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NOTICE This opinion is
subject to further editing and modification.
The final version will appear in the bound volume of the official
reports. |
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No. 93-2899
STATE OF WISCONSIN
: IN SUPREME COURT
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In re the marriage of: Michael A. Luciani, Petitioner-Appellant, v. Angelina Montemurro-Luciani, Respondent-Respondent-Petitioner. |
FILED MAR 7,
1996 Marilyn L. Graves Clerk of Supreme Court Madison, WI |
REVIEW of a decision of the
Court of Appeals. Affirmed in part
and reversed in part.
JON P. WILCOX,
J. This is a review of a published decision of the court of
appeals which affirmed in part and reversed in part the judgment of divorce
granted in the circuit court for Kenosha County, Bruce E. Schroeder,
Judge. See Luciani v.
Montemurro-Luciani, 191 Wis. 2d 67, 528 N.W.2d 477 (Ct. App.
1995). The court of appeals affirmed
the circuit court's maintenance provision requiring the respondent-appellant
Dr. Angelina Montemurro-Luciani (Dr. Montemurro) to pay the
appellant-respondent Michael A. Luciani (Luciani) $1,000 per month for 36
months. It reversed the income tax
exemption provision as well as the circuit court's child support award based on
the statutory percentage guideline standards requiring Luciani to pay 24% of
his income to Dr. Montemurro for support for the parties' two minor children. Id. at 72-73.
The issue we consider on
review is whether the circuit court erroneously exercised its discretion when
it did not deviate from the percentage guideline standards, where the payee
earns a substantially greater income than the payer. We hold that in the case of a high-income payee, the percentage
standards set by administrative regulation[1]
presumptively apply, absent a payer's showing of unfairness by the greater
weight of the credible evidence. We
conclude that the circuit court did not err in applying the percentage
standards, and therefore reverse that part of the decision of the court of
appeals addressing the issue of child support.
We affirm the court of appeals' decision regarding the award of
maintenance as well as the tax exemption provision.
The couple, Luciani and Dr.
Montemurro, were married in 1986, each at age 32. Dr. Montemurro was in the second year of her medical residency program
when the parties were married. In 1988,
upon the completion of this program, Dr. Montemurro established her own private
medical practice in Kenosha. Luciani
was employed as a lab technician at Modine Manufacturing Company in Racine
throughout the course of the marriage.
The income tax returns for 1987 reported near equal earnings of $22,000
for both parties. However, as Dr.
Montemurro's medical practice began to expand, so too did the disparity between
the parties' respective incomes:
Luciani Dr. Montemurro
1987 $ 22,000
$ 22,000
1988 26,571
14,273
1989 25,789
69,060
1990 31,342
121,809
1991 29,393
131,915
1992 33,177
132,857[2]
The divorce action was filed
on June 6, 1991. The marriage had
produced two children, ages four and three at the time of the trial, who reside
with Dr. Montemurro. The circuit court
approved the parties' stipulation to joint legal custody and primary physical
placement with Dr. Montemurro. The
children's physical placement with Luciani is approximately 117 overnights per
year, consisting of 32% of the overnight placement, and an additional 49
nonovernight days per year. Dr.
Montemurro has the children for the remaining 68% of the overnight placement.
In January 1993, a trial was
held in this matter involving a number of issues including property division,
debt allocation, attorney's fees, beneficiary designations, and placement of
the children during certain holiday periods.
We are primarily concerned on this review with the nature of the dispute
regarding the proper amount of child support Dr. Montemurro is entitled to
receive as the high-income payee with custody of the children a majority of the
time.
Dr. Montemurro argued that
the circuit court was required, in accordance with Wis. Stat. § 767.25(1j)
(1993-94),[3]
to determine the proper amount of child support payments according to the
percentage standards established by the Department of Health and Social
Services (DHSS). See Wis. Admin.
Code § HSS 80.03(1)(b) (June 1993).[4] Additionally, she urged the circuit court to
calculate Luciani's support obligations pursuant to the shared-time payer
provision of the child support percentage standard under Wis. Admin. Code §§
HSS 80.02(23) and 80.04(2) (June 1993).
In accord with this method, Dr. Montemurro requested an annual support
amount of $8,133.84, or approximately 24% of Luciani's gross income.[5]
Luciani argued that the
circuit court should not apply the percentage standards in this case. Asserting that the court should consider the
substantial physical placement of the children with him pursuant to the
parties' stipulation and the significant disparity between the parties'
incomes, Luciani maintains that the court should have deviated from the
presumptive application of the percentage standards, as allowed under Wis.
Stat. § 767.25(1m) (1993-94).[6] In determining whether to deviate from the
standards, the statute sets out 16 factors for the court to consider when
addressing this question. See §
767.25(1m)(a)-(i) (1993-94). If the
court finds that application of the percentage standards would be unfair, Wis.
Stat. § 767.25(1n) (1993-94)[7]
requires the court to state in writing or on the record the alternative support
amount, as well as the basis for the modification. Luciani claimed that applying the percentage standards in this
case would be fundamentally unfair, as Dr. Montemurro's income greatly exceeded
his own. Luciani proposed that the
court obligate each party to provide necessary support while the children were
physically placed with each respective parent.
Following the trial, a
judgment of divorce was granted on September 22, 1993. In the initial decision issued by the
circuit court, Luciani's child support obligation was established by straight
application of the percentage standards, although it did not specify a precise
dollar amount. The particular
subsection of the circuit court's decision regarding child support is provided
in full:
While there is certainly a huge disparity in the
incomes of these two parties, there is nothing in the evidence which would
warrant a finding that unfairness will result to Dr. Montemurro, Mr. Luciani or
the children by application of the legally-prescribed formula for computing the
child support obligation. Indeed, I
feel that deviation would have a strong potential for damage to the
relationship of the parties: of Dr. Montemurro feeling that Mr. Luciani's
parental rights are diminished because she is carrying the whole financial
load; of the children feeling that their father is less important than their
mother or disinterested in them or unwilling to sacrifice for them; of Mr.
Luciani feeling that he is not carrying his fair share. All of these can be avoided with Mr. Luciani
paying support in accord with the formula, and it is therefore adopted as the
Court's order.
In response to concerns
expressed by the parties in letter briefs following the decision, the circuit
court thereafter issued a supplemental decision clarifying that Luciani's
support obligation was in fact intended to be based on the shared-time provisions
of the Administrative Code, thereby reducing his support to 24% of gross income
based on the percentage of overnight placement attributed to him. In addition, the court confirmed its initial
decision that there was no evidence or testimony presented that would warrant a
finding that employment of the percentage guideline standards would be unfair
to the children or either party. The
court rejected Luciani's request to deviate based upon a claim of unfairness.
In support of its original
decision to adhere to the percentage standards, the circuit court examined
several of the statutorily identified factors which would permit deviation if
demonstrated by the greater weight of the credible evidence. See Wis. Stat.
§ 767.25(1m)(a)-(i) (1993-94). The
court articulated its analysis of such factors by noting that there was no
evidence presented that the children's welfare would suffer, that either party
lacked financial resources sufficient to make the prescribed support
contributions, or that Luciani would be unable to support himself at the same
level he enjoyed during the marriage after payment of the child support. Moreover, the court stated that it had
considered the cost of daycare, the substantial period of physical placement
with Luciani and Dr. Montemurro's far greater earning capacity. Declining to deviate from the percentage
standards, the court further stated:
It is important to note that while it may appear
to some that it is "unfair" for Mr. Luciani to be required to pay
such a large percentage of his income when his ex-wife is earning a much higher
income, that this is no more "unfair" than it is for someone who
earns the same salary as Mr. Luciani and who also lives apart from two children
to pay far more than Mr. Luciani because his ex-wife earns far less than Dr.
Montemurro.
In affirming this decision, the circuit court also reiterated the
non-economic considerations encompassed in the initial decision relating to the
potential damage to the parties' relationship and the negative perception of
Luciani that may have been harbored by the children if the court were to
deviate from application of the percentage standards. Along with the order for child support, the circuit court ordered
Dr. Montemurro to pay Luciani $1,000 per month in maintenance for 36 months.
Luciani appealed the circuit
court's order. The court of appeals
affirmed the issue of maintenance but reversed the child support portion of the
decision. The court of appeals
criticized the initial decision, expressing dissatisfaction with the circuit
court's principal reliance on the non-statutory, non-economic concerns rather
than an in-depth economic analysis of the raw financial data available in the
record. Luciani, 191
Wis. 2d at 76.
The court of appeals
expressed similar concern with the supplemental decision as well. The court concluded that it was couched in
non-statutory conclusionary language that lacked the appropriate examination of
the disparate incomes and the financial effects of substantial physical
placement with Luciani. Id. at
76. Furthermore, the court expressed a
troubling concern with its reading of the circuit court's decision as stating
that the disparity between the parties' incomes has no bearing on the question
of adherence to the percentage standards.
Id. at 76-77. The court
voiced its disagreement with such a proposition, noting that Hubert v.
Hubert, 159 Wis. 2d 803, 465 N.W.2d 252 (Ct. App. 1990) had
specifically cautioned against the robotistic use of the percentage standards,
especially in high-income cases.[8] Id. at 814.
The appellate court's
decision concluded that the circuit
court "erred in the exercise of its discretion by treating the
parties' disparate incomes as an irrelevant factor and by failing to analyze
the economic consequences of the support order in light of the parties'
budgets, incomes and nearly equal child placement[9]
provisions."[10] Id. at 77-78.
The determination of
appropriate child support is committed to the sound discretion of the circuit
court. Weidner v. W.G.N., 131
Wis. 2d 301, 315, 388 N.W.2d 615 (1986); Prosser v. Cook, 185
Wis. 2d 745, 751, 519 Wis. 2d 649 (Ct. App. 1994). Whether the trial court properly exercised
its discretion is a question of law. Seep
v. Personnel Comm'n, 140 Wis. 2d 32, 38, 409 N.W.2d 142 (Ct. App.
1987). "An appellate court will
sustain a discretionary act if it finds that the trial court (1) examined the
relevant facts, (2) applied a proper standard of law, and (3) using a
demonstrated rational process, reached a conclusion that a reasonable judge
could reach." State v.
Gudenschwager, 191 Wis. 2d 432, 440, 529 N.W.2d 225 (1995); see also
Loy v. Bunderson, 107 Wis. 2d 400, 414-15, 320 N.W.2d 175 (1982); Stephen
L.N. v. Kara L.H., 178 Wis. 2d 466, 477, 504 N.W.2d 422 (Ct. App.
1993).
The circuit court is required
to determine the appropriate award of child support by application of the
percentage standards mandated under Wis. Stat. § 46.25(9) (1993-94) as
established in § HSS 80.04(2). See
Wis. Stat. § 767.25(1j) (1993-94).
In Weidner, this court referred to the Department of Health and
Social Services Memorandum to Members of the Wisconsin Judiciary in
interpreting the proper application of the child support percentage standards:
According to the Department,
these percentage standards are an evidentiary shortcut for establishing the
need of the child for support. The
standards, establish ` . . . the cost of maintaining a child as an equivalent to that
percentage of the family income and disposable assets that a parent shares with
children in his or her custody.'
Weidner, 131
Wis. 2d at 318 (citing DHSS Memorandum to Members of the Wisconsin
Judiciary, December 20, 1983, Attachment I at 3).
This court's recent decision in Grohmann v. Grohmann, 189
Wis. 2d 532, 525 N.W.2d 261 (1995) clarified the presumptive nature of the
percentage standards where we stated: "[a]bsent a showing of unfairness,
courts must determine a parent's child support obligation by using the
percentage standard established by the Department of Health and Social
Services . . . ."
Id. at 536.
The framework of the statute
permits the court to modify the otherwise presumptive calculation if it is
demonstrated by the greater weight of the credible evidence that application of
the percentage standards would be unfair to the children or either of the
parties, see Wis. Stat. § 767.25(1m) (1993-94). When presented with a party's challenge to
application of the percentage standards, circuit court judges in exercising
their discretion, are to consider the statutory factors set forth by the
legislature in Wis. Stat. § 767.25(1m), and articulate the basis for their
decision to either remain within the guidelines or allow a modification. The circuit court's articulation of its
reasoning process is essential in reaching a reasonable determination and to
aid this court in reviewing the discretionary decision. See Haugan v. Haugan, 117
Wis. 2d 200, 215, 343 N.W.2d 796 (1984).[11] The burden of proof before the court lies
with the party requesting the modification under the percentage standards.
Dr. Montemurro challenges the
court of appeals' decision to reverse the child support award on two
fronts. First, she argues that Luciani
failed to prove by the greater weight of the credible evidence that application
of the percentage standards resulted in unfairness to him. Secondly, she asserts that the court of
appeals' decision has held that in high-income cases, the circuit court must
make a threshold determination that the guidelines are to be utilized, rather
than presumptively applying the percentage standards. She asserts that this represents an improper,
judicially-legislated shift in the prescribed methodology that the percentage
standards presumptively apply unless a showing of unfairness has been
established.
Here, the circuit court
exercised a rational mental process in examining the list of factors provided
under Wis. Stat. § 767.25(1m) (1993-94) which produced a reasonable
conclusion that application of the 24% child support obligation would not be
unfair to Luciani. The court's
supplemental decision provides a discussion of the statutory factors at length,
and makes a number of factual determinations which support its decision that
the evidence in the record did not warrant a finding of unfairness. The circuit court's findings included the
following: (1) the parties were not lacking financial resources sufficient to
make the prescribed contributions for the welfare and support of the minor
children; (2) Luciani had submitted no evidence to show that he will be unable
to support himself at a level equal to that enjoyed during the marriage after
payment of the child support obligation; (3) Luciani was under no obligation to
support any other person; (4) financially, the children would not be reduced to
a lower living standard than that enjoyed during the marriage; (5) the cost of
daycare had been considered by the court; (6) the payment of health insurance
premiums imposed no substantial burden on Luciani; (7) the period of physical
placement with Luciani had been considered by the court, and (8) the far
greater earning capacity of Dr. Montemurro had also been considered.
In addition, the court
reiterated the previously mentioned non-economic relationship concerns
expressed in the initial decision of April 8, 1993. The court found these facts pertinent to the mental and emotional
development of the children, and considered them as other factors relevant to
the determination of what was in their best interest. See Wis. Stat. § 767.25(1m)(i). The circuit court therefore balanced the
welfare of the children against any perceived unfairness to Luciani in reaching
a reasoned conclusion from the facts of the record.
Dr. Montemurro argues that
the circuit court made appropriate findings of the relevant child support
factors to support the monetary award under Wis. Stat. § 767.25(1m), and
that Luciani failed to demonstrate by the greater weight of the credible
evidence that unfairness would result if the percentage standards were
employed. She distinguishes the court
of appeals' reliance upon the language in Hubert by arguing that
although this is a high-income case, the support award does not so far exceed
the needs of the child so as to produce an absurd result.
In Hubert, the ex-wife
of a cardiac surgeon with an annual income of over $1,000,000 asked the circuit
court to determine child support by straight application of the percentage
standards. The circuit court determined
that such application would be unfair to the husband, and modified the award
accordingly.[12] Hubert, 159 Wis. 2d at 814. The court of appeals reversed, holding that
the circuit court had failed to consider several factors weighing against
deviation, including the economic level the children would have enjoyed had the
marriage continued. Id.
Relying on Parrett v.
Parrett, 146 Wis. 2d 830, 841-42, 432 N.W.2d 664 (Ct. App. 1988) for the
proposition that courts may deviate from the percentage standards if an award
will exceed the children's needs, the court of appeals noted that "[w]e
agree that in cases where the parties have a substantial marital estate and
income far beyond the average income of most people, the robotistic utilization
of the percentage standards may give absurd results." Hubert, 159 Wis. 2d at 814. The language in Hubert that both
Luciani and the court of appeals rely upon came from the court's recognition that a case may exist where
application of the percentage standards would result in a child support award
far beyond the child's needs, thereby justifying deviation from the general
rule of strict adherence. The facts of
the case at bar, however, in light of the lack of evidence presented by
Luciani, do not produce the absurd result that is contemplated by the court in Hubert. Luciani's challenge to the circuit court's
order relates more to his contention that his former wife should bear the total
burden of child support simply because of her substantially higher income.[13]
In this case, the circuit
court's application of the percentage standards was by no means
"robotistic," as suggested by the court of appeals, as it considered
the relevant statutory factors in determining Luciani's support obligation.
Luciani, however, maintains
that the circuit court failed to consider the disparity of the parties'
incomes, as well as the statutory factors, constituting an erroneous exercise
of discretion. The essence of Luciani's
challenge is that application of the percentage standards in this case will
produce an absurd result. He suggests
to this court that the record is "replete with evidence" which
supports this claim, and therefore seeks a modification of the child support
obligation as determined under Wis. Stat. § 767.25(1j).
Reviewing the record in light
of Luciani's claim, we examine the evidence presented to the circuit court to
demonstrate that unfairness would result.
The burden of demonstrating that a modification of the child support
award is warranted in a particular case rests with the requesting party, not
the circuit court.[14] The evidence presented by Luciani to support
his claim for unfairness rests primarily on the figures contained within the
financial disclosure statement and his testimony at trial.
In his financial disclosure
statement, Luciani represented to the court that his annual childcare expenses
(i.e., daycare) would slightly exceed $10,000.
However, when questioned about the validity of this figure by opposing
counsel, Luciani modified the child care claim to an average of $30 per week or
$1,560 per year. He admitted that he
has custody of the children on alternating weekends from January through May,
and September through December, and therefore incurs no child care expenses
during this time. Such expenses would
be confined to the months of June and August, during which time Luciani would
take vacation, and perhaps his parents visiting from Florida would care for the
children, as they had done for an entire summer in the past. These salient factors would significantly reduce
the already deflated child care expense estimate offered to the court by
Luciani. It is clear that the claimed
figures in the financial disclosure statement were not supported by the
testimony at trial.
On further cross-examination,
a number of additional figures were also reduced. Luciani's claimed housing expense was $1,124.30, but he testified
that his actual monthly rent was $650, a fixed cost unaffected by the presence
of the children. The claimed utility
expense of $195 was reduced to $150. In
addition, Luciani testified that he incurred clothing expenses for the children
in the amount of $20 per week and approximately $10 per week in medical
supplies. This was the extent of the
evidence provided by Luciani in support of his request to modify the child
support obligation.
In fact, a comprehensive
review of the record in this case further evidences testimony by Luciani which
seemingly undermines his challenge that the child support order is patently
unfair. Luciani initially testified
that his annual budget would require a figure of $36,500, based upon income and
liabilities in his financial disclosure statement. This computation, however, included the erroneous claim of child
care expenses in the amount of $200 per week.
As indicated above, Luciani's testimony dramatically reduced this figure
to only $30 per week. Subsequent to
being alerted to this discrepancy by opposing counsel, Luciani amended the
budget claim to an annual figure of $27,600.
Upon a cursory inspection,
this figure would appear to exceed Luciani's after-tax income of $22,000,
resulting in the alleged `forced
impoverishment' suggested by the dissent.
Dissent, at 2. However, the
$22,000 figure significantly underrepresents the income available to
Luciani. The dissent has failed to
appreciate the fact that he will also receive an additional $12,000 annually
($1,000/month), in the form of maintenance from Dr. Montemurro. When coupled with the $22,000, this
"income" will produce an annual budget that exceeds the $27,600
figure that Luciani testified he needed at trial.[15] Moreover, the discretionary income produced
by this maintenance award will certainly allow Luciani to provide the children
with gifts, entertainment, and vacations as he sees fit, allaying the
relationship concerns expressed by the dissent. Dissent, at 2. We find
that the record in this case clearly does not support Luciani's claim of
unfairness, nor does it sustain the dissent's conclusion of a `basic
inequity'. Dissent, at 5.[16]
The circuit court was next
presented with testimony regarding Dr. Montemurro's expenditures for the
children as well as a multitude of other expenses. Dr. Montemurro was making regular payments on her medical school
loans ($36,000 balance), the home mortgage ($84,000 balance; $1,100/month), and
payments on a business loan for her medical practice ($51,000 balance). In addition to the initial loan to open her
practice, Dr. Montemurro was similarly making payments on corporate debts of
nearly $44,000). To this figure we
further attach the court ordered $1,000 monthly maintenance award payable to
Luciani for 36 months.
With respect to the children,
Dr. Montemurro had purchased the majority of their clothes, paid for
counseling, guardian ad litem fees, and school tuition of $1,600 in addition to
weekly child care expenses throughout the year. The physical placement stipulation between the parties had placed
the children with Dr. Montemurro during the week other than the months of June
and August. The total cost for those
expenses associated with Dr. Montemurro's continuing care for the children was
approximately $1,100 per week.
The parties had a final
opportunity to offer additional support for their position when required to
submit letter briefs to the court following the initial decision. Luciani's letter brief reiterated his
position at trial, and though replete with allegations of unfairness, neglected
to provide the appropriate figures to support these claims.
After reviewing the record,
we are satisfied that the circuit court properly concluded that Luciani had
failed to prove by the greater weight of the credible evidence that the
presumptive application of the percentage standards would be unfair to the
children or either party. The court of
appeals' decision stated that it believed that the circuit court had found the
disparity of the parties' incomes to be an irrelevant consideration on the
question of adherence to the percentage standards. Luciani, 191 Wis. 2d at 77. This interpretation is mistaken.
The circuit court's supplemental decision clarified that the disparity
in income does not automatically trigger deviation from the percentage
standards. Rather, it is but one of
many factors that the court considers after receiving a modification
request. See Wis. Stat.
§ 767.25 (1m)(hs) (1993-94).[17]
The recent decision by the
court of appeals in Kjelstrup v. Kjelstrup, 181 Wis. 2d 973, 512
N.W.2d 264 (Ct. App. 1994) demonstrates that where the parent with primary
custody earns a higher income, it does not necessarily follow that
"unfairness" results when the circuit court does not deviate from the
percentage standards. In Kjelstrup,
the court commissioner increased Susan Kjelstrup's child support award, at a
post-judgment modification hearing, to equal the percentage standard. Id. at 974. Rod Kjelstrup petitioned, and the court reduced the
commissioner's award, stating that the application of the percentage standards
would be unfair given the recent disparity in the parties' incomes. The
court of appeals reversed the decision of the circuit court because it deviated
from the percentage standards by relying solely upon the income discrepancy
among the parents. Id. at
976. In its analysis, the court
referred to the preface of Wis. Admin. Code § HSS 80 to note the circuit
court's error. The preface to the
chapter provides as follows:
The [percentage of income] standard is based on
the principle that a child's standard of living should, to the degree possible,
not be adversely affected because his or her parents are not living together.
It [the standard] determines the percentage of a parent's income and potential
income from assets that parents should contribute toward the support of
children if the family does not remain together. The standard determines the
minimum amount each parent is expected to contribute to the support of their
children. It expects that the custodial parent shares his or her income
directly with their children.
Id. (citing § HSS
80 Preface). In the present case,
Luciani similarly seeks to have the support obligation modified because Dr.
Montemurro earns a greater income. This
argument fails to recognize the assumption that underlies application of the
percentage standards, as stated above.
Dr. Montemurro is presumed to contribute at least 25%[18]
of her income to the children's support, thereby reducing the income disparity
that Luciani relies upon. And further,
as made clear by the decision in Kjelstrup, disparity in the parties'
incomes, by itself, is not sufficient to require the court to deviate from
strict adherence to the percentage standards.
Absent a showing that such disparity will adversely affect the children
or the parties in some demonstrative manner, it is simply one among a number of
factors to be considered by the court when a request to deviate from the
percentage standards is presented.
We conclude that the circuit
court reviewed the disparity of the parties' incomes, the amount of physical
placement with Luciani, as well as other relevant factors, and exhibited a
reasoned process in concluding that deviation from the percentage standards was
not warranted in this case. The circuit
court did not err in exercising its discretion, and we therefore reverse the
court of appeals on this issue.
Finally, we address Dr.
Montemurro's contention that the court of appeals ignored the statutory presumption
of the percentage standards and implicitly rewrote the statute to require the
circuit court to make a threshold determination that the guidelines are to be
utilized, thereby improperly shifting the burden of proof away from Luciani.
The court of appeals' error
is exhibited in a series of footnotes, which set forth the issue presented by
this review:
On a somewhat similar theme,
Angelina contends that the amount of support to be paid by the payer under the
guidelines is not influenced by the income of the payee. We agree.
The standards expect that the custodial parent share his or her income
directly with the children. . . . Here, however, the issue is
whether the family court properly chose to adhere to the standards in the first
instance. It is not whether the
court correctly computed Michael's support obligation under the standards. This is a subtle but important
distinction. (Emphasis added.)
Luciani, 191
Wis. 2d at 77 n.5. The appellate
court's reversal of the percentage standards statutory presumption in a
high-income payee case is further evidenced by the following passage:
Angelina argues that Michael's attack is on the
mechanics of the shared-time formula . . . . We
disagree. Michael makes no argument
that the family court's computation of his support obligation under the
shared-time payer formula was flawed. Rather,
he argues against the application of the shared-time payer formula on a
threshold basis. (Emphasis added.)
Id. at 77-78 n.6.
The appellate court's
decision implies that the previously existing presumptions regarding
application of the percentage standards are inapplicable in high-income
disparity cases. The decision has
attempted to shift the established burden of proof in cases where unfairness is
alleged, from the requesting party to the circuit court. The circuit court would now be required to
conduct its own threshold investigation to determine the appropriateness of the
percentage standards in a high-income case, regardless of the amount of
evidence presented by the requesting party.
This approach ignores the administrative regulation and stated
presumptions underlying the statute, see Kjelstrup, 181 Wis. 2d
at 977, as well as case law interpreting the percentage standards as an
evidentiary shortcut to be utilized in determining the relative needs of the
child for support. Weidner, 131
Wis. 2d at 318.
The court of appeals'
dissatisfaction with the shared-time payer formula on the basis that neither
the Wisconsin Statutes nor the Administrative Code consider the income of the
custodial parent, is not the relevant inquiry in light of the nature of the
support guidelines as adopted in Wisconsin.
The rules promulgated by DHSS are consistent regardless of the
noncustodial parent's status as a shared-time payer or a simple payer: the
custodial parent's income is generally not considered under Wisconsin law. See supra, n.17. Future revisions to the mechanics of the
support statutes and the shared-time payer formula in high-income cases is
properly left to the province of the legislature.
The obligation to support
one's children is a basic one.
Luciani's contention that he should be relieved of this burden simply
because his ex-wife earns a substantially higher income runs contrary to the
paramount goal of child support, namely, securing the best interest of the
children. Kuchenbecker v. Schultz,
151 Wis. 2d 868, 875, 447 N.W.2d 80 (Ct. App. 1989). We recognize the role that income disparity
may play in a particular case, but under the facts before us, it is only
relevant where Luciani can demonstrate that he is unable to pay the court
ordered child support or that such disparity in income will adversely affect
the children or himself. The circuit
court properly concluded that he has failed to do so in this case. Luciani's claim of unfairness is unsupported
by the facts, as he enjoys an annual budget which exceeds that figure which he
testified at trial would be required to maintain himself and the children.
The language in Wis. Stat.
§ 767.25 (1993-94) is clear. The
circuit court is required to determine the appropriate amount of child support
by application of the percentage standards.
However, a requesting party's
showing of unfairness by the greater weight of the credible evidence will allow
the court to deviate from this presumptive application.
By the Court.—The decision of the court of appeals is affirmed
in part and reversed in part.
WILLIAM A. BABLITCH, J. (dissenting). I agree completely with the sound legal
analysis written by the majority. Where
I disagree is with the application of the law to the facts of this case. Accordingly, I respectfully dissent.
The economic facts are
somewhat difficult to glean from this record, particularly because the circuit
court made no specific economic analysis or findings other than some conclusory
references. What we do glean from the
record is the following.
Husband Michael Luciani has
aftertax monthly income of approximately $1900 ($22,000 annually). Wife Dr. Angelina Luciani has aftertax
monthly income of approximately $8300 ($100,000 annually). Mr. Luciani has the children for
approximately 117 overnight days and 49 nonovernight days per year, a placement
characterized by the court of appeals as a "nearly equal child placement
provision." Marriage of Luciani
v. Montemurro-Luciani, 191 Wis. 2d 67, 77, 528 N.W.2d 477 (1995).[19] He pays $650 a month rent for a home for
himself and his children when they are with him. From the statement of facts presented by Dr. Luciani's attorney
to the court of appeals, we further learn that Mr. Luciani spends about $150
monthly for utilities and $130 monthly for child care.
The majority affirms the
circuit court decision that says Mr. Luciani must pay approximately $680 a
month in child support. Taking into
account his rent, utilities, and child care, this leaves him with approximately
$290 a month for himself (and his children when they are with him) for expenses
such as food, car, gasoline, clothing, car insurance, health insurance, life
insurance, and incidentals. It leaves
him with little or no discretionary income to spend on gifts, entertainment,
vacations and the like for either himself or the children. We compare this to his wife who will have
more than ample discretionary income to bestow upon the children, a fact that
will certainly resonate with them as they get older.
On the face of it, this
result is tantamount to forced impoverishment of one spouse while the other
spouse has ample income to live exceedingly well.[20] Without further economic analysis by the
circuit court with respect to the circumstances of each party, this result
could hardly be more inequitable.
What we have here is a
situation in which the non-primary parent with a substantially lower income
than the primary parent has a time share with the children that approaches
equal time. Such a situation was
directly addressed in a 1992 study authored by Marygold S. Melli and Pat Brown
under a contract between the Wisconsin Department of Health & Social
Services and the Institute for Research on Poverty, entitled "Child
Support in Shared Physical Custody in Wisconsin: Present Guidelines and Possible Alternatives."
In addressing the shared-time
formula, the authors state that the formula results in inequitable award
calculations in two situations: one,
where the non-primary parent's time share approaches equal; two, where the
non-primary parent has a lower income.
Where both situations are present, as they are here with husband
Luciani, the authors state unequivocally:
"the resulting support award, as calculated by the formula
currently in effect, produces markedly inequitable results." Id. at 15 (emphasis added).
The authors use an example,
outlined more fully below,[21]
in which the mother is the non-primary parent with $3000 less income than the
father, but, after paying support consistent with the current formula, ends up
with nearly $10,000 less yearly income than the father. The authors' conclusion is that this is
"tremendously inequitable" to the mother. Id. at 17.
Here, the facts are different
from their example only with respect to who the non-primary parent is (and of
course gender should make no difference) and the amount of the income disparity
(which is far greater here than in the example where the authors found the
disparity to be "tremendously inequitable" to the mother).
There is a way for this court
to resolve the inequity: put teeth into
the statutory provision which permits the court to deviate from the standards
if the court finds by the greater weight of the credible evidence that the use
of the standards is unfair to the children or the party requesting such
deviation. See Wis. Stat. §
767.25(1m). To do so requires far more
fact finding than is presented by this record.
I conclude that Judge Nettesheim,
writing for a unanimous court of appeals, got it exactly right. That court concluded that the circuit court
"erred in the exercise of its discretion . . . by failing to analyze the
economic consequences of the support order in light of the parties' budgets,
incomes and nearly equal child placement provisions." Id. Even a cursory look at both circuit court
decisions compel this conclusion. Not
one figure is cited. There is no
analysis whatsoever. All statements are
conclusory.
The majority says Mr. Luciani
failed to prove by the greater weight of the credible evidence that the
presumptive application of the percentage standards would be unfair to either
the parties or the children. What more
does he need to produce other than the above described facts to establish basic
inequity? These facts, on their face,
are more than enough evidence to overcome the presumption. I agree with the court of appeals that this
case must be sent back for further economic analysis. High income disparity cases present significant problems of
fairness, requiring a high degree of economic analysis. Without such analysis, at the very least a
perception of unfairness will inevitably linger. Accordingly, I dissent.
SUPREME
COURT OF WISCONSIN
Case No.: 93-2899
Complete Title
of Case: In Re the Marriage of:
Michael A. Luciani,
Petitioner-Appellant,
v.
Angelina Montemurro-Luciani
Respondent-Respondent-Petitioner.
______________________________________
REVIEW OF A DECISION OF THE COURT OF APPEALS
Reported at: 191 Wis. 2d
67, 528 N.W.2d 477
(Ct. App. 1995)
PUBLISHED
Opinion Filed: March 7, 1996
Submitted on Briefs:
Oral Argument: November
1, 1995
Source of APPEAL
COURT: Circuit
COUNTY: Kenosha
JUDGE: BRUCE E. SCHROEDER
JUSTICES:
Concurred:
Dissented: BABLITCH, J., dissents (opinion filed)
Not Participating:
ATTORNEYS: For the respondent-respondent-petitioner
there was a brief by Donald E. Mayew, and Phillips, Richards,
Mayew & Corrigall, S.C., Kenosha and oral argument by Donald E.
Mayew.
For the
petitioner-appellant there was a brief by Thomas W. Anderson, Jr. and Anderson,
Sumpter & Anderson, S.C., Kenosha and oral argument by Thomas W.
Anderson, Jr.
[2] As noted by the court of appeals, the figures provided above are understated in some years in comparison to the gross income reported on the parties' W-2 forms. Both Luciani and Dr. Montemurro took advantage of available contributions to a retirement plan as well as a tax deferred stock plan. Luciani, 191 Wis. 2d at 72 n.1.
[3] Section
767.25(1j) provides:
Except as provided in sub. (1m), the court shall determine child support payments by using the percentage standard established by the department of health and social services under s. 46.25(9).
[4] Section
HSS 80.03(1)(b) provides:
Determining
child support using the percentage standard . . . . The
percentage of the payer's base or adjusted base that constitutes the child
support obligation shall be:
. . .
(b) 25% for 2 children;
[5] Application of the straight percentage standards would require Luciani to pay 25% of his gross income towards child support. However, because Luciani has the children for 32% of the overnight placement, the court is required to reduce this figure in accord with the "shared-time" formula provided in § HSS Table 80.04(2)(b) (i.e., 93.34%). Luciani's proper support obligation is therefore 24% of his gross income.
[6] Section
767.25(1m) provides:
Upon
request by a party, the court may modify the amount of child support payments
determined under sub. (1j) if, after considering the following factors, the
court finds by the greater weight of the credible evidence that use of the
percentage standard is unfair to the child or to any of the parties:
. . . .
[7] Section
767.25(1n) provides:
If the court finds under sub. (1m) that use of the percentage standard is unfair to the child or the requesting party, the court shall state in writing or on the record the amount of support that would be required by using the percentage standard, the amount by which the court's order deviates from that amount, its reasons for finding that use of the percentage standard is unfair to the child or the party, its reasons for the amount of the modification and the basis for the modification.
[8] The court of appeals recognized that this particular case was the converse of the Hubert decision, as here the payee (Dr. Montemurro), not the payer (Luciani), was the high-income earner. Nevertheless, the court stated that consideration of "the earning capacity of each parent" was an express factor under Wis. Stat. § 767.25(1m)(hs) (1993-94) to be considered upon a request to deviate from the percentage standards, and disagreed with its reading of the circuit court treatment of the issue as irrelevant.
[9] The
court of appeals' representation of the child placement as `nearly equal' is
unsupported by the record. Under the shared- time payer formula, the
determinative criteria utilized to calculate a child support obligation is
overnight care. In this case, Luciani has the children for a total of 117
overnights and 49 nonovernight days per year. See discussion, at p. 3.
The record illustrates that during the 49 nonovernight days, Luciani has the
children for only one-sixth of the day (4 hours), while Dr. Montemurro is
responsible for the remaining five-sixths (20 hours). The court of appeals has mistakenly considered the 117 and 49
figures collectively ((117+49)/365)= 45%) to characterize Luciani's placement
obligation as `nearly equal.' In fact, the children's total overnight placement
with their father is less than one-third. Even if one were to consider the
supplementary hours generated as a result of the additional 49 nonovernight
days per year (196 hours), the total physical placement with the father would
equal only 34%, a figure which cannot fairly be characterized as `nearly equal'
by the court of appeals nor the dissent.
Furthermore, if Luciani had been concerned about the proper calculation of the additional 49 nonovernight days in which he had the children for four hours, he could have sought relief under Wis. Admin. Code § HSS 80.02(25) (June 1993) which recognizes that physical placement arrangements exist where additional costs are incurred, but no overnight care is provided. The note to this subsection therefore provides: "[u]pon request of one of the parties the court may determine that the physical placement arrangement other than overnight care is the equivalent of overnight care." No such request was made in the present case.
[10] The court of appeals did note, however, that it was not concluding that the shared-time provisions of the percentage standards were not applicable in this case, rather, because the circuit court did not adequately analyze the financial data, it failed to provide substantial reasons for adherence to the guidelines. Luciani, 191 Wis. 2d at 78.
[11] The court of appeals' decision in Schnetzer v. Schnetzer, 174 Wis. 2d 458, 497 N.W.2d 772 (Ct. App. 1993) attempted to clarify the burden on the circuit courts when strictly applying the percentage standards. The Schnetzer case dealt with a post-judgment child support modification action, in which Mr. Schnetzer contended that the circuit court had abused its discretion in applying the percentage standards. The appellate court held that the factors provided in Wis. Stat. § 767.25(1m) (1989-90) "need to be demonstrably considered only where the trial court deviates from the percentage standards." Id. at 463. Rather, where the court elects "not to deviate from the percentage standards, the court, in exercising its discretion, need only articulate its reason and base its decision on facts of record and the correct legal standard." Id. We find that the above-quoted language improperly suggests that a circuit court, in considering a party's challenge to the presumptive application of the percentage standards, is not required to articulate its analysis of the statutory factors found in Wis. Stat. § 767.25(1m), except where it decides to deviate from the guidelines. This interpretation of the proper role of the circuit court is contrary to our holding in the present case, and we therefore overrule the language expressed in Schnetzer.
[12] The circuit court ordered Mr. Hubert to pay $4,000 per month in child support ($48,000 annually), which was substantially lower than the 25% figure ($250,000 annually) prescribed by the percentage standards.
[13] We note that Luciani's position on appeal before this court is seemingly contrary to that exhibited at the circuit court level, in which he proposed that the court obligate each party to provide necessary support while the children were physically placed with each respective parent. See supra, p.6.
[14] Contrary to Luciani's argument that the issue of his having met his burden of proof has not yet been addressed by the circuit court, we find that it is precisely the issue before us, as we consider whether the circuit court abused its discretion in finding that the record lacked any evidence to support a claim for unfairness.
[15] We note
that the circuit court maintenance award is payable for 36 months. Upon the
expiration of this period, if Luciani feels that he can no longer meet his
child support obligations under the current order, he may seek revision under Wis.
Stat. § 767.263 (1993-94) which provides:
Notice of change of employer; change of address;
change in ability to pay.
Each order for child support, family support or
maintenance payments shall also include an order that the payer notify the
clerk of court, within 10 days, of any change of employer and of any
substantial change in the amount of his or her income such that his or her
ability to pay child support, family support or maintenance is affected.
In order to secure such a revision in his child support obligation, Luciani would be required to prove a substantial change in circumstances. See Wis. Stat. § 767.32(1) (1993-94). At that time, the judge would then consider the relative change in economic condition along with the statutory factors utilized to calculate child support, and determine if a modification of the child support award is warranted.
[16] The
dissent bases this conclusion upon a reference to a 1992 study authored by
Melli and Brown, in which they conclude that the shared-time formula produces
inequitable results where the non-primary parent's time share approaches equal
and where the non-primary parent has a lower income. The example from the study as cited by the dissent, however, is
in stark contrast to the facts of the present case regarding placement. In the
study case, the father's overnight placement was 190 days, while the mother's
was 175, a difference of only 15 days. This placement arrangement was correctly
characterized as `nearly equal.' Here,
Dr. Montemurro's overnight placement was 248 days, while Luciani's was 117, a
difference of approximately 131 days.
Given this disparity in figures, it is inconceivable for the dissent to suggest that the physical placement arrangement in the present case is precisely analogous to the case study example. Dissent, at 3-4. See also supra, n.9. Moreover, the annual income after child support of the mother in the study placed her below the poverty line, supporting the conclusion that the result was `tremendously inequitable.' Luciani, on the other hand, is receiving $1,000 monthly in maintenance over three years, and has an annual budget which exceeds that to which he testified he would need at trial. While we recognize that a disparity in income does exist, the facts of the present case do not fit the dramatic example provided by the case study and relied upon by the dissent.
[17] At the
time of the trial, Wisconsin's shared-time payer formula, as promulgated in the
administrative code, did not consider the income of the primary custodial
parent. Rather, it only dealt with the
income of the lesser-time parent. The
new shared-time formula in Wis. Admin. Code § HSS 80, effective
March 1, 1995, does not consider the income of both parents until the lesser-time parent is over the 40% threshold in overnight placement. Luciani is presently at 32%. See Margaret W. Hickey, "New Rules for Child Support Obligations," 68 Wis. Law. 15 (Apr. 1995); Marygold S. Melli, "Child Support by Shared-Time Parents: Why a Simple Offset Formula is Wrong," 15 Wis. J. Fam. L. 41 (Apr. 1995) (characterizing the new administrative rule in shared-time cases as a progressive effort in addressing issues raised by the author in prior articles, regarding the need to recognize the changing economic burdens of shared parenting).
[19] The majority takes issue with this conclusion of the court of appeals, stating that it is "unsupported by the record. . . . In fact, the children's total overnight placement with their father is less than one-third." See majority op. at 10, fn. 9. Of course, the one-third figure is accurate, but only with respect to overnight placement. Mr. Luciani also has the children for 49 nonovernight days (4 hours per day). Although this is not equal time, it is certainly arguable that this placement approaches it.
[20] Although
the circuit court provided a maintenance award of $1000 a month, maintenance is
payable for only 36 months. After that,
according to the circuit court, "maintenance shall be barred." At that time, the two children will be ages
8 and 9.
Although the majority argues that Mr. Luciani may seek revision after the maintenance expires, the family court's order that "maintenance shall be barred" leaves scant hope that such request would be viewed with favor absent some change in circumstance other than the termination of maintenance.
In this case, a mother who has her children
living in her home for 15 fewer days over the course of a year than the father,
and who has a yearly income of $16,000 versus a yearly income of $19,000 for
the father, would be ordered to pay the father $3,282 per year using the
formula currently in effect. The family
incomes which would result after the child support transfer are, for the
father, $22,292; for the mother, $12,718.
The disparity in family finances which results from the application of
the current shared custody child support formula would be tremendously inequitable
in this case for the mother and the children.
Melli, Child Support in Shared Physical Custody, at 17 (emphasis added).