Opinion ID: 2524442
Heading Depth: 3
Heading Rank: 2

Heading: It Was Error to Impute Officer Compensation to Ron Without Holding a Hearing.

Text: The information Ron provided concerning his income as a self-employed business owner is ambiguous. He first affied that Line 7 of the corporate tax return reflected his 1998 earnings from National Auto. Line 7 reports $32,732 in officer compensation for 1998. Ron later affied that [t]he only income which I personally received from National Auto ... was evidenced by the Form W-2 Wage and Tax Statement ... disclos[ing] the total $6,100 in wages which I received from the business in 1998. Read together, these statements potentially conflict and are ambiguousdid Ron receive $6,100 or $32,732 from National Auto? Did Ron receive compensation in forms other than income? Was any income that Ron actually earned in the business paid to Ron's new wife and co-owner of National Auto? The ambiguity inherent in the affidavits would permit a fact finder, in resolving these fact disputes after hearing evidence on the issue, to infer that Ron's income from National Auto was higher than the $6,100 he reported. But Ron's most recent affidavit also reasonably permits the contrary inference, that his income was what his 1998 tax returns reported it to be. The superior court, in calculating income for child support purposes, should arrive at an income figure reflective of economic reality. [4] The question whether National Auto provided additional compensation to Ron cannot be answered without more evidence. [T]rial courts must take all evidence necessary to accurately reflect the parties' economic reality [5] Alaska Civil Rule 53(b) gives the standing master the ability to require the production of evidence upon all matters embraced in the reference, an ability not invoked here. A hearing is not required if there is no genuine issue of material fact before the court. [6] But here the limited evidence available creates a genuine issue of material facthow much did National Auto add to Ron's available income? In Adrian, we held that a similar contest over income statements warranted an evidentiary hearing. [7] The standing master recommended that the full amount of the Line 7 figure be imputed to Ron as income because Ron had a second opportunity to provide evidence of the validity of this deduction and did not. The standing master may resolve a finding of fact against a party whose vexatious, contemptuous, or obstructive behavior causes the [standing master] to have insufficient evidence. [8] The master must, however, explicitly state the facts which support its decision to rely on a party's obstructive or vexatious conduct in resolving the factual dispute. [9] Although the standing master observed that Ron had two opportunities to supplement the fact record, she did not find that he was uncooperative, vexatious, or obstructive. In adopting the recommendations of the standing master, the superior court did not list any facts that would have supported a finding by the master of uncooperative, vexatious, or obstructive behavior by Ron. And we will not infer such conduct from the record or create a rationale to support the trial court's action based on the suggestion of uncooperativeness in the record. [10] Although we have acknowledged the validity of a concern that income tax returns may not reflect true income, [11] a court cannot presume that a party is obstructive per se when the party provides a substantial response to requests for evidence of income received from a business by producing personal tax returns, business tax returns, and an affidavit swearing as to the amount of income received from the business. The burden of proof on the issue of Ron's change in income rested with Kathi, the movant on the motion to increase his child support obligation. [12] Kathi had to show by a preponderance of the evidence that there had been a material and substantial change in circumstances. [13] We hold that it was error to resolve this factual question against Ron without a hearing, absent specific findings of obstructive, vexatious, or contemptuous behavior that prevented Kathi from offering evidence concerning his income.