Court Opinion

ID: 4582989
Source: CourtListenerOpinion
Date Created: 2020-11-02 21:19:21.761726+00
Date Added: 2024-06-11T13:47:23.670936
License: Public Domain

IN THE COURT OF APPEALS FOR THE STATE OF WASHINGTON
 In the Matter of the Parentage of:
                                                     No. 80256-9-I
 O.M-S.,
                                                     DIVISION ONE
                                Child,
                                                     UNPUBLISHED OPINION
 ANDREW SUNWOO,

                                Respondent,

    and

 DIANA MCKUNE,

                                 Appellant.

       LEACH, J. — Diana McKune appeals several trial court decisions about child

support. She claims the trial court abused its discretion by the way it used a fringe benefit

for childcare in its child support calculations. We agree, reverse, and remand for further

proceedings consistent with this opinion.

                                      BACKGROUND

       Andrew T. Sunwoo and Diana M. McKune are parents of O.M-S. On August 15,

2018, the parties participated in a settlement conference with Cheryll Russell and agreed

on a final parenting plan. They also agreed to submit all remaining issues including

  Citations and pincites are based on the Westlaw online version of the cited material.
No. 80256-9-I/2

calculation of child support, development of all other provisions of a child support order,

claims for reimbursements, and attorney fees and costs to a binding arbitration.

      On March 5, 2019, Russell released her arbitration decision and award. Russell

concluded that under RCW 26.19.071(3) the employment benefits McKune received,

including both child care and pet insurance (fringe benefits), constitute income to McKune

for purposes of income calculation. She also calculated McKune’s monthly gross income.

For 2016, including a daycare benefit, her monthly gross income was $2,565.58. For

2017, she concluded that McKune’s monthly gross income increased to $5,212.66. She

noted that “the taxes paid on these employment benefits are included in the tax deduction

on the Child Support Worksheet.” Finally, for 2018 she calculated a monthly gross income

of $5,226.05.

      The arbitrator also found McKune had not incurred any work related child care

expenses. She declined to find that the value of the fringe benefit she included in

McKune’s income reflected an expense incurred by McKune. And, she therefore declined

to require Sunwoo to reimburse her for his proportionate share of this amount.

      The parties could not agree on final orders implementing the arbitration decision.

McKune asked the trial court to modify the arbitrator’s child support decision. Sunwoo

asked the court to enter his proposed final orders that “follow the CR 2(a), arbitration

ruling, and the court’s prior orders regarding arbitration fees and child support.” On

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No. 80256-9-I/3

June 17, 2019, the trial court signed these final orders with modifications that did not

address the child care issue. These orders were filed the next day. McKune appeals.

                                STANDARD OF REVIEW

      We review a superior court's decision setting child support for abuse of discretion.1

A superior court abuses its discretion if its decision is manifestly unreasonable or based

on untenable grounds or untenable reasons. 2 A decision is manifestly unreasonable if it

is outside the range of acceptable choices, given the facts and the applicable legal

standard; it is based on untenable grounds if the factual findings are unsupported by the

record; it is based on untenable reasons if the court applied the incorrect legal standard

or the facts do not meet the requirements of the correct standard. 3

                                       ANALYSIS

Income Calculation

      McKune first claims the trial court attributed too much income to her when

calculating child support. She contends the court should not have included as part of her

income the amount for the day care fringe benefit shown on her paystub. She notes the

arbitrator found the same amount was shown as a deduction from her gross pay on her

paystub. She asserts this shows the amount was never available to her for payment of

support.

      RCW 26.19.171(1) requires that the court consider all income and resources of

each parent’s household when establishing each parent’s child support obligation.

RCW 26.19.071(3) states a parent’s gross income includes all income from any source,

      1 In re Marriage of Booth, 114 Wash. 2d 772, 776, 791 P.2d 519 (1990).
      2 In re Marriage of Horner, 151 Wash. 2d 884, 893, 93 P.3d 124 (2004).
      3 Horner, 151 Wash. 2d at 893-94.

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No. 80256-9-I/4

except those sources expressly excluded in subsection 4 of the statute. Subsection 4

does not exclude child care payments made by an employer for the benefit of its

employee. So, if the child care payments made by McKune’s employer are income, the

trial court properly included them when making its child support calculation.

       No statute defines “income” for purposes of child support calculations. We look to

a dictionary for common definitions: (1) “a gain or recurrent benefit that is usually

measured in money” or (2) the “value of goods and services received.” 4 The challenged

day care payments meet these definitions. They were a recurrent benefit whose value

was measured in money. And, McKune received the value of child care purchased by

her employer for this amount. The trial court correctly included the amount of the child

care payments as income to McKune.

       McKune offers two arguments for a contrary result. First, she notes her employer

deducted from her gross pay the full amount of the day care payment. From this fact, she

asserts she did not have this amount available to pay child support, and it should not be

included as income. As we discuss below, this deduction bears on whether McKune

incurred any day care expense and not whether she received income.

       McKune also relies on an unpublished opinion from Division III of this court, Gore

v. Jones. 5   There, the court considered whether deferred compensation and health

insurance premiums paid by a physician’s employer should be included in the physician’s

income when calculating child support. The court noted RCW 26.19.071(3) requires

including income from deferred compensation and not deferred compensation itself as

       4 W EBSTER'STHIRD NEW INTERNATIONAL DICTIONARY 1143 (2002).
       5 No. 30831-6-I, slip op. (Wash. Ct. App. Aug. 13, 2013) (unpublished),
https://www.courts.wa.gov/opinions/pdf/308316%20OPN.pdf.
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No. 80256-9-I/5

income. It observed that including the deferred compensation payment as income would

result in counting the payment as income twice, once when paid by the employer and

again when distributed at a later date to the employee.

      Neither of the reasons for the court’s exclusion of deferred compensation apply to

a child care payment made by an employer for the benefit of its employee. No statutory

language supports its exclusion and no risk of double counting exists. The Gore court

noted that neither party cited any authority supporting a claim that an employer's payment

of a health insurance premium was income to the employee. Indeed, the tax code

contains an express provision allowing the employer a deduction for this expense and

providing that it is not income to the employee. 6 The court also noted the difficulty in

determining the value of a premium payment to the employee. Here, the record shows

the IRS code requires that McKune’s employer report its child care payment as income

to McKune. Because the amount reported equals the amount paid for the day care

provided on behalf of McKune, no problem exists determining the value of the benefit to

McKune. So, Gore does not provide support for McKune’s position.

Child Care Expenses

      McKune next claims if the child care fringe benefit is income to her, then the trial

court should have found she paid work related child care expenses and require Sunwoo

to reimburse her his proportionate share. We agree.

      RCW 26.19.080(3) provides that day care costs shall be shared by the parents in

the same proportion as basic child support obligation. The arbitrator and the trial court

      6 U.S. Internet Revenue Serv., Pub. 15-B, Employer’s Tax Guide to Fringe
Benefits 5 (2020), https://www.irs.gov/pub/irs-pdf/p15b.pdf.
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No. 80256-9-I/6

accepted Sunwoo’s argument that the child care fringe benefit provided by McKune’s

employer was “free” to McKune. As a result, he claims McKune paid no child care

expense. This argument improperly exalts form over substance and ignores economic

reality.

           McKune’s employer did not make a gift of child care services to her. “A fringe

benefit is a form of pay for the performance of services.” 7 McKune provided her services

to her employer and received in return compensation that included a child care fringe

benefit. As the provider of services, McKune is the recipient of the value of this fringe

benefit even if her employer made a payment to a third party for the child care. 8

           As between McKune and Sunwoo, the employer’s direct payment to the child care

provider has no different economic impact than if the employer had paid McKune

additional wages equal to the child care cost and McKune had paid the provider. Because

of our complex tax code, the employer and McKune benefit from the employer paying the

child care provider directly. Either way, Sunwoo receives exactly the same thing. His

child receives child care that he did not help pay for. But, RCW 26.19.080(3) requires

that he pay his proportionate share. So, the trial court should have found McKune

incurred a work related child care expense, made appropriate support calculations

incorporating this expense, and require Sunwoo to reimburse McKune for his share. To

the extent the trial court’s order on motion to enforce and enter final orders and for fees,

the child support order, the final parentage order, and the findings and conclusions about

           7
          Pub. 15-B, Employer’s Tax Guide to Fringe Benefits 2 (2020)
https://www.irs.gov/pub/irs-pdf/p15b.pdf.
        8 Pub. 15-B, Employer’s Tax Guide to Fringe Benefits 2 (2020)

https://www.irs.gov/pub/irs-pdf/p15b.pdf.
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No. 80256-9-I/7

parentage provide otherwise. We reverse those decisions and remand for further

proceedings consistent with this opinion.

       Sunwoo asks this court to provide him a credit against any child care expenses he

may owe from the judgments he recovered against McKune. The trial court is the

appropriate place for him to first make this request.

Attorney Fees

       McKune requests attorney fees and costs citing RCW 26.26B.060. 9 She correctly

notes this statute does not require consideration of either need or ability to pay. 10 McKune

has prevailed. We grant her request for attorney fees and costs subject to her compliance

with RAP 18.1.

                                      CONCLUSION

       We reverse the trial court’s decisions as described above. The trial court properly

included the employer paid child care fringe benefit in McKune’s income for child support

calculation purposes. But, it erred when it did not find McKune incurred work related child

care expenses for which she was entitled to proportionate reimbursement from Sunwoo.

WE CONCUR:

       9 The court may order reasonable fees of experts and the child's guardian ad litem,
and other costs of the action, including blood or genetic test costs, to be paid by the
parties in proportions and at times determined by the court. The court may order that all
or a portion of a party's reasonable attorney's fees be paid by another party, except that
an award of attorney's fees assessed against the state or any of its agencies or
representatives shall be under RCW 4.84.185.
       10 In re Marriage of Wendy M., 92 Wash. App. 430, 439, 962 P.2d 130 (1998).

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