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Beard v. Morris (3/20/98), 956 P 2d 418
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NOTICE: This opinion is subject to formal correction before
publication in the Pacific Reporter. Readers are requested to bring errors to
the attention of the Clerk of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501; (907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
THOMAS C. BEARD, )
) Supreme Court No. S-7228
Appellant, )
) Superior Court No.
v. ) 3KO-94-00110 CI
)
DONNA C. MORRIS, ) O P I N I O N
)
Appellee. ) [No. 4956 - March 20, 1998]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Kodiak,
Donald D. Hopwood, Judge.
Appearances: Charles A. Winegarden, Law Office
of Charles A. Winegarden, Kodiak, for Appellant. Joel H. Bolger,
Jamin, Ebell, Bolger & Gentry, Kodiak, for Appellee.
Before: Compton, Chief Justice, Matthews,
Eastaugh, Fabe, and Bryner, Justices.
FABE, Justice.
MATTHEWS, Justice, dissenting.
I. INTRODUCTION
Thomas Beard appeals from the superior court's decision
that he did not demonstrate a material change of circumstances for
purposes of reducing his child support obligation. Thomas alleges
that his income fell significantly because he lost valuable housing
allowances when he began living free of charge in the barracks on
the United States Coast Guard base where he is employed. We remand
for further findings.
II. FACTS AND PROCEEDINGS
Thomas and Donna Beard were married in April 1983 and
divorced in April 1994. During the marriage, they had three
children. Initially, the Decree of Dissolution of Marriage awarded
custody of the children to Thomas. In September 1994 the superior
court approved an agreement between the parties that awarded
custody of the children to Donna and required Thomas to pay $879
per month in child support.
Thomas's monthly child support obligation was calculated
using the formula in Alaska Rule of Civil Procedure 90.3(a), which
fixed his obligation at thirty-three percent of his adjusted
income. To calculate his adjusted income, Thomas submitted a Child
Support Guidelines Affidavit in which he estimated his total
monthly income to be $2,992.23. This sum included $1,571.40 in
base pay, which Thomas received as a quartermaster with rank E-5 in
the United States Coast Guard. It also included $80 attributable
to his permanent fund dividend and $1,340.83 in "other"income.
Thomas's "other"income consisted of five allowances that he
received from the Coast Guard: (1) a Basic Allowance for Quarters,
(2) a cost of living allowance, (3) a clothing allowance, (4) a
food allowance called Basic Allowance for Subsistence, and (5) a
Variable Housing Allowance. He received the Variable Housing
Allowance, as well as portions of both the Basic Allowance for
Quarters and the cost of living allowance, because he did not live
on the Coast Guard base.
Subsequently, Thomas moved into the Coast Guard barracks.
As a result, he lost his Variable Housing Allowance and received
smaller amounts for his Basic Allowance for Quarters and cost of
living allowance. These losses and reductions amounted to $800-
900. [Fn. 1] However, the move allowed Thomas to live on the Coast
Guard base for free, saving him approximately $675-700 per month in
rent.
In February 1995 Thomas filed a motion in the trial court
to reduce his child support obligation. In his memorandum
supporting that motion, Thomas stated that he "could not afford to
live off base and moved into the barracks." He also attached a
Child Support Guidelines Affidavit similar to the one he had filed
when the court initially fixed his child support obligation. In
the new affidavit, Thomas proposed that his new child support
obligation should be $615.49 per month. The new affidavit
resembled the earlier one as it calculated Thomas's income by
including his base pay, permanent fund dividend, and clothing
allowance. Unlike the earlier affidavit, the new one reflected
Thomas's new, lower cost of living allowance and did not include
the Variable Housing Allowance to which Thomas was no longer
entitled. In addition, the new affidavit did not include a
specific line item for either the Basic Allowance for Quarters or
the food allowance. Instead, Thomas characterized the sum of those
two allowances, $352.04, as the "value of employer-provided
housing/food."
In Donna's opposition to Thomas's motion, she asserted
that Thomas was not entitled to a reduction in his child support
obligation because, she alleged, he voluntarily reduced his income
by moving into the barracks. She also argued that Thomas
incorrectly calculated the value of his employer-provided housing,
and she posited that the value of Thomas's housing should be equal
to the allowances he relinquished when he moved to the barracks.
In response to Donna's opposition, Thomas revised his
Child Support Guidelines Affidavit. His revised affidavit
reflected (1) his base pay ($1,612.20), (2) his permanent fund
dividend ($81.99), (3) his food, clothing, and cost of living
allowances plus his Basic Allowance for Quarters ($499.38), and (4)
an estimate of the value of his employer-provided housing
($290.10). Thomas estimated the value of his housing to be equal
to the Basic Allowance for Quarters without Dependents associated
with his pay grade, which was $290.10. Based upon this estimate,
Thomas concluded that his child support obligation should be
$713.55.
Superior Court Judge Donald D. Hopwood declined to modify
Thomas's child support payments. In his order, Judge Hopwood
stated that Thomas "has not experienced a material change of
circumstances based upon his reduced income." He also concluded
that Thomas "is receiving in-kind housing with a value of
approximately $700 per month and in July will receive most of his
meals plus additional sea pay. His income and ability to pay the
ordered support has not decreased by 15% and might have increased."
Thomas appeals Judge Hopwood's ruling.
III. DISCUSSION
Thomas argues that the trial court did not provide a
sufficiently clear basis for its decision when it refused to modify
his child support obligation. He asserts that the superior court
"did not provide any calculations or other basis for its
determination." We agree.
Alaska Rule of Civil Procedure 52(a) requires the trial
court to "find the facts specially and state separately its
conclusions of law." Alaska R. Civ. P. 52(a). We recently
concluded that "[i]n the context of a Civil Rule 90.3 child support
modification motion,"the trial court must provide "'[a]dequate
findings of fact . . . so that a reviewing court may clearly
understand the grounds on which the lower court reached its
decision.'" Bird v. Starkey, 914 P.2d 1246, 1249 (Alaska 1996)
(quoting Waggoner v. Foster, 904 P.2d 1234, 1235 (Alaska 1995)).
"The findings need not be extensive, but must either give us a
clear indication of the factors which the superior court considered
important in exercising its discretion or allow us to glean from
the record what considerations were involved." Id. at 1249 n.4.
In this case, the superior court indicated that Thomas
was not entitled to a modification because Thomas's employer-
provided housing was worth "approximately $700 per month."
However, the court neither described the method it used to value
Thomas's housing nor provided an explanation that would permit us
to glean from the record the basis for its calculation. Therefore,
we conclude that the superior court did not provide adequate
findings to support its decision to deny Thomas's motion to modify.
Despite this lack of findings, Donna urges us to affirm
the superior court's decision, asserting that "[t]here is
substantial evidence that Mr. Beard's decision to move to the
barracks was voluntary." She maintains that Thomas's "claim that
he was forced to move to the barracks because of financial
circumstances does not bear scrutiny"because he gave up "over $850
per month in benefits to avoid $775 in monthly expenses."
We have noted that a trial court should consider whether
a noncustodial parent voluntarily reduced his or her income when
the trial court decides whether a modification of that parent's
child support obligation is appropriate. See Vokacek v. Vokacek,
933 P.2d 544, 549 (Alaska 1997). "[T]he judge [is] to consider the
nature of the changes and the reasons for the changes, and then to
determine whether, under all the circumstances, a modification is
warranted." Id. (quoting Pattee v. Pattee, 744 P.2d 658, 662
(Alaska 1987), overruled in part on other grounds by Nass v.
Seaton, 904 P.2d 412, 416 n.7 (Alaska 1995)). "[A] noncustodial
parent who voluntarily reduces his or her income should not
automatically receive a corresponding reduction in his or her child
support obligation." Nass, 904 P.2d at 418.
In this case, Donna opposed Thomas's motion to modify by
arguing at length that Thomas voluntarily reduced his "pay."
Specifically, she asserted: "Mr. Beard has given up over $900 per
month in benefits in order to avoid $775 . . . in monthly expenses.
His move to the barracks was not involuntary."[Fn. 2]
Despite Donna's arguments, the superior court apparently
did not consider whether Thomas's move into the barracks was
voluntary. Thomas asserted to the trial court that he moved
because he "could not afford to live off base." On remand, the
superior court should examine whether Thomas had a valid economic
reason for moving and, thus, reducing the allowances that he
receives from his employer. A modification would not be
appropriate if Thomas decided to forego these allowances simply to
reduce his child support obligation. [Fn. 3] If necessary, the
superior court may also examine and make additional findings on
remand relating to the value of Thomas's employer-provided housing.
[Fn. 4]
IV. CONCLUSION
For the foregoing reasons, we REMAND this case for
further proceedings consistent with this opinion.
MATTHEWS, Justice, dissenting.
Today's opinion remands this case to determine whether
Thomas had a "valid economic reason"for moving to the barracks.
Slip Op. at 7. The opinion also states that Thomas would not be
entitled to a modification in child support payments if he gave up
the off-base housing allowances "simply to reduce his child support
obligation." Id. This suggests that child support savings cannot
be considered in determining the validity of Thomas's reasons for
moving.
Given that economic validity is the test, I see no
justification for ignoring the surcharge which Civil Rule 90.3
imposes on Thomas's income and benefits. In his case the surcharge
is thirty-three percent of his adjusted income. Rational people
commonly structure their financial affairs in ways which legally
minimize their taxes, and the Civil Rule 90.3 surcharge is, from
the standpoint of an obligor, indistinguishable from a tax. When
an obligor is offered a choice of levels of in-kind benefits by his
employer, I think an obligor should be able to choose a low level
based on his belief that a higher level would be more than he needs
and too expensive when the 90.3 surcharge is taken into account.
One consequence of the majority's exclusion of child
support savings in determining whether an obligor's choice is
economically valid is that an obligor who is offered various levels
of employer-supplied housing may have to accept the most valuable
level available. [Fn. 1] As today's opinion points out, there is
case law for the proposition that an obligor may not refuse the
highest level of monetary income which he could reasonably earn.
Does this mean that the obligor must also accept the highest level
of in-kind benefits which he is offered? I think that the answer
should be "no." Additional money can always be spent for child
support, but the added value represented by more expensive in-kind
benefits cannot.
For example, if an obligor refuses a monetary raise of
$1000 per month, it may be right to impute to him the amount which
he has foregone as income for Civil Rule 90.3 purposes. Assuming
that his 90.3 surcharge is thirty-three percent, accepting the
raise would cost him $330, but he could readily afford this because
his income would be increased by $1000. Contrast this with the
case of an obligor who is offered a $1500 apartment as in-kind
compensation, but instead selects a more modest one having a value
of $500. Taxing him on the $1000 difference in value which he has
foregone is a much more questionable proposition. Accepting the
more valuable apartment would not supply the means of paying the
child support surcharge. The employee may rationally decline the
more expensive apartment because it would cost him $330 in 90.3
payments without, unlike a monetary raise, carrying with it the
means for making the additional payments. It is this difference
between monetary and in-kind compensation which leads me to
conclude that an employee should not be penalized for declining to
accept the highest level of employer-offered in-kind compensation.
The rationale for including in-kind compensation within
the concept of income for Civil Rule 90.3 purposes is that the
value of in-kind compensation reduces the obligor's living expenses
thus freeing funds which can be used to pay child support. The
commentary to Civil Rule 90.3 states that income includes
"perquisites or in-kind compensation to the extent that they are
significant and reduce living expenses . . . ." Commentary 90.3
III.A.19. The concept of reduction of living expenses implies a
normal range for such expenses. If, to revert to the example used
in the preceding paragraph, an obligor would normally spend $500 on
housing and is offered and accepts a $1500 apartment from his
employer, his reduction in expenses would be $500 rather than
$1500.
Arguably this suggests that when an obligor declines an
in-kind benefit at a higher level in favor of a lower level,
imputation of income would be appropriate to the extent of the
savings to the obligor measured by what the obligor would normally
be expected to spend for the benefit given his socio-economic
status. Arguably too, when an employee accepts high-level in-kind
benefits, he should be able to argue that the imputation of income
should reflect not the value of the benefits but the living
expenses which he would normally incur left to his own devices.
These suggestions, however, seem too imprecise, difficult to
administer, and too intrusive into personal lifestyle choices to be
generally adopted. Instead, the rule which I favor is simply that
an obligor should be charged with the value of the in-kind benefits
which he accepts.
In my view this rule should be applied to this case.
Thus on remand the court should be directed to make findings based
on the evidence as to the value of Thomas's employer-provided
housing. That value should be imputed to Thomas's income, and
child support payments should be calculated considering it along
with Thomas's other income. If the payments as so calculated are
more than fifteen percent less than the payments under the current
support order, the current payments should be modified.
FOOTNOTES
Footnote 1:
The allowances vary from month to month because some of them
are calculated according to the number of days in the month. Also,
Thomas moved at the end of 1994, just before some of the allowances
were raised slightly.
Footnote 2:
Donna contends that prior to moving, Thomas received up to
$900 in monthly allowances and each month paid $675 to live in an
off-base apartment and $100 in gas in order to commute to the base.
Thus, he had a place to live, access to the base and $125 left in
his pocket at the end of the month. By moving to the barracks,
Thomas gave up the $900 monthly allowance but was relieved of the
responsibility of paying for rent or gas to commute to the base.
As a result, he still has a place to live and access to the base;
yet, he no longer has the $125 remainder available as discretionary
income. This is the basis of Donna's contention that Thomas's
"claim that he was forced to move to the barracks because of
financial circumstances does not bear scrutiny."
Footnote 3:
"A showing of bad faith is not a prerequisite to a finding
that unemployment is voluntary." Kowalski v. Kowalski, 806 P.2d
1368, 1371 (Alaska 1991). "We will not relieve a noncustodial
parent from his child support obligations absent an affirmative
showing that the obligor parent cannot meet this obligation." Id.
(citing Houger v. Houger, 449 P.2d 766 (Alaska 1969). However, as
other courts have held, modification of a child support obligation
is certainly not available to an obligor who reduces income in an
effort to decrease child support, since such conduct amounts to bad
faith. See Thomas v. Thomas, 589 So. 2d 944, 948 (Fla. Dist. App.
1991) (remanding to trial court to determine whether spouse reduced
income to avoid compliance with a support obligation or was acting
in good faith); accord In re Marriage of Barnard, 669 N.E.2d 726,
729 (Ill. App. 1996) ("In determining whether an individual acts in
good faith . . . the trial court looks at whether the change was
driven by a desire to evade financial responsibility for supporting
the children."); Woodall v. Woodall, 837 S.W.2d 856, 858 (Tex. App.
1992) (evaluating whether "income reduction was designed to obtain
a decrease in [] child support obligation"); cf. Donald T. Kramer,
1 Legal Rights of Children sec. 4.07, at 188 (2d ed. 1994). Where
one
acts "purposefully . . . with the desire to evade one's support
obligations"or evidences "a careless disregard for one's support
obligations,"a modification is inappropriate. Mansfield v.
Taylor, 480 S.E.2d 752, 755 (Va. App. 1997); accord State, Dep't
Soc. Servs. v. Seals, 701 So. 2d 746, 748 (La. App. 1997) (holding
that a person who voluntarily reduces income "solely for the
purpose of avoiding his/her alimentary obligations"is not entitled
to reduction in his/her support obligation) (citation omitted).
Footnote 4:
The dissent predicts that the reasoning of today's opinion
will result in a rule that an obligor must always accept the
highest level of in-kind benefits that is offered by an employer.
The dissent expresses the concern that while "[a]dditional money
can always be spent for child support, . . . the added value
represented by more expensive in-kind benefits cannot." Diss. at
11. Thus, according to the dissent, "[i]t is this difference
between monetary and in-kind compensation"which leads to the
conclusion "that an employee should not be penalized for declining
to accept the highest level of employer-offered in-kind
compensation." Diss. at 12. However, that is not the issue
presented by this appeal. Thomas was not offered a choice between
two levels of in-kind benefits; he chose an in-kind benefit over
cash. Thomas was paid additional monetary compensation of
approximately $900 each month. The purpose of this compensation
was to cover his housing expenses. He was apparently able to do so
for $675 a month, which left him money for gas and discretionary
expenditures. Thomas's situation is thus quite similar to that of
any obligor who earns monetary compensation from which housing and
transportation expenses must be paid. Civil Rule 90.3 does not
permit deductions of such expenses in determining the obligor
parent's adjusted annual income for purposes of calculating child
support.
FOOTNOTES (Dissent)
Footnote 1:
Thomas, in substance, is offered a choice of levels of housing for which his employer
will pay. He may accept a room in the barracks or he may accept a housing allowance of
approximately $900 which is designed to defray the costs of off-base housing. This choice
differentiates Thomas's case from that of a typical employee who receives no housing
benefits.
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