Knott v. Knott

Opinion by GREENE, J. This appeal arises from a decision of the Circuit Court for St. Mary’s County refusing to modify or vacate an interlocutory consent order for the payment of money. Appellant, James Francis Knott, Jr., agreed with his wife, appellee, ²³⁸ Marlene Denise Knott, that he would pay the mortgage and other expenses in connection with the family home during the period of use and possession enjoyed by appellee and the parties’ minor child, Mallory Jean Knott. The Consent Order that memorialized the agreement designated the payments as “payments in lieu of child support.” Appellant’s new obligation equaled $1,316 monthly, more than double the amount he was obligated to pay under a previous consent pendente lite child support order. The new Consent Order, signed by the circuit court judge on September 3,1999, terminated appellant’s obligation under the prior pendente lite order.

As of the time this appeal was noted, the September 3, 1999 Consent Order had not been made final by the entry of the Judgment of Divorce, 1 which finally disposed of all remaining issues in the case without incorporating the Consent Order in it. ISSUES Appellant noted this appeal to present the following questions for review, which we have rephrased: 1. Did the circuit court err in denying appellant’s request to modify the September 3, 1999 Consent Order requiring ■him to pay specific monthly and annual expenses in lieu of child support? 2. Did the circuit court, after concluding that the Consent Order does not contain a form of child support, err in failing ²³⁹ to find that the order was in violation of the State’s public policy and therefore void?

Appellee further raises the following question: Should the appeal be dismissed as premature? With regard to appellee’s question, we hold that we have jurisdiction to decide the matter. For reasons that we shall explain, we reverse the court’s denial of appellant’s request to modify the order. We remand the case to the trial court for further proceedings consistent with this opinion.

Because the order appealed was interlocutory, the correct standard for modification of an order concerning care, custody or support of a minor child is the best interest of the child pursuant to FL 8-103. Such orders are subject to revision at any time before the entry of a final judgment that adjudicates all of the claims by and against all of the parties. Md. Rule 2-602(a)(3). The basis for modification of a final order concerning care, custody, or support of a minor child is material change of circumstances, pursuant to FL 12-104.

We further hold that the circuit court erred by failing to consider the child support guidelines as required by FL § 12-202 before adopting the agreement of the parties. Because of our answer to the first issue raised by the appellant, the second issue is moot. FACTS The parties were married on April 19, 1986, in St. Mary’s County, where they resided. Mallory was born on January 18, 1990.

On November 13, 1998, appellant filed a Complaint for Absolute Divorce against appellee in the Circuit Court for St. Mary’s County. The complaint requested an absolute divorce, custody of Mallory, use and possession of the family home and personal property, contribution to the mortgage payments and other expenses in connection with the family home, a monetary award, and further relief. ²⁴⁰ On May 26, 1999, the parties appeared before the circuit court for a hearing on pendente lite child support. On July 15, 1999, the circuit court signed a Consent Pendente Lite Order requiring appellant to pay pendente lite child support in the amount of $650.00 per month. 2 On August 23, 1999, the parties again came before the circuit court to litigate issues of custody, visitation, child support, use and possession of the family home, and other incidental relief. At that time, the parties reached an agreement on several outstanding issues.

The resulting Consent Order terminated the original pendente lite child support obligation and included, in pertinent part, that the parties would share joint legal custody of Mallory and that she would reside with appellee in the family home. The agreement gave appellee use and possession of the family home through June 15, 2004. Appellant received reasonable and liberal visitation. 3 The Consent Order set forth appellant’s new financial obligation as follows: ORDERED, that [appellant] shall be responsible for the mortgage, taxes and insurance for the marital home effective August 30, 1999 through the use and possession term and shall make all payments on a timely basis. That said payments on the marital residence shall be in lieu of child support; and it is further, ORDERED, that [appellant] will ensure that all monthly debts associated with the home will be paid up to date through August 30,1999; and it is further, ’ ²⁴¹ ORDERED, that [appellee] shall be responsible for all debts associated with the home effective August 30, 1999 through June 15, 2004;....

The Consent Order also required appellant to pay the monthly home equity loan payments; the payment on a family trailer; one half of the annual tuition, books, and fees for Mallory’s private schooling; and any uncovered medical expenses. Appellant’s new monthly payment obligation totaled $1,316 4 to begin on September 1, 1999. A review of the transcript reveals that the child support guidelines apparently were never considered or discussed at the time of the hearing. The circuit court signed the Consent Order on September 3, 1999.

On May 17, 2000, appellant filed an Amended Complaint for Absolute Divorce alleging, among other things, 5 that a material change of financial circumstances had occurred and requesting a modification of his child support obligation under the Consent Order. Appellant alleged that modifying the terms and conditions of any child support and/or custody agreement set forth in the September 3, 1999 Consent Order would be in the best interest of the child. On February 6, 2001, the issues raised in appellant’s amended complaint came before a master. Appellant testified that at the time of the Consent Order he was employed with Johnson Controls, earning approximately $44,000 per year, ²⁴² and was also self-employed with Patuxent Heating and Cooling, earning approximately $25,000 a year.

He also testified that in October 1999, he was laid off from his employment with Johnson Controls and that he was now only working for Patuxent Heating & Cooling. Appellant argued that this change in circumstances justified a modification of terms of the Consent Order relating to child support. In response to appellant’s amended complaint, appellee noted that the Consent Order contained no direct child support obligation and that payments made by appellant were “in lieu of’ child support. Appellee argued that an order directing a parent to make payments for the benefit of the child did not constitute child support, and thus was not subject to modification.

Appellee further asserted that the Consent Order had become enrolled and that no timely motion had been made by appellant to alter or revise it. Appellee concluded that, once enrolled, the Consent Order constituted a contract between the parties that was binding regardless of appellant’s employment circumstances. The master requested memoranda regarding the issues raised by appellee. On February 27, 2001, appellant filed a Motion to Revise and/or Vacate the Consent Order.

Appellant contended in this motion that if the payments he was making pursuant to the Consent Order did not constitute child support, the parties, by their agreement, had “bargained away” child support. Appellant concluded that such an agreement violated public policy and would thus be void. Appellant further contended that because the Consent Order was not a final judgment resolving all of the issues involved in the case, it could be modified at any time prior to the entry of a final judgment. Consequently, appellant argued he was not obligated to seek a modification of the Consent Order within the 30 day time limit specified in Maryland Rule 2-535.

Finally, appellant contended that the Consent Order impermissibly intertwined issues of child support, custody, visitation, use and possession, mortgage, and other matters that require the court to declare the Consent Order to be “invalid and .unenforceable.” ²⁴³ Appellee merely restated the arguments she had made previously at the master’s hearing. On April 9, 2001, the matter again came before the master with respect to appellant’s request to modify child support and other issues. The master noted that no child support guidelines had been prepared and requested that the attorneys provide a guidelines worksheet. Two guidelines worksheets were provided showing appellant’s child support obligation as $244.80 per month and $290.63 per month, respectively. 6 After hearing argument, the master found that the payments appellant was required to make did not constitute child support.

The master determined that the agreement to make the payments had justified a downward deviation of his child support obligation to zero. The master also found that appellant had lost his job at Johnson Controls through no fault of his own, resulting in a substantial reduction of his monthly income. Nonetheless, the master decided that it would be inequitable to modify one paragraph of the Consent Order without allowing the other side to seek modifications of the rest of the order. The master recommended that appellant’s request for modification of child support be denied.

Appellant filed exceptions to the master’s findings, and the matter came before the circuit court on May 23, 2001, for a hearing. On July 26, 2001, the court issued its opinion denying appellant’s modification request. The circuit court first noted that it was within its power to modify a child support agreement if such a modification would be in the best interest of the child. In the instant case, the court stated that appellant had not explained why modification would be in Mallory’s best interest.

The court opined that such an argument would be difficult to make because the purpose of the agreement was to benefit the child by allowing her to live in the family home until she finishes middle school. ²⁴⁴ The court found that the Consent Order did not constitute child support and, therefore, only could be modified “by mutual participation and consent of the parties.” The court also found that the court “implicitly” had recognized the application of the child support guidelines, as proven by its usage of the term “in lieu of child support,” and properly allowed for deviation. Finally, the court stated that appellant’s only means of redress had been pursuant to Maryland Rule 2-535(a), 7 but he had failed to timely challenge the order under that rule. Moreover, he had not moved to have the order vacated under Rule 2-535(b) for fraud, mistake or irregularity. Appellant noted the current appeal on August 6, 2001.

At that time the circuit court had not yet issued its Judgment for Divorce. That judgment, issued on October 12, 2001, did not incorporate the provisions of the September 3, 1999 Consent Order nor did it make any other provisions for child support. We shall furnish additional facts as necessary during our discussion of the issues. DISCUSSION I. Timeliness of the Appeal Appellee contends that the current appeal should be dismissed as premature.

We disagree. Appellee concedes that appellant filed his notice of appeal within 30 days after the circuit court’s decision of July 26, 2001, overruling appellant’s exceptions to the master’s Report and Recommendation and denying appellant’s motion to vacate or modify the Consent Order. Appellee notes, however, that the circuit court’s July 26, 2001, decision was not a final judgment, and that the appeal was filed before the ²⁴⁵ entry of the final judgment of divorce. The court entered a final judgment of divorce on October 12, 2001.

Appellant did not file a notice of appeal after enrollment of the final judgment of divorce. Maryland Code, § 12-303 of the Court and Judicial Proceedings Article, provides in pertinent part: Appeals from certain interlocutory orders. A party may appeal from any of the following interlocutory orders entered by a circuit court in a civil case: (3) An order: (v) For the sale, conveyance, or delivery of real or personal property or the payment of money, or the refusal to rescind or discharge such an order, unless the delivery or payment is directed to be made to a receiver appointed by the court. Md.Code (1973, 1998 Repl.Vol.), § 12-303(3)(v) of the Cts. & Jud.

Pro. Article (emphasis added). The Court of Appeals has clarified the type of orders that fall under § 12-303(3)(v) in Simmons v. Perkins, 302 Md. 232 , 486 A.2d 1192 (1985). The Court, in addressing the question of whether an award of counsel fees was an order for the payment of money within the scope of § 12-303(3)(v), summarized the history of the statute.

The Court stated: The history of § 12-303 thus indicates a legislative intent to allow interlocutory appeals only from those orders for the “payment of money” which had traditionally been rendered in equity. This is confirmed by judicial decisions. The types of orders previously held by this Court to be orders for the “payment of money” are orders for alimony, child support, and related counsel fees, Chappell v. Chappell, 86 Md. 532 , 39 A. 984 (1898), and Pappas v. Pappas, 287 Md. 455 , 413 A.2d 549 (1980). The Court of Special Appeals has recognized the appealability of similar interlocutory orders in domestic relations litigation, Hofmann v. Hofmann, 50 Md.App. 240 , 437 A.2d 247 (1981), and Della Ratta v. Dixon, 47 Md.App. 270, 284 , 422 A.2d 409 (1980), as well as an interlocutory order directing an assignee for the benefit of ²⁴⁶ creditors to pay certain sums to creditors, Genn v. CIT Corp., 40 Md.App. 516 , 392 A.2d 1135 (1978).

The common thread in the above-cited cases is that each involves an order for a specific sum of money which “proceeds directly to the person” and for which that individual is “directly and personally answerable to the court in the event of noncompliance.” Della Ratta v. Dixon, supra, 47 Md.App. at 285 , 422 A.2d 409 . These characteristics of a traditional equity order for the payment of money differ markedly from those of a typical judgment at law for the payment of money. The latter type of judgment “may settle the respective rights of the parties ... but it does not purport to order anyone to do anything.” Ibid. It is “not immediately enforceable,” id. at 286 , 422 A.2d 409 .

Simmons, 302 Md. at 235, 486 A.2d 1192 (quoting Anthony Plumbing of Maryland Inc. v. Attorney General, 298 Md. 11, 20, 467 A.2d 504 (1983)). In Lieberman v. Lieberman, 81 Md.App. 575, 585-591 , 568 A.2d 1157 (1990), we reviewed an appealable interlocutory judgment for the payment of money. In construing the payment provision we identified the amount that was originally allocated as child support and the amount that was originally allocated as spousal support. Id. at 585 , 568 A.2d 1157 .

We held that the amount identifiable as child support, whether or not allocated, is always subject to judicial modification. Id. at 589 , 568 A.2d 1157 . Not unlike Lieberman , the interlocutory order of July 26, 2001, falls squarely into the type of appeals permitted under § 12-303(3)(v).

II

Standard of Review Child support orders are generally within the sound discretion of the trial court. However, “where the order involves an interpretation and application of Maryland statutory and case law, [the] Court must determine whether the trial court’s conclusions are ‘legally correct’ under a de novo standard of review.” Walter v. Gunter, 367 Md. 386 at 392 , 788 A.2d 609 (citing In re Mark M., 365 Md. 687 , 782 A.2d 332 (2001)). See Also Jackson v. Proctor, 145 Md.App. 76, 90 , 801 ²⁴⁷ A.2d 1080, 1089 (2002), (noting that “we will not disturb the trial court’s determination as to child support, absent legal error or abuse of discretion”).

III

Payments In Lieu of Child Support Appellant contends that the payment of $1,316 per month in expenses he agreed to make in lieu of child support is a form of child support and therefore is subject to modification as a child support award. Appellant, in making this claim, relies on two separate theories. First, appellant relies on the Court of Appeals’ decision in Walsh v. Walsh, 333 Md. 492 , 635 A.2d 1340 (1994). Second, appellant relies on the fact that appellee’s counsel referred to appellant’s payment obligation as child support.

We agree the payments are child support but for somewhat different reasons. We shall explain. Whatever the parties may have chosen to call the payments appellant agreed to pay, it is clear that parents are required by law to support their children. Lacy v. Arvin, 140 Md.App. 412 , 780 A.2d 1180 (2001).

In Lacy , the Court noted that [t]he parents of a child are his natural guardians and, quite apart from the moral obligations of parenthood, owe the child a legal, statutory obligation of support. Thrower v. State ex rel. Bureau of Support Enforcement, 358 Md. 146, 159-60 , 747 A.2d 634 (2000); see also FL § 5-203 (stating that “[t]he parents of a minor child ... are jointly and severally responsible for the child’s support, care, nurture, welfare, and education”); Petrini v. Petrini, 336 Md. 453, 459 , 648 A.2d 1016 (1994)(noting that the legal obligation of parents to support and care for their children is “based on both common law and statutory authority”). A parent owes this obligation of support to the child, not to the other parent, see Rand v. Rand, 40 Md.App. 550, 554 , 392 A.2d 1149 (1978)....

When the parents and child live together, so that the child is in the parents’ joint physical custody, it is presumed that each parent fulfills that parent’s obligation of support to the ²⁴⁸ child directly. When the parents live apart, however, it is presumed that the parent in whose custody the child resides fulfills his or her obligation of support directly; the other parent’s support obligation then must be translated into dollars and paid to the custodial parent, for the child’s benefit. Md.Code (1984, 1999 Repl.Vol., 2001 Supp.) § 12-204(k) of the Family Law Article; Anderson v. Anderson, 117 Md.App. 474, 482 , 700 A.2d 844 (1997), vacated on other grounds, 349 Md. 294 , 708 A.2d 296 (1998). Id. at 422 , 780 A.2d 1180 .

Ironically, the parties concede in their respective briefs filed in this Court that appellant’s payments toward the expenses of the marital home are indeed a form of child support. Appellee contends, however, that appellant bargained away the right to modify the payments by not designating the payments as child support, per se. . This argument is simply inconsistent -with Maryland law. Judge Rosalyn Bell, speaking for this Court in Lieberman , said: A parent cannot agree to preclude a child’s right to support by the other parent, or the right to have that support modified in appropriate circumstances.

Moreover, there are public policy considerations. The State has a vested interest in requiring a responsible parent to support his or her child. Otherwise, the State could be responsible in whole or in part for the support of a minor child, even though a parent is financially able to meet those obligations. We hold that a parent may not, even potentially, shift the burden of support to the State.

Lieberman v. Lieberman, 81 Md.App. 575, 588 , 568 A.2d 1157 (1990). In addition to the law’s requirement that parents support their children, the language of the Consent Order in question supports appellant’s argument that his payment obligation is a child support obligation. Under the terms of the Consent Order, appellant agreed to pay the mortgage, taxes, and insurance with regard to the marital residence effective August 30, 1999, through the use and possession term. The ²⁴⁹ order provided also that payments on the marital residence “shall be in lieu of child support.” Both the master and the trial judge interpreted this language to mean that the payments on the marital home were not child support at all, but a deviation from the guidelines.

Maryland courts use the objective law of contract interpretation as the standard for a court to determine “from the language of the agreement itself, what a reasonable person in the position of the parties would have thought the agreement meant at the time it was effectuated.” Kramer v. Kramer, 26 Md.App. 620, 630 , 339 A.2d 328 (1975). “In lieu of’ means “instead of; in place of; in exchange or return for.” Black’s Law Dictionary, 791 (7th Edition, 1999). Here, the parties agreed that appellee and Mallory would continue to occupy the family home until 2004. It is a reasonable inference that the parties intended that appellant’s promise to pay these expenses directly as they became due was a form of indirect support payments to appellee for the benefit of Mallory. The fact that the payments are made for the benefit of Mallory is not altered because appellant pays the mortgage and other expenses directly rather than making payments to Mallory’s mother so that she can pay them.

Further review of the language of the Consent Order supports the conclusion that the payments concerning the expenses on the marital home were intended for the benefit of Mallory. The operative words are “said payments on the marital residence shall be in lieu of child support.” The order does not say that the payments on the marital residence shall be in lieu of child support and spousal support. If the parties had intended payments for spousal support, they could have included that language in the order. In addition, the Consent Order provides that Mallory and appellee will have the use and possession of the family home until 2004.

The use and possession statute’s sole purpose is for the benefit of the child or children of the family. Md.Code (1973, 1999 Repl.Vol.), § 8-206 of the Family Law Article; Pitsenberger v. Pitsenberger, 287 Md. 20, 410 A.2d ²⁵⁰ 1052 (1980). A parent’s or spouse’s needs are of no consideration except as those needs contribute to, or reflect upon, the obligation she or he owes to the children. Barr v. Barr, 58 Md.App. 569 at 585 , 473 A.2d 1300 (1984).

See Also Bledsoe v. Bledsoe, 294 Md. 183 , 448 A.2d 353 (1982) (holding that a wife with a child from a prior relationship was not entitled to use and possession of the family home). Moreover, in addition to any order that the noncustodial parent pay direct child support payments, the trial court may order one or both of the parents to contribute to the mortgage on the family home, insurance, and taxes. Md.Code (1984, 1999 RepLVol.), § 8-208(c) of the Family Law Article. It stands to reason that if appellant agreed to make the payments in order that Mallory could stay in the home with which she is familiar, those payments are made for her benefit, and therefore, should be considered child support payments.

The principles of Maryland law regarding child support, the language of the Consent Order, the parties’ concessions about the purpose of the payments, and the fact that the payments were made in connection with use and possession all support this Court’s conclusion that the payments in question are child support. Accordingly, the trial court erred by finding that the Consent Order did not provide for child support or its functional equivalent. IY. Child Support Guidelines A child’s best interest is of paramount importance and cannot be altered by the parties to a child support agreement.

Shrivastava v. Mates, 93 Md.App. 320, 327 , 612 A.2d 313 (1992) (citing Lieberman v. Lieberman at 588, 568 A.2d 1157 ). Judge Harrell, speaking for this Court in Shrivastava, said: This policy is codified by the child support guidelines. See Tannehill v. Tannehill, 88 Md.App. 4, 11 , 591 A.2d 888 (1991) (Guidelines intended “to remedy the low levels of most child support awards relative to the actual cost of rearing children” and “improve the consistency and equity of child support awards”). The guidelines require a trial court to presume, unless rebutted, that the amount of child ²⁵¹ support dictated by the guidelines is correct.

Id. The guidelines include specific language regarding the review of agreements for child support. Subsection (2) of § 12-202(a) provides, in pertinent part, as follows: (2)(i) There is a rebuttable presumption that the amount of child support which would result from the application of the child support guidelines set forth in this subtitle is the correct amount of child support to be awarded. (ii) The presumption may be rebutted by evidence that the application of the guidelines would be unjust or inappropriate in a particular case.

(iii) In determining whether the application of the guidelines would be unjust or inappropriate in a particular case the court may consider: 1. the terms of any existing separation or property settlement agreement or court order, including any provision for payment of mortgages or marital debts, payment of college education expenses, the terms of any use and possession order or right to occupy to the family home under an agreement, any direct payments made for the benefit of the children required by agreement or order, or any other financial considerations set out in an existing separation or property settlement agreement or court order; and 2. the presence in the household of either parent of other children to whom that parent owes a duty of support and the expenses for whom that parent is directly contributing. (Emphasis added.) Judge Rosalyn B. Bell, writing for this Court in Tanne-hill, 88 Md.App. at 14 , 591 A.2d 888 , observed that the considerations set forth in subsection (2)(iii) of § 12-202(a) “delineate situations that affect the financial resources of the parents or the financial needs of the children.” While the guidelines do not exclude “other relevant financial considerations that have the same or similar impact as the considerations listed [,]” id., the terms of an agreement for child support between the parties are relevant only to the ²⁵² extent that they impact upon the financial resources of the parents or the financial needs of the children. That this was the intent of the General Assembly is demonstrated by an examination of subsection (2)(iv) of § 12-202(a). It provides that, while a trial court may deviate from the guidelines if application thereof would be unjust or inappropriate, the court must make specific written or oral findings supporting such deviation, including: A. the amount of child support that would have been required under the guidelines; B. how the order varies from the guidelines; C. how the finding serves the best interest of the child; and D. in cases in which items of value are conveyed instead of a portion of the support presumed under the guidelines, the estimated value of the items conveyed. § 12-202(a)(2)(iv).

Shrivastava, 93 Md.App. at 328-29 , 612 A.2d 313 (1992). (Emphasis added.) In the case sub judice, the trial