shall be 
determined in accordance with the following guidelines:

Obligor's 

Monthly

 Net Income                            
                                                
Number of Children

     1                
2           
      
          3                  
    4               
5                         
6 or more

$ 
500-$1,000             
            17%             25%                   
30%                
32%                
37%                
42%

$1,001-$1,500               
       
20%             28%                   
 32%               
35%                
40%                
45%

$1,501-$2,000 
                     
22%             29%                 
   32%               
 40%               
40%                
45%

$2,001-$3,000 
         
            26%          
  30%                    
 33%               
 40%               
40%                
45%

$3,001-above 
                       
$780*      $900*                    $990*            
$1,200*              
$1,200*        
 $1,350*

      * Minimum dollar amounts. (Emphasis 
added).

[¶8]      Madison contends 
the district court erred in not expressing the child support in a "specific 
dollar amount." The district court did express the specific dollar amount of 
$1,270 which was immediately due. The amount of child support set is well within 
the district court's discretion, and we will not disturb that ruling. Ellison v. 
Walter ex rel. Walter, 834 P.2d 680, 685 (Wyo. 1992); Scaling v. Scaling, 805 P.2d 866, 869 (Wyo. 1991); Mintle v. Mintle, 764 P.2d 255, 258 (Wyo. 
1988).

[¶9]      The significant 
issue we must address is whether it was an abuse of discretion for the district 
court to set an upper scale of $2,000 per month for child support, based on a 
theory that Madison's income might vary upwardly in the future. What the 
district court actually did was to insert an "escalation clause" in the modified 
decree. Madison contends that, in addition to the language of WYO. STAT. § 
20-6-304, requiring that child support be in a "specified dollar amount," WYO. 
STAT. § 20-2-113 (Supp. 1992) contemplates that the district court will only 
modify that specific dollar amount upon petition. The district court retains 
jurisdiction of child support matters and may entertain petitions to modify the 
decree if changed circumstances present themselves. This is not a matter of 
first impression in this court,3 but the issue, has been addressed 
in greater detail by numerous other appellate courts. JAY M. ZITTER, ANNOTATION, 
"Validity and Enforceability of Escalation Clause in Divorce Decree Relating to 
Alimony and Child Support," 19 A.L.R. 4th 830 (1983). It is obvious that the 
district court carefully reviewed the cases cited in the annotation, as well as 
the cases cited at footnote three. It is our view that 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. Beyond that minimum level, a district court may, in its discretion, 
award child support consistent with the child's need and the parent's ability to 
pay. WYO. STAT. § 20-6-302(b)(xi) (Supp. 1992). Here the district court found 
that the children's needs were between $1,587 (Madison's evidence) and $2,511 
(Eisele's evidence).

[¶10]   It is noteworthy that for a period 
of many years a parent's standard of living was a significant factor in 
determining support for an illegitimate child, but not for a natural child. See 
WYO. STAT. § 14-2-113(e)(ii) (1986) (repealed in 1990 and replaced by WYO. STAT. 
§§ 20-6-301-306 (Supp. 1992) (the court shall consider all relevant facts 
including the standard of living and the circumstances of the parents); Nuspl v. 
Nuspl, 717 P.2d 341, 346 (Wyo. 1986) (noncustodial parent's mere operation on a 
monthly deficit was not enough to free father from increase in his child support 
obligation); Harrington v. Harrington, 660 P.2d 356, 360 (Wyo. 1983) (needs of 
children, not standard of living desired by custodial parent, are at issue in a 
petition to modify child support); and see Holtz v. State ex rel. Houston, 847 P.2d 972, 975 (Wyo. 1993). Our decisions in Harrington and Nuspl, to the extent 
that they suggest the means of the parent should not be an important 
consideration in setting the level of child support, need to be clarified. Child 
support set at a level which is consistent with the parent's wealth and income 
does not constitute an abuse of discretion. Bereman v. Bereman, 645 P.2d 1155, 
1160 (Wyo. 1982).

[¶11]   After careful consideration of the 
statutes which govern child support and the aggregate intention of those 
statutes, when read as a comprehensive body of law, we hold that the district 
court did not abuse its discretion in establishing an escalation clause. Given 
even a minimum level of cooperation between these parents, the escalation clause 
should diminish the need for the custodial parent to return repeatedly to court 
to modify the decree in order to avoid the prospect of increasingly inadequate 
support. Likewise, it should reduce the attendant need of the custodial parent 
to expend significant sums for attorney fees, as well as help prevent the 
emotional trauma associated with such court appearances. Such an escalation 
clause does not diminish the discretion of the district court to modify child 
support in the face of changed circumstances. It merely places the burden on the 
noncustodial parent to seek modification if a genuine change of circumstances 
does exist. See 3 MELLI, ET AL, ALIMONY, CHILD SUPPORT & COUNSEL FEES - 
AWARD, MODIFICATION & ENFORCEMENT, § 22.10 (1991).

[¶12]   The district court found it 
necessary to deviate from the guidelines for reasons that it set out in great 
detail and which adequately justify the court's innovation. The language 
requiring child support to be set in a "specific dollar amount" is not violated 
by the court's modification order. There is no violation because the formula 
provides a range of specific dollar amounts and readily translates to a specific 
dollar amount when escalation occurs. Appellant contends the district court 
should also have provided for reductions in child support if appellant's income 
fell or for refunds if he overpaid. As noted above, if those circumstances do 
come about in any meaningful sense, they may be addressed by a petition to 
modify the child support. Likewise, the district court's order does not violate 
the statutory requirement for changed circumstances. The district court 
determined that under all the relevant circumstances child support should be 
within a range of $1,270-$2,000, and, all other things remaining equal, it 
should stay at that level. Should all other things not remain equal, appellant 
may seek a change in the level of child support.

[¶13]   Appellant contends the district 
court erred in averaging his income over a period of four years. It is obvious 
from the record that the district court faced considerable difficulty in 
determining what appellant's monthly net income was because he experienced 
month-to-month and year-to-year fluctuations. We do not read the governing 
statutes as prohibiting use of such an average where circumstances require it. 
We hold the district court acted within its sound discretion in averaging 
appellant's income over the four-year period selected. Of course, as to the 
child support which was immediately due, the district court did express a 
specific dollar amount, i.e., $1,270. See In re Marriage of McQueen, 493 N.W.2d 91, 92-93 (Iowa App. 1992); Nelson v. Nelson, 454 N.W.2d 533, 535 (S.D. 1990); 
Studt v. Studt, 443 N.W.2d 639, 644 (S.D. 1989); Clutter v. McIntosh, 484 N.W.2d 846, 848-49 (N.D. 1992); contra, Hillebrand v. Hillebrand, 130 N.H. 520, 546 A.2d 1047, 1050-51 (1988). Appellant also contends that the averaging process 
did not take into account "phantom income."4 Our review of the record 
demonstrates that the district court took into account all relevant and 
available information in reaching its determination of appellant's income 
level.

[¶14]   The judgment of the district court 
is affirmed in all respects.

CARDINE, 
Justice, dissenting, with whom TAYLOR, Justice, 
joins.

[¶15]   I dissent. The divorce decree was 
modified by increasing appellant's child support obligation from $700 per month 
to $1,270 per month. The trial court averaged appellant's income from the 
preceding four years in arriving at $1,270 per month as appropriate, reasonable 
child support. The future effect of averaging, assuming appellant's income is 
the same in the ensuing four years, is that appellant will pay too much in some 
years and not enough in others, but the average will be just right. If 
appellant's income is dramatically more or less than expected, either party can 
seek modification as the law provides. That is fair. The trouble with the 
court's opinion here is that it approves an escalation clause that provides for 
yearly increases in child support upon an increase in income, but does not 
provide for corresponding decreases in child support upon a decrease in income. 
That is unfair where, as in this case, the child support will be adjusted 
annually. Thus, I would affirm the award of child support of $1,270 per month 
but reverse and delete the escalation clause from the 
decree.

FOOTNOTES

1 The order on modification reads:

Commencing in January 1992, Plaintiff shall pay as child support for two 
children a minimum monthly amount of $1,270. * * * Within 30 days after 
Plaintiff has prepared his taxes for any given year, he shall provide to 
Defendant a certified statement from his accountant setting forth his adjusted 
gross income from his Form 1040. This amount shall exclude any future spouse's 
income. The adjusted gross income shall be reduced by 33% to arrive at net 
income. Any net income over $51,238.20 shall be multiplied by 30%. Within 30 
days of providing the certified statement from his accountant to Defendant, 
Plaintiff shall submit that additional amount to Defendant as child support. 
This adjusted child support amount shall remain in [e]ffect for 12 months. In no 
event shall the child support exceed an amount equal to a total of $2,000 per 
month in child support.

2 The district court apparently based this percentage on the table, i.e., 
an individual whose monthly income is over $3,000 pays $900 for two children (or 
30%).

3 In the discussion of facts contained in Macy v. Macy, 714 P.2d 774 (Wyo. 
1986), mention is made of an escalation clause not dissimilar to the one in 
controversy here. However, no issue was raised in that appeal with respect to 
the escalation clause. Also see Swetich v. Smith, 802 P.2d 869 (Wyo. 1990). In 
Roberts v. Roberts, 816 P.2d 1293, 1297 (Wyo. 1991) we dealt with an escalation 
clause which the parties had agreed to in the stipulated settlement of their 
divorce (holding that the district court was not obligated to strictly follow 
that agreement).

In Mentock v. Mentock, 638 P.2d 156, 160 n. 3 (Wyo. 1981), this Court 
appeared to recommend the use of escalation clauses, but that was only dicta. In 
Harrington v. Harrington, 660 P.2d 356, 360-61 (Wyo. 1983), we rejected strict 
adherence to the terms of an escalation clause, but did not specifically approve 
or disapprove of its usage. In that case we did make clear that the welfare and 
needs of the children are very important considerations, along with the parents' 
ability to pay.

4 "Phantom income" is generally income resulting from a taxable event from 
which the taxpayer does not actually receive money.