Court Opinion

ID: 3066640
Source: CourtListenerOpinion
Date Created: 2015-10-15 14:17:51.000957+00
Date Added: 2024-06-11T10:33:40.924818
License: Public Domain

Opinion issued October 15, 2015

                                     In The

                              Court of Appeals
                                    For The

                         First District of Texas
                            ————————————
                              NO. 01-14-00851-CV
                           ———————————
    KORI LYNN PLOWMAN F/K/A KORI LYNN UGALDE, Appellant
                                       V.
                    PHILIP ANDREW UGALDE, Appellee

                   On Appeal from the 312th District Court
                            Harris County, Texas
                      Trial Court Case No. 2012-38295

                         MEMORANDUM OPINION

      This case concerns a dispute over the amount of a father’s child support

obligation. When the parents divorced in September 2012, they agreed that their

son would live primarily with the mother, the father would have expanded standard

possession, and he would pay $3,000 per month in child support. The terms of their
agreement were incorporated into two documents: an agreement incident to

divorce and a final decree of divorce signed by the trial court.

      One year later, the father filed a motion to modify his child support

obligation and, following a bench trial, the trial court reduced his monthly child

support obligation to $1,510 per month, which represents the amount of child

support that he would owe under the statutory guidelines based on his then-current

level of income.

      The mother raises three issues in her appeal. First, she contends that the trial

court abused its discretion by modifying the child-support order without evidence

of a material and substantial change in the father’s circumstances or that the

reduction was in the child’s best interest. Second, she argues that the trial court

abused its discretion when it failed to award her a money judgment for damages,

representing the difference between what the father had agreed to pay and the

amount the trial court was ordering him to pay subject to contempt. Third, she

argues that the trial court’s refusal to award her contract damages based on the

Agreement Incident to Divorce violated the open courts provision of the

constitution.

      We affirm.

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                                       Background

       Philip Ugalde and Kori Lynn Plowman ended their marriage in September

2012, and a divorce decree was entered based on their negotiated resolution of all

aspects of their separation, including division of property, child custody, and child

support. The decree specifically references a contemporaneous agreement between

them—an “Agreement Incident to Divorce”—and provides that it “incorporates

[it] . . . by reference as part of this decree as if it were recited herein verbatim . . . .”

       The Agreement Incident to Divorce contains a lengthy recitation of how the

couple’s many assets were to be divided. Regarding child custody and support, it

states: “Parties agree to, and will seek in the final decree, a standard child support

order” requiring Ugalde to pay “child support of $3,000.00 per month for the

Parties’ only child.” The agreement further states that, “[t]o the extent permitted by

law, the parties stipulate that this agreement is enforceable as a contract.”

       The divorce decree names both parents as managing conservators, with

Plowman granted the exclusive right to designate their son’s primary residence. It

orders Ugalde to pay $3,000 per month in child support and to maintain health

insurance for their son. The decree contains a finding by the trial court “that the

provisions in this decree . . . constitute the parties’ agreed parenting plan.” It

further provides that, “[t]o the extent permitted by law, the parties stipulate the

                                             3
agreement is enforceable as a contract.” The decree also contains a provision

concerning future disputes over its terms:

      Settlement of Future Disputes
      It is agreed that before setting any hearing or initiating discovery in a
      suit for modification of the terms and conditions of conservatorship,
      possession, or support of the child . . . the parties shall mediate the
      controversy in good faith. . . . It is agreed that the party wishing to
      modify the terms and conditions of conservatorship, possession, or
      support of the child shall give written notice to the other party of a
      desire to mediate the controversy. If . . . the parties cannot agree . . . ,
      the party desiring modification shall be released from the obligation to
      mediate and shall be free to file suit for modification.

      At the time of the couple’s divorce, Ugalde had been employed for seven

months as a commercial loan officer, making an annual salary of $170,000, plus a

one-time signing bonus of $50,000 and the possibility of annual, commission-

based bonuses moving forward. That employment ended seven months after the

divorce. A letter of resignation indicated that Ugalde had voluntarily resigned from

his position; however, he testified at the modification hearing that his employer

had given him the choice between (1) resigning and paying back only a portion of

his $50,000 signing bonus or (2) being fired and required to return the entire

signing bonus. Thus, according to Ugalde, his decision to leave his employment

was not voluntary.

      Ugalde was unemployed for approximately five months before he obtained a

position as a vice president of portfolio development at a much-reduced salary of

                                           4
$75,000 per year, again with the possibility of commission-based bonuses. Around

that time, Ugalde filed his motion to modify the child-support obligation.

      Ugalde held the vice president position for about seven months but was fired

for performance reasons. He was unemployed for two more months. Then, in

March 2014—one day before the hearing on the pending motion to modify—he

accepted a new position as a vice president of market banking at a different lending

institution earning an annual salary of $125,000, plus the possibility of

discretionary bonuses.

      Thus, to summarize, between the date of the divorce and the date of the

hearing on the modification request, Ugalde was employed at the $170,000 salary

for approximately seven months; employed at the $75,000 salary for approximately

seven months; unemployed, intermittently, for approximately six months; and,

finally, employed in a new position that paid a $125,000 salary.

      Ugalde testified that, during his periods of unemployment and lower

compensated employment, he “ended up basically cashing in all [of his] retirement

accounts,” an amount he estimated was “[p]robably more than $150,000,” leaving

him with substantially less savings and retirement funds at the time of the

modification hearing. Ugalde used these funds to maintain his living situation, fund

his job search, continue to pay his monthly $3,000 child-support obligation,

replace a vehicle damaged in a car accident, and cover various other expenses.

                                         5
      Ugalde pointed to both his reduction in salary and his loss of retirement

funds and savings as evidence of a material and substantial change in his financial

circumstances to justify modification of his child-support obligation. He asked the

trial court to reduce it from $3,000 per month—which was more than would have

been required if the Family Code child-support guidelines had been used to set the

amount—to a lesser amount of $1,510 per month. According to Ugalde and the

admitted financial documents, the $1,510 amount corresponded to the statutory

guidelines for his current employment at $125,000 gross annual income.

      Plowman argued that Ugalde had not established a material and substantial

change in circumstances, noting that his tax return actually showed an increase in

salary during the period he was unemployed 1 and that, because he chose to access

and spend such a large amount of his retirement funds, he wasted more money than

he would have had access to had he continued in his earlier employment and not

withdrawn anything from the retirement account. Plowman argued that Ugalde

should not benefit from squandering his retirement funds unnecessarily.

      The trial court also received evidence of Plowman’s net monthly income,

which was demonstrated to be approximately $8,700 and was higher than

Ugalde’s.

1
      This is because the $150,000 withdrawal of funds from the retirement account was
      treated, for tax purposes, as income.
                                          6
      The trial court made findings of fact and conclusions of law and found that

Ugalde had established a material and substantial change in his circumstances. The

trial court granted his motion to modify, applied the statutory guideline

percentages, and ordered that his child support obligation be reduced to $1,510 per

month, which the court found was in the child’s best interest.

                       Material Change in Circumstances

      In her first issue, Plowman contends that the trial court abused its discretion

by finding that Ugalde had established a material and substantial change in his

circumstances to support modification of his child support obligation from the

agreed-to amount of $3,000 per month to the guideline-based amount of $1,510 per

month and that such modification was in the best interest of the child.

A.    Standard of review

      “A trial court has discretion to set child support within the parameters

provided by the Texas Family Code.” Iliff v. Iliff, 339 S.W.3d 74, 78 (Tex. 2011).

The court is also given broad discretion to modify the amount to increase or

decrease the obligation. In re D.S., 76 S.W.3d 512, 520 (Tex. App.—Houston

[14th Dist.] 2002, no pet.). “A court’s order of child support will not be disturbed

on appeal unless the complaining party can show a clear abuse of discretion.”

Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990) (per curiam). A trial court

abuses its discretion when it acts arbitrarily or unreasonably, without reference to

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guiding rules or principles. Id.; Downer v. Aquamarine Operators, Inc., 701
S.W.2d 238, 241–42 (Tex. 1985). A trial court also abuses its discretion by failing

to analyze or apply the law correctly. Id.

      In a bench trial, “the trial court’s findings of fact have the same weight as a

jury’s verdict.” Brejon v. Johnson, 314 S.W.3d 26, 30 (Tex. App.—Houston [1st

Dist.] 2009, no pet.). Challenged findings of fact are not determinative unless they

are supported by the record. Id. We review the sufficiency of the evidence to

determine whether the trial court abused its discretion in making such findings. Id.

In this context, “legal and factual sufficiency of the evidence are not independent

grounds for asserting error, but they are relevant factors in assessing whether the

trial court abused its discretion.” Dunn v. Dunn, 177 S.W.3d 393, 396 (Tex.

App.—Houston [1st Dist.] 2005, pet. denied). “A trial court does not abuse its

discretion when there is some evidence of a substantive and probative character to

support the trial court’s judgment.” Miles v. Peacock, 229 S.W.3d 384, 389 (Tex.

App.—Houston [1st Dist.] 2007, no pet.).

      The trial court, as factfinder, is the sole judge of the credibility of the

witnesses, and the trial court’s resolution of issues of credibility are not subject to

reevaluation on appeal. See Puntarelli v. Peterson, 405 S.W.3d 131, 135 (Tex.

App.—Houston [1st Dist.] 2013, no pet.); Sw. Bell Media, Inc. v. Lyles, 825
S.W.2d 488, 493 (Tex. App.—Houston [1st Dist.] 1992, writ denied).

                                             8
B.    Modification of agreed-to child support amount

      Agreed child support amounts are subject to modification. In re G.J.S., 940
S.W.2d 289, 294 (Tex. App.—San Antonio 1997, no writ). Section 156.401 of the

Family Code provides as follows:

      If the parties agree to an order under which the amount of child
      support differs from the amount that would be awarded in accordance
      with the child support guidelines, the court may modify the order only
      if the circumstances of the child or a person affected by the order have
      materially and substantially changed since the date of the order’s
      rendition.

TEX. FAM. CODE ANN. § 156.401(a-1) (West 2014) (emphasis added).

      The trial court may consider the child-support guidelines to determine

whether there has been a material or substantial change of circumstances to

warrant a modification of an existing child-support order. TEX. FAM. CODE ANN.

§ 156.402(a) (West 2014); Rumscheidt v. Rumscheidt, 362 S.W.3d 661, 666 (Tex.

App.—Houston [14th Dist.] 2011, no pet.). However, “[a] child support order that

is not in compliance with the guidelines does not by itself establish such a material

and substantial change in circumstances.” In re G.J.S., 940 S.W.2d at 294; In re

A.T.A.L., No. 05-11-01666-CV, 2013 WL 1912618, at *2 (Tex. App.—Dallas May

8, 2013, no pet.) (mem. op.). Disparity between the statutory guideline amount and

the agreed-to amount is just one factor to be considered by the trial court. Cole v.

Cole, 882 S.W.2d 90, 92 (Tex. App.—Houston [14th Dist.] 1994, writ denied);

Elliott v. Elliott-Weber, No. 14-04-00130-CV, 2005 WL 481353, at *3 (Tex.

                                         9
App.—Houston [14th Dist.] Mar. 1, 2005, no pet.) (mem. op.). The court also may

consider “other relevant evidence.” TEX. FAM. CODE ANN. § 156.402(b) (West

2014); Rumscheidt, 362 S.W.3d at 666.

      “To determine whether there has been a substantial and material change, the

court must compare the financial circumstances of the child and the affected

parties at the time the order was entered with their financial circumstances at the

time the modification is sought.” Melton v. Toomey, 350 S.W.3d 235, 238 (Tex.

App.—San Antonio 2011, no pet.); In re C.C.J., 244 S.W.3d 911, 917–18 (Tex.

App.—Dallas 2008, no pet.); Cole, 882 S.W.2d at 92. “Without evidence setting

out the financial circumstances” of the parties at these relevant times, “the family

court cannot make a determination that there has been a material and substantial

change.” Cole, 882 S.W.2d at 92; see In re C.C.J., 244 S.W.3d at 917–18. As the

movant, it was Ugalde’s burden to present evidence of historical and current

financial circumstances. Melton, 350 S.W.3d at 238.

      Not all changes in income qualify as material and substantial. “Temporary

slumps do not rise to the level of a material and substantial change in condition and

should not support a permanent change in child support levels.” Starck v. Nelson,

878 S.W.2d 302, 308 (Tex. App.—Corpus Christi 1994, no writ). Instead, what is

required is a marked decrease in income or steady decline without offsetting

circumstances. See Blanco v. Garcia, 767 S.W.2d 896, 898 (Tex. App.—Corpus

                                         10
Christi 1989, no writ); Watkins v. Austin, 590 S.W.2d 830, 832 (Tex. App.—Dallas

1979, no writ).

         Trial courts look not only to a paying parent’s salary, but also to other

sources of income. In re G.J.S., 940 S.W.2d at 293; Clark v. Jamison, 874 S.W.2d
312, 317 (Tex. App.—Houston [14th Dist.] 1994, no writ). For example, a trial

court may take into consideration whether a parent has other assets at his disposal

with which to pay child support. See In re G.J.S., 940 S.W.2d at 293. Courts also

can consider the parent’s earning potential, not just actual income, to set the child

support amount. Id.; In re Striegler, 915 S.W.2d 629, 638 (Tex. App.—Amarillo

1996, writ denied). Unless a movant has established a material and substantial

change, there is no basis for reducing a child-support obligation to be in line with

statutory guidelines. See TEX. FAM. CODE ANN. § 156.401(a-1); Cole, 882 S.W.2d

at 92.

         The presumptively applicable percentage of net resources that should be

paid as child support for a single child is 20%. 2 TEX. FAM. CODE ANN.

§ 154.125(b) (West 2014). Ugalde contends that applying that percentage to his net

resources results in a child-support obligation of $1,510. Plowman does not dispute

that the guidelines, if applied, would result in a $1,510 monthly obligation. Instead,

she argues that Ugalde has not demonstrated a material and substantial change in

2
         Unless the parent’s income reaches into the high-income bracket designated by the
         statute. TEX. FAM. CODE ANN. § 154.125(b).
                                             11
his circumstances to permit the modification or that the modification is in the

child’s best interest.

C.     Trial court did not abuse discretion

       At the time Ugalde agreed to pay $3,000 per month, he was earning

$170,000 annually. Between then and the hearing on his motion to modify child

support, he had six months without employment, seven months of employment at

less than half the earlier salary, an unexpected obligation to repay $20,000 of his

signing bonus, and, ultimately, a job earning $125,000 annually.

       The statutory provisions on modification of child support permit the trial

court to consider, as a factor, the amount of support that would be required under

the guidelines. TEX. FAM. CODE ANN. § 156.402(a). Ugalde had been timely paying

much more than that amount, even during his periods of unemployment and less-

paid employment. During a period of unemployment, he withdrew approximately

$150,000 from his retirement account, which allowed him to remain current on his

child-support obligation and pay his other expenses, but doing so, he argued,

“wiped out” his savings and retirement and left him without a cushion if he were

to, again, face unemployment.

       The trial court received evidence that Plowman had significant net resources

to contribute to the support of the child. Ugalde testified that he believed a

                                        12
reduction in his support obligation to the statutory amount would be in the child’s

best interest.

       We conclude that Ugalde supplied legally and factually sufficient evidence

and the trial court did not abuse its discretion in concluding that Ugalde had

experienced a material and substantial change in his circumstances to warrant

modification of his child-support obligation. See Starck, 878 S.W.2d at 308

(change in paying parent’s income can qualify as material and substantial change);

Rumscheidt, 362 S.W.3d at 666 (trial court may consider child support guidelines

to determine whether material and substantial change in circumstances has

occurred to warrant modification); see also TEX. FAM. CODE ANN. § 156.402(a); cf.

In re G.J.S., 940 S.W.2d at 293 (whether other assets are available is relevant to

parent’s ability to pay child support).

       We further conclude that there was legally and factually sufficient evidence

that modification was in the child’s best interest. Without modification, Ugalde

would have been obligated to pay double the statutory amount in child support

while making 26% less in a new job and without the cushion that the withdrawn

retirement funds had provided in the past. It was within the trial court’s discretion

to determine that it was in the child’s best interest to have his father’s financial

obligation reduced to a more manageable level, subject to the possibility of future

modification should his situation improve. See Gillespie v. Gillespie, 644 S.W.2d
13
449, 451 (Tex. 1982) (noting broad discretion given to trial court to determine best

interest of child); see also TEX. FAM. CODE ANN. § 154.122(a) (child support

amount that conforms to statutory guidelines presumed in best interest of child); In

re A.M.P., 368 S.W.3d 842, 846 (Tex. App.—Houston [14th Dist.] 2012, no pet.).

        Accordingly, we overrule Plowman’s first issue.

               The Parties’ Agreement as an Enforceable Contract

        In her second issue, Plowman argues that “the trial court should have

granted [her] the difference between the present value of the agreed child support

and the court ordered child support as a money judgment subject to collection

[under contract law] based on the Agreement Incident to Divorce.” She contends

that the trial court abused its discretion by not “awarding [her] the benefit of the

bargain” based on that agreement.

        Ugalde responds that the issue of contract damages has been waived because

Plowman’s live pleading did not seek breach-of-contract damages and she has not

appealed the trial court’s decision denying her trial amendment, in which she

sought to add a claim for breach-of-contract damages. According to Ugalde, the

trial court could not have erred by denying Plowman damages that she had not

pled.

                                         14
A.    Denial of trial amendment

      During the modification hearing, Ugalde objected to Plowman’s question

whether Ugalde planned to continue paying $3,000 even if the trial court were to

reduce his obligation. Ugalde argued that the agreement to pay $3,000 was not an

enforceable contract and Plowman could not recover contract damages for its

breach. There was a lengthy discussion among the trial court and the parties,

during which it was discussed that the breach-of-contract claim would equal at

least $180,000. Ugalde argued that Plowman’s live pleading had only included a

defensive argument against modification without any affirmative claim for breach

of contract or request for contract damages. According to Ugalde, the pleading did

not inform him that she would be seeking money damages.

      The discussion culminated with the trial court ruling that Plowman’s

pleadings did not support the relief she was requesting. The trial court allowed

Plowman to submit a proposed amended pleading for its consideration. Plowman

did so, but Ugalde objected, arguing surprise and attempted delay. The trial court

denied Plowman’s trial amendment. However, the court did allow Plowman to

question Ugalde about whether he intended to pay the full $3,000 per month if the

court were to modify the child support order. He stated that he would not. The

court informed the parties that it would enter a finding concerning whether the

agreement was a contract but would not entertain a claim for contract damages.

                                        15
      The trial court made findings of fact and conclusions of law, including that

(1) under Section 153.007 of the Family Code, the child-support amount that the

parties had agreed to was part of an Agreed Parenting Plan; (2) under Section

153.007(c), it was not enforceable as a contract; (3) the child support obligation

was subject to modification based on a material change in circumstances; (4) the

section of the divorce decree on “child support” provides only for court-ordered

child support, not a contract obligation; and (5) the divorce decree does not

expressly incorporate into its terms a contractual support agreement.

B.    Without a pleading to support the award of damages or an appeal of the
      denial of a trial amendment to request such relief, Plowman cannot
      successfully argue trial court error in denying her damages claim

      A judgment of the court must conform to the pleadings and cannot award

more than requested, absent trial by consent. TEX. R. CIV. P. 301; Binder v. Joe,

193 S.W.3d 29, 32 (Tex. App.—Houston [1st Dist.] 2006, no pet.). Ugalde did not

consent to trial on Plowman’s damages claim. Neither did the trial court allow it.

Instead, the trial court denied Plowman’s request for a trial amendment. Plowman

has not appealed that ruling. Under these facts, we agree with Ugalde that

Plowman cannot prevail on her unpleaded claim for breach-of-contract damages.3

3
      We note that a since-repealed provision of the Family Code allowed enforcement
      of child-support agreements as contracts. ACT OF MAY 20, 2003, 78TH LEG., R.S.,
      ch. 480, § 1, 2003 Tex. Gen. Laws 1747, 1747. That provision was replaced with
      Section 154.124(c), which no longer allows enforcement of child-support
      agreements as contracts. Compare Bruni v. Bruni, 924 S.W.2d 366, 367–69 (Tex.
                                         16
TEX. R. APP. P. 38.1(f), (i); Walling v. Metcalfe, 863 S.W.2d 56, 58–59 (Tex. 1993)

(discussing unassigned error); Stoll v. Lewis, No. 01-08-00556-CV, 2009 WL
1331351, at *3 (Tex. App.—Houston [1st Dist.] May 14, 2009, pet. denied) (mem.

op.) (“Except in cases of fundamental error, neither claimed or at issue here, we

may not reverse a lower court’s judgment without an assignment of error, whether

by issues or points.”).

      We overrule Plowman’s second issue. Given our resolution of this issue, we

do not reach Plowman’s third issue.

                                     Conclusion

      The judgment of the trial court is affirmed.

                                                Harvey Brown
                                                Justice

Panel consists of Justices Jennings, Higley, and Brown.

      1996) (enforcing child support agreement in contract under earlier version of law)
      to Kendrick v. Seibert, 439 S.W.3d 408, 410–11 (Tex. App.—Houston [1st Dist.]
      2014, no pet.) (holding that, under Section 154.124(c), child-support agreements
      “are not enforceable as a contract” but agreements concerning other aspects of
      divorce may be enforceable as contracts) (internal citations omitted).

      Plowman admits that Section 154.124(c) does not allow enforcement of a child
      support agreement as a contract; however, she attempts to avoid this provision by
      arguing that she is not seeking to “enforce” a contract but to obtain “damages . . .
      for breach of contract.” While we fail to see a distinction where Plowman suggests
      one exists, we do not reach the merits of her claim due to her failure to plead a
      cause of action for breach of contract.
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