No. 91-389 IN THE SUPREME COURT OF THE STATE OF MONTANA 1993

IN RE THE MARRIAGE OF GORDON R. SULLIVAN, Petitioner and Appellant, and ANNETTE M. SULLIVAN, Respondent and Respondent.

APPEAL FROM: District Court of the Eighth Judicial District, In and for the County of Cascade, TheHonorable ThomasM. McKittrick,Judgepresiding.

COUNSEL OF RECORD: For Appellant: Antonia P.Marra;Bell & Marra,Great Falls,Montana For Respondent: Robert F. Jamesand William 0. Bronson; James,Gray & McCafferty, Great Falls,Montana

Submitted on Briefs: December 22, 1992 Decided: June 10, 1993 Filed:Justice John Conway Harrison delivered the Opinion of the Court.

This is an appeal from the Eighth Judicial District, Cascade County, the Honorable Thomas M. McKittrick presiding. Appellant Gordon Sullivan (Gordon) appeals from an order holding him in contempt,determining child support, allocating tax exemptions and medical costs,and refusing tomodify child support retroactively. He also appeals from an order awarding attorney's fees to respondent Annette Sullivan (Annette). We affirm in part, reverse in part, and remand for further proceedings. Gordon raises the following issues on appeal: 1. Did the District Court err in determining the amount of child support? 2. Did the District Court err in allocating the tax exemptions and medical costs? 3. Did the District Court err in refusing to modify child support retroactive to the time Gordon filed his firstmotion for modification? 4. Did the District Court err in holding Gordon in contempt and awarding Annette her attorney's fees and costs? Gordon and Annette were married on July 18, 1970. They dissolved theirmarriage under the terms of a Decree of Dissolution entered by the District Court on September 19, 1985. Three children--Riley, Amanda, and Ryan, all minors at the time of the dissolution--were born of the marriage. The decree incorporated the provisions of a Property Settlement Agreement dated September 17, 1985 (the 1985 agreement)

# . The agreementprovided that: 1) the 2parties would have joint custody of the childrenwithAnnette given exclusive discretion to determine theprimary residence; 2) Gordon would pay Annette child supportof $150per child per month through the clerk of thedistrict court; 3) child support would increaseto $175 a month per child in one year,and $200 a month per child two years from the date of the agreement; 4) Gordon could claimAmanda and Ryan for income tax exemptions if his child support and maintenance obligations were current; 5) Gordon would provide medical and dental insuranceand be responsible for thedeductibles for the children during their minority, while bothparties would be responsible for expenses not covered by insurance; and 6) the successfulparty would be awarded reasonableattorney's fees inany action commenced to enforce,modify, or interpretany provision of the agreement. At the time of the dissolution Gordon worked as the Director of Marketing and Special Projects at Columbus Hospital, earning approximately $36,000 a year from all sources. Annette worked as

a secretary earning approximately $10,000ayear fromall sources. In 1985 or 1986, Gordon suffered a work-related back injury whichhe exacerbated a few years later. He received $568 bi-weekly workers' compensationbenefits throughDecember 1989, atwhich time he received a $14,900 lump sum impairment award. The hospital eliminated Gordon's position on April 4, 1988, before he could return to work. InAugust 1988, Annettemoved for an order requiringGordon to show causewhy he should notbe held in contempt for failing topayover $3,000 inpast due child supportpayments, letting the health insurance coverage lapse, failing to pay maintenance, and failing to pay necessary dental bills for his children. Gordon responded to thatmotion with a counter-motion,based onhis reduced income, asking the court to reduce the amount of child support and require Annette to obtain insurance. On December 19, 1989, the parties finally entered into a stipulation (the 1989 stipulation) regarding enforcement of the 1985 agreement. The District Court entered an order 1) requiring the parties to abide by the stipulation; 2) modifying the 1985 agreement where inconsistent with the stipulation; 3) entering judgment against Gordon pursuant to the stipulation; and 4) modifying child support to $200 a month for each of two children, eliminating child support for Riley who was living with Gordon at that time. In the 1989 stipulation, the parties agreed: 1. Gordon owedAnnette $3,600inpast due maintenancebut was to have a credit of $2,992.98 as an offset against that amount; 2. Gordon owed Annette $4,920 inpast due child support that

was to be offset by $1,500 for the amount Annette owed Gordon because Riley lived with Gordon for ten months in 1989; 3. GordonowedAnnette $1,300inattorney's feesshe incurred in bringing her motion to enforce the dissolution decree. Gordon further stipulated that any child support or maintenance arrearages, or any obligations agreed to under the stipulationwould become an attachment on any lump sum payment hereceived for his workers1 compensation claim. Gordon received a $50,000 lump sum settlement of his claim in November 1990. On November 13, 1990, Gordon renewed his original motion to modify child support,whichhe had made in 1988, and asked that the modification be retroactive to his first motion. He also asked that he be allowed to claim as tax exemptions the two children who were then living with him. Annette responded by asking the court to hold Gordon in contempt for failing to comply with the court order enforcing the 1989 stipulation. She also asked the court to determine the new amount of child support effective October 23, 1990--the date the parties entered into a stipulation modifying residential custody and allowing for re-examination and reduction of child support. After a hearing on the renewed motion tomodify child support, the court entered its findings of fact, conclusions of law and order on February 28, 1991: 1. Holding Gordon in contempt for failing to pay from his lump sum workers' compensation settlement, all sumsdue and owing; 2. Holding Gordon responsible for Annette's attorney's fees; 3. SettingGordon's child support obligationat $72per month for the one child still living with Annette; 4. Ordering Gordon to pay Annette $9,324.13 and to immediately release to Annette as partial payment the $6,520 held in escrow by the clerk of the district court; 5. Requiring Annette's attorney to submit an affidavit of attorney's fees;6. Allowing Annette tax exemptions for Amanda and Ryan and allowing Gordon an exemption for Riley for the year 1990. Gordon moved to alter or amend this judgment. The court denied this motion except for a correction to give Gordon credit for $1,000 Annette had previously received. The courtheld a hearing on attorney's fees onMarch 25, 1991, after which it ordered Gordon to pay Annette $3,357.25 as her reasonable attorney's fees. Gordon appeals from the order dated February 28, 1991, from the order awarding attorney's fees,and from an order denying his motion to alter or amend the judgment. I Did the District err in determining the amount of child support? At the hearing on Gordon's renewed motion, Annette presented testimony from John Koch, a staff attorney for the Montana Department of Social and Rehabilitation Services, Child Support Enforcement Division. Mr. Koch explained how he determined on Worksheet #2 that Gordon owed Annette $72 per month in child support. Hebased his calculationon a gross income of $32,450 for Gordon. This was a two-year average of the $14,900 Gordon received in 1989 and the $50,000 he received in 1990. Gordon assigns error to the court's use of these figures to determine gross income because they are, according to Gordon,a replacement of a streamof income. He argues the $50,000 is meant to be a replacement of income at a rate of $149.50 per week over nine and one-half yearsunder 

### 5 39-71-701,MCA. Workers' compensation benefits are one of the factors to be considered in determining child support under 5 40-4-204(2), MCA. See In re Marriage of Durbin (1991), 251 Mont. 51, 823 P.2d 243. They are also specifically included as an item of gross income under the regulations promulgated by the Department of Social and Rehabilitation Services. 46.30.1508(1)(a), ARM. Mr. Koch testified that there was no specific rule on how a lump sum award ofworkers' compensation benefits shouldbe treated. Mr. Koch agreed that itwould be reasonable to spread the benefits over the nine and one-halfyears theywere intended to replace, but said that "[wle essentially want to leave that up to a trier of fact to determine." In its findings of fact the District Court found that: 1) Gordonhad received $598 bi-weekly payments for most of 1989; 2) Gordon received a $14,900lump sum (impairment award) in 1989: 3) Gordon received a $50,000 lump sum settlement of his workers' compensation claim in 1990; 4) after receiving the settlement in 1990 he bought ski equipment for each of his children, himself, and his current wife, and he bought ski passes for each of these people except for Ryan, who was living with Annette; 5) Gordon purchased two vehicles in late 1990; 6) Gordon spent over $26,000 of his settlement between November 1990 and January 21, 1991; 7) Gordon presented no authority supporting his claim that the Child Support Guidelines provide for spreading the income over nine and one-half years. Based on the foregoing findings,the District Court concludedthat the worksheet prepared by Mr. Koch was a "reasonable method for determining the child support due and owing under this fact situati~n.~~ Specificallythe court relied on the fact that Gordon had not treated the lump sum as if itwould last for nine and onehalf years and that it would be spentby June 1991. A presumption exists in favor of the district court's determination of child support,and thatdetermination will onlybe overturned where the court abused its discretion. In re Marriage of Sacry (1992), 253 Mont. 378, 382, 833 P.2d 1035, 1038. Here, theDistrict Courtproperly found that Gordonwould have spentthe entire $50,000 lump settlementby June of 1991. However, it did not find,norwas there any evidence to suggest, thatGordon would receive furtherworkers' compensationbenefits. Therefore, there was no basis for presuming that Gordon's income would be $32,450after 1990. Althoughwe sympathize with theDistrict Court in its dilemma, we conclude that it abused its discretion in attributing that amount of income to Gordon after 1990. In the 1989 stipulation, the parties agreed on the amount of support Gordon owed as of December of that year. We will not disturb the amounts agreed to in that stipulation. (See our discussion of Issue 111.) For 1990, we believe that the child support in this case should be determined based on the income Gordon actually received that year. Therefore, the $50,000 lump sum settlement shouldbe used todeterminehis obligation for 1990. A second calculationwill thenbe necessary to determine the amount of child support due beginning in 1991.Under the unique facts of this case, we believe this method accurately reflects the manner in which Gordon treated his income and at the same time reflects the fact that Gordonwill apparently not receive future workers' compensation benefits. We therefore remand for a redetermination of child support. I1 Did the District Court err in determining the allocation of tax exemptions and medical costs? We will first address the allocation of tax exemptions. The dissolution decree and the 1985 agreement provided that Annette would be entitled to claim Riley for the taxable year 1985 and any other year thereafter and that Gordon would be entitled to claim Amanda and Ryan for 1985 and thereafter provided that he was current on his child support obligation. At that timeAnnette was the primary residential custodian of all three children. In December 1989, the parties agreed and the court entered an order recognizing Gordon as the primary residential custodian of Riley. On October 23, 1990, the parties stipulated that Gordon would be the residential custodian ofAmanda as shehad been living with him since August of that year. The order of February 28, 1991, allowed Annette to claim tax exemptions forRyan andAmanda for 1990and allowed Gordon to claim Riley as an exemption. Amanda had lived with Annette until August of 1990. This order does not comport with the tax exemption arrangement in the 1985 agreement, rather it comportswith the tax code. See I.R.C. §§ 151, 152. The court then ordered that futuretax exemptionswould be determined by the tax code

### and by the 1985 agreement. Gordon takes issue with this order because he claims the tax regulations and the 1985 agreement are in conflict with each other and with the current custody arrangement. It appears that the tax exemption provision of the agreementno longer applies as the parties have stipulated to a change in custody and they do not challenge the 1990 arrangement, which is in line with the tax code. This appears to leave the parties to follow only the tax regulations in the future, and does not warrant a remand on this issue. Gordon also claims error because the court awarded a combined principal and interest payment of $373.16 to Annette based on a principal of $336.47 which he claims he does not owe. Gordon's claim arises only because he has not looked closely at the pertinent exhibit. That exhibit clearly identifies thepayment as

one for "medical

## + premium." This combines two amounts stipulated in the 1989 stipulation. Gordon claims there is no figure of $336.47 contained in that agreement. True. But the amount is the sum of an $80 insurance premium and $256.47 in medical bills. We hold there was no error. I11 Did theDistrict Court err in failing tomake themodification of child support retroactive to the time Gordon filed his first motion for modification? Gordon claims the District Court should have made the modification retroactivetohis October 20, 1988,counter-motiontomodify child support. The 1989 stipulation governs here. In the stipulation,Gordon agreed to the amounthe owed in past due child support. He also agreed to the entry of an order based on that stipulation. Annette gave up any other claims which were past due and owing, other than those included in the stipulation. Gordon

now argues that the court should reopen that order and modify what the parties agreed. However, the District Court was bound by the terms of the stipulation as they were not contrary to law, court rule, or public policy. School Dist. No. 4v. Colburg (1976), 169 Mont. 368, 372, 547 P.2d 84, 86-87. See also Morris v. McCarthy

(1972), 159 Mont. 236, 497 P.2d 102 (district court properly dismissed complaint where plaintiff had stipulated in a prior action that he would be bound in a later action by the property damage award in the first action). The District Court did not err in refusing to make the modification retroactive, especially where Annette gave up some claims in order to reach the stipulation. IV Did the District Court err in holding Gordon in contempt and awarding attorney's fees and costs? Inthe 1989 stipulation,Gordon agreed that the arrearagesand other obligations would become an attachment on any lump sum payment he received from his workers' compensation claim. When Gordon received that settlement in November 1990, rather than directly giving Annette themoney he agreed he owed her,he placed $7,520--the amount of principal he determined he owed Annette--inescrowwith the clerk of the district courtpending the outcome of the hearing on his renewed motion. He dissipated most of the remaining money. The District Court held Gordon in contempt for failing to pay Annette the agreed sum in a timely fashion. Generally, contempt orders are final, conclusive, and not appealable except by writ of certiorari. Section 3-1-523, MCA. However, an exception ismade for dissolution proceedings, although we must limit our standard of review towhether the district court actedwithin its jurisdictionandwhether theevidence supports the findings. In re Marriage of Sessions (1988), 231 Mont. 437, 441, 753 P.2d 1306, 1308. Here, the stipulationprovided that Annette was to have an attachment against Gordon's workers' compensation settlement in an agreed amount. When Gordon received that settlement, he failed to release the money he agreed he owed to Annette in a timely fashion. Therefore, the evidence supportsthe court's finding. Lastly, Gordon argues that the District Court erred by awarding Annetteher attorney'sfeesand costs. In its findings in its Order AwardingAttorney's Fees, the District Court found that: 1)Annettewas seeking attorney's feestopay forexpenses incurred to enforce a previous court order for child support; 2) she had negotiated a lienonGordon'sworkers' compensation settlementthat was not honored by Gordon's attorneys; 3) she had to take extraordinarymeasures to discoverhis income; 4)he did not timely release funds that he knew were owing for past due child support; 5) Gordon had over $80,000 income for a two-year period that wasnot subject to state or federal deductions; 6) Gordon's actions unreasonably increasedAnnette's attorney's fees;and 7) theamount submitted by Annette was a reasonable amount for attorney's fees. The property settlement agreement provided for an award of attorney's fees to the prevailing party. Section 40-4-110, MCA, also provides authority for awarding attorney's fees. Under the statute,an award of attorney's fees is discretionary and will not be disturbed absentan abuse of that discretion. 

### In reMarriage of Swanson (1986), 220Mont. 490, 496, 716 P.2d 219, 223. We look to whether substantial credible evidence supportsthe findings. 

### In re Marriage of Hall (1990), 244 Mont. 428, 436, 798 p.2d 117, 122. Substantial evidence supports the District Court's findings. It did not abuse its discretion by awarding Annette her reasonable attorney's fees. Affirmed in part, reversed in part, and remanded for further proceedings in conformity with our holding.

We 'concur: AJune 

### 10, 1993 CERTIFICATEOFSERVICE Ihereby certify that thefollowingorderwas sentbyUnitedStates mail,prepaid,tothe following named:

AntoniaP.Marra BELL&MARRA 9Third St.N., Suite201 GreatFalls,MT 59401 RobertF.James&William0.Bronson James,Gray&McCafferiy P.O. Box2885 GreatFalls,MT59403

ED SMITH CLERKOFTHE SUPREMECOURT STATEOFMONTANA BE Depu