Court Opinion

ID: 6501044
Source: CourtListenerOpinion
Date Created: 2022-07-19 14:06:13.014231+00
Date Added: 2024-06-11T09:40:27.736995
License: Public Domain

IN THE COURT OF APPEALS OF NORTH CAROLINA

                                            2022-NCCOA-487

                                             No. COA21-595

                                            Filed 19 July 2022

     Wake County, No. 15 CVD 2297

     JOAN BRITT, Plaintiff,

     and

     WAKE CO. HUMAN SERVICES, CHILD SUPPORT ENF., Intervenor Plaintiff,

                     v.

     ERVIN BRITT, Defendant.

           Appeal by defendant from order entered 30 April 2021 by Judge David Baker

     in Wake County District Court. Heard in the Court of Appeals 27 April 2022.

           Wake Family Law Group, by Nancy L. Grace and Melanie C. Phillips, for
           plaintiff-appellee.

           No brief filed on behalf of intervenor-plaintiff.

           Gailor Hunt Davis Taylor & Gibbs, PLLC, by Jonathan S. Melton, for
           defendant-appellant.

           ZACHARY, Judge.

¶1         Defendant Ervin Britt appeals from an order requiring him to pay child

     support to Plaintiff Joan Britt for the support of their two minor children, E.B. and

     R.B.1 After careful review, we affirm.

           1   We use initials to protect the identities of the juveniles.
                                         BRITT V. BRITT

                                        2022-NCCOA-487

                                       Opinion of the Court

                                         Background

¶2         Plaintiff and Defendant married in 1999 and separated in 2014. There were

     two children born of the parties’ marriage: E.B., born in 2004, and R.B., born in 2009.

     On 19 February 2015, Plaintiff filed a complaint seeking, inter alia, child support and

     equitable distribution of the parties’ marital assets. On 18 August 2016, Wake County

     Human Services, Child Support Enforcement filed a motion to intervene on Plaintiff’s

     behalf seeking to sever the child support claim from the collateral claims, which the

     trial court granted. On 18 August 2017, the trial court entered a temporary child

     support order, obligating Defendant to pay $375.00 per month in child support,

     together with $25.00 per month toward Defendant’s child support arrears of

     $7,500.00.

¶3         On 1 May 2018, the trial court entered a consent order executed by the parties

     resolving the equitable distribution claim. The parties agreed that Plaintiff would,

     inter alia, receive a distributive award of $110,000.00, which Defendant would pay to

     her at the rate of $4,000.00 per month.

¶4         The child support claim came on for hearing on 30 April 2021 in Wake County

     District Court. At trial, Defendant testified regarding his income. Defendant

     explained that he owned two businesses: Five-O Servicing, LLC, an HVAC company,

     and D Britt Enterprises, a real estate holding company. He also owned ten rental

     properties, all of which were encumbered by mortgages at various financial
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                                          2022-NCCOA-487

                                        Opinion of the Court

     institutions. Defendant estimated that he made “[l]ess than a hundred bucks” per

     month from Five-O Servicing; he only worked there one to two hours per week

     because the company was “in the process of being closed down.” He also stated that

     “D Britt [Enterprises wa]s closed.” Defendant testified that he received

     approximately $7,000.00 per month in rent from his properties, and he “guess[ed]”

     that after expenses, he had a net rental income of approximately $1,050.00 per month

     from the properties. He further testified that he did not know from which bank

     accounts he paid the mortgages on the various properties.

¶5         Several financial documents that were admitted at trial related to a third

     company, DER Enterprises, Inc. Defendant testified that DER belonged to his

     mother, who owned three rental properties, and that he did not control the company.

     However, he confirmed that he was a signatory on the two DER bank accounts in

     order to help his elderly mother. When asked why money was repeatedly transferred

     from the DER bank accounts to Defendant’s accounts, Defendant replied, “I’m sure it

     was to keep one of the properties from going out of foreclosure.” In contrast, Plaintiff

     testified that she and Defendant originally owned DER, but placed it in Defendant’s

     mother’s name to avoid creditors during the 2008 housing market crash. She

     elaborated: “[T]here was just no way for us to keep up with the bills and the debt we

     were creating, so -- I mean, we had creditors all the time, so we changed it over to her

     name so they, you know, couldn’t get at us directly . . . .”
                                        BRITT V. BRITT

                                       2022-NCCOA-487

                                      Opinion of the Court

¶6         Defendant testified that in addition to running his own businesses, he also

     worked as a “contractor” for Raleigh Air, an HVAC business owned and operated by

     his live-in girlfriend. At the time of trial, Defendant had worked at Raleigh Air for

     approximately one year for about “eight hours a day every other day, maybe.”

     Although he was merely a “contractor” with Raleigh Air, Defendant transferred his

     HVAC license from his company, Five-O Servicing, to Raleigh Air to expand Raleigh

     Air’s offered services. Moreover, Defendant contributed to Raleigh Air’s advertising

     campaigns and interviewed candidates for employment with the company. Defendant

     maintained that he was not paid for this work; rather, his employment with Raleigh

     Air “started as a loan type of situation,” and he worked for the company in an effort

     “to pay [it] back and make goodwill[.]” While Defendant conceded that money was

     deposited monthly into his personal bank account from the Raleigh Air bank account,

     he testified that this was not income to him. Instead, the money was intended to

     reimburse him for his girlfriend’s portion of the mortgage payment on their shared

     residence. Defendant also stated that he has used a Raleigh Air credit card to cover

     his personal expenses, such as lunches, without advance authorization from the

     company. On one occasion, he also used the card to purchase airline tickets to

     Washington for himself and his children.

¶7         At trial, Plaintiff’s counsel questioned Defendant regarding the itemized lists

     that Defendant created purporting to track his business expenses. Defendant
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                                        2022-NCCOA-487

                                       Opinion of the Court

     conceded that a list of Five-O Servicing’s expenses for the year 2020 was inaccurate,

     in that it listed the salaries for employees who were actually contractors for Raleigh

     Air; he confirmed that the list contained the salaries “in order to claim th[ose]

     expenses for Five-O[.]” Regarding another itemized list of his expenses from 1

     January through 2 April 2021, Defendant initially asserted that the list solely

     comprised expenses “for the apartments.” However, the list also contained an expense

     explicitly related to DER. When he was asked about this expense, Defendant

     responded that “[i]t could be anything[,]” and suggested that perhaps he had

     performed HVAC services for DER.

¶8         Other items on Defendant’s list of business expenses from 1 January through

     2 April 2021 included $962.91 from 2020, which Defendant confirmed were personal

     expenses; the nearly $4,000.00 mortgage payment on Defendant’s personal residence,

     which he contended was a business expense; and over $13,000.00 in “separation”

     expenses, which Defendant conceded should not have been included as a business

     expense. Defendant acknowledged that this list contained “some errors” and

     confirmed that a qualified accounting professional had not reviewed it.

¶9         Plaintiff also introduced bank statements for the two DER accounts. These

     statements evidenced several mortgage payments for various properties, but did not

     indicate the amount of each payment that was attributable to principal versus the

     amount attributable to interest. Additionally, despite Defendant’s assertion that he
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                                              2022-NCCOA-487

                                            Opinion of the Court

       was a signatory on the DER accounts simply “to help [his mother] with her bills[,]”

       Defendant could not describe how he paid the mortgages on his mother’s properties,

       stating only that the mortgage payment process was “automatic.” Regarding his

       ability to pay the mortgages on his own properties, Defendant explained: “The

       apartments bring me money; the mortgages get paid.” Furthermore, Defendant could

       not articulate which expenses were satisfied with the transfers to the DER accounts.

       Concerning the January 2020 deposits from the Raleigh Air bank account into a DER

       account, Defendant testified that he “assum[ed] there’s something that went on that

       [his mother] needed money for the apartments or something.”

¶ 10         Before entering its order, the trial court orally rendered its ruling. Addressing

       Defendant with regard to his testimony concerning his income and expenses, the trial

       court stated:

                       [T]he Court has wrestled with how to calculate your
                       income. . . . [T]he deposits into the accounts, that’s the one
                       thing that this Court can be certain of. However, there’s no
                       evidence of what the expenses are associated with any of
                       your business enterprises. And I’ll just be honest with you,
                       I don’t think I’ve found myself in a situation where I
                       declare a witness just completely not credible, but it
                       appears to the Court that you’ve gone to great lengths to
                       portray your income at an artificial low and that your
                       testimony was largely evasive with the purpose of
                       misleading the Court about your stake, your role and
                       interest particularly in the business of Raleigh Air.

                       But this Court will find that the bank account . . . for DER
                       Enterprises . . . is an account that [Defendant] has access
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                                           2022-NCCOA-487

                                          Opinion of the Court

                    to, that he utilizes for -- that he has access to and that he
                    utilizes for his personal and business expenses. And
                    although he’s testified that it’s his mother’s account, that
                    in light of the deposits and withdrawals that indicate that
                    [Defendant] is largely in control of this account and that
                    it’s appropriate, fair and just for this to be included in the
                    calculation of his income.

                    I don’t really even know where to start with the contentions
                    about your role in Raleigh Air. You’re all over the place.
                    And when I sit here in this capacity, representing the Court
                    of Justice, it’s really appalling when someone goes to the
                    lengths that you’ve gone . . . to mislead the Court. I want
                    to be clear about that. You haven’t fooled anyone.

       In light of Defendant’s “evasive” testimony and Plaintiff’s testimony that the parties

       “shifted and diverted their holdings with DER” to “avoid[ ] debt collection and debt

       collectors,” the trial court further found that Defendant “ha[d] done likewise” with

       his assets in Raleigh Air in an attempt to avoid his child support obligation.

¶ 11         In its order entered 30 April 2021, the trial court found that Defendant was

       self-employed in “HVAC + Real Estate Rentals[,]” and that he owned multiple

       businesses. The court determined that Defendant had a monthly income of

       $24,085.00 based on evidence presented at trial of the monthly deposits into his

       various bank accounts, and the court imputed income of $3,333.00 per month to

       Plaintiff. The trial court accordingly ordered, inter alia, that Defendant (1) contribute

       $2,040.23 per month to the support of the parties’ minor children beginning 1 May

       2021, in accordance with the North Carolina Child Support Guidelines; and (2) pay
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                                           2022-NCCOA-487

                                          Opinion of the Court

       his child support arrears of $6,059.00 to Plaintiff in full by 30 May 2021. Defendant

       timely filed notice of appeal.

                                             Discussion

¶ 12           On appeal, Defendant argues that the trial court erred by failing to (1) deduct

       the “ordinary and necessary expenses” from Defendant’s self-employment business

       receipts in its calculation of his monthly gross income; (2) provide a rationale as to

       why the court did not deduct the expenses; and (3) deduct Defendant’s temporary

       child support and equitable distribution payments from his monthly gross income in

       its calculation of his monthly adjusted gross income.

          I.      Standard of Review

¶ 13           “Child support orders entered by a trial court are accorded substantial

       deference by appellate courts and our review is limited to a determination of whether

       there was a clear abuse of discretion.” Jonna v. Yaramada, 273 N.C. App. 93, 100,

       848 S.E.2d 33, 41 (2020) (citation omitted). “A judge is subject to reversal for abuse

       of discretion only upon a showing by a litigant that the challenged actions are

       manifestly unsupported by reason.” Plott v. Plott, 313 N.C. 63, 69, 326 S.E.2d 863,

       868 (1985) (citation omitted). Because the North Carolina Child Support Guidelines

       vest a trial court “with the discretion to disallow the deduction of any business

       expenses which are inappropriate for the purposes of calculating child support, the

       trial court’s decision to disallow the claimed expenses must be upheld unless it is
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                                            2022-NCCOA-487

                                           Opinion of the Court

       ‘manifestly unsupported by reason’ and therefore an abuse of discretion.” Cauble v.

       Cauble, 133 N.C. App. 390, 395, 515 S.E.2d 708, 712 (1999) (citation omitted).

¶ 14            “[U]nchallenged findings of fact are binding on appeal.” Kleoudis v. Kleoudis,

       271 N.C. App. 35, 39, 843 S.E.2d 277, 281 (2020) (citation omitted). “Furthermore,

       evidentiary issues concerning credibility, contradictions, and discrepancies are for

       the trial court—as the fact-finder—to resolve and, therefore, the trial court’s findings

       of fact are conclusive on appeal if there is competent evidence to support them despite

       the existence of evidence that might support a contrary finding.” Sergeef v. Sergeef,

       250 N.C. App. 404, 406–07, 792 S.E.2d 192, 194 (2016) (citation and internal

       quotation marks omitted).

          II.      Analysis

¶ 15            Defendant first argues that the trial court erred by declining to deduct the

       “ordinary and necessary expenses” from Defendant’s business receipts when

       calculating his monthly gross income for child support purposes. Specifically, he

       asserts that the court erroneously failed to deduct the recurring “withdrawals for at

       least 5 mortgages and a pest and termite service[.]” We disagree.

¶ 16            “The calculation of child support is governed by North Carolina Child Support

       Guidelines established by the Conference of Chief District Court Judges.” Craven Cty.

       v. Hageb, 277 N.C. App. 586, 2021-NCCOA-231, ¶ 12 (citation omitted). The

       Guidelines define “gross income” as “a parent’s actual gross income from any source,
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                                           2022-NCCOA-487

                                          Opinion of the Court

       including but not limited to income from employment or self-employment . . . ,

       ownership or operation of a business, partnership, or corporation, [or] rental of

       property[.]” N.C. Child Support Guidelines, at 3 (2019).

¶ 17         The actual gross income derived from self-employment is calculated by

       subtracting the “ordinary and necessary expenses required for self-employment or

       business operation” from the gross receipts. Id. “ ‘Ordinary and necessary expenses,’

       although not specifically defined in the Guidelines, include expenses for repairs,

       property management and leasing fees, real estate taxes, insurance, and mortgage

       interest. Mortgage principal payments, however, are not an ‘ordinary and necessary

       expense’ within the meaning of the Guidelines.” Lawrence v. Tise, 107 N.C. App. 140,

       149, 419 S.E.2d 176, 182 (1992).

¶ 18         Here, given the proffered evidence of Defendant’s business expenses—or lack

       thereof—the trial court did not err by declining to deduct any expenses from

       Defendant’s business receipts in its calculation of Defendant’s gross income for child

       support purposes. The transcript supports the trial court’s finding that there was “no

       evidence of [which] expenses [were] associated with any of [Defendant’s] business

       enterprises.” Defendant did not introduce any documentation of his income and could

       only provide a rough estimate of the amount that he derived from his apartment

       rentals and other businesses; he did not provide any recent tax returns, because he

       had not filed an income tax return since 2017; he testified that he was unsure how
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                                           2022-NCCOA-487

                                          Opinion of the Court

       the apartment mortgages were paid; and his itemized list of business expenses

       included some which were clearly illegitimate, such as Defendant’s home mortgage

       payment and Defendant’s “separation” expenses, which he conceded were not

       business expenses.

¶ 19         Moreover, although two exhibits listed the pest control expense, Defendant

       failed to provide sufficient credible information concerning the expense to permit its

       consideration by the trial court. The itemized list of expenses from 1 January through

       2 April 2021 contained a $140.00 expense for “pest” under “office” expenses, but the

       trial court, as fact-finder, was not required to accept this bare assertion at face value,

       in light of its determination regarding Defendant’s lack of credibility. See Sergeef, 250

       N.C. App. at 406–07, 792 S.E.2d at 194.

¶ 20         Indeed, the court found that Defendant was not credible, as he “was largely

       evasive [in his testimony] with the purpose of misleading” the court. Defendant does

       not challenge this finding, and thus, it is binding on appeal. Kleoudis, 271 N.C. App.

       at 39, 843 S.E.2d at 281. Further, Defendant conceded at trial that the list of expenses

       contained errors, and that a qualified accounting professional had not reviewed it.

       And while the bank statements for one of the DER accounts also listed a monthly pest

       control expense of $70.00, Defendant failed to indicate whether that expense was

       incurred for his or his mother’s rental properties, or for one of their personal

       residences. Therefore, because the trial court found that Defendant offered no reliable
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                                         Opinion of the Court

       evidence as to the pest control expense—a determination supported by the court’s

       binding finding concerning the incredibility of Defendant’s testimony—the trial court

       appropriately exercised its discretion by declining to consider pest control expense as

       an ordinary and necessary business expense. See Cauble, 133 N.C. App. at 395, 515

       S.E.2d at 712.

¶ 21         Regarding the interest portion of the mortgage payments on Defendant’s rental

       properties, Defendant presented insufficient evidence to warrant its inclusion as a

       business expense. Although Defendant testified that the monthly mortgage payments

       on some of his rental properties, his mother’s residence, and her rental properties

       were paid from the DER accounts, he could not identify the specific properties

       associated with those mortgage payments. With this incomplete picture of

       Defendant’s expenses, the trial court could not adequately distinguish whether the

       proffered expenses were Defendant’s personal expenses or expenses associated with

       Defendant’s business or his mother’s business. Furthermore, even if Defendant had

       identified the mortgage payments which were attributable to his rental properties,

       full mortgage payments do not constitute “ordinary and necessary expenses” for the

       purpose of calculating child support. Lawrence, 107 N.C. App. at 149, 419 S.E.2d at

       182 (“Mortgage principal payments . . . are not an ‘ordinary and necessary expense’

       within the meaning of the Guidelines.”). Additionally, Defendant did not provide any

       evidence regarding the “expenses for repairs, property management and leasing fees,
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                                            2022-NCCOA-487

                                           Opinion of the Court

       real estate taxes, insurance, and mortgage interest[,]” id., or any other “ordinary and

       necessary expenses required for self-employment or business operation[,]” N.C. Child

       Support Guidelines, at 3.

¶ 22          Accordingly, the trial court did not abuse its discretion in finding that there

       was no competent evidence of Defendant’s “ordinary and necessary expenses[,]” id.,

       and appropriately declined to deduct the pest control expense and the mortgage

       payments from Defendant’s business receipts in its calculation of Defendant’s gross

       income for child support purposes, see Cauble, 133 N.C. App. at 395, 515 S.E.2d at

       712.

¶ 23          Defendant next asserts that the trial court was “required to make findings why

       the expenses [Defendant] testified about and that were admitted into evidence were

       not considered in the calculation of his income.” In support of this contention,

       Defendant cites Thomas v. Burgett, 265 N.C. App. 364, 852 S.E.2d 353 (2019).

       However, as explained below, Defendant’s reliance on Thomas is misplaced.

¶ 24          In Thomas, this Court vacated in part and remanded a child support order in

       which the trial court failed to articulate its reason for excluding particular expenses

       related to the defendant’s rental property. 265 N.C. App. at 368, 852 S.E.2d at 357.

       The Court explained that “even if the trial court chose not to find [the defendant]’s

       evidence credible at all and therefore did not factor it into its computation, its findings

       d[id] not provide its rationale for doing so.” Id. (citation and internal quotation marks
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                                         Opinion of the Court

       omitted). The Court determined that vacatur and remand were necessary because

       “[w]ithout any evidence indicating the trial court’s contemplation of those expenses,

       we do not have enough findings to conduct adequate review.” Id.

¶ 25         In the case at bar, the trial court sufficiently provided a rationale for not

       factoring Defendant’s proffered evidence of pest control expense into its calculation

       of his gross income: it did not find the evidence to be credible. And, unlike the trial

       court in Thomas, the court here articulated at trial why it did not find Defendant’s

       evidence to be credible: namely, that Defendant’s testimony “was largely evasive with

       the purpose of misleading” the court, a sentiment reiterated in the court’s written

       finding that Defendant’s “testimony was largely evasive with the purpose of

       misleading the court as to his income[.]” This finding, unchallenged by Defendant, is

       binding on appeal. Kleoudis, 271 N.C. App. at 39, 843 S.E.2d at 281. Moreover,

       because Defendant did not offer any evidence of the interest portion of the mortgage

       payments on his rental properties, the court did not need to provide a rationale for

       not considering the interest as a business expense, as there was no evidence for the

       court to consider.

¶ 26         Thus, given that the trial court provided a rationale for not accepting

       Defendant’s evidence of any pest control expense—that Defendant’s evasive and

       misleading testimony undermined the credibility of his proffered evidence—and that

       the court required no rationale for declining to consider evidence of the mortgage-
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                                         Opinion of the Court

       interest expense where Defendant offered none, we conclude that the court provided

       sufficient findings of fact in its order to enable appellate review. See Thomas, 265

       N.C. App. at 368, 852 S.E.2d at 357. Defendant’s argument accordingly fails.

¶ 27         Finally, citing no authority, Defendant contends that the trial court erred in

       calculating his monthly adjusted gross income by failing to deduct Defendant’s

       temporary child support and equitable distribution payments from his monthly gross

       income. This argument is manifestly without merit.

¶ 28         The Guidelines prescribe particular instances in which a parent is entitled to

       receive a deduction from his or her monthly gross income for the purpose of

       calculating child support: (1) where a parent is responsible for child support payments

       on behalf of a child other than the child for whom support is sought in the present

       action; and (2) where a parent is responsible for the financial care of “his or her

       natural or adopted children who currently reside with the parent (other than children

       for whom child support is being determined in the pending action).” N.C. Child

       Support Guidelines, at 4.

¶ 29         In the instant case, the trial court did not abuse its discretion by declining to

       deduct Defendant’s temporary child support and equitable distribution payments

       from his monthly gross income for child support purposes, in that the Guidelines do

       not permit deductions from a party’s gross income for such payments. See id.; see also
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                                        Opinion of the Court

       Cauble, 133 N.C. App. at 395, 515 S.E.2d at 712. Defendant’s argument to the

       contrary is overruled.

                                          Conclusion

¶ 30         For the foregoing reasons, we conclude that the trial court did not abuse its

       discretion in calculating Defendant’s monthly gross income and monthly adjusted

       gross income, and that the trial court provided sufficient findings to support its

       determinations. Accordingly, we affirm the child support order.

             AFFIRMED.

             Judges DILLON and CARPENTER concur.