Title: Roseman v. Sackett

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Roseman v. Sackett1999 WY 54979 P.2d 940Case Number: 98-108Decided: 05/10/1999Supreme Court of Wyoming
 
HAL 
M. ROSEMAN, Appellant (Defendant),

v.

SHELLEY ANN SACKETT, 
Appellee (Plaintiff).

Appeal from the District 
Court of Laramie County, The Honorable Edward L. Grant, 
Judge.

Carol A. 
Serelson, Cheyenne, Wyoming, for appellant.

Julie Nye 
Tiedeken, Cheyenne, Wyoming, for appellee.

Before 
LEHMAN, C.J., and THOMAS, MACY, GOLDEN, and TAYLOR, * 
JJ.

* Retired November 2, 
1998.

TAYLOR, Justice, 
Retired.

[¶1]      Appellant, Dr. 
Hal M. Roseman (Roseman), contests the modification of a 1994 divorce decree 
from appellee, Shelley Ann Sackett (Sackett). Roseman claims the district court 
lacked jurisdiction to order him to replace the value of savings bonds belonging 
to his children which, without the knowledge of the parties, were cashed by 
Roseman's mother just prior to the entry of the divorce decree. Roseman also 
challenges the district court's refusal to deduct alleged business expenses from 
Roseman's income when calculating child support. Finding jurisdiction existed to 
order Roseman to replace the value of the savings bonds, and that the district 
court exercised sound discretion in the disposition of this case, we affirm. 

I. 
ISSUES

[¶2]      Roseman presents 
the following issues:

I.

Whether the 
district court erred in modifying the decree of divorce to require appellant to 
maintain two funds of $12,600.00 each for two of the minor children for their 
education beyond high school?

II.

Whether the 
district court erred when it failed to deduct certain business expenses in 
determining appellant's income for computation of presumptive child 
support?

Sackett phrases 
these issues:

Issue 
1

Did the Trial 
Court err in finding that the Defendant failed to prove that his Employee 
Business Expense Deduction[s] were reasonable?

Issue 
2

Did the Trial 
Court err when it ordered Roseman to place funds for the minor children in an 
account to replace the funds which had been cashed by his 
mother?

II. 
FACTS

[¶3]      When the parties 
divorced in 1994, Roseman, a cardiologist, was unemployed. The district court 
based presumptive child support on an imputed annual income of $125,000.00. In 
the division of the couple's substantial financial assets, the district court 
ordered Roseman to maintain the savings bonds purchased in the names of the two 
older children to be used for their college education. Between the time the 
district court issued its decision letter on January 18, 1994, and the entry of 
the final divorce decree on March 18, 1994, Roseman's mother cashed the savings 
bonds, using a power of attorney over the two children granted by Roseman. The 
parties did not appeal the final divorce decree.

[¶4]      In November 1996, 
Sackett petitioned for a review of child support. Roseman denied that a change 
was appropriate, and counterclaimed for modification of the divorce decree to 
release him from the responsibility of maintaining the savings bonds. He alleged 
that, without his knowledge, his mother had redeemed the savings bonds on 
February 14, 1994, and that he should not be held responsible for savings bonds 
which were not in existence at the time the district court entered its final 
order.

[¶5]      At the hearing on 
the parties' motions, Roseman offered his 1996 income tax return, showing a 
gross income of $244,422.00. The return included a claim for unreimbursed 
business expenses of $26,924.00, consisting of lease payments for his personal 
vehicle; costs incurred in attending seminars for continuing medical education; 
equipment depreciation; and expenses for medical books and subscriptions, 
computers, telephone service, and professional fees. Neither Roseman, nor the 
accountant who appeared at the hearing on his behalf, could say how these 
expenses were calculated. However, the accountant testified that because federal 
law requires business expenses be necessary and ordinary, the amount claimed on 
the tax return should be taken at face value without further inquiry into the 
reasonableness of the expenses.

[¶6]      The district 
court disagreed, and ruled that Roseman had not met his burden of proving the 
claimed expenses were reasonable. Therefore, the district court found Roseman's 
net annual income was $179,429.00 after making proper deductions, and determined 
the parties' presumptive child support obligations accordingly. Further, the 
district court concluded that on the date the 1994 divorce decree was entered, 
the district court and the parties mistakenly believed the savings bonds 
continued to be in existence, thus giving the district court jurisdiction to 
modify the divorce decree. Roseman was ordered to replace the value of the 
savings bonds into a savings account for the two older children. Despite 
Roseman's testimony that "[t]he money is not an issue," he filed this timely 
appeal.

III. STANDARD OF 
REVIEW

[¶7]      A district 
court's order for child support modification or modification due to mistake is 
reviewed under an abuse of discretion standard. Rocha v. Rocha, 925 P.2d 231, 
233 (Wyo. 1996); Barnett v. Barnett, 704 P.2d 1308, 1310 (Wyo. 1985). An abuse 
of 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)).

IV. 
DISCUSSION

A. REPLACEMENT 
OF THE CHILDREN'S ASSETS

[¶8]      Roseman contends 
that the issue of the division of property and the absence of a legal obligation 
to pay for the children's college education was determined in the original 
proceeding, and, therefore, he cannot be required to make an additional 
contributions replacing the value of the children's savings bonds under the 
principle of res judicata. He also argues that the savings bonds, purchased by 
his parents for the purpose of funding the children's post-high school 
education, cannot be considered child support, and, therefore, the district 
court has no continuing jurisdiction based on child support or maintenance. If 
the district court's jurisdiction is based on a property division, Roseman 
asserts that the authority to divide property is limited to a division between 
the parties, and the conveyance of one parent's property to the children outside 
of child support obligations is precluded.

[¶9]      "A divorce decree 
is a final judgment and res judicata on all issues decided.'" Harshfield v. 
Harshfield, 842 P.2d 535, 537 (Wyo. 1992) (quoting Matter of Paternity of JRW, 
814 P.2d 1256, 1265 (Wyo. 1991) and citing Warren v. Hart, 747 P.2d 511, 512 
(Wyo. 1987); Mentock v. Mentock, 638 P.2d 156, 158 (Wyo. 1981); and Heyl v. 
Heyl, 518 P.2d 28, 30 (Wyo. 1974)). However, "[w]here res judicata bars 
reopening a divorce decree, a district court retains jurisdiction to modify the 
decree under particular circumstances." Harshfield, 842 P.2d  at 537; see also 
Barnett, 704 P.2d  at 1309.

In very limited 
situations a property division may be reopened and modified or vacated contrary 
to the bar of res judicata. Subject to specific time limitations, W.R.C.P. 60(b) 
and W.S. 1-16-401, et seq. authorize district courts to modify or vacate a 
judgment for fraud, mistake, inadvertence or irregularity.

Harshfield, 842 P.2d  at 538.

Wyo. Stat. Ann. 
§ 1-16-401 (Michie 1997) provides, in pertinent part:

(a) A district 
court may vacate or modify its own judgment or order after the term at which it 
was made:

* * 
*

(iii) For 
mistake, neglect or omission of the clerk or irregularity in obtaining a 
judgment or order[.]

Wyo. Stat. Ann. 
§ 1-16-408 (Michie 1997) requires "[p]roceedings for the causes mentioned in 
W.S. 1-16-401(a)(iii) and (vi) shall be commenced within three (3) years * * * 
after the defendant has notice of the judgment."

[¶10]   "We also have recognized that a 
district court has inherent equitable powers to modify a final judgment, based 
on mistake or fraud, without regard to statutory time limits." Harshfield, 842 P.2d  at 538; see also Barnett, 704 P.2d  at 1310; Matter of Kimball's Estate, 583 P.2d 1274, 1279 (Wyo. 1978); and Holmes v. Holmes, 66 Wyo. 317, 211 P.2d 946, 
953 (1949). In Barnett, 704 P.2d  at 1310, the petitioner was successful in 
having a divorce decree modified three years after entry of the divorce because 
the parties had mutually omitted a marital debt in the property division. We 
affirmed the district court's order approving the modification of the decree 
under its general equitable powers.

[¶11]   In this case, both parties agree 
that a mistake was made in the original divorce decree when the district court 
ordered Roseman to maintain the then non-existent savings bonds. It is also 
uncontested that Roseman's mother was able to cash the savings bonds only 
because she received power of attorney over the children's assets from Roseman. 
Other established facts include the timing of Roseman's mother's actions after 
the district court issued its decision letter ordering Roseman to maintain the 
savings bonds and that Roseman petitioned the district court to modify its order 
regarding the savings bonds within three years from the date of the initial 
order. See Wyo. Stat. Ann. § 1-16-408. Given that Roseman testified the "money 
[was] not an issue," and it is unquestionable that the maintenance of a fund for 
the children's education is in their best interests, we find no abuse of 
discretion in ordering Roseman to place the current value of the savings bonds 
in an account for the children and to maintain that account for their future 
welfare.

B. BUSINESS 
EXPENSE DEDUCTIONS FROM INCOME

[¶12]   Roseman contends the district court 
erred when it refused to deduct $23,507.00 for business expenses in the 
calculations for child support. In determining a parent's income for a 
presumptive child support obligation, "all reasonable unreimbursed legitimate 
business expenses shall be deducted." Wyo. Stat. Ann. § 20-6-301(a)(i) (Michie 
Repl. 1994). Roseman relied almost exclusively on the deductions which appeared 
in his federal income tax return.

[¶13]   In Houston v. Smith, 882 P.2d 240, 
244 (Wyo. 1994), we discussed the applicability of a federal income tax return 
in determining net income under the Wyoming child support statutes, 
holding:

[T]here are 
fundamental differences in the Wyoming statutory scheme and the federal income 
tax scheme, which foreclose any reliance upon the figures derived for taxable 
income on a federal income tax return in order to compute "net income" for 
purposes of the Wyoming statute. The concepts simply are 
different.

We recognized 
that "[t]he only factor in the Wyoming statutory definitions of income' and net 
income' that relates in any way to the federal above the line deductions is the 
phrase that permits an individual to deduct all reasonable unreimbursed 
legitimate business expenses' in arriving at income." Id. at 243 (emphasis in 
original). However, that recognition did not excuse the responsibility of the 
party claiming the deductions to show they are reasonable.

[¶14]   Roseman failed to present any 
evidence that the amounts he claimed were reasonable business expenses. For 
example, Roseman claimed $5,502.00 in travel expenses for continuing medical 
education conferences, including a trip to Africa. There was no testimony 
regarding how much was spent on each trip, why it was reasonable to travel to 
Africa, how many hours of continuing education were needed, whether he traveled 
to obtain minimum hours, or whether he attended conferences primarily because he 
enjoys traveling to different places. Similarly, there were discrepancies 
between Roseman's testimony and his tax returns on the use of his vehicle for 
personal purposes. Neither he nor his expert could identify how the amounts 
claimed were calculated, and no records other than the tax return were submitted 
to the district court. The absence of any specific evidence that the amounts 
listed on Roseman's tax return represented reasonable business expenses clearly 
supports the district court's determination that Roseman failed to show that 
these deductions were appropriate. Therefore, we find no abuse of discretion in 
the district court's refusal to include the deductions when calculating child 
support payments.

V. 
CONCLUSION

[¶15]   The district court did not abuse 
its discretion in ordering Roseman to replace the value of the children's assets 
removed by his mother nor did the district court abuse its discretion in denying 
deductions from Roseman's income which were not shown to be reasonable business 
expenses. The order of the district court is affirmed.