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Routh v. Andreassen (3/23/01) sp-5375
Routh v. Andreassen (3/23/01) sp-5375
Notice: This opinion is subject to 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, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
RON ROUTH, )
) Supreme Court No. S-9458
Appellant, )
) Superior Court No.
v. ) 4FA-92-2047 Civil
)
KATHI ANDREASSEN, ) O P I N I O N
)
Appellee. ) [No. 5375 - March 23, 2001]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Mary E. Greene, Judge.
Appearances: Fleur L. Roberts, Law Offices of
Fleur L. Roberts, Fairbanks, for Appellant.
Kathi Andreassen, pro se, North Pole.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
EASTAUGH, Justice.
I. INTRODUCTION
May a court impute income to a child support obligor
without conducting a hearing if there is a genuine factual dispute
about how much the obligor earned, and the court does not find that
the obligor has failed to produce any relevant financial
information? Holding that it may not, we reverse the order
increasing Ron Routh's child support obligation and remand for
further proceedings.
II. FACTS AND PROCEEDINGS
Kathi Lynn Andreassen and Ron Routh are divorced, and
Kathi has primary physical custody of their son. In March 1999
Kathi filed a motion requesting that Ron document his income to
assist her in requesting modification of his child support
obligation. Ron responded to the resulting production order by
providing financial records. Responding to a later motion, Ron
also provided a copy of his 1998 corporate tax returns and
attachments for National Auto, his newly acquired business.
Kathi then moved for an increase in child support,
arguing that Ron's tax returns under-reported his income and that
his income had increased since the last order. By cross-motion,
Ron sought a decrease in his child support obligation. Ron
supported his opposition to Kathi's motion and his reduction
request with an affidavit in which he stated that:
My current wife and I started the business
known as National Auto & Truck Service, Inc. at the end of June,
1998. We are the sole owners of this corporation. I had
previously been working for Airport Equipment Rentals d/b/a
National Car Rental, earning approximately $30,000 annually. Since
my [wife] and I began the National Auto & Truck Service business,
I have been compensated as an officer at the rate of approximately
$33,600 before taxes annually. This is reflected on [L]ine 7 of
the corporate tax return.
Finding the amount of Ron's compensation from National
Auto to be ambiguous, the superior court ordered Ron to file a
supplemental affidavit with evidence addressing the issue of how
much of the officer compensation and salaries documented on the
corporate tax return were paid to Ron. Ron responded with a second
affidavit, in which he stated:
The only income which I personally received
from National Auto and Truck Service, Inc. was evidenced by the
Form W-2 Wage and Tax Statement attached to my 1998 federal income
tax return . . . . This document discloses the total $6,100 in
wages which I received from the business in 1998. This income, and
the federal income tax which was withheld from this income, was
disclosed . . . [in my filing of] June 10, 1999.
The superior court referred Kathi's motion and Ron's
cross-motion to the standing master, who issued a report and made
recommendations without holding a hearing. The standing master's
report noted that Ron's affidavits contained conflicting statements
regarding his 1998 National Auto income. Finding that Ron had
twice failed to provide clear evidence on this issue, the standing
master recommended that the superior court disallow the "deduction
for officer compensation" reported by National Auto and instead
impute the deducted sum to Ron as income, creating a net income of
$53,315. The superior court adopted the standing master's report
and ordered Ron to pay child support in the amount of $889 per
month. Ron appeals.
III. DISCUSSION
A. Standard of Review
The superior court's factual findings regarding Ron's net
income are subject to the clearly erroneous standard of review.
[Fn. 1] We review de novo the question of whether the trial court
has applied the correct legal standard in determining child
support. [Fn. 2] We use our independent judgment to decide whether
it was error not to hold an evidentiary hearing. [Fn. 3]
B. It Was Error to Impute Officer Compensation to Ron
Without Holding a Hearing.
The information Ron provided concerning his income as a
self-employed business owner is ambiguous. He first affied that
Line 7 of the corporate tax return reflected his 1998 earnings from
National Auto. Line 7 reports $32,732 in officer compensation for
1998. Ron later affied that "[t]he only income which I personally
received from National Auto . . . was evidenced by the Form W-2
Wage and Tax Statement . . . disclos[ing] the total $6,100 in wages
which I received from the business in 1998." Read together, these
statements potentially conflict and are ambiguous -- did Ron
receive $6,100 or $32,732 from National Auto? Did Ron receive
compensation in forms other than income? Was any income that Ron
actually earned in the business paid to Ron's new wife and co-owner
of National Auto? The ambiguity inherent in the affidavits would
permit a fact finder, in resolving these fact disputes after
hearing evidence on the issue, to infer that Ron's income from
National Auto was higher than the $6,100 he reported.
But Ron's most recent affidavit also reasonably permits
the contrary inference, that his income was what his 1998 tax
returns reported it to be. The superior court, in calculating
income for child support purposes, should "arrive at an income
figure reflective of economic reality." [Fn. 4] The question
whether National Auto provided additional compensation to Ron
cannot be answered without more evidence. "[T]rial courts must
take all evidence necessary to accurately" reflect the parties'
economic reality. [Fn. 5] Alaska Civil Rule 53(b) gives the
standing master the ability to "require the production of evidence
upon all matters embraced in the reference," an ability not invoked
here.
A hearing is not required if "there is no genuine issue
of material fact before the court." [Fn. 6] But here the limited
evidence available creates a genuine issue of material fact -- how
much did National Auto add to Ron's available income? In Adrian,
we held that a similar contest over income statements warranted an
evidentiary hearing. [Fn. 7]
The standing master recommended that the full amount of
the Line 7 figure be imputed to Ron as income because Ron "had a
second opportunity to provide evidence of the validity of this
deduction and did not." The standing master may "resolve a finding
of fact against a party whose vexatious, contemptuous, or
obstructive behavior causes the [standing master] to have
insufficient evidence." [Fn. 8] The master must, however,
"explicitly state the facts which support its decision" to "rely on
a party's obstructive or vexatious conduct in resolving the factual
dispute." [Fn. 9] Although the standing master observed that Ron
had two opportunities to supplement the fact record, she did not
find that he was uncooperative, vexatious, or obstructive.
In adopting the recommendations of the standing master,
the superior court did not list any facts that would have supported
a finding by the master of uncooperative, vexatious, or obstructive
behavior by Ron. And we "will not infer such conduct from the
record or create a rationale to support the trial court's action
based on the suggestion of uncooperativeness in the record." [Fn.
10]
Although we have acknowledged the validity of a concern
that income tax returns may not reflect true income, [Fn. 11] a
court cannot presume that a party is obstructive per se when the
party provides a substantial response to requests for evidence of
income received from a business by producing personal tax returns,
business tax returns, and an affidavit swearing as to the amount of
income received from the business. The burden of proof on the
issue of Ron's change in income rested with Kathi, the movant on
the motion to increase his child support obligation. [Fn. 12]
Kathi had to show by a preponderance of the evidence that there had
been a material and substantial change in circumstances. [Fn. 13]
We hold that it was error to resolve this factual
question against Ron without a hearing, absent specific findings of
obstructive, vexatious, or contemptuous behavior that prevented
Kathi from offering evidence concerning his income.
IV. CONCLUSION
For these reasons we REVERSE the order of the superior
court and REMAND for further proceedings. We leave it to the
superior court to decide whether to permit the parties to submit
additional evidence.
FOOTNOTES
Footnote 1:
See Gallant v. Gallant, 945 P.2d 795, 800 (Alaska 1997).
Footnote 2:
See Marine v. Marine, 957 P.2d 314, 316 (Alaska 1998) (citing
Sanders v. Sanders, 902 P.2d 310, 313 (Alaska 1995)).
Footnote 3:
Cf. Adrian v. Adrian, 838 P.2d 808, 811 (Alaska 1992) ("[T]he
goal is to arrive at an income figure reflective of economic
reality. As a necessary corollary, trial courts must take all
evidence necessary to accurately accomplish this task.") (citing
Ogard v. Ogard, 808 P.2d 815, 818-19 (Alaska 1991)); see alsoAcevedo v. Burley, 944 P.2d 473, 476 n.2 (Alaska 1997).
Footnote 4:
Adrian, 838 P.2d at 811 (citing Ogard, 808 P.2d at 818-
19).
Footnote 5:
Id.
Footnote 6:
Turinsky v. Long, 910 P.2d 590, 594 (Alaska 1996) (citing
Epperson v. Epperson, 835 P.2d 451, 453 (Alaska 1992)).
Footnote 7:
See Adrian, 838 P.2d at 811 ("In our view, Civil Rule 90.3
does not authorize child support trials by affidavit.").
Footnote 8:
Hartland v. Hartland, 777 P.2d 636, 640 (Alaska 1989).
Footnote 9:
Adrian, 838 P.2d at 811 n.6.
Footnote 10:
Id. (emphasis added).
Footnote 11:
See Ogard, 808 P.2d at 819 ("[W]e acknowledge the court's
concerns regarding the accuracy of an income tax return as a
reflection of true income . . . .").
Footnote 12:
See Dewey v. Dewey, 886 P.2d 623, 629 (Alaska 1994) (citing
Curley v. Curley, 588 P.2d 289, 291 (Alaska 1979)).
Footnote 13:
See Dewey, 886 P.2d at 629 (citing Curley, 588 P.2d at 292
n.9).
