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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Byers v. Ovitt (04/21/2006) sp-6004
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,
e-mail corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
| THOMAS R. BYERS, | ) |
| ) Supreme Court No. S- 11605 | |
| Appellant, | ) |
| ) Superior Court No. | |
| v. | ) 3AN-99-08687 CI |
| ) | |
| SANDRA OVITT, | ) O P I N I O N |
| ) | |
| Appellee. | ) No. 6004 - April 21, 2006 |
| ) | |
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Morgan Christen, Judge.
Appearances: Peter F. Mysing, Kenai, for
Appellant. Sandra L. Ovitt, pro se,
Anchorage, Appellee.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
FABE, Justice.
I. INTRODUCTION
This case arises from a dispute about the amount of
child support owed by Thomas Byers to Sandra Ovitt on behalf of
their son, Kristerfer Byers. In December 2003 Ovitt moved for a
modification of the courts initial child support order, claiming
that purchases made by Byers showed that he had more income than
he had disclosed to the court. After a series of hearings, a
superior court master issued a recommended order increasing
Byerss child support payments. With slight modifications, the
order was adopted by the superior court.
Byers raises three issues on appeal. First, he argues
that the superior court erred in failing to dismiss the motion
and in permitting discovery when a material change in
circumstances was not immediately evident. Second, he claims
that the superior court should have scheduled a third evidentiary
hearing sua sponte. Finally, he alleges that the superior court
erred in its method of calculating his income. The superior
court was acting well within its discretion when it allowed
discovery on the motion to modify, accepted Byerss knowing waiver
of a third evidentiary hearing, and imputed income to Byers based
on his expenses. But the court erroneously failed to deduct
Byerss federal taxes and a portion of his voluntary retirement
contributions from the income available for child support. For
that reason, we affirm in part and reverse in part, and remand
for further proceedings consistent with this opinion.
II. FACTS AND PROCEEDINGS
A. Background
Byers and Ovitt, who have never been married, are the
biological parents of Kristerfer Byers, a minor who was born on
July 8, 1995. In June 1999 Byers and Ovitt filed a joint
petition and stipulation for custody, which was granted. Ovitt
subsequently moved to modify the custody arrangement and, in May
2002, she was awarded sole legal custody. Physical custody was
divided between the two parents, with Ovitt having Kristerfer
seventy percent of the time, including weekdays during the school
year, and Byers having him for the remaining thirty percent of
the time.
B. The 2002 Child Support Order and Ovitts Motion to
Modify
In September 2002 the court issued a child support
order requiring Byers to pay Ovitt $112.16 per month. The court
based its calculation of Byerss income on his DR-305, which
showed an adjusted annual income of $11,844.1 Ovitt moved for a
modification of the courts order in December 2003, on the ground
that Byerss income was higher than what he had reported.
According to Ovitt, Byers had recently purchased a 2001 . . .
Ford Truck for [$]30,000, and a [n]ew [h]ot tub, and was making
substantial payments on his home mortgage. She also claimed that
the Alaska Child Support Enforcement Division (CSED) was
conducting a [l]ife [s]tyle [i]nvestigation of Byers. Byers
filed an opposition to Ovitts motion, and also sought a reduction
in his child support obligations for 2002 and 2003.
1. The first hearing
In March 2004 Superior Court Master Suzanne Cole held
an evidentiary hearing on the two motions. Ovitt, who had
submitted the motion to modify pro se, was represented by an
attorney; Byers represented himself.2 Ovitt introduced two
vehicle loan applications that Byers had submitted to a credit
union. The first application, submitted in November 1999, stated
that Byerss monthly income was $6,000. The second, submitted in
March 2003, stated that his monthly income was $12,000, and that
his monthly mortgage payment was $1,222. Byers testified that
the loan applications were inaccurate because he had mistakenly
listed his annual income instead of his monthly income, and
because he did not read the application before signing it.
The superior court master found that the loan
applications were extremely vague and unclear, and ruled that
Ovitt had not yet shown a change in circumstances that would
justify altering the child support order. But the master noted
that Byers had not submitted his tax return, and determined that
an additional hearing was necessary:
Well, the way I see things right now is I do
not believe that Ms. Ovitt has met her burden
of proof currently; however, I do believe
that whether this has been neglected in the
past or whether CSED has chosen to
investigate this through another route . . .
I do believe that [Ovitts attorney] is
entitled to review [Byerss] entire tax
return, including the Schedule C, to
determine whether the deductions claimed for
business are appropriate or not for child
support purposes.
Now I still, even after that, Im going to
have to determine that a significant change
of circumstances exists . . . . So it
appears to me appropriate that you [Byers] do
provide the tax return information as part of
discovery, and well come back to this issue
once that is completed . . . .
Although the court required Byers to submit his tax return, it
denied a request from Ovitt for discovery of Byerss company
records going back to 1999.
2. The second hearing
At the second hearing, which was held on May 13, 2004,
Ovitt called Theodore Sherwin, a certified public accountant, as
a witness. Sherwin testified that he had received three separate
2003 federal income tax returns from Byers: a signed return from
January 2004, reporting a gross income of $14,369; an unsigned
return from March 2004, indicating a gross income of $22,316; and
a signed return from April 2004, indicating a gross income of
$18,074. The unsigned return was incomplete, as it did not
include a form required for the calculation of self-employment
taxes, a form explaining a non-cash deduction of $1,300, or a
completed partnership form.3 Byers protested that, because his
business was a partnership, he was not required to file certain
forms that Sherwin expected, and claimed that he was trying to
save the [c]ourt some time with this missing stuff.
Sherwin gave an estimate of Byerss 2003 income by
adding up his yearly expenses and assuming that Byerss income was
at least equal to the total amount spent. For certain expenses,
such as utilities, car maintenance, insurance, and credit card
payments, Sherwin used estimates. The total of these expenses,
and the income that Sherwin attributed to Byers for 2003, was
$48,850. Byers disputed Sherwins estimate, claiming that his
company paid half of his $1,245 mortgage payment and eighty
percent of his vehicle loan payments and operating expenses. The
superior court master directed Byers to provide Sherwin a copy of
what was actually filed with the IRS with all attachments, and
set a deadline for Ovitt to respond to this in writing. Byers
was given a deadline a week after Ovitts to reply.
Master Cole then offered to hold a third hearing if
either party found one necessary. She explained in detail how
Byers could request such a hearing:
The Court: You may respond to [Ovitts
response to the tax return] in
writing, whatever you think is
necessary or appropriate, and then
if you feel that you need to come
back to [c]ourt and have a hearing
and put on other evidence, you can
tell me at that time. You can,
depending on what Mr. Sherwin
submits.
Mr. Byers: Right.
The Court: But you need to tell me by
June 1st that you want a hearing
and why you want a hearing, what
you intend to do at the hearing.
Mr. Byers: Okay.
The Court: Okay?
Mr. Byers: All right.
3. After the second hearing
Byers produced a copy of a 2003 tax return, dated May
18, 2004, claiming an adjusted gross income of $15,551. Sherwin
then composed a letter analyzing the return, in which he noted
that there was no proof about whether the return had been filed,
that Byers was attempting to claim as personal deductions
expenses that he was already claiming as deductions for his
partnership, and that the income Byers attributed to the
partnership was inconsistent with the expenses he was claiming
the partnership had paid. The letter also pointed out a number
of inconsistencies between the May return and the previous three
returns, and emphasized that [t]here is no indication in the data
supplied how much money was actually paid to Thomas Byers [by the
partnership] for 2003. Based on the information provided in the
tax return, but excluding any improper accounting for vehicle
expenses, supplies ($74,000) and the like, Sherwin provided a
possible estimate of Byerss income:
Ordinary Income per Form K-1
$25,042
[Simplified Employee Pension] Payment
(pending proof of payment) (4,242)
50% of Depreciation taken on Form 1065
(This is a non-cash deduction[)]
4,605
Duplication of home office expenses
8,382
Permanent Fund Dividend
1,108
Net Income Tax Liability for 2003
(2,919)
SEP payment to be refunded
631
Total
$32,607
Sherwin provided a second estimate, using Byerss expenses as a
basis for estimating income:
Tax per Form 1040 for 2003 @ 5/18/04 $ 2,919
Allowable SEP paid for 2003
3,611
Personal Household Costs - Mtg. Pmts. 7,470
Utilities
913
20% of Vehicle Expenses
2,131
Child Support
2,652
Personal (Food, hygiene, etc.) -
Per IRS Guidelines for A[laska]
(One person) @ $790 per month 9,480
Total
$29,176
The letter emphasized that these figures assume[d] that Mr.
Byerss latest testimony, information and the returns he has
provided are more correct tha[n] any of the others he has
previously provided, and went on to question whether Byerss SEP
contributions were deductible for child support purposes.
Byers responded with a letter of his own, disputing the
figures cited by Sherwin, and claiming that his partnership had
recently been audited by the IRS. He attached a letter from the
IRS, dated May 6, 2004, stating that it had examined his
partnerships tax return and had made no changes. Byers did not
request a third hearing.
C. The Masters Report
The superior court master filed a report and
recommended ruling in June 2004. Noting that Byers had submitted
a total of four 2003 tax returns, each seem[ing] to respond to
questions or discrepancies raised by Ms. Ovitt, and that none of
the four had been filed with the IRS, the master recommended
imputing income to Byers based on his yearly expenses. Using the
second proposed estimate from Sherwins letter, the master
determined that Byerss adjusted annual income was $29,176, and
recommended that he be required to pay $333.25 per month in child
support. The superior court adopted the masters report, but
amended it to reduce Byerss child support payment to $305.80 per
month.4
III. DISCUSSION
A. Standard of Review
We review a trial courts modification of a child
support order under an abuse of discretion standard.5 The same
standard applies to a trial courts decisions about the scope of
discovery.6 An abuse of discretion is found if we are left with
the definite and firm conviction on the whole record that a
mistake has been made.7 Although the trial courts findings of
fact will not be set aside unless clearly erroneous,8 [w]e use
our independent judgment to decide whether it was error not to
hold an evidentiary hearing.9
Because Byers was proceeding pro se before the superior
court, and Ovitt is representing herself before this court, the
record contains documents from both parties that were submitted
without the benefit of counsel. We hold these pleadings to less
stringent standards than those of lawyers.10
B. Failure To Dismiss Ovitts Motion at the First Hearing
Byerss first argument is that the superior court master
erred in failing to dismiss Ovitts motion after an initial
hearing, and that the decision to permit discovery of Byerss tax
returns allowed Ovitt to engage in a fishing expedition. But
Alaska Civil Rule 90.3, which provides for the issuance and
modification of child support orders, does not create an
exception to the general rule that trial courts have broad
discretion in determining the extent of discovery.11
Rule 90.3(h) permits a trial court to modify a child
support order if a material change of circumstances occurs, such
that support as calculated under [Rule 90.3] is more than 15
percent greater or less than the outstanding support order.
Trial courts must consider all motions for a modification of
child support,12 and may modify the original order if a change in
circumstances is shown by a preponderance of the evidence.13 As
Byers correctly notes, the change must be a factual event that
affects a partys ability to pay, not just a proposal to change
the method of calculation.14
But Rule 90.3 places few limits on trial courts broad
discretion15 regarding the scope of discovery, and this court has
emphasized the importance of tak[ing] all evidence necessary to
accurately reflect the parties economic reality.16 Neither Rule
90.3, nor any of our cases, requires that a trial court
adjudicating a motion to modify child support limit the
proceedings to a single hearing or forbid discovery after the
first hearing. To the extent that this rule addresses discovery
at all, it supports the superior courts request for Byerss tax
returns: Rule 90.3(e)(1) requires each parent in a child support
proceeding to file a statement under oath of his or her income,
accompanied by documentation verifying the income.17 In the
present case, a copy of Byerss complete tax return was not in the
record, and the other evidence that had been submitted was
inconclusive. In view of this lack of evidence, and Byerss duty
under Rule 90.3(e)(1) to submit income documentation, it was
appropriate and well within its discretion for the superior court
to ask for [Byerss] current tax returns.18
Furthermore, far from granting Ovitt unconditional
license to engage in a fishing expedition, the superior court
limited the additional discovery to documents necessary to
determine Byerss income in the tax year after the child support
order was issued. When Ovitt requested documents beyond this,
the court denied the request:
[Ovitts attorney]: I would like you to
continue the hearing date. Id
like Mr. Byers to have a date
to supply to us the company
records from 99 through
The Court: No. Were not going
backwards. Im sorry Mr.
Eschbacher, Im not
[Ovitts attorney] Well, the reason I want
to go backwards is for
comparison.
The Court: I am not willing to do
that.
By limiting discovery in this way, the trial court properly
focused the proceedings on the central issue: whether Byerss
income had changed significantly since the previous order was
filed. We therefore hold that the superior court did not abuse
its discretion in permitting discovery of Byerss tax return.
C. The Courts Failure To Schedule a Third Hearing
Byerss second argument is that the court erred in
failing to sua sponte schedule a third evidentiary hearing
following the parties submission of supplemental authorities. He
claims that the lack of a third hearing resulted in a
determination based on uncorroborated written statements, a
violation of this courts holding that Civil Rule 90.3 does not
authorize child support trials by affidavit.19
In the present case, the superior court did not hold a
trial[] by affidavit.20 It actively and repeatedly sought
information about Byerss 2003 income, continuing discovery to
obtain a current copy of Byerss tax return, scheduling a second
hearing, again ordering Byers to submit a complete copy of his
2003 tax return, and even offering to hold a third hearing.
Byers responded by submitting four incomplete versions of his
2003 tax return, which reported gross income ranging from $14,369
to $22,316 and were replete with errors and omissions. As of the
June 15, 2004 masters report, none of these returns appear to
have been submitted to the IRS.
Because of Byerss repeated failure to submit a complete
and final 2003 tax return, the superior court imputed income to
him based on his estimated expenditures. As the masters report
recognizes, a trial court has broad discretion to impute income
based on the most complete evidence before it21 if the record is
incomplete. This discretion is particularly broad where the
reason for the incomplete record is the parents own
unresponsiveness.22 Imputing income to Byers based on his
estimated expenses was therefore well within the trial courts
discretion.
Byers also emphasizes that he was proceeding pro se,
suggesting that his waiver of a third hearing might not have been
a knowing one. The trial court has an obligation to inform a pro
se litigant of the option of holding an evidentiary hearing, and
to make it clear that the litigant must actively request the
hearing.23 Had the superior court failed to do this, Byerss
waiver would be highly suspect. But the court expressly informed
Byers of the option of holding a third hearing, told him that he
would have to request the hearing by a certain date, and
repeatedly confirmed that he understood. Byers was well aware
that a third hearing was available if he asked for one, but he
made no such request. For this reason, we hold that Byers
knowingly waived such a hearing.
D. The Courts Calculation of Byerss Income
Byerss final argument is that the superior court erred
in calculating his income. But his claim that the trial court
should not have imputed income to him based on estimated expenses
because it erred in finding that Byers was uncooperative lacks
merit. As discussed above, the courts finding that Byers was
uncooperative, and that he had not provided the requested
documentation of his 2003 income, was amply supported by the
record. In spite of repeated requests from the court, Byers did
not submit a complete and final 2003 tax return. Moreover, he
actively obstructed the fact-finding process by submitting four
incomplete, and mutually inconsistent tax returns. As in Benson
v. Benson, Byerss recalcitrance forced [the trial court] to
impute income for purposes of calculating child support.24 For
this reason, we hold that imputing income to Byers based on his
estimated expenses was not an abuse of discretion.
But Byerss argument that the court abused its
discretion by refusing to grant him deductions for his federal
income tax payments and contributions to a voluntary retirement
program is more persuasive. Rule 90.3(a)(1) provides that
adjusted annual income for the purposes of child support means
the parents total income from all sources minus . . . mandatory
deductions such as . . . federal, state, and local income tax . .
. [and] voluntary contributions to a retirement or pension plan.25
The total deducted for voluntary contributions to retirement
plans may not exceed 7.5% of the parents gross wages and self-
employment income.26 As this court has emphasized, [c]ourts must
follow the legal standards set forth in Rule 90.3 in determining
awards of child support.27
The superior court imputed income to Byers based on the
amounts spent by Byers during the year. Sherwins expense-based
method of estimating income totaled Byerss expenditures for a
year and the resulting figure $29,176 was Byerss imputed
income. Yet Sherwins calculation of Byerss expenses included
Byerss payment of federal taxes and his voluntary contribution to
a retirement account. Although the superior court used these
estimated federal tax and voluntary retirement contributions as
expenses to impute income to Byers, it appears not to have
deducted taxes or voluntary retirement contributions when
determining Byerss income for child support purposes as required
by Rule 90.3(a)(1)(B). Specifically, the superior court did not
deduct from the imputed gross income the $2,919 which it found
Byers paid in income taxes or the allowable voluntary retirement
contribution of $2,188.20 (7.5% of the $29,176 imputed gross
income), despite the fact that these expenditures were used to
calculate the imputed gross income. As Byers correctly argues,
these allowable deductions would have significantly reduced the
income available to him for the purposes of child support. For
that reason, we vacate the modified child support order and
remand for a determination of Byerss income tax and retirement
contributions for 2003. The superior court may impute income
based on the expenditures-based method that it used or it may use
another recognized method of imputation.28 If better
documentation (such as the 2003 tax returns actually submitted to
the IRS) is now available, the superior court may also
recalculate Byerss actual gross income for 2003. But whatever
method it uses to impute or determine Byerss income for Rule 90.3
purposes, the court should deduct Byerss federal income taxes, as
well as voluntary retirement contributions up to 7.5% of his
gross income.
IV. CONCLUSION
For the reasons set forth above, we AFFIRM in part and
REVERSE in part the judgment of the superior court, and REMAND
for further proceedings consistent with this opinion.
_______________________________
1 The DR-305 is a standardized affidavit listing sources
of income for child support purposes. See
http://www.state.ak.us/courts/support.htm.
2 In the present appeal, Ovitt is proceeding pro se and
Byers is represented by an attorney.
3 Byers was a fifty-percent partner in the Conservative
Building Maintenance Company.
4 The reduction involved Kristerfers health insurance, an
issue that has not been raised on appeal.
5 Robinson v. Robinson, 961 P.2d 1000, 1002 (Alaska
1998).
6 Jones v. Jennings, 788 P.2d 732, 735 (Alaska 1990).
7 Wright v. Wright, 22 P.3d 875, 878 (Alaska 2001).
8 Horton v. Hansen, 722 P.2d 211, 215 (Alaska 1986).
9 Routh v. Andreassen, 19 P.3d 593, 595 (Alaska 2001).
10 DeNardo v. Calista Corp., 111 P.3d 326, 330 (Alaska
2005).
11 Jones, 788 P.2d at 735.
12 Acevedo v. Burley, 944 P.2d 473, 475 (Alaska 1997).
13 Id.
14 Cf. Bunn v. House, 934 P.2d 753, 758 (Alaska 1997)
(holding that a change in a partys legal theory is not a change
of circumstances which warrants the modification of a child
support order).
15 Jones, 788 P.2d at 735.
16 Routh, 19 P.3d at 595.
17 Alaska R. Civ. P. 90.3(e)(1). The rule also permits a
party to obtain documents such as tax returns and pay stubs
showing the [other] partys income for the prior calendar year
upon written request while there is an ongoing monthly support
obligation. Alaska R. Civ. P. 90.3(e)(2). Although Rule
90.3(e)(2) applies regardless of whether a party has moved to
modify the order, it suggests that tax returns are viewed as
highly probative evidence of income.
18 Goossen v. Still, No. S-10285, 2002 WL 31716561, at *8
(Alaska 2002) (holding that a superior courts request for income
tax returns in the context of formulating a child support order
was not error because the tax returns would be a good source of
information for the income information that the superior court
previously did not have). Although the superior court in the
present case may have had information as to Byerss income when
the original child support order was filed, it did not have
information about what Byerss income was when Ovitt moved to
modify the order.
19 Adrian v. Adrian, 838 P.2d 808, 811 (Alaska 1992).
20 Id.
21 Coghill v. Coghill, 836 P.2d 921, 926 (Alaska 1992).
22 Cf. Benson v. Benson, 977 P.2d 88, 95 (Alaska 1999)
(affirming a child support order based on imputed income because,
[d]ue to the lack of credible income information supplied by [the
appellant], and his non-responsive and contradictory testimony
regarding such information, [the superior court] was forced to
impute income for the purposes of calculating child support); see
also Hartland v. Hartland, 777 P.2d 636, 640 (Alaska 1989)
(noting that Alaska law clearly permits a trial court to resolve
a finding of fact against a party whose vexatious, contemptuous,
or obstructive behavior causes the trial court to have
insufficient evidence).
23 Cf. Collins v. Arctic Builders, 957 P.2d 980, 982
(Alaska 1998) (holding that the failure to inform a pro se
litigant of specific defects in his or her notice of appeal and
to give the litigant an opportunity to respond to those defects
is manifestly unreasonable and thus constitutes an abuse of
discretion); Breck v. Ulmer, 745 P.2d 66, 75 (Alaska 1987)
(discussing the duty of the trial court to inform a pro se
litigant of the proper procedure for the action he or she is
obviously attempting to accomplish).
24 977 P.2d at 95.
25 Alaska R. Civ. P. 90.3(a)(1)(A)-(B).
26 Alaska R. Civ. P. 90.3(a)(1)(B).
27 Teseniar v. Spicer, 74 P.3d 910, 915 (Alaska 2003)
(reversing in part a superior courts modification of a child
support order because the court did not allow deductions for
mandatory expenses enumerated in Rule 90.3(a)(1)).
28 For example, the court could use Department of Labor
wage statistics to impute income to Byers.
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