Court Opinion

ID: 4677221
Source: CourtListenerOpinion
Date Created: 2021-04-14 16:05:40.643715+00
Date Added: 2024-06-11T08:03:36.976785
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 20-0666
                               Filed April 14, 2021

IN RE THE MARRIAGE OF MARY A. WESSELS
AND JAMES C. WESSELS

Upon the Petition of
MARY A. WESSELS, n/k/a MARY A. REKEMEYER,
      Petitioner-Appellee,

And Concerning
JAMES C. WESSELS,
     Respondent-Appellant.
________________________________________________________________

       Appeal from the Iowa District Court for Dubuque County, Thomas A. Bitter,

Judge.

       James Wessels appeals the district court order modifying the child support

and expense-sharing provisions of the decree dissolving his marriage to Mary

Wessels and the dismissal of his contempt application filed against her.

AFFIRMED AND REMANDED.

       Constance Peschang Stannard of Johnston, Stannard, Klesner, Burbidge

& Fitzgerald, PLC, Iowa City, for appellant.

       Taryn R. McCarthy of Clemens, Walters, Conlon, Runde & Hiatt, L.L.P.,

Dubuque, for appellee.

       Considered by Doyle, P.J., and Tabor and Ahlers, JJ.
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AHLERS, Judge.

       This case serves as yet another reminder that parties who attempt to

circumvent the child support guidelines do so at their peril.

I.     Factual Background

       James and Mary Wessels1 divorced in 2015. The decree dissolving their

marriage incorporated the terms of the parties’ stipulation. Via the stipulation, the

parties agreed they would have joint legal custody and joint physical care of their

two minor children. Neither party was obligated to pay child support to the other,

but James was obligated to pay for specified costs associated with the children

attending private school, school lunches, and extracurricular activity expenses.

       Prior to the dissolution, Mary earned modest income, mostly by operating

her coffee shop business. Mary earned only $4012 from the coffee shop in 2012

and $4057 in 2013. Mary also taught fitness classes as a separate business, but

it is unclear what income she earned from this business while she and James were

married. As the dissolution was on the verge of being finalized, Mary began

working full-time at a recreational center and earned approximately $32,000 per

year. She worked at the recreational center from 2014 to 2015 until she took a job

at a gym, where she earned $55,000. Mary’s income in 2015 was $46,695 and

her income in 2016 was $57,736. Mary stayed at this position while continuing to

run her personal fitness business until June 2017.        Due to reshuffling of job

responsibilities at the gym at which she worked, Mary was moved to a part-time

position and her income declined significantly. She tried to find another position

1 Mary’s surname was restored to her maiden name of Rekemeyer in the
dissolution of marriage decree.
                                        3

like her original position at the gym, but she was unsuccessful. Mary’s 2018 tax

return shows she made $4531 in wages from the gym and $6400 from her personal

fitness business. She dipped into $21,000 of her savings to help pay her expenses

that year. In January 2019, Mary further supplemented her income by starting a

business buying and selling active-wear clothing.

      Throughout the marriage and continuing to the present, James has owned

and operated a business corporation that makes countertops for residential and

commercial applications. The parties’ joint tax returns from 2012 and 2013 show

James drew yearly wages from the corporation of $66,137 and $46,486

respectively. James is also the sole owner of a separate limited liability company

(LLC) that owns the real estate from which the countertop corporation operates.

The countertop corporation pays rent to James’s LLC for that real estate.

II.   Procedural History

      James filed a contempt action against Mary in March 2019. He alleged

Mary had moved the children to public school without his consent, he had paid

more than his allocated share of expenses related to the children’s extracurricular

activities and school lunches, and Mary had failed to reimburse him for that

overpayment and certain other expenses. Mary countered with a contempt action

of her own. She alleged James failed to pay his share of certain expenses he was

obligated to pay, including dance lesson, cellphone, and uncovered medical

expenses.

      In addition to her contempt action, Mary filed a modification petition seeking

to order James to pay child support according to the Iowa Child Support
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Guidelines. She alleged her reduced income and James’s failure to pay certain

expenses warranted a modification.

       At trial in January 2020, Mary submitted evidence showing she made a total

of $28,150 from her job at the gym, her personal fitness business, and her active-

wear sales business.      James submitted child support guidelines worksheets

claiming income of $48,955, based on his tax returns. Mary argued James’s

income was much higher than that based on James’s acknowledged expenses

that could not be supported by that income, his lifestyle that included purchasing

expensive luxury items, his receipt of cash payments not reported on his tax

returns, and his practice of purchasing personal items using corporate funds that

resulted in unreported income.

       Based on the evidence presented at trial, the district court concluded Mary

earned gross annual income of $28,150, as she claimed. As for James, the district

court did not accept James’s claimed income as reported on his tax returns and

determined James’s gross income for purposes of calculating child support as

$80,000. The court made this determination based on the fact James claimed

monthly expenses of over $6000 which could not be supported on his claimed

gross income and the fact that some of the rent the corporation paid to the LLC

was “reinvested in the business,” of which James was the sole owner.

       The court found a substantial change in circumstances had occurred and

modified the original dissolution decree to require James to pay Mary $560 per

month in child support, starting on the first day of the month following the filing of

the modification order. The court further modified the provisions related to paying

the children’s expenses by relieving James of the sole obligation to pay for private
                                          5

school and requiring the parties to equally share the costs of the children’s

expenses as defined in the original stipulation, including the children’s school-

related expenses (including lunches), clothing, and extracurricular activities. The

court also modified the obligation for payment of uncovered medical expenses in

proportion to the parties’ respective net monthly incomes, while James continued

to be obligated to provide health insurance for the children, as he had agreed to

do. The district court also ordered James to pay $1000 of Mary’s attorney fees.

       As to the reciprocal contempt actions, based on verbal comments stated on

the record at the conclusion of trial and in the modification order that followed, the

court found both parties had misinterpreted the original stipulation in different

ways. The court dismissed both parties’ contempt applications.

       James appeals, arguing: (1) the district court erred by finding a substantial

change of circumstances had occurred which justified a modification; (2) the district

court erred by dismissing his contempt action; and (3) the district court erred by

awarding Mary $1000 in trial attorney fees. Although Mary did not cross-appeal,

she seeks an award of appellate attorney fees.

III.   Standards of Review

       Child support modification actions are reviewed de novo. In re Marriage of

McKenzie, 709 N.W.2d 528, 531 (Iowa 2006). “Although we give weight to the

factual findings of the district court, we are not bound by them.” In re Marriage of

Mauer, 874 N.W.2d 103,106 (Iowa 2016). The district court’s ruling will only be

disturbed when the ruling fails to do equity. In re Marriage of McDermott, 827

N.W.2d 671, 676 (Iowa 2013).
                                          6

       When a trial court refuses to find a party in contempt, the court has “broad

discretion and ‘unless this discretion is grossly abused, the [trial court’s] decision

must stand.’” In re Marriage of Swan, 526 N.W.2d 320, 327 (Iowa 1995) (quoting

State v. Lipcamon, 483 N.W.2d 605, 607 (Iowa 1992)).

IV.    Substantial Change in Circumstances

       James argues Mary has not shown a substantial change in circumstances

sufficient to warrant a modification of James’s child support obligation.          His

argument is three-pronged, and we will address each prong in turn.

       A.     Information Upon Which to Base Modification

       James first argues the parties agreed to deviate from the child support

guidelines in their original stipulation and, with no income information

accompanying the original stipulation or factual findings by the judge that approved

the original stipulation as to why deviation was allowed, there is no basis for finding

a substantial change of circumstances.

       James’s argument fails for several reasons. First, James misunderstands

what is being compared to determine whether a modification of child support is

warranted. He focuses on the fact the parties generally have the same jobs and

live in the same places. Therefore, he argues, there is no substantial change in

circumstances. This argument ignores the fact that the comparison of the child

support obligation, not the income that supports the obligation, can justify

modification of child support. Iowa Code section 598.21C(2) (2019) provides for a

per se change of circumstances justifying modification, irrespective of the factors

set forth in section 598.21C(1), “when the court order for child support varies by

ten percent or more from the amount which would be due pursuant to the most
                                         7

current child support guidelines.” See In re Marriage of Mihm, 842 N.W.2d 378,

385–86 (Iowa 2014) (recognizing that a substantial change in circumstances to

justify modification of child support can be determined under section 598.21C(1)

or 598.21C(2)(a)); In re Marriage of Heald, No. 14-0777, 2015 WL 409129, at *3

n.4 (Iowa Ct. App. Jan. 28, 2015) (citing In re Marriage of Mihm and concluding

that, even when there has been no change in circumstances as contemplated by

the parties or the district court, section 598.21C(2)(a) establishes a per se

substantial change upon which modification can be based when there is a ten

percent or more discrepancy in child support). Here, the child support amount

based on the current incomes of the parties yielded a child support obligation of

$560,2 which is more than ten percent of the zero amount provided for in the

original stipulation and decree. Therefore, we affirm the modification of James’s

child support obligation to require him to pay $560 per month starting March 1,

2020, and the corresponding modification of the sharing of certain expenses,

including uncovered medical expenses.

       Second, even if we were to ignore the per se basis for modifying child

support provided for in Iowa Code section 598.21C(2)(a), James misconstrues the

effect of the parties’ failure to provide information and factual findings supporting

the claimed deviation in the original stipulation and decree. Even assuming there

2  While James disagrees with the district court’s determination that his gross
annual income is $80,000, he raises no challenge to the monthly child support
figure of $560 determined by the district court based on that income. As will be
discussed later in this opinion, we agree with the determination of James’s income.
As James does not challenge the child support amount based on that income, we
accept $560 per month as the correct monthly child support amount owed by
James pursuant to the offset method provided for in Child Support Guidelines rule
9.14(3).
                                          8

was an agreed deviation, as James claims, the parties did not meet the

requirements necessary to sustain that deviation. See Iowa Code § 598.21B(2)(d)

(“A variation from the guidelines shall not be considered by a court without a record

or written finding, based on stated reasons, that the guidelines would be unjust or

inappropriate as determined under the criteria prescribed by the supreme court.”).

       We conclude the dissolution decree, which adopts the terms of the

stipulation, does not adequately explain why a deviation from the child support

guidelines was appropriate. There is nothing in the record that indicates the district

court was advised that the stipulation deviated from the child support guidelines.

Neither party submitted affidavits of financial status or child support guidelines

worksheets during the original dissolution proceeding. Without this record, it is

inappropriate to use the stipulation as a basis for modification proceedings. See

Mihm, 842 N.W.2d at 385 (“Absent compliance with the statute and our rules, there

is no reason to assume that the initial child support amount set forth in the decree

has any proper basis, or that it should be used as the basis for subsequent

modification proceedings.”).

       Having determined the original stipulation cannot serve as a basis for

modification, we must next determine whether the rest of the record supports a

finding that a substantial change in circumstances has occurred since the entry of

the dissolution decree. See id. at 386. To modify the existing child support

obligation, the change in circumstances “must not have been within the district

court’s contemplation when the decree was entered.” Id. at 381–82. Furthermore,

“it must appear that continued enforcement of the original decree would, as a result

of the changed conditions, result in positive wrong or injustice.” Id. at 382. The
                                         9

district court “has reasonable discretion in determining whether modification is

warranted and that discretion will not be disturbed on appeal unless there is a

failure to do equity.” In re Marriage of McKenzie, 709 N.W.2d 528, 531 (Iowa

2006).

         To determine whether a substantial change in circumstances has occurred,

we consider several factors, including “changes in a party’s employment or

income, changes in a party’s number of dependents, changes in a party’s

residence, a party’s remarriage, and other factors relevant in the case.” Mihm, 842

N.W.2d at 381; accord Iowa Code § 598.21C(1). Here, there have been multiple

changes. One change has been a decrease in Mary’s income since the original

stipulation and decree were entered. Additional changes include the fact there has

been a breakdown in the ability of the parties to implement the cost-sharing

provisions related to school and extracurricular activities and changes made to the

children’s health insurance plan.3 The disagreement over whether James was

obligated to pay all the children’s school and extracurricular activity expenses once

they were moved to public school resulted in Mary paying a higher share of the

children’s expenses than originally contemplated. The higher deductible insurance

plan leads to Mary paying much more out of pocket for the children’s medical care.

Based on these unexpected increases in Mary’s financial obligations coupled with

the unexpected decrease in her income, we conclude there has been a substantial

change in circumstances.

3 After the original decree was entered, James selected a different insurance plan
for himself and the children that resulted in a higher deductible.
                                         10

       Having concluded there has been a substantial change in circumstances,

we next consider what child support amount is appropriate under the

circumstances. The district court determined Mary’s income was $28,150, and

James’s income was $80,000. As previously noted, if these income figures are

accurate, James lodges no challenge to his monthly child support obligation of

$560. However, James disputes the district court’s income determinations. He

argues the district court both understated Mary’s income and overstated his.

       Turning first to James’s income, we agree with the district court and

conclude James’s income is accurately estimated to be $80,000. While James

claimed annual gross income of $49,955, other evidence in the record suggests

his income is higher. For instance, evidence showed James’s corporation paid

James’s LLC annual rent in the approximate amount of $80,000 each year. James

testified that the “vast majority” of this rent went to the upkeep on the building and

to pay the mortgage note on the property, both of which would have contributed to

increased net worth for James as the sole owner of the LLC. Additionally, a

financial affidavit signed by James approximately six months before trial disclosed

personal monthly expenses of $6059, or $72,708 annually. Further, the evidence

showed James purchased personal items through the corporation, giving him the

benefit of those items without it showing up as income on his tax returns. Finally,

James testified he occasionally did side jobs for cash and admitted he did not know

how much he made, although he estimated he made $1000 in 2018 from these

jobs. Taking this information together, we conclude $80,000 accurately estimates

James’s income.
                                           11

       As for Mary’s income, the district court found Mary had an income of

$28,150 based on Mary’s testimony and her supporting documentation. The

district court impliedly found Mary credible and we find no basis for not giving

weight to that finding. Further, on our de novo review, we conclude $28,150

accurately estimates Mary’s income.

       B.     Contract That Cannot Be Modified

       Next, James argues the original stipulation was a contract between the

parties and that contract relieved James of the obligation to pay child support to

Mary in exchange for the property division and spousal support provisions. He

asserts the bargained-for “no child support” provision cannot now be modified, as

to do so would inequitably ignore the property division and spousal support

provisions that were agreed to in return. While we agree with some of James’s

assertions, we disagree with his conclusion.

       It is true that an agreement for child support set forth in a stipulation by the

parties “becomes a final contract when it is accepted and approved by the court.”

Mihm, 842 N.W.2d at 384 (quoting In re Marriage of Lawson, 409 N.W.2d 181, 182

(Iowa 1987)). However, “[p]arents cannot lightly contract away or otherwise modify

child support obligations.” Id. (quoting In re Marriage of Zeliadt, 390 N.W.2d 117,

119 (Iowa 1986)). “[I]t is not for the parties to determine an appropriate level of

child support. By statute, establishing an appropriate level of child support is

ultimately the responsibility of the district court after being fully advised of the

circumstances of the parties.” Id. at 385.

       Here, the parties deprived the district court judge who signed the original

decree of the ability to fulfill the judge’s obligation by failing to disclose an agreed-
                                          12

upon deviation from the guidelines and providing reasons for the deviation. See

Iowa Code § 598.21B(2)(d) (prohibiting the district court from considering a

variation from the guidelines “without a record or written finding, based on stated

reasons, that the guidelines would be unjust or inappropriate”). As stated in Mihm,

to avoid the problem we have in this case, such writen findings and reasons are

vital:

         The written findings and reasons are vital to a later determination by
         the court about whether there has been a substantial change in
         circumstances. That is the case whether the child support
         modification is sought under Iowa Code section 598.21C(1) or
         under section 598.21C(2)(a). If the parties want the district court to
         deviate from the child support guidelines, and also want to avoid
         subsequent modification of that award based on an evaluation of
         changed circumstances or the ten percent deviation, counsel and the
         district court need to insure that the dissolution decree explains the
         reasons for the deviation and that those reasons are factually and
         legally valid. See Iowa Ct. R. 9.11; see also In re Marriage of
         Nelson, 570 N.W.2d 103, 108 (Iowa 1997) (explaining a modification
         order that deviated from the child support guidelines without
         explanation could not be used as a basis to determine whether there
         had been a substantial change in circumstances).               Absent
         compliance with the statute and our rules, there is no reason to
         assume that the initial child support amount set forth in the decree
         has any proper basis, or that it should be used as the basis for
         subsequent modification proceedings.

The parties having not complied with the rules for deviating from the guideline-

amount of support, James cannot claim the parties had an enforceable contract

with respect to child support that prevents modification.

         C.    Voluntary Underemployment

         Finally, James argues that a substantial change in circumstances cannot

be based on Mary’s decreased income because such decrease was voluntary. It

is true that a parent cannot rely on a claim of decreased income to obtain a

modification of child support if the reduction of income is voluntary with an improper
                                          13

intent to deprive children of support or in reckless disregard for the children’s well-

being.    See Swan, 526 N.W2d at 323–24. However, we find no persuasive

evidentiary support for James’s claim that the decrease in Mary’s income was

voluntary or that it was the result of an improper intent to deprive the children of

support. To the contrary, our de novo review causes us to conclude Mary lost her

full-time position at the gym through no fault of her own. To her credit, within a

reasonable time after losing her full-time job at the gym, she sought replacement

employment. When she was unsuccessful, she worked several part-time jobs and

tried to develop her own businesses to replace her lost income. Finding Mary’s

reduced income was not a voluntary circumstance, it does not preclude the

reduced income from being taken into account as one of the changes in

circumstances warranting modification.

         D.    Conclusion

         For the foregoing reasons, we find Mary met her burden of establishing a

substantial change in circumstances warranting modification of the child support

provisions of the original decree.       Therefore, we affirm the district court’s

modification order in all respects with regard to child support and children’s

expenses, including the expense-sharing provisions, the uncovered medical

expense division provisions, and the imposition of a $560 monthly child support

obligation owed by James. See McDermott, 827 N.W.2d at 686 (finding it proper

to order each party to pay one-half of extracurricular activities when the parties are

awarded shared physical care and child support is calculated using the offset

method); In re Marriage of Dillon, No. 16-0415, 2016 WL 7393904, at *2 (Iowa Ct.
                                          14

App. Dec. 21, 2016) (same with respect to the children’s school and extracurricular

activities).

V.      Contempt of Court

        Next, James argues the district court erred by dismissing his contempt

application against Mary. The only contempt claim briefed on appeal relates to

Mary’s decision to move the children to public school.

        Contempt proceedings are “quasi-criminal in nature,” and the “party alleging

contempt has the burden to prove the contemner had a duty to obey a court order

and willfully failed to perform that duty.” Ary v. Iowa Dist. Ct., 735 N.W.2d 621,

624 (Iowa 2007). We further note, however, that the district court has broad

discretion to refuse to find a party in contempt even when the elements of contempt

have been shown. See Swan, 526 N.W.2d at 327. “[U]nless this discretion is

grossly abused, the [trial court’s] decision must stand.” Id. (alteration in original).

        On our review, we affirm the district court’s decision not to find Mary in

contempt of court. We agree it was inappropriate for Mary to act unilaterally to

switch the children’s school without agreement from James when James is a joint

legal custodian of the children. See Iowa Code § 598.1(3) (defining “joint legal

custody” to give both parents the right and responsibility to participate in decisions

affecting the children’s education with neither parent having rights superior to the

other); In re Marriage of Comstock, No. 20-1205, 2021 WL 1016601, at *2 (Iowa

Ct. App. Mar. 17, 2021) (confirming that, when parties with joint legal custody reach

an impasse as to education issues involving the children, the court system is to be

used to resolve the dispute rather than allowing the parent with physical care of

the child to act unilaterally). However, the record does not suggest Mary switched
                                         15

the children’s school for any reason other than the children’s own desire to do so.

Additionally, the evidence established Mary attempted to communicate the

children’s desire to transfer to James, and, while he was unhappy with the

decision, he never ultimately demanded mediation as provided for in the original

stipulation and decree. Nothing in the record indicates Mary acted with the bad

intent or disregard necessary to show willful disobedience. See In re Marriage of

Ruden, 509 N.W.2d 494, 496 (Iowa Ct. App. 1993) (“In order to show willful

disobedience there must be evidence of conduct which is intentional and deliberate

with a bad or evil purpose, or wanton and in disregard of the rights of others, or

contrary to a known duty, or unauthorized, coupled with an unconcern whether the

contemner had the right or not.”). Further, we note James waited over three and

one-half years after the children were enrolled in the public school to bring the

contempt action challenging the switch and there was no evidence the children

had been adversely affected in any way by it.

       Under all of these circumstances, even if we assumed James had

established a willful violation of the original stipulation and decree, we find no

abuse of discretion in the district court’s decision to dismiss James’s application.

VI.    Attorney Fees

       We are asked to address both trial and appellate attorney fee claims.

       A.     Trial Attorney Fees

       James argues the district court erred by awarding Mary $1000 in trial

attorney fees. An award of attorney fees in a dissolution of marriage modification

proceeding rests in the sound discretion of the district court and will not be

disturbed on appeal in the absence of an abuse of discretion. In re Marriage of
                                         16

Romanelli, 570 N.W.2d 761, 765 (Iowa 1997). The controlling factor is the parties’

ability to pay the fees. Id. Given James’s significantly greater earnings, coupled

with Mary’s limited means, the district court did not abuse its discretion in ordering

James to pay $1000 of Mary’s trial attorney fees.

       B.      Appellate Attorney Fees

       Mary requests an award of appellate attorney fees. Appellate attorney fees

in a dissolution of marriage modification proceeding “are not a matter of right, but

rather rest in this court’s discretion.” In re Marriage of Okland, 699 N.W.2d 260,

270 (Iowa 2005). The factors we consider include “the needs of the party seeking

the award, the ability of the other party to pay, and relative merits of the appeal.”

Id.

       Here, Mary has significant need for the award of appellate attorney fees and

James has the ability to pay such fees. In addition, Mary has been forced to defend

the district court’s position on appeal and has been fully successful in doing so.

Therefore, we determine James should be ordered to pay all reasonable and

necessary fees incurred by Mary on appeal. As we do not have an attorney fee

affidavit from which to determine that amount, we remand to the district court for

the sole purpose of determining the amount of the reasonable and necessary fees

incurred by Mary on appeal and entering judgment in her favor against James for

that amount.
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VII.   Conclusion

       For the reasons stated, we affirm the district court’s modification order and

we remand for the sole purpose of determining James’s obligation for Mary’s

appellate attorney fees as stated herein.

       AFFIRMED AND REMANDED.