No. 95-407

IN THE SUPREME COURT OF THE STATE OF MONTANA

1996

IN RE THE MARRIAGE OF

TANYA TRUAK STOUT,

Petitioner and Respondent,

and

DAVID MARK STOUT,

Respondent and Appellant.

APPEAL FROM: District Court of the Fourth Judicial District,

1n and for the County of Missoula,

The Honorable John Larson, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Judith A. Loring, Stevensville, Montana

For Respondent:

John H. Gilliam, Skjelset Law Offices, Missoula,

Montana

Filed:

Submitted on Briefs: February 22, 1996

Decided: June 18, 1996
Justice William E. Hunt, Sr. delivered the Opinion of the Court.

Pursuant to Section I, Paragraph 3 (c), Montana Supreme Court

1995 Internal Operating Rules, the following decision shall not be

cited as precedent and shall be published by its filing as a public

document with the Clerk of this Court and by a report of its result

to State Reporter Publishing Company and West Publishing Company.

Appellant David Mark Stout (Mark) appeals the decision of the

Fourth Judicial District Court, Missoula County, which granted an

increase in child support to Respondent Tanya Stout (Tanya).

Affirmed in part and reversed in part.

ISSUES

The following restated issues are raised on appeal:

1 . Did the evidence presented demonstrate changed

circumstances so substantial and continuing in nature as to make

the original child support terms unconscionable?

2 . Did the District Court abuse its discretion in its

application of the Child Support Guidelines?

3. Did the District Court abuse its discretion by refusing to

admit one of Mark's proposed exhibits?

4 . Did the District Court abuse its discretion by limiting

the time allowed to the parties for presentation of evidence?

FACTS

Mark and Tanya divorced in 1984. They have two children, a

sixteen-year-old boy and a thirteen-year-old girl, who reside

primarily with their mother and enjoy liberal visitation with their

father. Pursuant to the parties' divorce decree, Mark paid $150

2
per child per month in child support. After the divorce, Mark

remarried. His wife, Roxanne, owns and operates an advertising

agency which employs Mark. Through her business, Roxanne pays for

the children's health insurance, for which Mark is responsible

under the divorce decree.

In 1994, Tanya was diagnosed with kidney disease. Her doctor

discovered that one of her kidneys was entirely non-functioning and

placed her on medication to maintain the function of the other.

Since then, Tanya has incurred medical bills of over $2000 each

year.

Also in 1994, Tanya moved the District Court for an increase

in child support. Mark did not file a brief opposing the motion

and, pursuant to Uniform District Court Rule No. 2, the District

Court deemed the motion well-taken. It therefore ordered the

parties to submit child support worksheets in order to facilitate

the determination of an appropriate increase in child support.

Both parties submitted worksheets and the District Court referred

the matter to a Special Master. The Special Master returned her

proposed findings, conclusions, and recommended increase in child

support, which the District Court substantively adopted in its

order. Mark appeals.

STANDARD OF REVIEW

We review a district court's findings of fact regarding child

support modification to determine whether they are clearly

erroneous. In re Marriage of Kovash (1995), 270 Mont. 517, 521,

893 P.2d 860. 862-63. We review a district court's conclusions of

3
law regarding child support modification to determine whether the

court's interpretation of the law was correct. Kovash, 893 P.2d at

863 (citing In re Marriage of Barnard (1994), 264 Mont. 103, 870

P.2d 91). In addition, we review a district court's overall

decision on child support modification to determine whether the

district court abused its discretion. Kovash, 893 P.Zd at 863

(citing In re Marriage of Hill (1994), 265 Mont. 52, 874 P.2d 705).

DISCUSSION

1 . Did the evidence presented demonstrate changed

circumstances so substantial and continuing in nature as to make

the original child support terms unconscionable?

When Tanya moved the District Court for an increase in child

support, Mark did not file a brief in response to her motion.

Uniform District Court Rule No. 2 states that "failure to file an

answer brief by the adverse party within ten days shall be deemed

an admission that the motion is well-taken." Rule 2(b), Mont.

Uniform Dist. Ct. Rules. On this basis, the District Court deemed

Tanya's motion well-taken

However, § 40-4-208, MCA, provides in part:

(2) (b) Whenever the decree proposed for

modification contains provisions relating to maintenance

or support, modification under subsection (1) may only be

made:

(i) upon a showinq of changed circumstances so

substantial and continuinq as to make the terms

unconscionable;

(ii) upon written consent of the parties; LOTI

(iii) upon application by the department of public

health and human services . .

Section 40-4-208(2)(b), MCA (emphasis added). Here, the parties

did not agree to modification, nor has the department of health and

4
human services been involved. Therefore, only 5 40-4-208(2) (b) (i),

MCA, applies.

Mark argues that his failure to respond to Tanya's motion does

not relieve her of the duty of showing changed circumstances such

as the statute requires. He contends that this statutory mandate

must be given precedence over the applicable district court rule.

Mark further contends that, by ruling that the motion was welltaken, the District Court erroneously relieved Tanya of the duty of

showing substantial and continuing changed circumstances sufficient

to make the terms of the existing decree unconscionable.

We have held that compliance with 5 40-4-208, MCA, is a

mandated prerequisite for modification of child support. In re

Marriage of Conkey (1995), 270 Mont. ZOO, 203, 890 P.2d 1291, 1293.

See also, In re Marriage of Clyatt (1994), 267 Mont. 119, 882 P.2d

503; In re Marriage of Craib (19941, 266 Mont. 483, 880 P.2d 1379;

In r-e Marriage of Kukes (1993), 258 Mont. 324, 852 P.2d 655.

Therefore, a district court is powerless to modify a child support

obligation unless it does so in compliance with the statute.

The statute does not render the relevant district court rule

wholly inapplicable, however. Nor does it mean that the court,

faced with an unopposed motion, must hold an evidentiary hearing in

order to prove that which is not disputed. A party may comply with

the statute through a motion by showing therein with reasonable

specificity the changed circumstances which serve to make a decree

unconscionable. If such a reasonably specific motion is not

opposed, the district court may then deem it well-taken pursuant to

5
the district court rule, because the motion on its face will comply

with § 40-4-208(2) (b) (i), MCA.

In this case, however, Tanya's motion stated only that "upon

[her] information and belief" circumstances had changed to such an

extent that the existing support order was unconscionable. The

motion did not state which circumstances had changed, how they had

changed, or to what extent. Such a generic statement does not

comply with § 40-4-208(2) (b) (i), MCA. Therefore, Mark is correct

in asserting that the District Court could not have granted an

increase in child support on the basis of the motion alone.

But the District Court did not deem the motion well-taken,

assign an increase in support, and send the parties home. Instead,

it held a comprehensive evidentiary hearing regarding the proposed

increase, during which both Tanya and Mark were permitted to

present evidence on the issue of whether an increase in child

support was necessary or justified. The proper question,

therefore, is whether the evidence presented at the hearing

supported a finding of changed circumstances substantial and

continual enough to make the existing support decree

unconscionable.

On appeal, Mark alleges that Tanya's motion for an increase in

child support was based on the increase in the cost of living as

well as the increased cost of raising older children. He points

out that Tanya presented no evidence which showed either a general

cost-of-living increase or the specific costs associated with

raising their children. Moreover, he asserts that Tanya's income

6
has increased while his has decreased. Mark therefore alleges that

Tanya failed to show changed circumstances substantial and

continuous enough to render the existing child support arrangements

unconscionable.

It is true that Tanya showed few specific increased expenses

or a general increase in the cost of living. But this Court has

repeatedly recognized that teenage children generate greater

expenditures for the parent than do younger children. In re

Marriage of Barber (19921, 252 Mont. 458, 461-62, 830 P.Zd 97, 99.

See also, In re Marriage of Forsman (1987), 229 Mont. 411, 747 P.2d

861; Johnson v. Johnson (1983), 205 Mont. 259, 667 P.2d 438;

Uniform District Court Rule of Child Support Guidelines (1987), 227

Mont. 1, 9. Furthermore, Mark himself acknowledged at the hearing

that it undoubtedly costs more to raise children today than it

formerly did.

Mark is correct, however, that merely asserting increased

costs, without more, will not be sufficient to show changed

circumstances. In re Marriage of Gingerich (1994), 269 Mont. 161,

164, 887 P.2d 714, 716 (distinguishing Johnson, 667 P.2d at 438).

Such assertions must be supported by evidence of specific cost

increases or a demonstrable impact on the parent's financial

situation. See -I e.g., Johnson, 667 P.2d at 438, and Reynolds, 660

P.2d at 90. If Tanya had based her request solely on the increased

cost of raising the children, we would be compelled to reverse the

District Court because the evidence presented on this issue was

sketchy at best.

7
Tanya ( s motion, however, was also based on her Own

deteriorating health. She testified that she must spend at least

$2000 each year on health-related costs. Since she has lost the

function in one kidney, Tanya must take medication to maintain the

function of the other. The District Court did not abuse its

discretion by finding that the evidence of her medical condition,

coupled with the admitted increased cost of raising teenage

children, was sufficient to constitute changed circumstances so

continuing and substantial as to make the existing child support

unconscionable.

Nor does the evidence support Mark's contention that, by so

finding, the District Court ignored Tanya's admitted increase in

wages. When Tanya was divorced, she earned less than $8000 a year.

She currently earns slightly more than $16,000 a year, so her

income has in fact doubled. But such an increase in earnings does

not automatically create a presumption that an increase in child

support is not warranted, especially when, as here, the parent

initially earned very little. The District Court properly

considered Tanya's current income when calculating child support.

Mark also asserts that the District Court erred by determining

his income to be higher than the amount which he claims to

currently earn. He asserts that the District Court improperly

imputed income to him based on its belief that he was purposely

under-employed and that his decrease in wages was "made up" to

avoid an increase in child support. He claims that his salary had

been greatly reduced, and testified that he would only make

8
approximately $10,000 in 1995, the year of the hearing. However,

he also testified that he made $5,700 in one two-week period,

followed by earnings of only $127 in the two weeks which preceded

the hearing.

The District Court's findings and conclusions do not indicate

that it imputed income to Mark based on under-employment. Instead,

Mark's income was determined by looking at his earning capacity as

demonstrated by his salaries for the past four years. It is not

error for the District Court to use the figures actually before it

when determining modification of child support. Platt v. Platt

(1994), 267 Mont. 38, 41, 881 P.Zd 634, 636.

Further, the circumstances of the parties must be determined

at the time of the modification hearing. They may not be based

upon speculative or possible future conditions. In re Marriage of

Conklin (19861, 221 Mont. 30, 32, 716 P.2d 629, 631 (quoting Gall

v. Gall (1980), 187 Mont. 17, 20, 608 P.2d 496, 498). Mask's

earnings before the hearing more than justified a finding that his

income should be at least $20,000. If the District Court found

Mark's sudden and precipitous drop in salary to be suspicious, this

nevertheless was not the basis for determination of his income.

The District Court did not abuse its discretion by determining

Mark's income based on his past proven earning ability and

demonstrated by his salaries for the past four years.

2 . Did the District Court abuse its discretion in its

application of the Child Support Guidelines?

Mark asserts that the manner in which the District Court

applied the Child Support Guidelines in this case was erroneous.

9
Specifically, Mark argues that the District court erred by

attributing income to him from his home; by including income Mark

earns from his second job as a musician; and by failing to consider

medical expenses which Mark currently pays on behalf of himself and

the children.

A. Assiqnment of income to Mark from his home.

In computing Mark's income for purposes of determining child

support, the District Court attributed to him the equity income of

his home. To do so, the District Court subtracted a "homestead

exemption" of $40,000 from the total value of the home ($52,000),

leaving Mark with $12,000 in equity in his home. The District

Court then calculated the amount of interest which Mark would earn

if the $12,000 were invested, and attributed this amount to Mark as

income. Mark asserts that the Guidelines do not provide for

attribution of income in this fashion. We agree.

The Child Support Guidelines address the attribution of income

to non-performing assets in Rule 46.30.1514, ARM. That Rule

provides in part:

Income attributed to assets is the amount of interest

income which could be earned if non-performing assets are

liquidated and the proceeds invested. For example, a

parent may possess non-performing assets like a vacation

home, idle land, hobby farm or recreational vehicles. In

such cases, a child is entitled to benefit from this

potential income.

Rule 46.30.1514(l), ARM.

Essentially, by applying the homestead exemption, the District

Court considered $40,000 of the $52,000 value of the home as a

performing asset. It then considered the other $12,000 of the

10
home's value as a non-performing asset to which income may be

attributed. This treatment was erroneous for three reasons.

First, the homestead statutes, found at 5 70-32-101, MCA, et

seq. I provide that a homestead, valued up to $40,000, generally

will be exempt from execution or forced sale. Section 70-32-201,

MCA. However, in order to claim the exemption, the owner must file

a declaration and acknowledgement of homestead in the same way that

a grant of real property must be acknowledged and filed. Section

70-32-105, MCA. In this case, there is no indication that Mark has

filed a homestead declaration as is required by statute, or that

his home is in danger of being subject to execution or forced sale.

Therefore, there is no legal basis for appl,ying the homestead

exemption statutes to this child support modification case.

Second, the applicable rule allows for the attribution of

income which a parent might earn if "non-performing assets are

liquidated and the proceeds invested." Rule 46.30.1514, ARM. By

attributing income to part of Mark's house, the District Court

seemed to presume that some part of the home could be liquidated

and the proceeds invested, while leaving the rest of the home

intact. We fail to see how this can be done. Mark's house is

valued at $52,000. He cannot simply remove the $12,000 which the

District Court has deemed to be non-performing in order to invest

it, as if some part of the house's value is severable from the

rest. The house, in its entirety, is a performing asset; it is

where he and his wife live and where the children live when they

are with him. There is no basis for finding that the majority of

11
the home is a performing asset but that some small part of it is

non-performing.

Third, Mark testified that he is not the sole owner of the

house in question. Apparently, his wife and his brother also have

some interest in the property. This testimony was uncontroverted.

Therefore, the District Court erred in attributing income from the

entire value of the house without acknowledging that Mark does not

in fact own the house in its entirety.

In short, the District Court erred by using the homestead

statutes to conclude that any part of Mark's home was a nonperforming asset.

B. Inclusion of income earned by a second iob.

Mark next argues that the District Court misapplied the

guidelines by including income which he earns through his second

job as a free-lance musician. He points out that the applicable

administrative rule provides that:

[i]f a person with a subsequent family has income from

overtime or a second job, that income is presumed to be

for the use of the subsequent family, and is not included

in gross income for the purposes of determining support

for a prior family. The presumption may be rebutted upon

a showing that the additional income is discretionary.

Rule 46.30.1508(2), ARM. On the basis of this rule, Mark argues

that the income from his second job should be presumed to be for

the benefit of his second family. Therefore, he argues, the

District Court erred in including the income from his second job

when calculating his child support obligation. The cited

administrative rule, however, creates only a presumption which may

12
be overcome by evidence that "the additional income is

discretionary." Rule 46.30.1508(2), ARM.

Mark's wife Roxanne is the owner and operator of her own

business. She is also Mark's employer and pays his salary. At the

hearing, Roxanne testified that her business is very much a going

concern; she has moved the business into new offices and hired

additional staff to handle its substantial growth. The testimony

of both Mark and Roxanne indicated that Roxanne is more than able

to provide for her own needs. This evidence rebuts the presumption

that the income from Mark's second job is necessary for the support

of a second family.

Moreover, Mark admitted that he worked a second job as a

musician during the time he was married to Tanya. When he met

Roxanne, he also was working as a musician. The fact that an

individual's second job pre-dates the second marriage may rebut the

presumption that the second job serves to provide for a second

family. _,See Craib, 880 P.2d at 1385.

Mark argues that Tanya had the burden of proving that the

income from his second job was discretionary. He argues that the

presumption is not adequately rebutted because Tanya herself

presented no evidence tending to rebut it. However, more than

sufficient evidence was presented to indicate that the second job

is not necessary for the support of Mark and Roxanne. The fact

that this evidence came from them, instead of Tanya, does not

diminish its probative value.

13
However, Mark also testified that 50 to 70% of the gross

income from his second job as a musician goes to cover expenses

related to the pursuit of that job. This testimony was

uncontroverted. Therefore, the District Court erred in attributing

all of Mark's gross earnings to him as income without taking his

expenses into consideration.

Because the presumption regarding income from a second job was

adequately rebutted by the evidence presented, the District Court

did not err in considering the income Mark receives from his second

job when calculating his child support obligation. The District

Court erred, however, by not de'ducting Mark's expenses before

attributing to him the income from this second job.

C . Consideration of medical expenses.

Mark complains that the District Court "failed to draw any

conclusions" from the fact that Mark is responsible for the

children's medical expenses. He argues that the District Court

erred because it "did not give [him] credit for payment of those

costs in its calculations."

In general, a deduction is allowable for that portion of a

parent's insurance costs which benefits the children. Chiovaro v.

Tilton-Chiovaro (1991), 247 Mont. 185, 191, 805 P.2d 575, 578.

However, only the parent's net cost for the children's insurance

may be deducted, Chiovaro, 805 P.2d at 578. If the children's

insurance does not cost the parent,anything, then he or she is not

entitled to a deduction.

14
Mark assigns error to the District Court's failure to allow

him a deduction in consideration of "his" payment for health

insurance. In fact, however, he doesn't pay for the children's

health insurance; Roxanne does, through the policy she maintains

for her business. Mark explains that this arrangement is

economically advantageous because it would be very difficult for

him to obtain insurance for the children independently. We have no

quarrel with the arrangements made. Mark is free to fulfill his

responsibilities in any way he chooses, so long as he does in fact

fulfill them. It is indisputable, however, that Mark incurs no

out-of-pocket expense to obtain the children's insurance.

Accordingly, the District Court did not err in refusing to grant

him a deduction for such expenses.

Mark argues that the District Court erred in its treatment of

the parties' medical expenses as well. At the hearing, Tanya

testified that her worsening health results in between $2000 and

$2500 in medical expenses each year. Mark attempted to introduce

an exhibit showing that he expends approximately $900 each year for

his own medical expenses, but the District Court refused the

exhibit. On appeal, Mark asserts that the District Court erred in

considering Tanya's medical needs while refusing to consider his.

This argument is without merit. While the District Court

refused Mark's proposed exhibit, it nevertheless allowed a $900

deduction for his medical expenses. This deduction appears in the

Child Support Guidelines worksheet prepared and released by the

District Court and accompanying its order.

15
3. Did the District Court abuse its discretion by refusing to

admit one of Mark's proposed exhibits?

Mark asserts that the District Court erred in not allowing his

exhibit regarding his medical expenses. Regardless of whether or

not the exhibit was properly refused, the refusal did not prejudice

Mark. Apparently, the District Court considered the substance of

the exhibit despite having refused it at trial. The proposed

exhibit lists various checks written to cover medical expenses and

totalling $921. As noted above, the District Court gave Mark a

$900 deduction for his medical expenses.

Since Mark received the benefit of the District Court's

consideration of the information contained in the exhibit, its

formal refusal at the hearing did not substantially affect his

rights. Had the exhibit been allowed, it would not have changed

the financial allocation of support. Therefore, even if the

District Court erred in refusing the exhibit, the error was

harmless.

4 . Did the District Court abuse its discretion by limiting

the time allowed to the parties for the presentation of evidence?

At the beginning of the hearing, the District Court informed

the parties that each would be given 45 minutes to present

evidence. Mark now asserts that the time limit prejudiced his

ability to present all the evidence he desired.

It is well-settled that this Court will not consider an issue

raised for the first time on appeal. Erler v. Erler (1993), 261

Mont. 65, 73, 862 P.Zd 12, 18 (citing In re Marriage of Starks

(1993), 259 Mont. 138, 855 P.2d 527). Moreover, a party who fails

16
to object to an alleged error during a trial or hearing is

precluded from raising the issue on appeal. Hando v. PPG

Industries, Inc. (1995), 272 Mont. 146, 150, 900 P.2d 281, 284.

At the hearing, the District Court clearly notified the

parties that each would have 45 minutes in which to present

evidence and testimony. Mark's counsel indicated that "probably

that [was] fair." At the end of the hearing, the District Court

expressly asked Mark's attorney, "Do you desire to submit anything

further?" She replied, " I don't. I think I've submitted

everything." Mark's attorney did not object to the time limit

imposed at the hearing; on the contrary, she indicated such a limit

was fine. Because no objection was made, and because this issue

was raised for the first time on appeal, we will not consider it.

Finally, Tanya asks this Court to impose costs and sanctions

against Mark for bringing a frivolous appeal. We do not agree the

appeal was frivolous and decline to impose costs or sanctions.

Affirmed in part and reversed in p,art.

We Concur:

17
Justices

18
Justice W. William Leaphart; dissenting.

I dissent from the Court's holding in issue one that the

District Court correctly held a comprehensive evidentiary hearing

despite the inadequacy of Tanya's initial motion to modify child

support. As the Court points out, compliance with § 40-4-208, MCA,

is a mandated prerequisite for modification of child support. In

re Marriage of Conkey (1995), 270 Mont. 200, 203, 890 P.2d 1291,

1293; In re Marriage of Craib (1994), 266 Mont. 483, 491, 880 P.2d

1379, 1384. Despite this mandatory threshold, the Court relieves

Tanya of the requirements of § 40-4-208, MCA, by approving of the

District Court's sidestep around the deficiencies of Tanya's

initial pleadings.

Rule 8(a), M.R.Civ.P., states that a pleading which sets forth

a claim for relief shall contain a short and plain statement of the

claim showing that the pleader is entitled to relief. To modify a

child support obligation, § 40-4-208(2)(b) (i), MCA, requires that

the moving party establish changed circumstances so substantial and

continuing as to make the terms of the existing child support

agreement unconscionable. Marriaqe of Conkev, 890 P.2d at 1293;

Marriase of Craib, 880 P.2d at 1384.

Tanya's motion to modify child support, pursuant to 5 40-4-

208, MCA, did not establish changed circumstances and did not show

that she was entitled to relief. The motion's entire statement in

support of changed circumstances consisted of the following

remarks:

[Upon the undersigned's information and belief,

circumstances have changed in a substantial and

continuing manner, such that the terms of the original

Decree are now unconscionable. . . Petitioner

respectfully requests the Court entertain her Motion and

19
allow the parties to commence discovery on the issues of

unconscionablity [sic] and the prior and current

financial status of the parties.

The motion is signed by Tanya's attorney. Not only is the motion

based entirely on the attorney's, rather than Tanya's, information

and belief, it is nothing more than a conclusory statement devoid

of any factual allegations. The accompanying child support

determination worksheet itemizes Tanya and Mark's incomes, assets,

and expenses for 1994. The worksheet does not include any

information concerning incomes, assets, and expenses from previous

years, thus, it does not show any changed circumstances. The

motion was inadequate to initiate the proceedings that followed

irrespective of the fact that Mark did not respond to the motion.

Instead of proceeding with an evidentiary hearing, the court should

have summarily denied the motion without prejudice to amend or

refile in accordance with § 40-4-208, MCA. I agree with Mark that

his failure to respond to Tanya's motion did not relieve her of the

initial duty to file pleadings showing changed circumstances as the

statute requires. Since I believe that this matter should have

been terminated based upon the pleadings, I would not reach issues

two through five which arose as a result of the evidentiary

hearing. However, if I were to reach those issues, I would concur

with the Court's analysis.

Justice James C. Nelson and Justice Karla M. Gray join in the

dissent of Justice Leaphart. I

Istide!i I