An unpublished opinion of the North Carolina Court of Appeals does not constitute 

controlling legal authority. Citation is disfavored, but may be permitted in accordance 

with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Procedure.

NO. COA14-227

NORTH CAROLINA COURT OF APPEALS

Filed: 2 December 2014

DENISE S. UPCHURCH,

Plaintiff

v. Alamance County

No. 10 CVD 2185

CHARLES D. UPCHURCH,

Defendant

Appeal by defendant from order entered 8 October 2013 by 

Judge James K. Roberson in Alamance County District Court. 

Heard in the Court of Appeals 13 August 2014.

No brief filed on behalf of plaintiff-appellee.

The Vernon Law Firm, P.A., by Benjamin D. Overby and Wiley 

P. Wooten, for defendant-appellant.

DAVIS, Judge.

Charles D. Upchurch (“Defendant”) appeals from the trial 

court’s 8 October 2013 alimony order. On appeal, he contends

that the trial court erred by (1) improperly considering 

Defendant’s earning capacity for purposes of determining his 

alimony obligation; and (2) awarding alimony to Denise S. 

Upchurch (“Plaintiff”). Specifically, Defendant contends that 
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the trial court’s conclusion that he suppressed his income in 

bad faith was unsupported by competent evidence. After careful 

review, we vacate and remand for further proceedings.

Factual Background

Plaintiff and Defendant were married on 15 September 2002, 

separated on 1 June 2010, and subsequently divorced. No 

children were born from the parties’ marriage.

On 29 July 2010, Plaintiff filed a complaint against 

Defendant seeking postseparation support, equitable 

distribution, and alimony. Defendant filed an answer and 

counterclaim, seeking equitable distribution and requesting that

Plaintiff’s spousal support claims be denied. On 10 January 

2011, the trial court entered an order requiring Defendant to 

pay postseparation support to Plaintiff of $1,000.00 per month 

for 15 months beginning 1 August 2010.

Prior to and during the marriage, Defendant owned and 

operated a lawn care business, Upchurch Lawn Care. Defendant 

was employed by Upchurch Lawn Care, participated in the actual 

landscaping work, and received monthly income from the business 

throughout the course of the marriage. Defendant’s son, Wesley 

Upchurch, was a regular employee of Upchurch Lawn Care for 

approximately 13 years. During the marriage, Plaintiff handled 
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bookkeeping for Upchurch Lawn Care but did not receive 

compensation for doing so. Upchurch Lawn Care paid for numerous 

personal expenses of the parties, including expenses related to 

dining out and vacations as well as personal household bills. 

During the marriage, Plaintiff was employed by Mobile Lift of 

Burlington, a construction equipment company, until she was laid 

off in August 2009. After being laid off, Plaintiff worked 

several waitressing jobs until she found part-time work with 

Dougherty Equipment Company on 3 May 2011. Since 1 November 

2011, Plaintiff has worked full-time for Dougherty Equipment 

Company. In April 2012, Defendant sold Upchurch Lawn Care to 

his son for $130,000.00 and began receiving payments of 

$1,500.00 per month in May 2012. In June 2012, Defendant 

applied for and began receiving Social Security benefits.

On 7 September 2012, the trial court heard Plaintiff’s 

claim for alimony.

1 On 8 October 2013, the trial court entered 

an order in which it concluded that Defendant “exercised bad 

faith in selling his lawn care business, stopping his employment 

in the lawn care business, and choosing to live off of his 

inheritance when considered in light of his potential obligation 

 

1 Prior to the hearing, the parties settled their equitable 

distribution claims in a consent judgment entered 7 September 

2012.
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to provide support for Plaintiff.” The trial court also 

determined that (1) based on Defendant’s earning capacity, he is 

a supporting spouse; (2) Plaintiff is a dependent spouse; and 

(3) awarding alimony to Plaintiff was equitable after 

considering all relevant factors. The trial court imputed an 

annual income of $75,000.00 to Defendant and concluded that 

Plaintiff was entitled to $1,000.00 per month in alimony from 

Defendant for a period of 21 months. Defendant gave timely 

notice of appeal to this Court.

Analysis

On appeal, Defendant argues that the trial court erred in 

concluding that he acted in bad faith by selling his business. 

Consequently, he contends that the trial court could not impute 

income to him under the earning capacity rule and, therefore, 

erred in concluding that he was the supporting spouse for 

purposes of alimony.

“The decision to award alimony is a matter within the trial 

court’s sound discretion and is not reviewable on appeal absent 

a manifest abuse of discretion.” Megremis v. Megremis, 179 N.C. 

App. 174, 181, 633 S.E.2d 117, 122 (2006) (citation, quotation 

marks, and brackets omitted). “An abuse of discretion has 

occurred if the decision is manifestly unsupported by reason or 
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one so arbitrary that it could not have been the result of a 

reasoned decision.” Kelly v. Kelly, ___ N.C. App. ___, ___, 747 

S.E.2d 268, 272-73 (2013) (citation and quotation marks 

omitted).

It is well settled that

[e]ffective appellate review of an order 

entered by a trial court sitting without a 

jury is largely dependent upon the 

specificity by which the order’s rationale

is articulated. Evidence must support 

findings; findings must support conclusions; 

conclusions must support the judgment. Each 

step of the progression must be taken by the 

trial judge, in logical sequence; each link 

in the chain of reasoning must appear in the 

order itself. Where there is a gap, it 

cannot be determined on appeal whether the 

trial court correctly exercised its function 

to find the facts and apply the law thereto.

Coble v. Coble, 300 N.C. 708, 714, 268 S.E.2d 185, 190 (1980); 

see also Spicer v. Spicer, 168 N.C. App. 283, 287, 607 S.E.2d 

678, 682 (2005) (“The trial court must . . . make sufficient 

findings of fact and conclusions of law to allow the reviewing 

court to determine whether a judgment, and the legal conclusions 

that underlie it, represent a correct application of the law.”).

Alimony is ordinarily based upon a party’s actual income at 

the time of the hearing. Kowalick v. Kowalick, 129 N.C. App. 

781, 787, 501 S.E.2d 671, 675 (1998). However, the trial court 

may impute income based on the party’s earning capacity if the
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trial court determines that the party suppressed his income in

bad faith. Id.; see also Megremis, 179 N.C. App. at 182, 663 

S.E.2d at 123 (“It is well established that a trial court may 

consider a party’s earning capacity only if the trial court 

finds the party acted in bad faith.”). Bad faith within the 

context of alimony means “that the spouse is not living up to 

income potential in order to avoid or frustrate the support 

obligation.” Works v. Works, 217 N.C. App. 345, 347, 719 S.E.2d 

218, 219 (2011) (citation and quotation marks omitted and 

emphasis added).

Bad faith may be found “from evidence that a spouse has 

refused to seek or to accept gainful employment; willfully 

refused to secure or take a job; deliberately not applied 

himself or herself to a business or employment; [or] 

intentionally depressed income to an artificial low.” Id.

(citation and quotation marks omitted). As such, when 

determining whether the imputation of income to a party is 

appropriate, “[t]he dispositive issue is whether a party is 

motivated by a desire to avoid his reasonable support 

obligations.” Wolf v. Wolf, 151 N.C. App. 523, 527, 566 S.E.2d 

516, 519 (2002).
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Intent is a mental attitude which “must ordinarily be 

proven, if proven at all, by circumstantial evidence, that is, 

by proving facts from which the fact sought to be proven may be 

inferred.” Roberts v. McAllister, 174 N.C. App. 369, 378, 621 

S.E.2d 191, 198 (2005) (citation and quotation marks omitted), 

appeal dismissed, 360 N.C. 364, 629 S.E.2d 608 (2006). Thus, to 

support its conclusion that a party suppressed his income in bad 

faith, the trial court’s findings must reflect facts and 

circumstances from which bad faith may be inferred. See id.

(explaining that “[i]n order to base an award on earning 

capacity the finder of fact must have before it sufficient 

evidence of the proscribed intent” (citation and quotation marks 

omitted)).

Here, the trial court made the following relevant findings

of fact regarding Defendant’s income and earning capacity:

11. Defendant sold his lawn care business to 

his son, Wesley Upchurch, on or about April 

2, 2012. The total purchase price was 

$130,000.00[,] which represented the Fair 

Market Value of any equipment plus the 

goodwill and other intangible property of 

the lawn care business.

12. On or about April 2, 2012, Wesley 

Upchurch signed a Promissory Note in favor 

of Defendant, Charles Upchurch, for 

$130,000.00, at zero percent interest, with 

payments of $1,500.00 per month beginning 

May 2012. The payout extends until June 
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2019.

13. Defendant indicated that his reason for 

selling his business to his son in May 2012 

was because of his (Defendant’s health). He 

indicated that he cannot “do it anymore.” 

Particularly he stated that he “can’t get 

out in 95 degree weather anymore.” 

Plaintiff acknowledged in her testimony that 

Defendant went out to the sites of his 

customers and did the landscaping work. His 

son was generally a regular employee of the 

landscaping business, and that he would 

sometimes pick up a part-time employee from 

time to time if it were a particularly busy 

time. This testimony by Plaintiff 

corroborates that Defendant’s involvement in 

the landscaping business was not in a less 

physically taxing position such as a 

supervisor, but he was in fact actively 

engaged in the landscaping work itself.

14. Defendant did not have the business 

appraised, but set the price based upon the 

advice of an accountant to average three 

years of receipts to determine the purchase 

price.

15. According to the property settlement of 

the parties, the lawn care business was 

allocated to Defendant as his separate 

property and was his to sell.

. . . .

18. Defendant applied for and began 

receiving Social Security Benefits in June, 

2012 for May 2012. He receives a monthly 

benefit of $1,424.00 on or about the second 

Wednesday of each calendar month. Defendant 

obtained information from the Social 

Security Office that his benefit at age 66, 

if he retired at that age, would be 

$1,677.00, as compared to the $1,424.00 he 
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would receive as a monthly benefit at age 

62.

. . . .

21. Defendant’s mother passed away in 

February 2010. He inherited approximately 

$500,000.00 from his mother’s estate as his 

separate property.

The trial court then concluded that

Defendant exercised bad faith in selling his 

lawn care business, stopping his employment 

in the lawn care business, and choosing to 

live off of his inheritance when considered 

in light of his potential obligation to 

provide support for Plaintiff. The court 

imputes an income to Defendant in the amount 

of at least $75,000.00 per year gross.

We recognize that a determination of bad faith resulting in 

the application of the earning capacity rule “is best made on a 

case by case analysis by the trial court.” Pataky v. Pataky, 

160 N.C. App. 289, 307, 585 S.E.2d 404, 416 (2003), aff'd per 

curiam, 359 N.C. 65, 602 S.E.2d 360 (2004). Here, however, the 

trial court’s determination of bad faith is not adequately 

supported by its findings of fact. While the court concluded 

that Defendant’s sale of his business was in bad faith “when 

considered in light of his potential obligation to provide 

support for Plaintiff,” the trial court failed to make adequate 

findings to support that ultimate determination. Specifically, 

the trial court’s findings fail to demonstrate that Defendant 
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sold his business, thereby reducing his income, “in order to 

avoid or frustrate [his] support obligation” to Plaintiff. 

Works, 217 N.C. App. at 347, 719 S.E.2d at 219 (citation and 

quotation marks omitted).

“[A] voluntary reduction in income is insufficient, without 

more, to support a finding of deliberate income depression or 

bad faith.” Pataky, 160 N.C. App. at 307, 585 S.E.2d at 416. 

We therefore remand to the trial court so that it may make 

further findings of fact to support its conclusion that 

Defendant suppressed his income in bad faith. If the trial 

court ultimately determines that the evidence is insufficient to 

show bad faith, it must utilize Defendant’s actual income when 

considering Plaintiff’s alimony claim. See Quick v. Quick, 305 

N.C. 446, 453, 290 S.E.2d 653, 658 (1982) (“Unless the 

supporting spouse is deliberately depressing his or her income . 

. . the ability of the supporting spouse to pay is . . . 

determined by his or her income at the time the award is 

made.”).

Conclusion

For the reasons stated above, we vacate the trial court’s 

alimony order and remand for further proceedings consistent with 

this opinion.
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VACATED AND REMANDED.

Judges HUNTER, Robert C., and DILLON concur.

Report per Rule 30(e).