Court Opinion

ID: 4036607
Source: CourtListenerOpinion
Date Created: 2016-09-23 15:06:39.701558+00
Date Added: 2024-06-11T14:29:47.193725
License: Public Domain

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
                                                                           FILED
this Memorandum Decision shall not be                                  Sep 23 2016, 8:44 am

regarded as precedent or cited before any                                  CLERK
                                                                       Indiana Supreme Court
court except for the purpose of establishing                              Court of Appeals
                                                                            and Tax Court
the defense of res judicata, collateral
estoppel, or the law of the case.

ATTORNEYS FOR APPELLANT                                  ATTORNEY FOR APPELLEE
Peter M. Yarbro                                          Len C. Zappia
Fred R. Hains                                            South Bend, Indiana
Erica V. Speraw
Hains Law Firm, LLP
South Bend, Indiana

                                           IN THE
    COURT OF APPEALS OF INDIANA

Kimberly A. Anderson,                                    September 23, 2016
Appellant-Petitioner,                                    Court of Appeals Case No.
                                                         71A05-1602-DR-308
        v.                                               Appeal from the St. Joseph
                                                         Superior Court
Marc A. Anderson,                                        The Honorable David C.
Appellee-Respondent.                                     Chapleau, Judge
                                                         Trial Court Cause No.
                                                         71D06-0708-DR-537

Robb, Judge.

Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016       Page 1 of 10
                                Case Summary and Issue
[1]   Kimberly Rudzinski (“Mother”) and Marc Anderson (“Father”) were divorced

      in 2008, and Father was ordered to pay child support. In 2014, Father sold his

      business interest in Foremost Fabricators, LLC, which resulted in a one-time

      capital gain of $1,088,516. Mother subsequently filed a petition to include

      Father’s capital gain in his child support calculation, which the trial court

      denied. Mother raises two issues on appeal, which we consolidate and restate

      as whether the trial court abused its discretion in excluding Father’s capital gain

      from his weekly gross income for the purposes of child support. Concluding the

      trial court did not abuse its discretion, we affirm.

                            Facts and Procedural History
[2]   Mother and Father were married in 1997. Their marriage produced two

      children. In 2008, the trial court entered a dissolution of marriage decree and

      incorporated into its order the parties’ settlement agreement regarding the

      property settlement and co-parenting plan. Pursuant to the settlement

      agreement, each party retained certain assets and liabilities from the marriage.

      Specifically, Mother retained a 2006 Nissan Altima, certain items of personal

      property, her individual financial accounts, fifty-five percent of a Key

      Investment Services IRA account, and received a cash payment from Father of

      $10,000. Father retained his business interest in Foremost Fabricators, LLC,

      the marital residence along with the mortgage obligation, certain items of

      personal property, his individual financial accounts, and forty-five percent of

      Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016   Page 2 of 10
      the Key Investment Services IRA account. Father also refinanced all other

      martial debts into his name. The trial court ordered Father to pay $235 per

      week in child support.

[3]   In 2013, the parties agreed to modify Father’s child support payments, which

      the trial court approved. The modification required Father to pay $428 per

      week in child support and nine percent of the pre-tax value of any bonus or

      commission he received.

[4]   In 2014, Father sold his business interest in Foremost Fabricators, LLC, which

      resulted in a one-time capital gain of $1,088,516.1 One year later, Mother filed

      a petition to modify child support. The parties resolved some of the issues on

      their own, agreeing to modify Father’s child support to $440 per week.

      However, the parties disagreed whether Father’s capital gain from the sale of

      his business interest should be included in his weekly gross income for the

      purpose of calculating child support. Following a hearing, the trial court denied

      Mother’s request to include the sale proceeds in Father’s weekly gross income.

      Mother then filed a motion to correct error, which the trial court denied.

      Mother now appeals.

                                    Discussion and Decision

      1
          Father is still employed by Foremost Fabricators, LLC.

      Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016   Page 3 of 10
                                       I. Standard of Review
[5]   In this case, the trial court denied Mother’s request to include Father’s capital

      gain in his child support calculation and her subsequent motion to correct error.

      A decision to grant or deny a motion to correct error and decisions regarding

      child support, such as a modification, are reviewed for an abuse of discretion.

      Lovold v. Ellis, 988 N.E.2d 1144, 1149-50 (Ind. Ct. App. 2013). An abuse of

      discretion occurs when a trial court’s decision is against the logic and effect of

      the facts and circumstances before it or if the court has misinterpreted the law.

      Id. at 1150. When reviewing a decision for an abuse of discretion, we consider

      only the evidence and reasonable inferences favorable to the judgment. Id.

                                            II. Capital Gain
[6]   On appeal, Mother argues the trial court erred in excluding Father’s capital gain

      from his child support calculation. Specifically, she argues that for the purposes

      of calculating child support, the Indiana Child Support Guidelines’

      (“Guidelines”) definition of “weekly gross income” includes capital gains.

      Thus, she believes Father’s proceeds of $1,088,516 from the sale of his business

      interest should be included in his weekly gross income for calculating child

      support.2

      2
        As a separate issue, Mother argues nine percent of Father’s capital gain income should be included in his
      child support obligation as irregular income. This argument stems from the trial court’s 2013 order
      approving the parties’ modification of child support. See Appendix of Appellant at 27. We find no merit in
      this argument. Pursuant to the 2013 child support order, Father is required to pay Mother, in cash, “nine

      Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016         Page 4 of 10
[7]   Father responds the trial court correctly denied Mother’s petition to include

      capital gain in his child support calculation. He does not dispute the nature of

      the proceeds as income to him. However, he maintains the capital gain is a

      one-time, irregular form of income which the trial court could exclude in its

      discretion. Further, Father argues because the marital assets were equally

      divided pursuant to a bargained-for settlement agreement upon dissolution of

      the marriage, the proceeds from Father’s sale of his business interest in

      Foremost Fabricators, LLC should not be included in his weekly gross income.3

[8]   As noted by Mother, Indiana Child Support Guideline 3(A)(1) includes capital

      gains as an element of “weekly gross income”:

               For purposes of these Guidelines, “weekly gross income” is
               defined as actual weekly gross income of the parent if employed
               to full capacity, potential income if unemployed or
               underemployed, and imputed income based upon “in-kind”
               benefits. Weekly gross income of each parent includes income
               from any source, except as excluded below, and includes, but is
               not limited to, income from salaries, wages, commissions,
               bonuses, overtime, partnership distributions, dividends,
               severance pay, pensions, interest, trust income, annuities, capital
               gains, social security benefits, workmen’s compensation benefits,
               unemployment insurance benefits, disability insurance benefits,
               gifts, inheritance, prizes, and alimony or maintenance received. .
               . . Specifically excluded are benefits from means-tested public
               assistance programs, including, but not limited to, Temporary

      percent (9%) of the pre-tax of any value of all bonuses and/or commissions received by Father.” Id. Here,
      the parties agree the sale of his business interest constitutes capital gain, not a “bonus” or “commission.”
      3
        We note Indiana law contains a statutory presumption that an equal division of marital assets is just and
      reasonable. Ind. Code § 31-15-7-5.

      Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016          Page 5 of 10
                 Aid to Needy Families (TANF), Supplemental Security Income,
                 and Food Stamps. Also excluded are survivor benefits received
                 by or for other children residing in either parent’s home.

      (Emphasis added.) “Weekly gross income” is “broadly defined to include not

      only actual income from employment, but also potential income and imputed

      income from ‘in-kind’ benefits.” Glover v. Torrence, 723 N.E.2d 924, 936 (Ind.

      Ct. App. 2000). The phrase “actual income” implies that “the income be not

      only existing in fact but also currently received by the parent and available for

      his or her immediate use.” Carmichael v. Siegel, 754 N.E.2d 619, 628 (Ind. Ct.

      App. 2001). Thus, we agree capital gains should be considered in determining

      weekly gross income for purposes of the Guidelines.

[9]   However, the Guidelines are not “immutable, black letter law,” and

      “[d]eviation is proper if strict application of the Guidelines would be

      ‘unreasonable, unjust, or inappropriate.’” Garrod v. Garrod, 655 N.E.2d 336,

      338 (Ind. 1995) (citation omitted). In fact, the Commentary to the Guidelines

      recognizes the “fact-sensitive” nature of computing child support and cautions

      that determining income is more difficult when irregular or nonguaranteed

      forms of income are involved. Child Supp. G. 3(A), cmt. 2(b).4 The

      4
          The Guidelines recognize such irregular forms of income:

                 There are numerous forms of income that are irregular or nonguaranteed, which cause
                 difficulty in accurately determining the gross income of a party. Overtime, commissions,
                 bonuses, periodic partnership distributions, voluntary extra work and extra hours worked
                 by a professional are all illustrations, but far from an all-inclusive list, of such items. . . .

      Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016                   Page 6 of 10
Commentary urges judges and practitioners to be “innovative in finding ways

to include income that would have benefited the family had it remained intact,

but be receptive to deviations where reasons justify them.” Id. In this case, the

nature of Father’s capital gain suggests it may justify a deviation. Father’s sale

of his business interest was a single transaction, and not “periodic, regular, or

dependable.” Gardner v. Yrttima, 743 N.E.2d 353, 358-59 (Ind. Ct. App. 2001)

(concluding the trial court did not abuse its discretion in excluding a single

inheritance from mother’s child support calculation). Further, Father and

Mother agreed when their marriage was dissolved he would retain his business

interest, with Father incurring more marital debt and paying Mother cash in

exchange. In its order on Mother’s petition to modify, the trial court denied

Mother’s request to include Father’s capital gain, stating,

        [I]n this case mother received substantial assets in exchange for
        the ownership interest in father’s business, and when that
        business is sold, mother should not be able to both possess the
        assets she bargained for in exchange for the business in the
        property settlement agreement and also include the proceeds of
        the sale in father’s weekly gross income.

Appendix of Appellant at 14-15.

        Care should be taken to set support based on dependable income, while at the same time
        providing children with the support to which they are entitled.

Child Supp. G. 3(A), cmt. 2(b).

Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016     Page 7 of 10
[10]   In Scoleri v. Scoleri, 766 N.E.2d 1211 (Ind. Ct. App. 2002), the parties disputed

       whether an early withdrawal from father’s 401(k) account constituted income

       within the meaning of the Guidelines. Father received the 401(k) account as

       part of the parties’ property settlement agreement, with mother receiving the

       marital home. We held the withdrawal constituted income; however, we

       concluded the trial court erred in including the cash withdrawal in the

       calculation of father’s child support obligation. Id. at 1217-18. Specifically, we

       stated, “[p]resumably, the parties agreed that Father would retain his 401(k)

       IRA in exchange for Mother retaining the marital home. Without any evidence

       to the contrary, we deem it inequitable to utilize Father’s portion of the marital

       property, his 401(k) account, in the calculation of his weekly gross income.” Id.

       (internal citation omitted).

[11]   Likewise, the parties here agreed and the trial court entered an order awarding

       Father his business interest as part of the marital property distribution. In

       exchange, Father incurred a substantial amount of marital debt and paid

       Mother $10,000. The settlement agreement provides, in pertinent part:

               [Father] shall continue as the sole owner of his interest in the
               business enterprise known as Foremost Fabricators, LLC.
               [Father] shall be solely responsible to pay for his share of the
               liabilities of said business enterprise.

       App. of Appellant at 20. Presumably, the parties valued Father’s business

       interest at the time of dissolution of marriage in order to effect an equitable

       Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016   Page 8 of 10
       division, and his capital gain represents that value.5 Thus, Father’s capital gain

       represents the sale of an “asset” he received in the property settlement. For

       example, consider the more likely scenario of a marital home or car awarded to

       a wife in an equitable distribution of marital assets. If the wife cannot afford to

       maintain the home or car, and therefore sells it, the proceeds should not be

       included in her weekly gross income. If they were, husband could then

       potentially reduce the amount of his child support, leading to absurd results.

       Based on the facts in the record before us, to utilize the capital gain from

       Father’s sale of his business interest in the calculation of his weekly gross

       income would “usurp the equitable split of the marital property in the summary

       dissolution decree.” Scoleri, 766 N.E.2d at 1217 (footnote omitted).6

[12]   The trial court’s decision is not clearly against the logic and effect of all the facts

       and circumstances before the court. Here, the trial court considered the capital

       gain and concluded it should be excluded from the child support calculation.

       The record discloses reasons supporting such exclusion, and Mother has not

       shown the trial court abused its discretion in doing so.

                                                  Conclusion

       5
        We note neither party presented evidence of the value of Father’s business interest at the time of the
       dissolution of marriage.
       6
        We express no opinion regarding whether interest from Father’s capital gain, if any, might be considered in
       his future child support calculations.

       Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016           Page 9 of 10
[13]   The trial court did not abuse its discretion in denying Mother’s petition to

       modify child support and motion to correct error, and we therefore affirm.

[14]   Affirmed.

       Mathias, J., and Brown, J., concur.

       Court of Appeals of Indiana | Memorandum Decision 71A05-1602-DR-308 | September 23, 2016   Page 10 of 10