Sczudlo v. Berry

DAVIS, Judge. On February 20, 1996, appellant Walter J. Sczudlo and appellee Julia Berry received a Judgment of Absolute Divorce from the Circuit Court for Montgomery County (Chapin, J.). The couple have three children: Lauren, born May 12, 1983; Elizabeth, bom September 16, 1985; and Walter, born August 8, 1988. The judgment incorporated but did not merge a Separation and Property Settlement Agreement, which pro ⁵³⁵ vided, in part, that the parties have joint custody of their three minor children, and that each parent would pay for the costs incurred by the parents while the children were with them, except that appellant additionally agreed to pay appellee $1,200 a month in child support.

The agreement further provided that each parent would contribute equally to activities for the children to which they both agreed. On March 25, 1998, appellant filed a Motion to Vacate or Modify Child Support Order. Appellant ceased paying the agreed child support amount at the end of March 1998. Subsequently, appellee filed an Opposition to the Motion to Vacate or Modify Child Support Order and a Motion for Contempt and other Relief.

Appellant filed a response to appellee’s opposition and later filed an opposition to appellee’s motion for contempt. A hearing was held in the Circuit Court for Montgomery County on September 3, 1998, on both appellant’s motion to vacate or modify child support and appellee’s motion for contempt. On November 23, 1998, the trial court issued its order and opinion in which it found appellant in contempt and denied his motion to vacate or alter child support. The court ordered appellant to pay appellee $8,400 in back child support, $2,382.16 as reimbursement to appellee for appellant’s share of the children’s expenses, and awarded appellee fifty percent of her attorney’s fees.

On December 4, 1998, appellant filed a Motion for Stay of Order and a Motion to Shorten Time and an Amended Motion to Shorten Time. The court, on December 10, 1998, denied the motion to shorten time. This appeal followed. Meanwhile, appellee filed an opposition to the motion to stay the order on December 22, 1998 and the court denied the motion to stay on January 5, 1999.

Appellant presents three questions for our review, which we rephrase: I. Did the trial court err in denying appellant’s motion to modify child support when it determined that no material change of circumstance occurred, despite appellant’s loss of his job? ⁵³⁶ II. Did the trial court err in awarding appellee reimbursement for the children’s expenses in violation of the parties’ agreement?

III

Did the trial court err in awarding appellee fifty percent of her attorney’s fees absent a determination by the court of the reasonableness of said fees? We answer all three questions in the affirmative and, accordingly, reverse the judgment of the circuit court and remand. FACTUAL BACKGROUND The parties to this action received a Judgment of Absolute Divorce on February 20, 1996, which incorporated but did not merge a Separation and Property Settlement Agreement. That agreement, dated November 23, 1994, provided that the parents have joint custody of their three minor children and each would be responsible for expenses while the children were in his or her custody, except that appellant would pay $1,200 a month in child support to appellee.

Additionally, the parties would share equally in the expenses incurred for any traveling the children did without a parent and for activities to which both parties agreed. At the time the agreement was executed, appellant earned approximately $115,000 to $120,000 annually. At the time of the hearing on September 3, 1998, appellee’s 1998 income was approximately $46,000, while appellant’s 1997 earnings totaled $174,118. Appellant’s employment terminated in early April 1998.

In anticipation of his loss of employment, appellant contacted appellee to request suspension of his child support obligation until he was once again employed. Unable to reach an agreement with appellee, he filed a motion to vacate or modify his child support with the court on March 25, 1998. Subsequently, appellant ceased paying his child support obligation. In response, appellee filed an opposition to appellant’s motion and a motion for contempt for appellant’s failure to maintain his child support payments.

The September hearing was held and, following testimony, the trial judge took the matter under advisement and issued an order and opinion on November 23, ⁵³⁷ 1998, which ordered appellant to pay appellee $8,400 in back child support and $2,382.16 for reimbursement of appellant’s share of the children’s expenses. The court also found appellant in contempt and awarded appellee fifty percent of her attorney’s fees. Additionally, the court denied appellant’s motion to modify child support, finding that no material change in circumstance existed because appellant maintained his standard of living even though unemployed. Appellant timely noted this appeal.

DISCUSSION I Appellant first contends that the trial court erred in determining that no material change in circumstance occurred to justify a modification in child support. Appellant asserts that the evidence of his termination of employment was sufficient to show a material change in circumstance and, accordingly, the court should have modified appellant’s child support obligation to reflect his current financial status. Section 12-104 of the Family Law Article permits the trial court to modify an amount of child support upon a showing of a material change in circumstance. Md.Code (1999 Repl.Vol.), Fam.

Law (F.L.) § 12-104(a). Appellant states that his reduction in salary from more than $170,000 in 1997 to zero constitutes a material change in circumstance, justifying a reduction in his child support obligation. As the Court of Appeals explained in Wills v. Jones, 340 Md. 480, 488 , 667 A.2d 331 (1995), the statute requires that the court evaluate 1) if a change of circumstance has occurred, and 2) if that change is material. The Court explained that at least two circumstances are clearly relevant to a petition to modify a child support obligation: 1) the passage of some event which causes the support actually received by the child to diminish or increase, and 2) a change that affects the income pool used to calculate the support obligation.

Id. at 488 n. 1, 667 A.2d 331 . For a change in circumstance to be material, the change must ⁵³⁸ be significant enough to justify judicial modification of the child support obligation. Id. at 489 , 667 A.2d 331 . Appellant’s loss of employment through no fault of his own is clearly a change in circumstance.

When the parties signed their agreement in November 1994, appellant was making between $115,000 to $120,000 annually. The $1,200 monthly child support obligation therein was clearly in contemplation of appellant maintaining his income at that level, if not greater. Appellant testified that his unemployment was sudden and unexpected; it is clear from the evidence that he became involuntarily unemployed. The relevant inquiry is whether the change in circumstance is material and, if, despite his employment status, appellant is nevertheless capable of maintaining his court-ordered child support payments.

The trial court concluded that no material change in circumstance occurred. Appellant contends that the evidence does not support the court’s finding. He specifically points to the court’s opinion, in which it states that appellant demonstrated no change in lifestyle following his loss of employment. In support of this conclusion, the court stated that “[ejvidence was introduced during the hearing of several vacations since April 1998.” Appellant states that the evidence indicated that he took a trip to Santa Barbara, California, to attend his mother’s seventieth birthday for which his mother paid, that he attended a work conference with his current wife in North Carolina, and that he took his children to the beach during their spring break for six days.

Appellant claims that the court’s reliance on this evidence is insufficient to show that there was no change in his lifestyle after losing his job. We agree. The court obviously accorded weight to the fact that appellant maintained a savings account of $12,000. Appellant states that the court ignored evidence that the savings account is jointly held between appellant and his current spouse.

He points out that, while a natural parent bears the responsibility to support his or her child, a step-parent bears no such responsibility. Knill v. Knill, 306 Md. 527, 531 , 510 A.2d 546 ⁵³⁹ (1986) (citations omitted). This is not a case such as Knill , however, in which a step-parent is being ordered by the court to support a child that is not his or hers. The $12,000 savings account was a liquid asset of appellant and is a legitimate item for the court to consider in determining his ability to pay his support obligation.

In Petrini v. Petrini, 336 Md. 453, 463 , 648 A.2d 1016 (1994), the Court of Appeals explained that the trial court has the latitude when it initially awards child support to consider all relevant circumstances in a case to determine what should be incorporated into the court’s calculation of the child support order. In that case, the Court allowed contributions to the father from his mother to be considered as income under the statute’s definition of “gift.” Id. The Court articulated some of the considerations that the court should assess in determining a parent’s child support obligation, which include: 1) a parent’s actual ability to pay the specified child support award, 2) any lack of liquidity or marketability of a party’s assets, 3) the fact that a parent’s take-home income may not accurately reflect his or her actual standard of living, and 4) whether a party is voluntarily impoverished. Id. at 463-464 , 648 A.2d 1016 .

Although Petrini contemplated the court’s assessment in providing an original award of support, the same considerations are applicable in the context of a request for modification of child support. As we noted, supra, the focus of the court’s inquiry is not simply on whether a change occurred, but whether that change is significant enough to warrant a modification in the award by the court. Wills, 340 Md. at 489 , 667 A.2d 331 . In making that assessment, the court should evaluate not only the change, but how that change affects a parent’s ability to meet his or her child support obligation.

In concluding that appellant’s ability to pay his child support continued after his employment ended, the court viewed it as unreasonable that appellant would expend $5,000 of his $12,000 savings account toward legal fees instead of using those funds to fulfill his child support obligation. It ⁵⁴⁰ stated: “Thus, instead of paying the child support obligation, [appellant] voluntarily appropriated his funds to his attorney to commence this litigation.” In the court’s final assessment, it determined that appellant could maintain his child support at the time of the hearing. The court cited several factors to support this conclusion: 1) appellant was still employed when he commenced the modification action, 2) he ceased child support payments after March, despite receiving one-half of a paycheck in April, 3) he had $12,000 in savings, of which $5,000 was expended on legal fees in connection with the modification action, and 4) the evidence did not show a change in appellant’s lifestyle. The court ordered appellant to pay back child support through October 1998 in the amount of $8,400.

We shall now evaluate the factors that the court used to support its conclusion. First, the court noted that appellant commenced the action when he was still employed. We do not perceive the relevance of this fact. Appellant filed the modification request in anticipation of his unemployment.

He was, in fact, unemployed at the time of the hearing and he had been unemployed since March 1998. Appellant testified that the loss of his job was unexpected and sudden. He testified that he attempted to resolve his child support obligation with appellee unsuccessfully and it was only then that he sought relief through the court. Appellant filed the action with the knowledge that the court is not permitted to retroactively modify a child support award prior to the date of the filing of the motion for modification.

F.L. § 12 — 104(b). The court next points out that appellant received payment of two weeks’ salary in April 1998 yet discontinued payment of child support in March 1998. Appellant testified that he had not expected this payment. The receipt of the payment, however, does not address appellant’s change in circumstance.

It is relevant as far as the court’s analysis of his ability to pay his obligation, based on his income, but should not be the basis to deny any modification ⁵⁴¹ when the evidence was undisputed that appellant’s income changed from over $170,000 to zero. The third factor that the court articulated was appellant’s savings account, which contained $12,000. The court was obviously disturbed that appellant expended at least $5,000 of that money to pay for legal fees in connection with the modification action. It stated, “[rjeasonable efforts were made to pay the attorney, while conscientiously not appropriating funds to his children.” The arrearage from April through October 1998 was $8,400.

Even assuming appellant had the full $12,000 to pay only his child support obligation, as the court indicated he should, within three months of the hearing, that asset would have been depleted. Certainly, the availability of few resources would constitute a material change in circumstance to justify a modification in appellant’s support obligation. Additionally, in its consideration of the savings account, the court did not factor in appellant’s other expenses, indicating that the $12,000 should not be allocated to anything other than appellant’s support obligation. This analysis completely ignores appellant’s responsibilities to support his children when they are in his custody, which is fifty percent of the time, in addition to any other legitimate expenses he may incur.

Lastly, the court found that appellant had not suffered a change in his lifestyle. The vacations that the court cited, however, were hardly luxurious and the evidence established that appellant did not fully pay for all of them. Appellant testified as to changes that have occurred in his daily life due to his unemployment. While appellant’s lifestyle is a relevant consideration, his actual income should be considered to determine his ability to meet his obligation.

Wills, 340 Md. at 485 , 667 A.2d 331 . The court, on remand, must calculate appellant’s child support obligation, based on his income and in light of his change in circumstance. In cases in which the Guidelines are applicable under the statute, “[ojnce a court finds that a material change in circumstance has occurred, it must apply ⁵⁴² the guidelines in §§ 12-202 to 12-204 of the Family Law Article to determine the level of support to which the child is currently entitled.” Id. at 491, 667 A.2d 331 . We recognize that a parent is obligated to support his or her children.

Petrini, 336 Md. at 466 , 648 A.2d 1016 (quoting Goldberger v. Goldberger, 96 Md.App. 313, 326-27 , 624 A.2d 1328 , cert. denied, 332 Md. 453 , 632 A.2d 150 (1993)). Appellant, therefore, is not able to use his unemployment as an excuse to forego his child support obligation. “ ‘The law requires [a] parent to alter his or her previously chosen lifestyle if necessary to enable the parent to meet his or her support obligation.’ ” Id. It is up to the court to make a factual determination as to appellant’s income. Wills, 340 Md. at 497 , 667 A.2d 331 .

In making its finding, the court should consider the totality of the circumstances. Petrini, 336 Md. at 462 , 648 A.2d 1016 . It is relevant, therefore, that the court here consider the temporary nature of appellant’s unemployment, determining his potential income had he accepted a position commensurate with his education and experience. The guidelines specifically provide that a determination of potential income may not be made if a parent is: a) unable to work because of a physical or mental disability, or b) is caring for a child under two years of age for whom the parents are jointly and severally responsible.

F.L. § 12-204(b)(2). It is clear that, in cases of involuntary impoverishment, the court is authorized to determine a parent’s potential income. F.L. § 12-201(b)(2). See also Wills, 340 Md. at 492 , 667 A.2d 331 ; Wagner v. Wagner, 109 Md.App. 1, 45-46 , 674 A.2d 1 (1996).

In the case sub judice, appellant is not unable to work due to a disability, nor is he caring for any children under the age of two. Additionally, it is patent that he did not voluntarily lose his job. In Wills , the Court of Appeals considered the legislative history of the child support guidelines and specifically noted that “the final bill replaced the original requirement that an involuntarily impoverished parent’s obligation ‘shall’ be calculated using his or her potential income with an option that the parent’s obligation ‘may’ be calculated based on the parents’ [sic] potential income.” ⁵⁴³ Wills, 340 Md. at 493 , 667 A.2d 331 (citing 2 Journal of Proceedings of the Senate of Maryland 757 (1989)). The Court of Appeals penned, in Wills , “Our review of the language and legislative history of the child support guidelines leads us to conclude that the legislature intended that a parent’s support obligation can only be based on potential income when the parent’s impoverishment is intentional. ” Id. at 494, 667 A.2d 331 (emphasis added).

The statute, F.L. § 12-204(d), provides, however, “If the combined adjusted actual income exceeds the highest level specified in the schedule in subsection (e) of this section, the court may use its discretion in setting the amount of child support.” The “highest level specified” in the statute is a combined adjusted actual monthly income of $10,000. Notwithstanding that the combined adjusted actual income in the instant case was $44,289.96 1 (appellee’s gross income from her 1998 financial statement) plus zero (appellant’s income) for a total of $44,289.96 after appellant lost his employment, the calculation of the proper child support payment should be based on the amount to be modified, i.e., the combined total of the parties’ incomes prior to appellant’s unemployment. Consequently, the proscription against imputing income when impoverishment is not intentional is inapplicable in a case where the adjusted combined income exceeds $10,000 per month. In other States, the court has discretion to impute income to a parent for purposes of calculating child support when the parent is unemployed.

Hoplamazian v. Hoplamazian, 740 So.2d 1100, 1104 (Ala.Civ.App.1999), cert. denied, 8/27/99, Alabama Sup.Ct. 1981488; In re Marriage of Casey, 984 S.W.2d 894, 897 (Mo.Ct.App.1999). Those States recognize, and we agree, that, where the proscription against imputing income to one who is involuntarily impoverished is inappli ⁵⁴⁴ cable, the circumstances of the case will dictate when it is appropriate for the court to use its discretion. Id. Considering appellant’s past employment, income, and education, we hold that it is appropriate for the court to consider appellant’s probable income in determining appellant’s child support obligation.

In this case, appellant lost his employment through no fault of his own and, fortunately, at the time of oral argument, appellant was once again gainfully employed. The loss of his employment from April to December, however, does not provide an automatic reduction to zero for his child support when he had the ability to become