Court Opinion

ID: 2779257
Source: CourtListenerOpinion
Date Created: 2015-02-13 16:03:38.496984+00
Date Added: 2024-06-11T10:49:58.927081
License: Public Domain

MEMORANDUM DECISION
       Pursuant to Ind. Appellate Rule 65(D), this                          Feb 13 2015, 9:27 am
       Memorandum Decision shall not be regarded as
       precedent or cited before any court except for the
       purpose of establishing the defense of res judicata,
       collateral estoppel, or the law of the case.

       ATTORNEYS FOR APPELLANT                                  ATTORNEY FOR APPELLEE
       Gloria J. Rahman                                         Joseph L. Verkamp
       Keith P. Rahman                                          Jasper, Indiana
       Rahman Law Office
       Ferdinand, Indiana

                                                   IN THE
           COURT OF APPEALS OF INDIANA

       Randall J. Herzog,                                      February 13, 2015

       Appellant-Respondent,                                   Court of Appeals Case No.
                                                               19A01-1407-DR-318
               v.                                              Appeal from the Dubois Circuit
                                                               Court
                                                               The Honorable Dean A. Sobecki,
       Judy K. Herzog,                                         Special Judge
       Appellee-Petitioner                                     Case No. 19C01-1207-DR-405

      Crone, Judge.

                                             Case Summary
[1]   Randall J. Herzog (“Husband”) appeals the trial court’s division of marital

      assets and amount of his child support obligation stemming from the

      dissolution of his marriage to Judy K. Herzog (“Wife”). Finding that the trial

      Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015      Page 1 of 14
      court acted within its discretion in determining that Husband failed to

      overcome the presumption in favor of equal division of marital assets, we affirm

      on that issue. Finding that the trial court clearly erred in its treatment of

      Husband’s parenting time credit and weekly income for purposes of child

      support, we reverse and remand on that issue.

                              Facts and Procedural History
[2]   Husband and Wife were married in October 1997 and had three children during

      their marriage. In July 2012, Wife filed for dissolution of the marriage.

[3]   Husband is an electrician and owns Randy Herzog Electrical (“RHE”), which

      he operates as a sole proprietorship. At the beginning of the marriage, he netted

      around $100,000 annually from RHE. After the economic downturn and

      collapse of the construction market, Husband’s tax returns for years 2010, 2011,

      and 2012 showed a net income from RHE of $5286, $9268, and $13,257

      respectively.

[4]   Throughout the marriage, Wife worked full time at a cabinet factory and one

      night per week at a restaurant. Her earnings for tax years 2011 and 2012 totaled

      $36,525.27 and $42,058.18 respectively.

[5]   Before the marriage, in 1994, Husband purchased a thirteen-acre parcel from

      his parents. Although the initial agreement allowed him to match the highest

      outside bid of $64,000 by paying half to each of his parents, his father ultimately

      chose to retain a life estate in the property in lieu of his $32,000 cash share of

      the proceeds.
      Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 2 of 14
[6]   In 1998, 3.16 acres of the thirteen-acre parcel were subdivided and retitled in

      Husband and Wife’s name.1 The parties built a residence on the 3.16-acre

      parcel (“residential parcel”). The remaining 9.83 acres (“family farm”)

      remained in Husband’s name only, and his father lived there until his death.

      During the early part of his marriage to Wife, Husband made the payments on

      the family farm. However, at one point, Wife made a lump-sum payment

      toward the $32,000 obligation. She also made some monthly payments of

      $264.

[7]   During the pendency of the dissolution, the parties shared equal time with the

      children. As part of the decree, Wife was awarded custody and Husband was

      awarded parenting time in accordance with the Indiana Parenting Time

      Guidelines. The parties each submitted child support obligation worksheets.

      The trial court adopted the figures as laid out in Wife’s worksheet, listing

      Husband’s weekly gross income as $1200, giving him a parenting time credit of

      ninety-five days, and setting his weekly child support obligation at $232. As

      part of the order distributing the marital property, the trial court divided

      Husband’s family farm equally between the parties.

[8]   Husband filed a motion to correct error, citing as error the equal division of his

      family farm and the calculation of his child support obligation. The trial court

      1
          Husband’s father released his life estate on the 3.16 acres.

      Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 3 of 14
       denied his motion to correct error, and he now appeals. Additional facts will be

       provided as necessary.

                                   Discussion and Decision
[9]    Husband challenges two aspects of the dissolution decree: the distribution of

       marital property and the calculation of his child support obligation. Where, as

       here, a trial court issues findings of fact and conclusions thereon pursuant to

       Indiana Trial Rule 52(A), we apply a two-tiered standard of review. Smith v.

       Smith, 938 N.E.2d 857, 860 (Ind. Ct. App. 2010). We determine first whether

       the evidence supports the findings and then whether the findings support the

       judgment. Id. We neither reweigh evidence nor determine witness credibility

       and will consider only the evidence favorable to the trial court’s judgment. Id.

       We review the findings using a clearly erroneous standard and will reverse only

       where the record leaves us firmly convinced that a mistake has been made. Id.

       We do not defer to conclusions of law, and as such, we evaluate them de novo.

       Id.

             Section 1 – The trial court did not abuse its discretion in
                         distributing the marital property.
[10]   Husband challenges the trial court’s decision to divide the marital property

       equally. Indiana Code Section 31-15-7-5 governs marital property division and

       reads in pertinent part,

               The court shall presume that an equal division of the marital property
               between the parties is just and reasonable. However, this presumption
               may be rebutted by a party who presents relevant evidence, including

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 4 of 14
               evidence concerning the following factors, that an equal division
               would not be just and reasonable:

               (1) The contribution of each spouse to the acquisition of the property,
               regardless of whether the contribution was income producing.

               (2) The extent to which the property was acquired by each spouse;

               (A) before the marriage; or

               (B) through inheritance or gift.

[11]   Specifically, Husband maintains that the trial court abused its discretion by

       equally dividing his family farm. He renewed this claim by way of a motion to

       correct error, which was denied, and we review both denials of motions to

       correct error and marital property divisions using an abuse of discretion

       standard. Wortkoetter v. Wortkoetter, 971 N.E.2d 685, 687-88 (Ind. Ct. App.

       2012). An abuse of discretion occurs when the trial court’s decision is clearly

       against the logic and effect of the facts and circumstances before it. Id. at 687.

[12]   A party challenging the trial court’s division of marital property must overcome

       a strong presumption that the court considered and complied with the statute.

       Id. at 688. In other words, Husband must overcome a strong presumption that

       the trial court complied with the statutory factors, considered his evidence

       concerning the title as well as the means and timing of his acquisition of his

       family farm, and nevertheless concluded that an equal division of the family

       farm was just and reasonable. Id. at 689.

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 5 of 14
[13]   Husband contends that the family farm is individual property and that he

       rebutted the statutory presumption of its equal division. It is well established

       that all marital property goes into the marital pot for division, whether it was

       owned by either spouse before the marriage and/or acquired by the single or

       joint effort of the parties. Ind. Code 31-15-7-4(a); Smith, 938 N.E.2d at 860.

       The one-pot theory ensures that all assets are subject to the trial court’s power

       to divide and award. Id.

[14]   Here, Husband presented evidence that he acquired the family farm before

       marriage and retained it in his name individually even after subdividing and

       retitling the residential parcel to include Wife. He characterizes the transfer

       from his parents as “quasi-gratuitous,” claiming that he paid his parents less

       than fair market value. Appellant’s Br. at 20. He bases this claim on evidence

       that although initially his parents allowed him to match the highest sealed

       outside bid of $64,000 for the family farm (paying $32,000 each to his mother

       and father), his father ultimately decided to accept a life estate in lieu of his

       $32,000 cash share. Nevertheless, we note that Husband presented no evidence

       of (1) the value of his father’s life estate or (2) donative intent, i.e., that his

       father intended to make a gift. In contrast, both Husband and Wife testified

       that Wife contributed to the purchase of the family farm by making periodic

       payments toward the balance owing to Husband’s mother ($264 per month) as

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 6 of 14
       well as a $17,000 lump sum payment following the sale of her vehicle. 2 See, e.g.,

       Tr. at 161 (Husband’s cross-examination testimony concerning Wife’s

       contribution of $264 per month followed by his statement that “hindsight is

       twenty-twenty,” and if he had known it would “come to this,” he would have

       paid it off himself). Simply put, Wife contributed regularly and significantly to

       the payments on the family farm. Thus, title and time of original purchase

       notwithstanding, we conclude that the trial court acted within its discretion in

       declining to deviate from the statutory presumption favoring equal division of

       that asset.

               Section 2 – The trial court clearly erred in calculating
                       Husband’s child support obligation.
[15]   Husband also challenges the trial court’s calculation of his child support

       obligation. A trial court’s calculation of child support is presumptively valid,

       and as such, we will reverse only where the determination is clearly erroneous

       or contrary to law. Young v. Young, 891 N.E.2d 1045, 1047 (Ind. 2008).

           Section 2.1 – The trial court clearly erred in imputing income
                                    to Husband.
[16]   Husband specifically contends that the trial court failed to follow Indiana Child

       Support Guideline 3(A)(2) and -(3) when calculating his income derived from

       2
         To the extent that Husband disputes the characterization of the vehicle as solely belonging to Wife, we note
       that even if the vehicle had been jointly owned by Husband and Wife, Wife’s half of the $17,000 proceeds
       ($8500) from its sale nevertheless would constitute a significant contribution toward the $32,000 obligation.

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015          Page 7 of 14
       self-employment for child support purposes. The Guideline reads in pertinent

       part,

               2. …. Weekly Gross Income from self-employment [and] operation of
               a business … is defined as gross receipts minus ordinary and necessary
               expenses. In general, these types of income and expenses from self-
               employment or operation of a business should be carefully reviewed to
               restrict the deductions to reasonable out-of-pocket expenditures
               necessary to produce income. These expenditures may include a
               reasonable yearly deduction for necessary capital expenditures.
               Weekly Gross Income from self-employment may differ from a
               determination of business income for tax purposes.

               ….

               The self-employed shall be permitted to deduct that portion of their
               FICA payment that exceeds the FICA tax that would be paid by an
               employee earning the same Weekly Gross Income.

               3. …. If a court finds a parent is voluntarily unemployed or underemployed
               without just cause, child support shall be calculated based on a
               determination of potential income. A determination of potential income
               shall be made by determining employment potential and probable earnings
               level based on the obligor’s work history, occupational qualifications, prevailing
               job opportunities, and earnings levels in the community. If there is no work
               history and no higher education or vocational training, the facts of the
               case may indicate that Weekly Gross Income be set at least at the
               federal minimum wage level.

       (Emphases added.)

[17]   Guideline 3(A) requires the trial court to make its determination concerning a

       parent’s underemployment after making preliminary determinations of his

       employment and earnings potential. In other words, the Guideline clearly

       anticipates that the trial court will indicate in its findings that it has considered

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 8 of 14
       the evidence presented regarding the parent’s work history, occupational

       qualifications, prevailing job opportunities, and earning levels within his

       community and issue a conclusion indicating that it considered whether the

       parent acted without just cause. See Ind. Child Supp. G. 3(A), cmt. c(2)

       (explaining that imputing income based on underemployment is appropriate

       where underemployment is voluntary and without just cause, meaning that

       parent is capable but fails or refuses to work).

[18]   Although we presume that a trial court knows the law, the trial court’s findings

       are devoid of any language indicating that it considered the factors outlined in

       Guideline 3(A)(3). Moreover, neither the findings of fact nor the conclusions

       thereon state that Husband was underemployed without just cause. Instead, the

       trial court simply adopted verbatim Wife’s proposed findings on this issue:

               8. [Husband] is a self-employed electrician doing business as
               “Randy Herzog Electrical.” His net earnings for the 2011 tax
               year were $9,268.00 and for the 2012 tax year, $13,257.00 (Resp.
               Ex. “F” and “G”). [Husband] testified that in the year 2010, his
               net income from his business was $5,286.00, although he is capable
               of earning $40.00 per hour when he works.

               9. [Wife] contends that child support in the amount of Two
               Hundred Thirty-two Dollars ($232.00) should be paid weekly by
               the Respondent based on the Indiana Child Support Guidelines
               as reflected on her worksheet admitted into evidence (Pet. Ex.
               “8”). Such calculation is based on her weekly income of $949.00
               and $32.24 weekly for health insurance costs. She has calculated
               [Husband’s] weekly income to be $1,200 based on $30 per hour and
               a 40 hour work week.

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 9 of 14
       Appellant’s App. at 29 (emphases added); see also id. at 22 (Petitioner’s

       proposed findings 11 and 12).

[19]   The only indication that the trial court may have deemed Husband to be

       voluntarily underemployed is its adoption of Husband’s testimony that he is

       “capable of earning $40.00 per hour when he works.” Id. at 29. This figure is

       based on Husband’s testimony that when he works, he can bill the customer at

       a rate of $40 per hour. However, Husband also testified that many hours

       during a typical work week are spent on administrative tasks that are not

       billable. In other words, when he is on a jobsite performing electrician services

       for a customer, he can bill that customer at $40 per hour. Below, Wife claimed

       that the significant decrease in Husband’s income from his business is evidence

       of his voluntary underemployment. The record shows that Husband went from

       operating a thriving business, netting around $100,000 annually in late 1990s, to

       netting only $5286 in 2010, $9268 in 2011, and $13,257 in 2012. He explained

       the negative effects of the economic downturn on his electrical business,

       especially owing to the collapse of the residential and commercial construction

       industry. He testified that he had tried to counter the downturn by advertising

       and joining the Better Business Bureau.

[20]   In searching the findings for some indication that the trial court carefully

       considered the Guideline’s factors before imputing potential income to

       Husband for voluntary underemployment without just cause, we find only the

       phrase “she has calculated [Husband’s] weekly income.” Id. This indicates

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 10 of 14
       that the trial court simply adopted Mother’s figure without making a

       preliminary determination of voluntary underemployment without just cause.

[21]   In this vein, we note that nineteen of the trial court’s twenty findings of fact

       were adopted verbatim from Wife’s proposed findings. A trial court’s verbatim

       adoption of a party’s proposed findings is not prohibited. Country Contractors,

       Inc. v. A Westside Storage of Indianapolis, Inc., 4 N.E.3d 677, 694 (Ind. Ct. App.

       2014). “Although we by no means encourage the wholesale adoption of a

       party’s proposed findings and conclusions, the critical inquiry is whether such

       findings, as adopted by the court, are clearly erroneous.” Id.

[22]   The majority of the adopted findings are not proper findings; instead, they are

       merely recitations of testimony and witness opinions. For example, the

       findings are replete with phrases such as, “Petitioner testified,” “Respondent

       testified,” “Petitioner contends,” “According to the Petitioner,” “According to

       the Respondent,” and “in her opinion.” Appellant’s App. at 28-31. Findings

       that indicate that the testimony or evidence was this or that are not findings of

       fact. Parks v. Delaware Cnty. Dep’t of Child Servs., 862 N.E.2d 1275, 1279 (Ind.

       Ct. App. 2007). Rather, a “finding of fact must indicate, not what someone

       said is true, but what is determined to be true, for that is the trier of fact’s duty.”

       Id. (citation omitted). In other words, the “trier of fact must adopt the

       testimony of the witness before the ‘finding’ may be considered a finding of

       fact.” Id. (citation omitted).

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 11 of 14
[23]   In short, the majority of the findings addressing the contested issues are not

       findings of fact. The remaining findings are insufficient to establish that

       Husband was voluntarily underemployed without just cause. As such, we

       reverse and remand for consideration of the factors in Guideline 3(A)(3) and for

       proper findings on the question of whether Husband’s weekly gross income

       may be imputed due to underemployment.

         Section 2.2 – The trial court clearly erred in its treatment of
                     Husband’s excess FICA tax burden.
[24]   Husband also challenges the trial court’s treatment of his FICA withholdings in

       calculating his child support obligation. Guideline 3(A)(2) and its commentary

       stress the importance of carefully reviewing the business deductions of a self-

       employed parent. The Guideline states, “The self-employed shall be permitted to

       deduct that portion of their FICA tax payment that exceeds the FICA tax that

       would be paid by an employee earning the same Weekly Gross Income.” Id.

       (emphasis added). The mandatory language of the guideline is clear, and the

       commentary explains why: the self-employed pay FICA at twice the rate paid

       by employees, and therefore they are permitted to deduct the excess when

       calculating their weekly gross income. Id. at cmt. 2(a). See also Truman v.

       Truman, 642 N.E.2d 230, 237 (Ind. Ct. App. 1994) (holding that language

       permitting self-employed parent to deduct half of FICA tax obligation is not

       flexible but mandatory). The trial court clearly erred in failing to deduct one-

       half of Husband’s FICA tax payment from his income. Consequently, we

       remand for an adjustment to his weekly gross income.

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 12 of 14
             Section 2.3 – The trial court clearly erred in calculating
                        Husband’s parenting time credit.
[25]   Finally, Husband submits that the trial court erred in giving him a parenting

       time credit for only ninety-five nights. Indiana Child Support Guideline 6

       states, “A credit should be awarded for the number of overnights each year that

       the child(ren) spend with the noncustodial parent.” 3 The commentary to

       Guideline 6 accurately describes Husband and Wife’s arrangement here,

       reading in part, “If the parents are using the Parenting Time Guidelines without

       extending the weeknight period into an overnight, the noncustodial parent will

       be exercising approximately 98 overnights.” The trial court specifically ordered

       that Husband’s parenting time be “not less than those times set forth in the

       Indiana Parenting Time Guidelines,” Appellant’s App. at 32. However, instead

       of calculating the parenting time credit at ninety-eight nights, the trial court

       simply adopted Wife’s figures, which amounted to a credit of only ninety-five

       nights. Wife asserts that ninety-five is approximately ninety-eight and that as a

       result, any error is so minimal as to not constitute clear error. Although a three-

       3
         In support of her argument that the wording of Child Support Guideline 6 affords the trial court broad
       discretion over whether to award any parenting time credit, Wife cites Grant v. Hager, 868 N.E.2d 801 (Ind.
       2007) and Vandenburgh v. Vandenburgh, 916 N.E.2d 723 (Ind. Ct. App. 2009). Husband correctly points out
       that those cases were decided in accordance with the previous version of Guideline 6, which used the term
       “may,” instead of the current version, effective as of January 1, 2010, which has replaced “may” with
       “should,” when referencing the trial court’s determination concerning parenting time credit. Our supreme
       court has emphasized that where the Guidelines have been amended, the trial court and the parties shall use
       the version applicable during the year for which the obligation is calculated. Schwartz v. Heeter, 994 N.E.2d
1102, 1106 (Ind. 2013). “We further presume the parties intended their obligations to keep pace with
       periodic amendments to the Guidelines—regardless of whether the amendments increase or decrease their
       obligations.” Id. at 1107.

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015          Page 13 of 14
       night deviation is seemingly minimal when divided out into a weekly difference

       of $10, the deviation comes to more than $500 annually. We conclude that the

       trial court clearly erred in adopting Wife’s figures amounting to a credit of only

       ninety-five nights. We reverse and remand for an adjustment of Husband’s

       parenting time credit.

[26]   Affirmed in part, reversed in part, and remanded.

       Friedlander, J., and Kirsch, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 19A01-1407-DR-318 | February 13, 2015   Page 14 of 14