Opinion ID: 1876184
Heading Depth: 1
Heading Rank: 5

Heading: Cross-Appeal: Effective Date of Modification

Text: On cross-appeal, OCSE argues that the circuit court erred in making the modification effective January 19, 2005, instead of October 3, 2003, the date of the filing of the motion to modify. [1] Pursuant to Ark.Code Ann. § 9-14-107(d) (Supp. 2005), [a]ny modification of a child support order that is based on a change in gross income of the noncustodial parent shall be effective as of the date of filing a motion for increase or decrease in child support unless otherwise ordered by the court. The circuit court's decision regarding the effective date of modified child support is reviewed for abuse of discretion. See, e.g., McWhorter v. McWhorter, 346 Ark. 475, 58 S.W.3d 840 (2001). In its letter opinion, the circuit court stated: As set out above, in applying the net worth approach to determine the increase in Defendant's child support obligation, this Court utilized financial statements for a period from August 1, 2003, to January 19, 2005. The net worth approach in this case, and by the very nature of the calculation, looks to an incremental increase in the Defendant's net worth in this case concluding with the January 15, 2005, financial statement. To accept [OCSE's] position would result in a child support obligation on October 3, 2003, which would be based on a net worth that did not exist in its entirety until some sixteen months later. It is apparent from the documents presented and relied upon by this Court that an increase in net worth occurred. It is clear that the total amount of increase relied upon by this Court for setting the increase in support was not in existence on October 3, 2003. It is certain that the net worth relied upon by this Court was in place on January 19, 2005. Because [OCSE] provided no information which would support an analysis of increase in net worth for a two-year period prior to the filing of the Petition for Modification any retroactive application prior to the 19th day of January, 2005, would be done so without any reasonable degree of certainty, and therefore, is denied. The increase in support awarded hereon shall be retroactive to the date of January 19, 2005. OCSE argues that the circuit court clearly erred in finding that there was no evidence that enabled it to calculate Randy's income for the two-year period prior to the filing of the petition for modification. We agree. The record reveals that there was evidence of the change in Randy's income that predated the filing of the petition in the form of financial statements from January 2003, August 2002, March 2002, and August 2000; however, that evidence was not necessary to perform a net-worth analysis. We agree with the following analysis by the court of appeals: [T]he trial court's reasoning that the net worth was not established until January 19, 2005, is inconsistent with using each month within the relevant period to determine the average increase in net worth. It is true that [Randy's] full increase in net worth was not realized on his financial records until January 19, 2005, but he presumably enjoyed the benefits of the incremental increases in his income during the months in which they arose. Thus, logic dictates that the averaging of the increased net worth over the entire calculation period must mean that the average increase applied to each month within the calculation period. To hold otherwise would penalize the child by denying increased support for a period of time in which [Randy] actually enjoyed the benefits of his increased net worth, even if that increase did not materialize on the books until a later date. Tucker, 96 Ark.App. at 199-200, 239 S.W.3d at 536-537. We hold that the circuit court abused its discretion in making the child support increase retroactive to January 19, 2005. Therefore, we reverse the circuit court's decision concerning the effective date of the modification and remand the case to the circuit court with instructions to the circuit court to enter an order making the modification retroactive to October 3, 2003. Affirmed on direct appeal; reversed and remanded on cross-appeal.