Opinion ID: 1651797
Heading Depth: 1
Heading Rank: 4

Heading: whether the chancellor erred in finding the first mortgage assumed by james had a balance of $116,658 and in ordering judy to be responsible for the second-mortgage/credit-line liability of $40,816 on the marital home.

Text: ¶ 28. Judy argues that the chancellor erroneously found the first mortgage to be in the amount of $116,658. She asserts that the first mortgage is actually in the amount of $75,872, a difference of $40,786 in James's favor. Given that the chancellor assigned Judy the $40,816 liability from the second mortgage, Judy argues that the miscalculation of the first mortgage resulted in an inequitable distribution of the marital debt. ¶ 29. James counters that a chancellor's discretion is exceedingly broad in matters of equitable distribution. See Chamblee v. Chamblee, 637 So.2d 850, 864 (Miss.1994). As such, in the absence of any manifest error, the marital debts were aptly classified and assigned by the chancellor. ¶ 30. Ample evidence supports Judy's claim that the first mortgage is $75,872. James's financial declaration lists the mortgage balance as $116,658; however, in his own testimony, James established that this was a combined total of the first and second mortgages. He further testified that the first mortgage was $75,872. ¶ 31. Judy contends in her reply brief, One dollar of debt would decrease the party's value of assets being awarded by one dollar. However, as this Court has often stated: One must bear in mind ... that an equitable division of property does not necessarily mean an equal division of property. Mississippi is not a community property state. Chamblee v. Chamblee, 637 So.2d 850, 863-64 (Miss.1994) (citing Dillon v. Dillon, 498 So.2d 328, 330 (Miss. 1986); Rives v. Rives, 416 So.2d 653, 657 (Miss.1982)). ¶ 32. The record shows that, with all marital and separate property, James received $435,761 in total assets. Judy received $481,603 in total assets, after all marital and separate property had been classified and assigned to her by the chancellor. However, in the end, because we are reversing and remanding this case to the chancery court with instructions, based on our discussion and disposition of Issue VI, infra, we choose not to finally dispose of this issue; instead, we direct the chancellor to revisit this issue on remand, since the record before us reveals that the testimony of Judy and James was that the outstanding amount of the first mortgage was $75,872. Once the chancellor reconsiders this issue on remand, she may likewise consider adjustments, if any, that should be made in the total distribution of marital and nonmarital assets to each party.
¶ 33. Judy contends that the chancellor erred in awarding James, the custodial parent, $750 per month in child support, because this amount is in excess of the statutory child-support guidelines. See Miss.Code Ann. 43-19-101(1) (Rev. 2009). According to Judy, the trial court erred in finding her current adjusted gross income to be in excess of $50,000 per year. She argues that the income reported on her financial declaration was not income, but rather the proceeds from the Northrop Grumman temporary-severance agreement that was scheduled to be exhausted in May 2007. According to Judy, the child-support award exceeds the statutory guidelines found in Section 43-19-101, especially when considered with the fact that she was ordered to pay one-half of the child's automobile insurance, one-half of the child's health-insurance premium and noncovered medical expenses, and one half of the child's college expenses. ¶ 34. James counters that this severance pay had been described by Judy as compensation for the pay she would have received had she elected to remain employed for two more years, and then taken early retirement, and as such it is, in fact, income. Moreover, James references his financial disclosure, which shows Jamie's expenses to be $1,500 per month, or at least $750 per month for both parents. James avers that Judy's payment of monthly child support in an amount equal to one-half of Jamie's monthly expenses is a reasonable amount for Judy, given that she was making significantly more than James at the time she resigned, and given her earning potential. ¶ 35. Section 43-19-101(1) establishes a rebuttable presumption that one child should receive support in an amount equal to fourteen percent of the adjusted gross income of the noncustodial parent. Miss. Code Ann. § 43-19-101(1) (Rev.2009). This presumption exists unless the chancellor makes a written, specific finding that the application of the guidelines would be unjust or inappropriate pursuant to Section 43-19-103, which addresses extraordinary needs or expenses of the minor child. Miss.Code Ann. § 43-19-101(2) (Rev.2009). Furthermore, in cases where the annual adjusted gross income is more than $50,000 or less than $5,000, the chancellor shall make a written finding as to whether the application of the guidelines is reasonable. Miss.Code Ann. § 43-19-101(4) (Rev.2009). ¶ 36. As to the issue of child support, the chancellor made the following findings: ... The evidence in this case shows that Judy's current annual adjusted income is in excess of $50,000. However, Judy testified that her income would decrease after May of 2007 pursuant to the terms of her severance package with Northrop Grumman. After May of 2007 Judy's income will consist of her monthly retirement benefit which at the time of trial was unknown. There was nothing at trial to show that Jamie had any extraordinary needs or expenses other than automobile insurance. Therefore, the Court finds a reasonable amount of child support from Judy would be $750.00 per month. Judy should also pay ½ of Jamie's automobile insurance premium.... Judy also was ordered to reimburse James for the cost of the insurance premium on the policy James was maintaining for Jamie through James's employer, one-half of any uncovered medical expenses, and one-half of college expenses. ¶ 37. As of 2006, Judy's net monthly pay on the financial disclosure submitted to the trial court was shown to be $6,549. However, her financial declaration reflects that this was her adjusted monthly income only through May 2007. Her testimony was that her earnings after May 2007 were unknown, as Updates LLC had produced no income for her. Judy's primary source of monthly revenue would be her retirement accounts, two accounts valued at $64,904. As the chancellor noted, it was unknown what the monthly payments from these accounts would be, nor were there any findings as to what, if any, dividends or interest Judy's other investments would produce on a monthly basis. Judy's reported investments, including the two retirement accounts, at the time of trial were valued at $354,807.55. She was ordered to pay James $91,458 of this amount. ¶ 38. Mississippi Code Section 43-19-101(3)(a) gives numerous examples of what may be considered by the trial court as income: Determine gross income from all potential sources that may reasonably be expected to be available to the absent parent including, but not limited to, the following: wages and salary income; income from self employment; income from commissions; income from investments, including dividends, interest income and income on any trust account or property; absent parent's portion of any joint income of both parents; workers' compensation, disability, unemployment, annuity and retirement benefits, including an individual retirement account (IRA); any other payments made by any person, private entity, federal or state government or any unit of local government; alimony; any income earned from an interest in or from inherited property; any other form of earned income; and gross income shall exclude any monetary benefits derived from a second household, such as income of the absent parent's current spouse.... Miss.Code Ann. § 43-19-101(3)(a) (Rev. 2009). ¶ 39. While $750 conceivably could be seen as a reasonable amount of monthly child support in light of Judy's significant assets, the statute plainly states gross income is determined from all expected and available sources of income. The Northrop Grumman severance package was no longer an available source of income after May 2007. The monthly income from Judy's retirement accounts, her expected income, was unknown at the date of divorce, as noted by the chancellor. The chancellor does not appear to have based the award of child support solely on the fact that Judy's previous income was more than $50,000, as Judy suggests. This is evident in that, even when strictly applying the statutory guidelines of Section 43-19-101(1), fourteen percent of Judy's $6,549 monthly severance would be $916.86; therefore, $750 would be a downward departure from the guidelines. Thus, it is unclear what source of revenue serves as the basis of the trial court's award of child support. ¶ 40. James argues that, even if the chancellor's award was not based on actual income, this Court should affirm it, because earning capacity, rather than actual income, has been considered by courts when awarding child support. A chancellor can base child support on the parent's potential earning capacity. Suber v. Suber, 936 So.2d 945, 949 (Miss.Ct.App.2006) (citing White v. White, 722 So.2d 731, 734 (Miss.Ct.App.1998)). In White, 722 So.2d at 734 (Miss.Ct.App.1998), the Court of Appeals held where temporary financial reverses create an unreliable measure for an award of child support, the chancellor may in his discretion predicate an award on reasonable earning capacity. White addressed whether an unemployed father's child support must be based on his unemployment benefits or his earning capacity. Id. at 733. The Court of Appeals rejected Mr. White's argument, and held that an award of child support based on earning capacity was not manifest error. Id. at 734. ¶ 41. The current case is distinguishable from White in that the chancellor in White made on-the-record findings that an upward departure from the guidelines was warranted based on the fact that Mr. White's earning capacity was higher than his actual monthly income, i.e., unemployment benefits. See id. at 733. The Court of Appeals agreed, based on these on-the-record findings. Id. at 734. The guidelines must apply unless the judicial or administrative body awarding or modifying the child support award makes a written finding or specific finding on the record that the application of the guidelines would be unjust or inappropriate.... Miss.Code Ann. § 43-19-101(2) (Rev.2009). Moreover, while the chancellor could have based the child support on Judy's earning capacity rather than her actual earnings, no on-the-record findings were made that Judy's earning capacity was the basis for the $750 award of monthly child support. ¶ 42. As a result, we find this issue must be reversed and remanded for further proceedings consistent with this opinion. Upon remand, a determination of child support must be made based on Judy's circumstances from the time of divorce until remand. Moreover, given that much time has passed since the divorce on October 10, 2007, a determination should be made as to the amount of child support that is appropriate based on Judy's current circumstances.