Court Opinion

ID: 2728079
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:28:51.087147+00
Date Added: 2024-06-11T10:03:15.974558
License: Public Domain

NO. COA13-1184

                      NORTH CAROLINA COURT OF APPEALS

                              Filed: 1 July 2014

ELIZABETH HINSHAW,
     Plaintiff/Mother,

    v.                                        Mecklenburg County
                                              No. 09 CVD 3118
JOHN KUNTZ,
     Defendant/Father.

    Appeal by plaintiff from judgment entered 8 May 2013 by

Judge Paige B. McThenia in Mecklenburg County District Court.

Heard in the Court of Appeals 9 April 2014.

    HORACK TALLEY PHARR & LOWNDES, P.A., by Christopher T. Hood
    and Elizabeth J. James, for plaintiff.

    Krusch & Sellers, P.A., by Rebecca K. Watts, for defendant.

    ELMORE, Judge.

    Elizabeth Hinshaw (plaintiff) appeals the trial court’s 8

May 2013 child support award on the basis that the trial court

erred in (1) failing to include bonus income in calculating the

parties’   base     income,   (2)    denying    her   claim    for   retroactive

child    support,    and   (3)      denying    her    motion   for   reasonable

attorney’s fees.       After careful review, we find no error in the

latter two issues, but hold that the trial court erred in the
                                              -2-
first.     Accordingly, we affirm, in part, and reverse and remand,

in part, for further action consistent with this opinion.

                                         I.      Background

    Plaintiff          and    John       Kuntz      (defendant)     were       married    in

September 2001, separated in December 2006, and divorced in July

2010.      The parties are the parents of three minor children,

namely,    A.    Kuntz,      born    15    September       2002;    S.   Kuntz,    born    6

February 2004; and E. Hinshaw, born 27 January 2007 (the minor

children).       Plaintiff was awarded primary physical custody of

the minor children pursuant to a Consent Order for Child Custody

entered 16 April 2009.              On 12 February 2009, the parties entered

into a Settlement Agreement/Separation Agreement (the Agreement)

whereby defendant agreed to pay plaintiff child support in the

amount    of    $1,750.00     per     month      and   alimony      in   the    amount    of

$5,000.00 per month until 31 August 2010, the date on which his

alimony    obligation        was    to    terminate.          The   Agreement      further

provided       that,    after       alimony       ended,     the    parties       were    to

renegotiate      the    amount      of    child      support    defendant       would    pay

plaintiff       pursuant       to     the      North     Carolina        Child     Support

Guidelines (the Guidelines).                  At the time the parties negotiated

the Agreement, their combined adjusted gross income was less

than $25,000.00 per month.
                                         -3-
       When    alimony    ended,   defendant     voluntarily      increased      his

child support payment from $1,750.00 per month to $2,750.00 per

month. Plaintiff did not find this new sum to be an adequate

support payment.         The parties were subsequently unable to agree

on    an    appropriate    child   support     award;   therefore,       plaintiff

filed a Motion in the Cause for Child Support on 29 March 2011.

In    her    motion,   plaintiff    alleged     that    the   amount     of   child

support currently paid by defendant was not adequate to meet the

needs of the minor children.

       In its 8 May 2013 Child Support Order, the trial court made

the following findings of fact:                After spending a number of

years as a stay-at-home parent, plaintiff was hired by Wells

Fargo in April 2010.          Plaintiff’s gross base income from Wells

Fargo       totaled      $121,000.00     per    year;     she     also        earned

approximately $94.00 per month on a crossword puzzle business

and     $48.00    in   interest    and     dividend     income.        Therefore,

plaintiff’s gross yearly income totaled $122,904.00.                   Plaintiff

has received and can continue to expect an annual bonus from her

employer.        Defendant is employed by Bank of America earning an

annual salary of $211,000.00.              Defendant has received and can

continue to expect an annual bonus from his employer.
                                          -4-
    Based on these figures, the trial court found that the

supporting parent’s basic child support obligation could not be

determined by using the child support schedule outlined in the

Guidelines because the parents’ combined adjusted gross income

exceeded $25,000.00 per month.                  Accordingly, the trial court

determined    that      the     minor     children’s         reasonable     needs     and

expenses      totaled         $6,630.89       per         month,     with     $5,768.70

attributable to plaintiff’s household and $862.19 attributable

to defendant’s household.           Based solely on the parties’ monthly

gross   incomes—without         accounting          for    bonus   income—the       trial

court ordered defendant to pay sixty percent (60%) of the minor

children’s      reasonable        needs       and     expenses,       which     totaled

$3,978.53 per month.             After crediting defendant $862.19, the

trial   court     set    defendant’s          child        support    obligation      at

$3,116.34 per month.           Further, the trial court ordered defendant

to pay $8,425.82 in arrears (prospective child support).                             Both

parties’ motions for attorney’s fees were denied in the 8 May

2013 order.     Plaintiff now appeals.

                                        II.   Analysis

  A. Bonus Income
                                         -5-
       Plaintiff      first    argues    that    the   trial   court      erred   in

excluding the parties’ bonus income when calculating the parties

actual income and the overall child support award.                  We agree.

       “In reviewing child support orders, our review is limited

to     a    determination      whether     the     trial   court     abused       its

discretion.         Under this standard of review, the trial court’s

ruling will be overturned only upon a showing that it was so

arbitrary that it could not have been the result of a reasoned

decision.”         Spicer v. Spicer, 168 N.C. App. 283, 287, 607 S.E.2d

678,       682     (2005)     (citations       omitted).       “Child       support

calculations        under   the   guidelines     are   based   on   the    parents’

current [or actual] incomes at the time the order is entered.”

Caskey v. Caskey, 206 N.C. App. 710, 713, 698 S.E.2d 712, 714

(2010) (citations omitted).             Under the Guidelines,        “income” is

defined as:

                 [A] parent’s actual gross income from any
                 source, including but not limited to income
                 from     employment    or     self-employment
                 (salaries,   wages,   commissions,   bonuses,
                 dividends, severance pay, etc.) . . . . When
                 income is received on an irregular, non-
                 recurring, or one-time basis, the court may
                 average or pro-rate the income over a
                 specified period of time or require an
                 obligor to pay as child support a percentage
                 of his or her non-recurring income that is
                 equivalent to the percentage of his or her
                 recurring income paid for child support.
                 When income is received on an irregular,
                                       -6-
            non-recurring, or one-time basis, the court
            may average or pro-rate the income over a
            specified period of time or require an
            obligor to pay as child support a percentage
            of his or her non-recurring income that is
            equivalent to the percentage of his or her
            recurring income paid for child support.

N.C. Child Support Guidelines, 2012 Ann. R. N.C. 51.                           “Gross

annual income in its plain, ordinary and popular sense means

total income without deductions.”            Saunders v. Saunders, 52 N.C.

App. 623, 624, 279 S.E.2d 90, 91 (1981) (internal quotations

omitted).      This    definition      “include[s]         longevity     pay   [and]

bonuses.”    Id.

    In the case sub judice, the trial court found that both

parties had received and remained eligible for an annual bonus.

Specifically, the trial court found that defendant’s 2011 bonus

totaled     $114,002.20     ($28,500.00      of    cash     and    $85,502.20      of

restricted stock); his 2010 bonus totaled $114,000.00; and his

2009 bonus totaled $37,500.00.            Plaintiff’s 2011 bonus totaled

$30,800.00, and her 2010 bonus totaled $17,931.00, representing

nine months of employment.          However, in Finding #118 the trial

court declined to incorporate the parties’ bonus income in its

calculation    of     the   parties’    base      income     for   the    following

reason:

            Given that the reasonable needs and expenses
                                     -7-
           of the children are covered by the parties
           each month prior to the addition of bonus
           income    deferred   compensation,    tuition
           reimbursement or other increases to base
           income, and given that both parties are
           eligible for a bonus each year, the Court
           declines to calculate bonus income, deferred
           compensation, tuition reimbursement or other
           increases to base income as part of child
           support.

    On    appeal,   plaintiff      contends   that   the   trial     court    was

required to include bonus income in calculating the parties’

gross base income.     Alternatively, defendant argues that because

his bonus income is irregular or non-recurring, “the trial court

is to address that income separately from the parties’ gross

monthly   income    when   determining     child   support.”         Defendant

avers:     “The    approach   of    separating     out   irregular    or     non-

recurring income from regular, ongoing income . . . makes sense”

given that there is no “guarantee” of receiving a bonus.                       We

disagree with defendant and point out that he cites no authority

to support his position.

    First, we note that the plain language of the Guidelines

clearly includes bonus income in the definition of “income.”

Should certain bonus or other income be deemed irregular or non-

recurring, the Guidelines further instruct the trial court to

average or pro-rate the income or order the obligor to pay a
                                       -8-
percentage of his or her non-recurring income equivalent to the

percentage of his or her recurring income for child support.

There is no provision in the Guidelines that instructs the trial

court to completely separate irregular or non-recurring bonus

income from its calculations.            Second, we can infer that the

trial court found that the bonus income was not irregular or

non-recurring    given    that   the    order    specifically        stated   each

party had received and could expect an annual bonus.                          After

reviewing the record, we agree that the bonus income did not

constitute irregular or non-recurring income as contemplated by

the   Guidelines.        Finally,      there    is    no   provision     in    the

Guidelines which instructs the trial court that it may elect to

opt out of including bonus income               in its calculations           based

solely on the premise that the reasonable needs and expenses of

the   children   are   otherwise    satisfied        without   its    inclusion.

Because the Guidelines include bonus income in the definition of

income, and because the bonus income was not irregular or non-

recurring, the trial court was required to include the bonus

income in calculating the parties’ base income and the overall

child support award.       Its failure to do so constituted an abuse

of discretion. See e.g., Waller v. Waller, 20 N.C. App. 710,

713, 202 S.E.2d 791, 793 (1974) (holding that before ruling on a
                                             -9-
motion    to    modify    child       support,      the   trial    court    must    give

consideration to the fact that part of the defendant’s income

was a bonus which fluctuated from year to year).

B. Retroactive Child Support

     Plaintiff          next   argues        that   the   trial    court    erred    in

failing to award retroactive child support from 1 September 2010

through the time she filed her complaint in district court.                           We

disagree.

    “Child support awarded prior to the time a party files a

complaint is properly classified as retroactive child support.”

Carson v. Carson, 199 N.C. App. 101, 105, 680 S.E.2d 885, 888

(2009)         (quotation        and         internal      citations         omitted).

“[R]etroactive child support payments are only recoverable for

amounts   actually       expended       on    the     child’s   behalf     during   the

relevant period.          Therefore, a party seeking retroactive child

support must present sufficient evidence of past expenditures

made on behalf of the child, and evidence that such expenditures

were reasonably necessary.”                Robinson v. Robinson, 210 N.C. App.

319, 333, 707 S.E.2d 785, 795 (2011) (quotations and citations

omitted).       “[W]here the parties have complied with the payment

obligations       specified      in    a     valid,    unincorporated       separation

agreement,”       the    trial        court    is     prohibited     from     awarding
                                                  -10-
retroactive         child        support,         absent     an     emergency             situation.

Carson at 106-107, 680 S.E.2d at 889.

    On appeal, plaintiff’s argument is premised on the notion

that the child support provision in the Agreement expired when

defendant’s         obligation         to   pay     alimony       likewise       expired.           As

such, plaintiff contends that the parties were not subject to a

valid,    unincorporated           separation            agreement     as       of    1    September

2010.     Plaintiff avers, “the parties were, for purposes of child

support,    in      a    position       procedurally          analogous         to    that       where

parties     separate            without      executing        a     separation             agreement

providing for child support.”                       Plaintiff’s argument is similar

to the argument advanced by the plaintiff-mother in Carson.                                         In

Carson, the parties entered into an unincorporated separation

agreement      in       March    2008,      which        provided     that      the       defendant-

father would pay a child support obligation of $500.00 per month

until the parties were able to negotiate the terms of a consent

order for child support.                 Id. at 103, 680 S.E.2d at 887.                         In the

event    the   parties          were    unable       to    negotiate        a    consent         order

within one year, the separation agreement stated that either

party    could      file    a     complaint         in    district     court.             Id.      The

parties    never         negotiated         the    terms     of   a   consent         order;       the
                                       -11-
defendant-father continued to pay $500.00 per month in child

support.    Id.

        Eight   years   passed    before      the   plaintiff-mother      filed    a

complaint in district court seeking retroactive child support,

claiming that she was “entitled to reimbursement from defendant

for a portion of the actual expenses incurred for the benefit of

the minor child from August 2003 through the present.”                     Id. at

104, 680 S.E.2d at 887 (internal quotation omitted).                   The trial

court    ordered    the      defendant-father        to    pay    $31,036.85      in

retroactive and prospective child support from September 2003

through January 2008.            Id. at 104, 680 S.E.2d at 888.                   On

appeal, the defendant-father argued that the trial court erred

in   awarding     the   plaintiff-mother        retroactive       child   support

because he had consistently paid $500.00 per month in accord

with the terms of the parties’ separation agreement.                       Id. at

105, 680 S.E.2d at 888.               This Court held that, because the

defendant-father fully complied with the terms of the valid,

unincorporated      separation        agreement,     the    trial     court    was

prohibited from awarding retroactive child support in excess of

the stated terms of the separation agreement.                    Id. at 108, 680

S.E.2d at 890 (holding “where there is a valid, unincorporated

separation      agreement,    which    dictates     the    obligations    of   the
                                             -12-
parent providing support, and the parent complies fully with

this    obligation,          the   trial     court    is    not    permitted      to    award

retroactive child support absent an emergency situation”).

       In the instant case, plaintiff’s argument that the child

support provision “expired” is without merit.                         Here, the parties

were        operating     under       a     valid,     unincorporated            separation

agreement       which     clearly         intended    for     defendant     to     continue

making       child    support        payments      after    the     expiration        of    the

alimony term.            It is undisputed            that defendant made monthly

payments pursuant to the terms of the Agreement from the time it

became effective until the time plaintiff filed a complaint in

district       court.         Defendant       even     voluntarily        increased         his

support       payment     from       the    mandated       $1,750.00      per     month      to

$2,750.00 per month.               Should plaintiff have found $2,750.00 to

be     an    acceptable       support       payment,       the    parties       could      have

operated under the terms of the Agreement indefinitely.                                      On

these       facts,      the    trial       court     lacked       authority      to     award

retroactive child support because defendant, at all requisite

times,       abided     by     the    terms     of    the        valid,   unincorporated

separation agreement.              Accordingly, the trial court did not err

in denying plaintiff’s claim for retroactive child support.
                                          -13-
    Assuming arguendo that the trial court had authority to

award retroactive child support,                 plaintiff’s argument remains

unconvincing.     Again, retroactive child support is based on the

non-custodial      parent’s          share       of        the     reasonable         actual

expenditures     made    by    the    custodial       parent       on   behalf     of    the

child.     Robinson, supra.           The record discloses that plaintiff

failed to present evidence                to the trial court             regarding the

specific    amounts     she    actually      expended        to    support      the    minor

children    during      the   requisite       period         for    which    she      sought

retroactive child support.                As such, plaintiff failed to meet

her burden of proof.           The trial court did not err in declining

to award plaintiff retroactive child support on these facts.

Having found that the original terms of the Agreement were not

reasonable to meet the children’s needs, the trial court was

justified in awarding prospective child support in the amount of

$8,425.82.

C. Attorney’s Fees

    Lastly,      plaintiff      argues       that     the    trial      court   erred     in

denying    her   motion       for    an    award      of    attorney’s       fees.        We

disagree.

    In a child support action, the trial court has discretion

to award attorney’s fees to “an interested party acting in good
                                       -14-
faith who has insufficient means to defray the expense of the

suit.”     N.C. Gen. Stat. § 50-13.6 (2013).                Whether a party has

satisfied     these    requirements        is   a   question       of    law     fully

reviewable on appeal.           Barrett v. Barrett, 140 N.C. App. 369,

374, 536 S.E.2d 642, 646 (2000) (citation omitted).                      Generally,

the dependent spouse has insufficient means to defray the costs

of litigation if he or she is unable “as litigant to meet the

supporting    spouse    as     litigant    on   substantially       even       terms.”

Theokas v. Theokas, 97 N.C. App. 626, 630-31, 389 S.E.2d 278,

281 (1990) (citation omitted).             In addition, “[b]efore ordering

payment of a fee in a support action, the court must find as a

fact that the party ordered to furnish support has refused to

provide     support    which    is    adequate      under    the    circumstances

existing    at   the   time     of   the   institution      of     the   action    or

proceeding[.]”     N.C. Gen. Stat. § 50-13.6 (emphasis added).

    In the instant action, both parties requested an award of

attorney’s fees.       Specifically, plaintiff sought to recover “at

least” $25,265.50 in attorney’s fees from defendant.                           In its

order, the trial court found that neither party was entitled to

recover attorney’s fees because each had sufficient means to

defray the cost of litigation.             On appeal, our focus hinges on

whether plaintiff had sufficient funds to defray the costs of
                                       -15-
litigation.       “With regard to this determination, a court should

generally focus on the disposable income and estate of just that

spouse, although a comparison of the two spouses’ estates may

sometimes be appropriate.”           Barrett at 374, 536 S.E.2d at 646

(citation omitted).        Having reviewed the trial court’s findings,

we find them to be sufficient to form a basis to deny plaintiff

attorney’s fees.          Excluding bonus income, plaintiff’s monthly

gross   income    is     $10,242.00,   and    her    reasonable       needs    total

$3,183.87.       After paying $2,652.35 per month towards the minor

children’s reasonable needs, plaintiff is left with a surplus of

$4,405.78 per month.           This alone supports the trial court’s

determination that plaintiff had sufficient means to defray the

cost of litigation.

    Further,       the    trial    court   did      not   find   as    fact     that

defendant refused to provide support which was adequate under

the circumstances.         See N.C. Gen. Stat. § 50-13.6.              The record

indicates     that     defendant    complied     with     the    terms    of     the

Agreement directing him to make child support payments; in fact,

he voluntarily made support payments in excess of what he was

required    to   pay.      This    evidence   further     supports      the    trial

court’s decision to deny plaintiff’s motion for attorney’s fees.

See Prescott v. Prescott, 83 N.C. App. 254, 262, 350 S.E.2d 116,
                                          -16-
121    (1986)    (holding      that    the    trial    court       did   not    abuse    its

discretion in denying wife’s motion for reasonable attorney’s

fees    in     connection      with    her    child    support       action      when    the

husband      paid      adequate       child   support        and    voluntarily         made

additional support payment which he was not obligated to make

under    the    parties’    consent      order).        We    hold       that   the   trial

court’s findings of fact are supported by competent evidence and

conclude that it was not an abuse of discretion for the trial

court to deny plaintiff’s               motion for an award of attorney’s

fees.

                                       III. Conclusion

       The trial court did not err in denying plaintiff’s motions

for retroactive child support and for attorney’s fees.                           However,

by excluding the parties’ bonus income in its calculation of the

parties’       gross    base      income,     the     trial    court       did    err     in

calculating its child support award.                   We reverse the requisite

portions of the trial court’s order and remand so that the trial

court can include the bonus income in its calculations.                                   We

further instruct the trial court to recalculate the supporting

parent’s child support obligation accordingly.

       Affirmed, in part; reversed and remanded, in part.

       Judges McCULLOUGH and DAVIS concur.