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COURT OF APPEALS DECISION DATED AND RELEASED October
26, 1995 |
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,
Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
No. 94-1605
STATE OF WISCONSIN IN
COURT OF APPEALS
DISTRICT IV
BRYAN
R. THOMPSON,
Petitioner-Appellant,
v.
CHERI
THOMPSON,
Respondent-Respondent.
APPEAL
from an order of the circuit court for Monroe County: JAMES W. RICE, Judge. Affirmed
in part; reversed in part and cause remanded.
Before
Gartzke, P.J., Sundby and Vergeront, JJ.
VERGERONT,
J. Bryan Thompson appeals from an order increasing the amount
of his child support payments and directing the payment of support arrearages. He contends the trial court erred by: (1) imputing $1,000 to his 1993 income
adjusted for child support; (2) disallowing a business depreciation expense in
calculating his 1993 income adjusted for child support; (3) applying the split
custody formula under Wis. Adm. Code
§ HSS 80.04(3) (August 1987) using twenty-five percent; and (4) not
giving him more time to pay his support arrearages. We conclude that the trial court erred in applying the split
custody formula under Wis. Adm. Code
§ HSS 80.04 (August 1987) and therefore reverse that portion of the
order. We reject Bryan's remaining
contentions.
Bryan
and Cheri Thompson were married on August 27, 1988, and divorced on December
13, 1991. Pursuant to a marital
settlement agreement, the parties agreed to joint legal custody of their two
minor daughters, Nicole and Jessie, and to physical placement of both children
with one parent one week and the other parent the next week. The agreement also provided that Bryan would
have primary placement of Nicole and that Cheri would have primary placement of
Jessie. The parties' agreement was
later amended so that each parent has placement of both children for two weeks
at a time instead of one week.
The
agreement further provided that Cheri would not be required to pay child
support and that Bryan would pay child support by way of a wage
assignment. The wage assignment order
required Bryan to contribute 14.11 percent of his gross income per pay period
to Cheri's household. At the time of
the divorce, Cheri was not employed.
Bryan was employed at Fort McCoy and received occasional income from his
wood pulping business.
On
February 18, 1994, Bryan filed a motion to change the child support order. He argued that since the parties were
sharing placement of the children equally, the support order unfairly required
that he pay 14.11 percent of his gross income in child support. According to Bryan, the reason he was
initially ordered to contribute 14.11 percent of his gross income to Cheri was
because she was then unemployed, and now that Cheri was gainfully employed, his
support obligation should be reduced, if not eliminated.
Cheri,
in turn, filed a motion for remedial contempt alleging that Bryan had failed to
pay 14.11 percent of his gross income for child support and was in
arrears. In her affidavit, Cheri stated
that, upon information and belief, Bryan worked as a wood pulper in addition to
his employment at Fort McCoy. According
to Cheri, Bryan earned substantial sums of money as a wood pulper and had not
reported any of the income from this business.
Cheri averred that while she was married to Bryan, Bryan earned between
$350 and $400 per week at his wood pulping business.
At
the hearing on the motions, the parties agreed that the children spend an equal
amount of time with each parent during the year. Bryan testified that he pays 14.11 percent of his gross income in
child support.[1] Cheri testified that she did not pay
support. Bryan stated that he provided
for the health insurance for the children at a cost of approximately $90 per
month. Bryan further testified that he
earned $11.29 per hour from his work as a warehouser at Fort McCoy and that his
1993 income from Fort McCoy was $22,742.
Bryan
also testified regarding his wood pulping business. His tax returns for 1993 show a wood pulping income of $5,218,
which was offset by business expenses of $5,297, for a net loss of $79.
The
trial court asked Bryan a series of questions regarding a depreciation expense
Bryan claimed on a tractor he had purchased in December, 1993:
THE
COURT: I guess I can't figure out this
depreciation. You have a $4,000 Case
tractor. And you took $1,500 worth of
depreciation on it. How old is that
tractor?
THE
WITNESS: Probably 1960.
THE
COURT: How long have you had it?
THE
WITNESS: Last December.
THE
COURT: How much did you pay for it?
THE
WITNESS: Four thousand.
....
THE
COURT: December of '93. And you took a whole year's depreciation on
it?
THE WITNESS:
It's been acting up and something by, you know -- It's going to be junk
when I get done with it.
Cheri
testified that she is employed by F.A.S.T. Corporation and earns $5.50 per
hour. She stated that she has been
employed at F.A.S.T. for almost two years and works between thirty-two and
thirty-six hours per week. She stated
that she would be agreeable to offsetting child support at twenty-five percent
of Bryan's income against twenty-five percent of her income. Cheri also testified that during the
marriage Bryan had earned $250 per week in profit from his wood pulping
business, that Bryan did not report this income, and that she did not think
Bryan was reporting this income now.
When
confronted with some of Bryan's tax returns indicating that Bryan had reported
income from his wood pulping business during the years they were married, as
well as in 1993, Cheri responded:
It's a bunch of crap.
It's not true.... A good tax person can get you out of a lot of tax or
money that you have.
Cheri
testified that she had not been receiving child support payments in a timely
manner and that she depended on the child support for groceries. Cheri requested a set amount of child
support, rather than a percentage, so that she could budget her expenses every
week.
When
Cheri was through testifying, the trial court asked whether Bryan paid cash for
the tractor in December. Bryan answered
yes.
In
its oral decision, the trial court determined that $1,000 should be imputed to
Bryan as income for 1993 from his wood pulping business. It also disallowed the $1,500 Bryan had
claimed as a depreciation expense on the tractor. Adding $1,000 of imputed income from Bryan's wood pulping
business to the $1,500 of disallowed business depreciation expense, and
subtracting the $79 loss from his tax returns, the trial court determined that
Bryan's income from his wood pulping business in 1993 was $2,421. The trial court ordered Bryan to pay 14.11
percent of this sum to Cheri.
In
determining Bryan's support obligation, the trial court concluded that Bryan's
base child support payment would remain at $273.05 per month, with an
additional $50 per month, making his total monthly payment $325 per month,
effective March 1, 1994.
Bryan
filed a motion to reconsider on March 18, 1994. After the hearing on April 8, 1994, the trial court affirmed its
earlier ruling setting child support at $325 per month effective March 1,
1994. In its written order entered on
April 8, 1994, the trial court ordered Bryan to pay 14.11 percent of the
imputed income of $2,421 for 1993 within sixty-five days. It also ordered that the arrearages since
March 1, 1994, were to be paid within fifteen days.
The
establishment and modification of child support lies within the trial court's
discretion. Roberts v. Roberts,
173 Wis.2d 406, 408, 496 N.W.2d 210, 211 (Ct. App. 1992). We will affirm the trial court's exercise of
discretion where the decision reflects a reasoning process based on facts in
the record and conclusions based on the proper legal standards. Id.
Bryan
argues that there are no facts in the record to support the trial court's
decision to impute $1,000 in income to him for the year 1993.[2] We disagree.
Cheri
testified that during their marriage, Bryan did not accurately report his
income from the wood pulping business and that Bryan had earned approximately
$250 per week in profit from this business.
Cheri also testified that Bryan had lied on one occasion in court
regarding whether or not he was earning money from his wood pulping business. Further, Bryan testified that he paid $4,000
in cash for the tractor and did not detail the source of these funds.[3] The trial court drew the inference that the
source of the funds used to purchase the tractor was income from his wood
pulping business. This is a reasonable
inference. The trial court's decision
to impute $1,000 of the $4,000 was based on facts in the record and was
reasonable.
We
also reject Bryan's contention that the trial court erred in disallowing the
$1,500 as a depreciation expense he claimed for the tractor. Wisconsin
Administrative Code § HSS 80.02(13) (August 1987), in effect at the
time of the motion, defined "gross income adjusted for child support"
as including:
[T]he business assets depreciation allowance under 26
USC 179 and the excess of accelerated depreciation as determined under 26 USC
167, and 26 USC 168 over straight-line depreciation allowable under 26 USC 167.
At
the hearing, Bryan testified that he purchased the tractor in December 1993 for
$4,000. His income tax return for 1993
shows that he claimed $1,500 on his taxes as a depreciation expense for the
tractor under 26 U.S.C. § 179.[4] Under Wis.
Adm. Code § HSS 80.02(13) (August 1987), the trial court could
properly add the $1,500 Bryan claimed as depreciation under 26 U.S.C. § 179 in
calculating his 1993 gross income adjusted for child support.
Bryan
next argues that the trial court erroneously applied the split custody formula
of Wis. Adm. Code § HSS 80.04(3)
(August 1987) in arriving at the amount of child support he was ordered to pay. A split custody payer is "a payer who
has 2 or more children and who has physical custody of one or more but not all
of the children." Wisconsin Administrative Code § HSS
80.02(23) (August 1987). The formula
for determining the child support obligation of a split custody payer involves
determining the appropriate support for each parent using the percentage
guidelines for the number of children each parent has in his or her physical
custody and subtracting the smaller child support obligation from the larger
support obligation to determine the reduced amount of child support owed by the
parent with the larger support obligation.
Wisconsin Administrative Code
§ HSS 80.04(3) (August 1987). According
to Bryan, the trial court should have determined that each parent had physical
custody of one child, computed seventeen percent of his gross income and
seventeen percent of Cheri's gross income, and ordered him to pay the
difference to her for child support.
It
is not clear to us how the court first arrived at the $325 figure. The court stated that it was adding $50 per
month to the support Cheri was then receiving, which the court stated was
$273.05. However, the court did not
explain why it was adding $50.[5] In his motion for reconsideration, Bryan
assumed the trial court had used the split custody formula in arriving at this
figure but had used twenty-five percent rather than seventeen percent in
calculating the support obligation of each parent. At the hearing on the motion for reconsideration, Bryan argued
that this was incorrect because, under the marital settlement agreement, each
parent has primary placement of one child.
Cheri
argued in reply that the split custody formula did not apply at all because
each parent has physical custody of each child for an equal amount of time and Wis. Adm. Code ch. HSS 80 did not
provide a formula for child support when each parent has physical custody of
both children for fifty percent of the time.
In Cheri's view, the trial court had the discretion to set support
without using any formula, and could reasonably add $50 because of the
additional income.
The
trial court articulated its reason for affirming the $325 figure at the hearing
on the motion for reconsideration in this way:
At first -- I know, at first glance, it looks
as though I am inconsistent because, in other split custody cases, I have -- if
one is given one and another is given one, or whatever it is, I follow the
guidelines.
However, this is not the usual split custody
case because, in those cases, what happens is that one person goes -- one child
goes to the husband and the other child goes to the wife. And then they meet for visitation purposes
on weekends.
So one child spends a week or five days,
whatever it might be, with one parent and the other -- and five days with the
other. And then they spend time
together on the weekends.
This is different because each child goes to
each household for two weeks and then goes to the other household for two
weeks.
This is different enough so that I feel it
gives me the discretion of using the twenty-five percent rule, which I did,
rather than the seventeen percent rule.
I do this in total recognition of paragraph
"E" of the matter, which says that primary physical placement of
Jessie and Nicole be with the parent named in that paragraph.
I recognize, also,
as Mr. Eglash pointed out in his argument -- or in his letter, I guess, that
that was for the purpose of income taxes.
We
understand from this statement that the trial court intended to use twenty-five
percent, rather than seventeen percent, in applying the split custody formula.[6]
A
trial court need not apply the mathematical formulas for child support
contained in the administrative code. Molstad
v. Molstad, 193 Wis.2d 602, 607, 535 N.W.2d 63, 64 (Ct. App.
1995). However, if it does decide to
apply a formula, it must do so correctly.
Id.
We
conclude that the trial court was correct in declining to apply the split
custody formula using seventeen percent.
Bryan is not a split custody payer because he does not have physical
placement of only one of the two children.
The split custody formula using seventeen percent would be applicable,
and the court could choose to apply it, if Bryan had primary physical placement
of one of the children and Cheri had primary physical placement of the other
child. But, although the martial
property agreement provides for that, that is not the actual physical placement
of the children. Both children are with
each parent exactly half the time.
Bryan
argues that having two children half the time is the same as having one child
most or all of the time. But he points
to no facts of record that would support this conclusion. The trial court implicitly rejected this
argument, and it was within its discretion to do so.
However,
we conclude that the trial court erred in applying the split custody formula
using twenty-five percent. We
understand that the trial court was attempting to take into account that having
physical placement of two children half the time involves greater expenses than
having one child most or all of the time.
However, applying this formula using twenty-five percent results in a
child support payment that is intended to be appropriate when there are four
children--two primarily residing with one parent and two with the other. Applying the formula in this way to this
case is a misapplication of the formula and, therefore, an erroneous exercise
of discretion. Prosser v. Cook,
185 Wis.2d 745, 751, 519 N.W.2d 649, 651 (Ct. App. 1994).
Cheri
is correct that at the time this matter was before the trial court, there was
no formula in Wis. Adm. Code ch.
HSS 80 that expressly addressed the situation in which a child resides with
each parent one-half the time.[7] In the absence of an applicable
formula--indeed, even if one is applicable, see Prosser,
185 Wis.2d at 751, 519 N.W.2d at 651--the trial court has the discretion to set
a revised child support obligation by taking into account the pertinent
statutory factors. Section
767.25(1m)(i), Stats.; Molstad,
193 Wis.2d at 607, 535 N.W.2d at 64. We
have searched the record and do not find a basis for a monthly support
obligation of $325 a month, other than the court's stated decision to apply the
split custody formula using twenty-five percent. For example, there is no evidence of the needs of the children
from which we might determine that, given Bryan's greater income, there is a
reasonable basis to order that he pay $325 monthly even though the children are
with him half the time. We must
therefore reverse that portion of the order determining the amount of child
support and remand for further proceedings.
Finally,
Bryan argues that the trial court erred in its April 8, 1994 order when it set
the dates by which he had to pay the arrearages because his remaining income
was below the poverty line in violation of § 767.265(1), Stats.[8] Cheri states in her brief that Bryan has
paid his arrearages. Bryan does not
dispute this in his reply brief.
Because this issue appears to be moot, we do not address it. See DeLaMatter v. DeLaMatter,
151 Wis.2d 576, 591, 445 N.W.2d 676, 683 (Ct. App. 1989).[9] Even if the issue is not moot, Bryan's
argument is undeveloped. A reviewing
court will not consider undeveloped arguments.
State v. Gulrud, 140 Wis.2d 721, 730, 412 N.W.2d 139,
142-43 (Ct. App. 1987).
By
the Court.—Order affirmed in
part; reversed in part and cause remanded.
Not recommended for
publication in the official reports.
[1] Bryan also testified that since late 1993, he
has paid eleven percent of his gross income for child support for a child born
to another woman.
[2] At the time of the motion, Wis. Adm. Code § HSS 80.05 (August
1987) provided:
Determining imputed income for child support. For a payer with
assets, a reasonable earning potential may be attributed to the assets as
follows:
(1) Determine the payer's gross income;
(2) If the court finds that the payer has underproductive
assets or has diverted income into assets to avoid paying child support or that
income from the payer's assets is necessary to maintain the child or children
at the economic level they would enjoy if they and their parents were living
together, identifying those assets and then impute income to them by
multiplying the total net value of the assets by the current 6-month treasury
bill rate or any other rate that the court determines is reasonable; and
(3) Subtract the actual earnings of the assets from the
imputed income from the assets to determine the imputed income for child
support.
[3] In his reply brief, Bryan attached a photocopy of
an automobile insurance check which, according to Bryan, "could be one
explanation for the source of the $4,000 Bryan used to purchase the
tractor." This document was not
presented to the trial court, is not part of the record and, consequently, we
do not consider it. See State
v. Smith, 55 Wis.2d 451, 459, 198 N.W.2d 588, 593 (1972).
[4] 26 U.S.C. § 179 provides in part:
Election to expense certain
depreciable business assets. (a) Treatment
as expenses. A taxpayer may
elect to treat the cost of any section 179 property as an expense which is not
chargeable to capital account. Any cost
so treated shall be allowed as a deduction for the taxable year in which the
section 179 property is placed in service.
[5] Fifty dollars is approximately twenty-five
percent of the additional income attributed by the trial court to Bryan, both
through imputing income and adding in the depreciation. But the existing support obligation was
14.11 percent of his income, and presumably the $273.05 Cheri was receiving was
14.11 percent of his gross monthly income from his employment.
[6] Cheri points out in her brief that
twenty-five percent of her gross wages subtracted from twenty-five percent of
Bryan's gross wages would result in a child support obligation of $284.44 per
month. She notes that if twenty-five
percent of Bryan's additional imputed income is added to this sum, his monthly
support obligation would be $334.88.
She then asserts that the trial court rounded this sum down to $325 per
month, but she provides no support for this in the record. We have reviewed the record and cannot
determine from it that the trial court made or considered the computation Cheri
describes. But we assume from the
court's statements at the hearing on the motion for reconsideration that
application of the split custody formula using twenty-five percent was the
basis on which it affirmed the $325 figure.
[7] The formula for a "shared-time
payer," then in effect, defined a shared-time payer as a payer "who
is not the primary custodian but who provides overnight care beyond the
threshold [30% of a year or 109.5 out of every 365 days] and assumes all
variable child care costs in proportion to the number of days he or she cares
for the child under the shared-time arrangement." Wisconsin
Administrative Code § HSS 80.02(22) and (25) (August 1987). Whether and how that formula applied was not
clear when each parent had equal physical placement. See, e.g., Prosser v. Cook, 185 Wis.2d 745,
752, 519 N.W.2d 649, 651-52 (Ct. App. 1994) (Shared-time formula assumes child
is with payer thirty percent of the time and reduces support obligation for
time in excess of thirty percent; therefore, reduction of formula result by
fifty percent for payer who has child fifty percent of time is misapplication
of formula, although reduction by twenty percent might be appropriate). Recent revisions to Wis. Adm. Code ch. HSS 80 remove from the definition of
"shared-time payer" the requirement that the payer not be the primary
custodian and also provide a formula for child support when each parent has a
child fifty percent of the time. Wisconsin
Administrative Code §§ HSS 80.02(25) and 80.04(2)(c) (June 1995).
[8] Section 767.265(1), Stats., provides that a wage assignment shall be for an
amount sufficient to ensure payment of the support order, as well as any
arrearages, so long as the addition of the amount toward arrearages does not
leave the party at an income level below the poverty line established under 42
U.S.C. § 9902(2).