Leineweber v. Leineweber

WRIGHT, J. Appellant/Cross-Appellee, John Leineweber (“Father”), and Appellee/Cross-Appellant, Michele Leineweber (“Mother”), were divorced in the Circuit Court for Howard County on April 4, 2005. The Judgment of Absolute Divorce granted the parties joint legal custody of their minor children with Mother having primary physical custody. Pursuant to a Mediated Settlement Agreement (“Agreement”), that was incorporated in the Judgment but not merged, Father agreed to “pay to [Mother] the sum of $2,199.00, per month, as and for child support.” On April 29, 2011, Mother filed a motion to modify custody and child support, which Father moved to dismiss. After hearing the matter on November 30, 2011, the Master in Chancery issued a written report and recommendation to which neither party filed exceptions.

On January 3, 2012, the circuit court granted Mother’s motion and ordered Father to pay Mother $13,263.00 per month in child support effective December 1, 2011, $14,336.54 for child support-related reimbursements, $110,156.00 for child support arrears, and $43,704.27 for counsel fees. ⁵³ On October 31, 2012, Father filed a complaint to modify child support which Mother moved to strike. After hearing the matter on April 30, 2013, the Master recommended that the circuit court deny Father’s request for modification. On May 9, 2013, Father filed exceptions arguing in pertinent part that “although the Master determined that [Father’s] previous deferrals were counted as income in the year in which they were earned ... and [Father] introduced sufficient evidence to identify the amounts which were previously deferred, the Master failed to take into consideration the evidence presented in reaching her recommendation.” On July 3, 2013, the court held a hearing on Father’s exceptions and, thereafter, denied Father’s request for modification of child support. On July 31, 2013, Father timely appealed.

He asks us to determine whether the circuit court abused its discretion in denying his motion to modify child support. 1 On May 16, 2013, prior to the exceptions hearing, Mother filed a motion for counsel fees and costs with request for a hearing, which the circuit court summarily denied on August 26, 2013. On September 4, 2013, Mother filed a motion for reconsideration, which the court also summarily denied on October 15, 2013. Thereafter, Mother noted a cross-appeal wherein she asks us to determine whether “the trial court err[ed] in failing to conduct an evidentiary hearing on [her] claim for an award of counsel and experts [sic] fees and court costs.” For the reasons that follow, we affirm the circuit court’s judgments. Facts The parties were married on October 21, 1995, in Baltimore, Maryland, and had two children, Emory and Peyton.

At all ⁵⁴ times of the proceedings in this case, Father worked as an employee of Jones Lang LaSalle, Inc. In 2004, the parties entered into an Agreement, which was incorporated but not merged into the Judgment of Absolute Divorce. The Agreement provided, in pertinent part: 4. CHILD SUPPORT A. Commencing April 1, 2004 or the date on which this Agreement is signed, whichever later occurs, [Father] shall pay directly to [Mother], for the support and maintenance of the Children, the sum of Two Thousand One Hundred Ninety Nine Dollars ($2,199) per month, payable on the first day of each month.... The parties have agreed to the amount of child support payments set forth above in consideration of each party’s rights and benefits under this Agreement, and with due regard for the child support guidelines currently in effect in Maryland.

The parties have based this calculation on the following information: [Father’s] gross annual income is $150,000; [Mother’s] gross annual income is $75,000.... D. The parties agree that the child support shall be recalculated on April 15th 2006 and that they will recalculate the child support every two years thereafter. The parties shall exchange his and her income tax forms with the other party on or before April 15th of the recalculation year, the child support shall be calculated in accordance with the then current gross incomes of the parties and the child support guidelines in effect at that time. The new child support figure shall be payable as of May 1st of the recalculation year.

In addition, if either party has an involuntary twenty five percent (25%) increase or decrease in gross income, the child support shall be recalculated as of the date of such involuntary increase or decrease and the new child support amount shall be due and payable as of the first day of the month immediately following the effective date of such increase or decreased] ⁵⁵ In 2011, Mother filed a motion to modify custody and child support which the circuit court granted. In ordering the modification, the court adopted the Master’s recommendations, which were based on the following factual findings: 33. At the time of the parties’ meeting in April 2006, based on the documentation produced by Father, the parties agreed that Father’s total income for the year would be $144,000. This figure represented the $125,000 in wages, a projected $15,000 bonus, and some other miscellany.

It was not an accurate expression of Father’s gross income, and the [MJaster finds that Father was aware of this inaccuracy and that it was intended by Father to mislead Mother for the purpose of reducing his child support obligation. 44. At no time did Father ever disclose to Mother that his income had dramatically increased from the time child support was originally set. The evidence presented by Father shows the following income: 2004: $150,000; 2005: $291,125; 2006[:J $402,791; 2007: $356,434; 2008: $392,796; 2009: $422,060; 2010: $626,570; and 2011 (as of October): $838,426. 45. Mother’s income has also increased, but not as dramatically: 2004: $68,377; 2005: [$]73,189.61; 2006: $82,577; 2007: $87,567; 2008: $90,486; 2009: $94,134; 2010: $95,831.73; 2011: $108,929 (extrapolated from current numbers).

As a result, Father was ordered to pay Mother $13,263.00 per month in child support effective December 1, 2011, $14,336.54 for child support-related reimbursements, $110,156.00 for child support arrears, and $43,704.27 for counsel fees. He did not note an appeal. On October 31, 2012, Father filed a complaint to modify child support, alleging that “there has been a material change in circumstances” in that his “income has substantially decreased.” In support of his allegation, Father averred: 6. That, at or about the time in the Court’s Order, the Court utilized the sum of Eight Hundred Thirty Eight ⁵⁶ Thousand Four Hundred Twenty Six Dollars and Two Cents ($838,426.02) as 2011 income for [Father]. 7.

That that figure consisted of, inter alia, a base salary of Two Hundred Five Thousand Dollars ($205,000.00), a bonus of Four Hundred Sixty Seven Thousand One Hundred Twenty Three Dollars ($467,123.00), and [Share Option Plans] vesting of $162,573.20. 10. That since the aforesaid Hearing, [Father] has received his bonus for 2011 received in 2012 in the amount of One Hundred Thirty One Thousand Six Hundred Forty Three Dollars and Seventy Five Cents ($131,643.75), representing a substantial decrease.... 11. That, in addition, [Father] has available to him, through his employer, a deferred compensation plan that provides him with the opportunity to defer income on an annual basis.... 12. That, although documentation of current income will appear to be significantly higher than set forth herein, those figures that contribute to the W-2 and paystub numbers are in fact the result of compensation previously deferred. 13.

That, although it may appear that those figures should be considered for purposes of determining current child support, the Court has already considered those deferred compensation figures.... 14. ... The income for Defendant is now Four Hundred Thousand Nine Hundred Thirty One Dollars and Sixty Cents ($400,931.60). 17. That, as of January 1, 2012, [Father’s] income decreased by more than twenty five percent (25%) from his 2011 income figure utilized by the Court to calculate his 2011 child support obligation. Thus, Father asked the court to “modify his child support retroactive to January 1, 2012.” ⁵⁷ After hearing the matter on April 30, 2013, the Master recommended that the circuit court deny Father’s motion based, in relevant part, on the following factual findings, to which Father subsequently excepted: 37.

The [MJaster did not agree with [the] analysis [of Mother’s accounting expert, that the deferred monies should be treated as income both in the year it was deferred, and in the year it was paid]. In this particular case, the previous deferrals were counted as income in the year in which they were earned for child support. Only the growth on the deferrals can be attributed as income to avoid the “double dipping.” However, comparing the numbers from the [W-2s] and the amounts on the deferred compensation it is not possible to know how much is attributable to actual contribution to the deferred compensation plans and the amount of gain that money earned prior to distribution. 48. The burden is clearly on [Father] to prove the material change in circumstances in order to merit a modification of child support. [Father] presented numerous documents and reports to demonstrate his income.

Clearly his 2012 bonus income is lower than his 2011 bonus income. The dispute between the parties surrounds the treatment of [Father’s] receipt in 2012 of the $396,164.24 deferred compensation for child support purposes. If it is not included in income, [Father] is entitled to a modification of child support. If it is included in income, or if a sufficient portion is included in income, [Father] would not be entitled to a modification.

The problem is one of proof. The [M]aster finds that amounts actually deferred in prior child support years should not be included in income in determining child support in future years to the extent that the deferred monies are being paid out to [Father]. However, [Father] has failed to prove how much of that money was actually counted before as his income for the purposes of child support. Since the burden of production rested with [Father], his failure to bring proof from which this court can ⁵⁸ determine his 2012 income is a fatal flaw i[n] his case for modification, and it must fail.

In his exceptions, Father argued that he “produced sufficient evidence for the Master to accurately segregate the amounts deferred from [his] income from the gains and losses which those amounts earned prior to distribution.” According to Father, the evidence that he presented “reflects that the sum of $896,164.24 is comprised of income which [he] previously deferred from (1) his 2005 bonus (paid in 2006), (2) his 2007 base salary, and (3) his 2007 bonus (paid in 2008).” Specifically, Father noted that evidence was presented to show that he “deferred one hundred percent (100%) of his 2005 bonus, twenty five percent (25%) of his 2007 base salary, and seventy five percent of his 2007 bonus.” Therefore, he urged the circuit court not to include the sum of $396,164.24 in his 2012 income for the purposes of determining child support. After holding a hearing on Father’s exceptions on July 3, 2013, the circuit court ruled from the bench as follows: I find that that was an appropriate position for the Master to take [to include the $396,164.24 in calculating Father’s income because there was no evidence to distinguish what portion of it was a gain on the original deferred income]. And, quite frankly, even perhaps more, I guess I should say that I agree with the Master beyond that because I think it results in the same conclusion that that $396,164.24 was income for 2012. And whether it was or was not properly included as income when it was deferred is not entirely clear from the record.

But, if it was inappropriately included at the time it was originally calculated as income when it was, in fact, deferred is sort of ancient history. My position would be that it was, in fact, income for the year 2012, which was the important time frame for purposes of these calculations. And so, I agree with the Master, perhaps, for a slightly different reason. I feel like the inclusion of the deferred income at the — in the past may have been a mistake.

That the parties did not take exception to or appeal from ... that’s res judicata. That’s water under the bridge. But, ⁵⁹ for purposes of 2012, what is appropriately income, I find that that [$396,164.24] was appropriately considered in those calculations because it was, in fact, income for 2012. ... So, with that the [Father] does not meet his burden of demonstrating a 25% reduction.

I’m sorry if that does result in double dipping. As a practical matter maybe it did, but the calculations for 2012, as far as I’m concerned, are correct. Additional facts will be included as they become relevant to our discussion, below. Discussion I. Child Support Father argues that the circuit court erred in denying his request for modification of child support because he met his burden of proving that he suffered a decrease in income of at least 25 percent. 2 Specifically, Father contends that “deferred income, which was attributed to a parent in the years it was earned for purposes of calculating child support ... should not be counted a second time,” as the court “recognized,” that it did here.

Father further asserts that he met his burden by establishing that the entire $396,164.24 in deferred income “had been included in the prior award.” In response, Mother argues that the circuit court’s judgment should be affirmed because Father failed “to meet his burden of proof that he incurred a 25% decrease in his income to warrant a modification of his child support