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COURT OF APPEALS
DECISION
DATED AND RELEASED
August 20, 1996
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NOTICE
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62(1), Stats.
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This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports.
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Nos. 96-0618-FT
96-1689-FT
STATE
OF WISCONSIN IN
COURT OF APPEALS
IN RE THE MARRIAGE OF:
JAY R. LELLMAN,
Petitioner-Appellant,
v.
ANNETTE MOTT,
Respondent-Respondent.
APPEAL from a judgment
of the circuit court for Eau Claire County:
GREGORY A. PETERSON, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
MYSE, J. Jay R. Lellman appeals a judgment
setting his child support obligation at 17% of his net income found by the
court to be $100,000 per year, and awarding attorney fees to his former wife,
Annette Mott, for legal services incurred in obtaining a modification of the
previously entered divorce judgment. Lellman contends that the trial court
adopted an incorrect methodology in determining his net annual income, and
failed to credit reasonable business expenses in determining the amount of
Lellman's net annual income. Because we
conclude that the court applied a proper methodology in determining Lellman's
net annual income, that the court's finding of $100,000 annual income is
reasonable and supported by the evidence of record, and that Mott was entitled
to attorney fees for expenses incurred based upon Lellman's refusal to make
accurate disclosures of his financial circumstances, the judgment is
affirmed.
Lellman and Mott were
married in 1979 and divorced one year later.
One child was born of the marriage.
In the divorce judgment, Lellman was required to pay child support in
the amount of $120 per month. Fifteen
years after the judgment, Mott sought modification of the child support
provisions alleging that Lellman enjoyed substantially larger income than reflected
by his current monthly child support payment.
Lellman is self-employed
in a business known as Home Renovators involving home repairs on existing
residences. He also owns and manages a
series of duplexes and four-plexes that he rents to various tenants. Lellman asserts that in 1994 he had a
federally adjusted gross income of $10,967.
He was required to produce his income tax returns, bank statements and
other financial information. Although
he surrendered some of the information, much of the required information was
not disclosed and could not be determined from the records that were
disclosed. After examining the records
that were produced, the court found that Lellman's business expenses were paid
in cash and by credit card, but that the receipts did not coincide with the
claimed business expenses.
Lellman claimed a gross
income of $126,865 on his tax return, which the trial court found to be an
intentional understatement of his actual gross income. The court based its finding that Lellman had
intentionally misrepresented his income and expenses upon the inconsistencies
within his business records. The court
also based its finding on the fact that Lellman had adopted a lifestyle
requiring substantially greater expenses than was consistent with his
income. His assets include a thirty-one
foot boat, a 1987 Acura and 1987 Mercedes and a substantial number of other
assets, including real estate.
Additional facts will be set forth in the opinion in the analysis of the
various issues raised by Lellman.
Lellman contends that
the trial court erred by determining his net annual income to be $100,000. Lellman assumes a specified annual income
and applies a series of subtractions for expenses and concludes that the trial
court's failure to use these numbers in achieving Lellman's annual income is
clearly erroneous. The trial court,
however, rejected Lellman's claimed annual earnings as an intentional
understatement of his actual earnings and further rejected the claimed expenses
as an intentional overstatement of his true expenses.
Lellman's annual income
and the existence of various claimed expenses are facts to be determined by the
trial court based upon the evidence.
Factual determinations made by the trial court are reviewed under a
clearly erroneous standard. Bentz
v. Bentz, 148 Wis.2d 400, 404, 435 N.W.2d 293, 294 (Ct. App.
1988). As long as the determination of
fact could be achieved by a reasonable factfinder based upon the evidence
presented, a reviewing court is required to accept the facts found by the trier
of fact. Hartung v. Hartung,
102 Wis.2d 58, 66, 306 N.W.2d 16, 20 (1981).
The trial court made
several important findings of fact that must be reviewed under the clearly
erroneous standard of review. Section
805.17(2), Stats. First, the
trial court found that Lellman had deliberately understated his income. Lellman contended that his annual adjusted
gross income was just under $11,000.
The trial court found that Lellman had accumulated five rental
properties with a combined value exceeding $200,000. Additionally, Lellman purchased a thirty-one foot boat in 1990
for $5,000. Despite his extensive
renovations to the boat, Lellman contended the boat had depreciated to
$1,500. This was sharply contrasted by
another witness whom the trial court found "credibly testified that the
boat is worth $25,000 to $30,000."
The trial court also
found that Lellman had intentionally overstated his expenses. The court based this finding on the
financial records, which disclosed that expenses were paid from a variety of
sources, none of which supported Lellman's claimed expenses.
The trial court
determined that Lellman's lifestyle including the accumulation of a number of
different assets, such as the boat, automobiles and a substantial real estate
portfolio, were inconsistent with his claimed net annual income of less than
$11,000. The trial court also concluded
that the mortgages on Lellman's property, obtained after the order to show
cause to increase child support had been filed, were an attempt by Lellman to
disguise his assets by mortgaging these real estate assets to the maximum. If the mortgage payments reflect loan
proceeds retained but undisclosed by Lellman, the court could properly
disregard the amount of mortgage payments claimed by Lellman.
Lellman asserts that one
of the vehicles is not his and has explanations as to how he could accumulate
such assets with such a modest annual net income. The trial court, however, was
not required to accept Lellman's explanation for the accumulation of such a
substantial number of assets. The
credibility of witnesses and the weight to be attached to that evidence is a
matter uniquely within the discretion of the finder of fact. Laribee v. Laribee, 138 Wis.2d
46, 54-55, 405 N.W.2d 679, 683 (Ct. App. 1987).
Here, the court rejected
Lellman's explanations as to his accumulation of substantial amounts of
valuable property and concluded that his net assets were a reflection of
substantially greater income than was disclosed on his financial disclosure
form. Based upon all the evidence,
including Lellman's lack of records, his accumulation of substantial assets,
and evidence of a deliberate intention to manipulate his financial disclosure
so as to minimize his child support obligation, there is sufficient evidence to
support the trial court's finding that Lellman enjoyed a substantially higher
income than was disclosed as part of his financial disclosures.
Next, we move to
consideration of the trial court's factual finding of Lellman's net income for
the purpose of setting child support.
The court candidly acknowledged that Lellman's financial records were so
incomplete that it was impossible to determine with any degree of specificity
his actual income or expenses. The fact
that Lellman by his deliberate conduct frustrated an accurate calculation of
his net income, however, does not preclude the trial court from making the
appropriate finding of fact. The trial
court may make its finding based upon the available evidence when a party's
intentional conduct precludes a precise determination of that annual
income.
The test to be applied
by the appellate court must, of necessity, involve a determination whether the
trial court's finding of fact could reasonably be made based upon the available
information. Hartung, 102
Wis.2d at 66, 306 N.W.2d at 20-21. The
trial court's factual finding that Lellman's net annual income is $100,000 is
reasonably supported by the record and we, therefore, affirm this finding.
Lellman's income tax
returns listed a business income of $126,865.
Lellman's bank account, however, did not reflect that level of income,
which led the trial court to believe income was being diverted. The claimed business expenses similarly
create an inference of other resources.
The trial court found that many of the expenses that were allegedly paid
by check had no corresponding check in the account records furnished to the
court. While Lellman provides
explanations for all of these facts, the trial court is not required to accept
his testimony as credible. See Laribee,
138 Wis.2d at 54-55, 405 N.W.2d at 683.
Substantial evidence
existed, based upon the totality of the record, for the trial court to conclude
that Lellman had an income of $100,000.
Lellman's incomplete disclosures at trial made an exact determination of
his income impossible. Nevertheless,
the evidence did establish a range in which his income fell. The record discloses approximately $69,000
in business income and at least $57,000 in rental income, totalling
$126,000. Additionally, Lellman has
$17,000 in cash receipts that did not come from either of these sources. Subtracting for his legitimate expenses and
mortgages, the trial court could have reasonably concluded that Lellman had a
net annual income of $100,000.
Therefore, the record contains substantial evidence to support the trial
court's finding of fact, especially in light of Lellman's partial disclosures
and attempts to hide assets.
Lellman contends that
the trial court applied an improper methodology in determining his net annual
income. This claim is based upon the
trial court's candid admission that a precise determination of net annual
income is impossible because of Lellman's intentional conduct. The court accordingly likened its role to
that of a jury in a personal injury case.
It is this analogy that Lellman attacks as evincing an improper
methodology employed by the trial court in making its findings of fact.
Lellman's argument both
misconstrues and overemphasizes the court's comment. The trial court accurately reflected its frustration with its
inability to determine with precision Lellman's annual net income. Because Lellman did not produce the
necessary financial records and because he intentionally misrepresented both
his income and expenses, the trial court was left to determine a reasonable
figure attributable to Lellman as a net annual income. The court correctly identified its role in
making determinations of fact that could reasonably be made based on the
evidence before it. The analogy to the
court functioning like a jury in a civil case is only a reflection of the
requirement that the rule of reason must be used when specific evidence of
actual income and expenses is unavailable due to a party's intentional conduct.
Lellman appears to
contend that without the financial information that he was obligated but failed
to disclose, the trial court is powerless to make the specific determinations
required in this case. We disagree and
note that not only may Lellman's conduct be punishable as contempt or perjury,
but that it was Lellman's misconduct that placed the court in the position of
being required to make reasonable approximations. Lellman cannot be heard to complain that this approximation was
excessive when the precise information available to make that determination was
in his exclusive control.
Finally, Lellman
contends that the court erred by awarding attorney fees in the amount of
$2,182. Although no precise basis for
this claim is articulated in Lellman's brief, he appears to argue that the
American rule, whereby each party is responsible for his or her own attorney
fees, should prevail in this case.
However, when counsel is required to expend additional time because of a
party's lack of cooperation, attorney fees may be awarded to compensate for the
additional time. See Seymour v.
Eau Claire, 112 Wis.2d 313, 320, 332 N.W.2d 821, 824 (Ct. App.
1983). In this case, although Lellman
claims he fully cooperated in the disclosure of his financial information, the
disclosures were so inadequate that counsel was required to spend a substantial
amount of time attempting to construct Lellman's actual income and
expenses.
The decision whether to
award attorney fees under such circumstances is committed to the trial court's
discretion. Bisone v. Bisone,
165 Wis.2d 114, 123-24, 477 N.W.2d 59, 62 (Ct. App. 1991). Here, the trial
court reasonably exercised its discretion by awarding attorney fees based upon
Lellman's failure to produce satisfactory financial records from which his
financial status could be accurately determined. The court was not only empowered to make an award of attorney
fees but the additional time required by counsel because of Lellman's
intentional conduct fully warranted the court's awarding of attorney fees so as
to compensate counsel for that time.
We conclude that the
trial court's judgment setting Lellman's net annual income at $100,000 for the
purpose of establishing child support was reasonable and supported by
substantial evidence. Additionally, the
trial court properly exercised its discretion by awarding attorney fees to
Mott. The trial court's analogy to a
civil jury was simply that and in no way taints the methodology Lellman forced
the court to adopt.
By the Court.—Judgment
affirmed.
