NO. 94-429

IN THE SUPREME COURT OF THE

1995

STATE OF MONTANA

Respondent and Appellant.

APPEAL FROM: District Court of the Eighteenth Judicial District,

In and for the County of Gallatin,

The Honorable Larry W. Moran, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Todd R. Hillier, Schraudner & Hillier,

Bozeman, Montana

For Respondent:

Lynda S. Weaver, Morrow, Sedivy & Bennett,

Bozeman, Montana

Filed:

Submitted on Briefs: December 22, 1994

Decided: March 7, 1995
Justice William E. Hunt, Sr., delivered the opinion of the Court.

Raymond Paunovich moved the Eighteenth Judicial District

court, Gallatin County, to modify his child support obligation.

The District Court denied his motion and awarded Melody Conkey,

formerly known as Melody Paunovich, attorney fees and costs.

Raymond appeals. We affirm and remand for determination of

attorney fees and costs.

We frame the issues on appeal as follows:

1 . Did the District Court abuse its discretion by not

modifying Raymond's child support obligation?

2 . Was the District Court's award of attorney fees and costs

to Melody supported by substantial evidence?

Melody and Raymond were married on October 4, 1976. Two

children were born of the marriage. Melody petitioned for

dissolution of the marriage on April 8, 1991. Following trial, the

District Court issued findings of fact and conclusions of law on

January 17, 1992, which Melody moved to amend. Melody asserted,

along with other issues that are not before this Court, that the

January 17 findings and conclusions did not provide for child

support. The District Court conducted a hearing on the motion on

January 29, and on February 5, the District Court entered an order

voiding its January 17 findings and conclusions. The court issued

revised findings and conclusions on February 20, and its final

decree on February 24.

The February 20 findings and conclusions required the parties

to file child support determination worksheets by April 1, 1992.

2
On November 4, 1992, the District Court ordered Raymond to pay

Melody child support in the amount of $276.62 per month,

retroactive to April 1, 1992.

Raymond made child support payments until April 1993. On

June 30, 1993, he filed combined motions to modify child support,

clarify the final decree, and allow the transfer of property to

satisfy the judgment pertaining to the division of the marital

estate. In his supporting affidavit, Raymond stated

[t]hat substantial and continuing changes have occurred

in [his] financial and employment status since the court

order determining child support was issued . . . which

directly affect [his] ability to pay the amount of

support so ordered and/or to make any more payments on

the property distribution amount decreed by the court

back in February of 1992.

Melody filed a motion for contempt against Raymond on

September 2, 1993, on the grounds that he had failed to pay child

support and court-ordered monthly property distribution payments

since April 1993. The District Court issued an order to Raymond to

appear and show cause why he should not be held in contempt. On

October 21, 1993, the show cause hearing took place. Raymond's

attorney stated that Raymond had filed for bankruptcy, and the

court stated that it would reset the hearing at a later date.

The parties conducted extensive discovery, and the hearing on

Raymond's motion to modify child support was held on January 5,

1994. Following the hearing, both parties submitted proposed

findings and conclusions. On May 26, 1994, the District Court

issued findings and conclusions denying Raymond's motion to modify

child support and ordering him to pay all arrearages. The court

3
further determined that Raymond should pay Melody's attorney fees

and costs, and stated that a hearing on the matter would be held at

a later date.

A hearing to determine attorney fees and costs was held on

June 20, 1994. The District Court received testimony concerning

Melody's attorney fees and costs. The court entered judgment on

June 20, 1994, awarding Melody $3805.66 for past-due child support

and interest, $229.90 for costs, and $2882.50 for attorney fees.

Notice of entry of judgment was filed on June 27. Raymond filed

notice of appeal on July 22.

Raymond and Melody each filed briefs in this Court. On

November 22, 1994, Raymond moved this Court to strike "any and all

references contained in Respondent's Answer Brief . . pertaining

to matters outside the record and which occurred subsequent to the

date of the trial (January 5, 1994) from which this appeal is

taken." Raymond specifically complains that Appendix G of Melody's

brief on appeal and references to the bankruptcy court proceedings

should be stricken. An examination of the record shows that the

documents and references which Raymond objects to are part of the

record on appeal. Therefore, his motion to strike is denied.

ISSUE 1

Did the District Court abuse its discretion by not modifying

Raymond's child support obligation?

Raymond argues that, because he filed bankruptcy, allegedly

has no assets, and allegedly is unemployed, the District Court

should have modified his child support obligation. Before a child

4
support obligation can be modified, 5 40-4-208(2) (b), MCA, requires

the moving party to establish that there are changed circumstances

so substantial and continuing as to make the terms of the existing

child support agreement unconscionable. In re Marriage of Clyatt

(Mont. 1994), 882 P.2d 503, 505, 51 St. Rep. 997, 998; In re

Marriage of Craib & Rhodes (Mont. 19941, 880 P.2d 1379, 1384, 51

St. Rep. 937, 940.

In reviewing the district court's findings in child support

modification cases, a presumption exists in favor of the district

court's decision, and we will overturn the decision only if the

district court abused its discretion. Craib & Rhodes, 880 P.Zd at

1384; In re Marriage of Platt (Mont. 1994), 881 P.2d 634, 635, 51

St. Rep. 926, 927; Clyatt, 882 P.2d at 505; In re Marriage of Long

(Mont. 1994), 885 P.2d 533, 534, 51 St. Rep. 1252, 1253.

In this case, the District Court found that:

The evidence is insufficient to establish changed

circumstances warranting modification of child support as

[Raymond] has requested. [Raymond] testified that his

circumstances are essentially the same as at the time of

dissolution, i.e., his work situation varies in that

there are times when he is under contract earning a

substantial income, and there are times when he is not

earning income because he is soliciting new proposals for

production. This Court determined in the dissolution

action that Mr. Paunovich is capable of earning

substantial income and he remains capable of earn,ing

substantial income at the present time.

During the January 5, 1994, hearing, Raymond testified that he

stopped making child support payments after April 1993 because he

had sold the parties' house, was unemployed, and had "a lot of

debts" to pay. After selling the house, he paid off a $24,000 note

5
held by the Stock Grower's State Bank and over $21,000 in credit

card bills. He testified that he chose to pay off these debts and

not his debts to Melody, and that after doing so, he "didn't have

any future work available or lined up" from which to make child

support payments. Additionally, he stated that he incurred monthly

expenses of about $6768.46

Raymond testified that he was unemployed from October 1991

until February 1992. In February 1992, he entered into a contract

with Busch Productions to make a film about bears. The contract

provided that "Ray Paunovich, d/b/a The Natural Image Films" would

receive $6500 per month. Raymond stated that Busch Productions did

in fact pay him and his film company $6500 a month.

Raymond testified on cross-examination that he never contacted

the court to amend his child support guideline worksheets, which

were submitted in 1991 when he was unemployed, to reflect his

employment with Busch Productions in 1992. The following exchange

took place during the hearing:

[BY MELODY'S ATTORNEY]

Q. And at no time after [February 19921 until today have

YOU informed the Court that you had obtained that

contract; isn't that correct?

A. That's correct.

Q. And in fact, you filed several affidavits with this

Court, the first of which was filed on behalf of yourself

on November 2, 1992 . . . do you recall that?

A. Correct.

Q . And in your affidavit, you stated that "The evidence

does not indicate that I earn $54,000 per year; rather

the evidence indicates that I earn $18,000 per year." Do

you recallstatingthat andsigningthat in your affidavit?

6
A. Correct.

. . . .

Q. And you did not at that time disclose to the Court

you had current income at a much higher level, did you?

A. Was I supposed to?

Q. I'm asking the question. Did you disclose it?

A. I did not.

Raymond testified that his actual income during 1992 was about

$31,000, consisting of $18,150 in wages and an additional amount of

$13,000. He claimed that his contract with Busch Productions ended

in late fall 1992 and that in January 1993 he sold his equipment to

Busch Productions for $28,000. Melody disputed both of these

claims.

Both attorneys questioned Raymond regarding his contract with

Busch Productions. In response to his attorney's question whether

he was earning any money in 1993, Raymond stated, "I have been

unemployed all year." On cross-examination, however, he testified

that, in conjunction with Busch Productions, he continued to work

on the project and attempted to develop alternative sources of

financing for the film. Melody's attorney introduced evidence

which showed that from May to August 1993, Raymond processed and/or

workprinted approximately 7600 feet of film on behalf of Busch

Productions. Raymond testified that he obtained the film from

Busch Productions and that he used the camera equipment and editing

table which he allegedly sold to Busch Productions. According to

Raymond, Busch Productions did not "want to spend any more money or

7
put up any more of the budget to finish the project," however, "if

there were certain expenses that were attributable to this, [Busch

Productions] would reimburse me for those costs and we would work

together on trying to get the financing."

Melody's attorney also introduced into evidence Raymond's bank

account statements from 1993 which showed deposits as follows:

Month

January

February

March

April

May

June

July

August

TOTAL

First

Citizens

$5094

6231

6000

7050

2000

3500

0

827

$30,702

Western Federal

Acct. l/Acct. 2

$ 3700 $ 0

2720 85

6940 85

62,456 170

7834 10,000

3744 85

2769 85

3900

$94,063

Total

Deposits

$ 8794

9036

13,025

69,676

19,834

7329

2854

4727

$135;275

Only $62,000 of Raymond's total deposits was attributable to the

sale of the parties' house.

Melody's attorney also questioned Raymond regarding the

alleged sale of his equipment to Busch Productions. According to

Raymond, Busch Productions "took possession of [the equipment] when

they bought it.~' However, when Melody's attorney asked during the

hearing whether Busch Productions currently had physical possession

of the equipment, Raymond stated that he still had physical

possession of some it. Raymond also testified that during 1993, he

used the equipment for filming and editing. When asked whether he

got a release of his financing statement from the Stock Grower's

State Bank, to whom the equipment had been pledged as collateral on

a note, Raymond stated that he could not recall, and then he stated

8
that he did not communicate with Stock Grower's at all regarding

the sale of the equipment. Melody's attorney asked Raymond whether

a bill of sale or acknowledgment of receipt was ever executed by a

representative of Busch Productions. Raymond stated that he could

not recall.

Melody's attorney asked Raymond if he anticipated eventually

getting his money back and making a profit on the bear film

project. Raymond answered:

A. I will not get my money back, but I hope that we

will get the financing so I can at least get employed

again. That's part of being an independent producer, is

you have to risk a lot of capital to get income.

Q. You anticipate getting that back?

A. I always anticipate that. MY whole life is

anticipation. Nothing that is being an independent

producer is guaranteed. Everything that you do is done

on anticipation. You hope somebody likes your concept

and idea and will finance it.

Q. That was true in 1992; isn't that true?

A. This has been true ever since I have been working.

Q. It hasn't changed a bit since you testified in trial

in 1992?

A. What hasn't changed?

Q. The fact that there are highs and lows in your

industry and sometimes you have highs and sometimes you

have zero.

A. That's correct.

Based on the foregoing testimony and evidence, it is clear

that Raymond failed to demonstrate a change in circumstances so

substantial and continuing to make the terms of the existing child

support agreement unconscionable. We determine that the District

9
Court did not abuse its discretion by refusing to modify Raymond's

child support obligation.

ISSUE 2

Was the District Court's award of attorney fees and costs to

Melody supported by substantial evidence?

Section 40-4-110, MCA, provides district courts with the

discretion to award attorney fees and costs in certain domestic

relation matters. In re Marriage of Malquist (Mont. 1994), 880

P.2d 1357, 1361, 51 St. Rep. 914, 917. That statute provides:

The court from time to time, after considering the

financial resources of both parties, may order a party to

pay a reasonable amount for the cost to the other party

of maintaining or defending any proceeding under chapters

1 and 4 of this title and for attorney's fees, including

sums for legal services rendered and costs incurred prior

to the commencement of the proceeding or after entry of

judgment. The court may order that the amount be paid

directly to the attorney, who may enforce the order in

his name.

Section 40-4-110, MCA.

In Maluuist, we held that

before a court awards attorney fees under the statute,

the petitioning party must make a showing of necessity.

In addition, the award must be reasonable and must be

based on competent evidence. To make a showing of

reasonableness a hearing must be held allowing for oral

testimony, the introduction of exhibits, and the

opportunity to cross-examine. If the award of attorney

fees is supported by substantial evidence, we will not

reverse the award upon appeal.

Malauist, 880 P.2d at 1362 (citations omitted).

In the instant case, Melody's attorney filed affidavits of

attorney fees on June 2, 1994, and June 15, 1994, and a hearing was

held on June 20, 1994. Counsel for both parties were present at

10
the hearing. Melody's attorney moved for entry of judgment for

back child support and attorney fees. The record shows that

Raymond's attorney stated that he had no objection to the motion.

The District Court, therefore, entered judgment.

The requirements set forth in Malouist clearly were met in

this case. The record contains substantial evidence supporting the

District Court's award of attorney fees to Melody.

Melody further requests that this Court award her attorney

fees and costs for defending this appeal. Section 40-4-110, MCA,

allows the recovery of attorney fees incurred after entry of

judgment by the district court, including attorney fees incurred in

defending an appeal. We, therefore, award the respondent her

attorney fees and costs on appeal and remand to the District Court

for determination of the amount to be awarded.

Affirmed and remanded.

We concur: