Opinion ID: 2514245
Heading Depth: 3
Heading Rank: 2

Heading: Michael's Request for a Hearing on His Claim of Voluntary Underemployment Should Have Been Granted.

Text: Michael argues that the trial court erred by denying his request for an evidentiary hearing to establish whether Georgia was underemployed. Michael's right to a hearing is governed by well-settled precedent. Because conflicting affidavits and exhibits seldom provide a meaningful basis for resolving factual disputes, [8] we have recognized that evidentiary hearings on motions to modify child support will generally be needed when the pleadings raise genuine issues of material fact. [9] In the present case, then, the critical question is whether Michael raised genuine issues of material fact concerning his claim that Georgia was voluntarily underemployed. Michael's underemployment claim arose from the parties' 1997 agreement to modify their existing custody agreement; the new custody agreement, in turn, necessitated a reexamination of the parties' child support obligations. Under the prior arrangement, Georgia had primary physical custody of all three children. Upon implementing the new agreement, however, Michael assumed primary physical custody of Jason and shared custody of Joshua and Laura. The change left Georgia with half-time custody of two children instead of full-time custody of three children, thereby triggering Rule 90.3(b)'s provisions governing shared and divided custody situations and making it necessary to establish Georgia's child support obligation. At the time of the parties' agreement for modification of custody, the commentary to Rule 90.3 provided that annual income could be imputed to a parent for purposes of calculating child support in cases of voluntary underemployment: The court may calculate child support based on a determination of the potential income of a parent who voluntarily is unemployed or underemployed. A determination of potential income may not be made for a parent who is physically or mentally incapacitated, or who is caring for a child under two years of age to whom the parents owe a joint legal responsibility. Potential income will be based upon the parent's work history, qualifications and job opportunities. The court also may impute potential income for non-income or low income producing assets. [10] Relying on this provision, Michael argued that the court should impute income to Georgia because she was no longer a full-time custodian. Michael pointed out that she now owed the children a duty of support while they were in his custody. He contended that she therefore could not reasonably refuse to seek gainful employment. In support of this argument, Michael offered evidence indicating that Georgia had previously held a job, that she was capable of obtaining gainful employment, and that she was actually working without pay in Coyne's business. In response, Georgia minimized the amount of time she worked for Coyne's business and expressed doubts about her ability to find a job outside the home. But she acknowledged that she had not looked for another job and insisted that she had a right to continue living as if she still had full-time custody of the children: When the children were born, Michael and I jointly agreed that I should be a full-time mom. I intend to continue to make myself available for the children at all times. Considering Michael's proffered evidence of Georgia's ability to find gainful employment and Georgia's stated intent to continue being a full-time mom despite having only one-third of the total custody time, we find that Michael raised a material dispute on the issue of Georgia's voluntary underemployment. This showing would normally suffice to require an evidentiary hearing.
In denying a hearing on voluntary underemployment, however, the superior court found three reasons to reject Michael's claim as a matter of law: (1) Alaska case law disfavors finding voluntary underemployment absent a history of gainful employment; (2) Michael failed to establish any change in Georgia's circumstances to support a finding of voluntary underemployment; and (3) a finding of voluntary underemployment would have the damaging effect of reducing the amount of available child support. Our consideration of these reasons leads us to conclude that they do not support the court's decision to reject Michael's claim without a hearing.
The superior court identified three situations in which our case law has found voluntary underemployment. In Kowalski v. Kowalski , we reviewed a finding of voluntary underemployment on the part of a noncustodial father who had held various short-term construction jobs before marrying but had failed to maintain similar employment after marrying. [11] Noting that the father had failed to establish his current earning capacity or show that his unemployment was involuntary, we affirmed the superior court's finding. We emphasized that [w]e will not relieve a noncustodial parent from his child support obligations absent an affirmative showing that the obligor parent cannot meet this obligation. [12] In Pugil v. Cogar, after divorcing, a noncustodial father moved out of state where he planned to change to a lower-paying occupation. [13] We affirmed a decision to impute income based on his history of earnings as a fisherman during the marriage, finding that the trial court had correctly considered all relevant circumstances in resolving the tension between locking the father into an established career and burdening the mother and child with his choice of a new, lower-paying career. [14] Finally, in Nass v. Seaton , we upheld a decision imputing earnings to a noncustodial father who had a history of substantial earnings during the marriage but had not fully advertised his services after divorcing. [15] The superior court found a common thread uniting these cases: [P]rior to the litigation, the obligor had a clearly defined track record of employment and earnings, but his employment or wages changed in a manner that led the court to believe that the reduction was voluntary. Concluding that prior employment was a critical element of the court's ability to determine whether the obligor was voluntarily underemployed, the court declined to impute income to Georgia, who had no history of prior earnings. But this ruling effectively converted a repeating fact pattern into a critical element of voluntary underemployment. Although prior employment can be an important factor in measuring underemployment, [16] our cases do not suggest that it is an indispensable element. To the contrary, the relevant inquiry under Civil Rule 90.3 is simply whether a parent's current situation and earnings reflect a voluntary and unreasonable decision to earn less than the parent is capable of earning. [17] Civil Rule 90.3(a)(4) only bars a finding of voluntary underemployment in two situations: when the underemployed parent is physically or mentally incapacitated or is caring for a child under two years of age to whom the parents owe a joint legal responsibility. [18] In all other situations, the rule and our case law specifically require courts to consider the totality of the circumstances to decide whether income should be imputed. [19] In summary, then, neither Rule 90.3 nor our case law supports the superior court's threshold legal assumption that a track record of employment and earnings is a critical element in the absence of which there is no baseline from which to measure the extent to which [Georgia] [was] voluntarily underemployed. The superior court also distinguished Georgia's situation from that in Kowalski by pointing out that she was not a non-custodial parent because, although one child lived full-time with Michael, she shared equal custody of the parties' other two children. But in addressing the issue of voluntary underemployment, Civil Rule 90.3 does not distinguish between situations involving primary custody and those involving shared or divided custody. Subparagraph (a)(4) of Rule 90.3 expressly addresses voluntary underemployment in the context of primary custody situations. But this concept carries over to shared and divided custody situations, since Rule 90.3(b)'s provisions governing shared and divided custody require the court to begin its child support determination by calculating the individual support obligations of both parents under Rule 90.3(a). And while the bulk of our voluntary underemployment cases deals with primary custody situations, our discussion of the subject in those cases accords no special significance to that form of custody. [20]
Although it stopped short of holding that voluntary underemployment can never be found in the absence of a showing of prior gainful employment, the superior court declared that, without such a showing, Michael needed to prove some comparable change in Georgia's circumstances. Unless Michael showed that Georgia changed her employment or lifestyle, the court reasoned, the fact that [she] might be able to find a paying job in lieu of continuing to work in the family business and focusing on her children when they are staying with her does not mean that she thereby is voluntarily underemployed. To the contrary, the available facts indicate that she continues to do what she has always done: to make the raising of her children her primary focus.... There being no change, it is difficult to conclude that [she] is voluntarily underemployed. But the court's reasoning overlooks the crucial significance of the parties' agreement to modify their existing custody arrangement. By virtue of the 1997 custody agreement, Georgia changed her parental role from that of a full-time custodian of three children to that of a half-time custodian of Laura, age 10, and Joshua, age 15. For his part, Michael undertook to share equal custody of Laura and Joshua with Georgia and to assume sole physical custody of Jason, age 17. This arrangement necessarily lessened the demands on Georgia as a parent, because it essentially made Michael responsible for two-thirds of the children's total physical custody. Yet despite this change from sole physical custody to one-third custody, Georgia insisted on continuing to play her usual role as a full-time mom, denying any intention to shift her efforts toward supporting the children while they were in Michael's care. Given these circumstances, we believe that Michael's claim of voluntary and unreasonable underemployment was facially plausible and should not have been rejected as a matter of law for failure to establish a more direct change in Georgia's employment or lifestyle. Georgia's desire to continue in her accustomed role is certainly understandable. But standing alone, it is not a self-evidently reasonable basis for refusing to support her children during their substantial time in Michael's care. [21] Moreover, the need for an evidentiary hearing was particularly great because Michael offered substantial evidence indicating that Georgia would be capable of earning significant wages. Without further justification, then, Georgia's decision not to look for employment outside the home, even though she shared only one-third of the total responsibility for her children's physical custody raised genuine issues of material fact as to whether she was voluntarily and unreasonably underemployed. [22]
The superior court identified one additional final and absolutely key other consideration warranting summary rejection of Michael's voluntary underemployment claim: One might argueas [Michael] implicitly doesthat a parent with week-on, week-off custody still has an obligation to support her children and that she should not evade that obligation by being voluntarily under employed. But in this case, due to the manner in which child support is calculated, imputation of income will actually reduce the support available to the children.... Imputation of income is an appropriate course to take when a non-custodial parent, who bears the full expense of child support, chooses not to work; for it ensures that children will receive the financial support that that parent ordinarily should be able to provide. But under the facts of this case, imputation of income accomplishes the reverse result, for [Georgia] is assumed to make money she actually is not making and hence is not using to support the children. Rather, imputation of income here can only reduce [Michael's] obligation, thereby reducing the actual monetary support that the children will receive. This final reason for rejecting Michael's claim is problematic. It assumes that an order imputing income to Georgia would not encourage her to find a paying job. [23] Yet this is not a fair assumption. An important reasonif not the chief reasonfor imputing income to a voluntarily underemployed parent is to goad the parent into full employment by attaching an unpleasant consequence (a mounting child support debt or, in certain cases of shared custody, a reduced child support payment) to continued inaction. Indeed, in primary and shared custody situations alike, an order imputing income often yields no tangible benefits to the children unless and until it impels the underemployed parent to find a job. To this extent, then, our rule allowing courts to impute income in cases of voluntary underemployment depends on the very premise that the superior court rejected here-the likelihood that an order imputing income to Georgia would spur her to find a paying job.
Given our conclusion that Michael made a prima facie showing of voluntary underemployment and that his claim could not be rejected as a matter of law, we must vacate the superior court's 1998 child support order and remand this case for entry of a modified order after an evidentiary hearing on Michael's claim. In remanding for further proceedings, however, we emphasize the narrow basis of our decision. We have recognized that Michael is entitled to an evidentiary hearing because he has made out a prima facie showing of voluntary underemployment. But we express no opinion as to the ultimate validity of his claim. Nor do we attempt to define the boundaries of underemployment. We leave these issues to the superior court's sound discretion on remand. We do think it important, however, to observe that Rule 90.3(a)(4) does not rigorously command pursuit of maximum earnings. The rule's more modest objective is to give courts broad discretion to impute income based on realistic estimates of earning potential in cases of voluntary and unreasonable unemployment or underemployment. We note that courts in other jurisdictions have varied widely in interpreting and enforcing similar provisions. [24] In our view, the boundaries of Alaska's rule are best left to be defined through case-by-case consideration based on the totality of relevant circumstances. [25] We further note that our decision vacating the 1998 child support order makes it unnecessary to address the issues arising on appeal from the superior court's 1999 orders denying Michael's second generation of modification motions. Since the superior court will be able to base its reconsideration of the original child support order on the parties' current circumstances and their actual earnings since 1997, the intervening events of the second appeal will necessarily be subsumed in the court's ruling on its original order. [26]