Posted by William Horne on Jan 16, 2013 in Gallery Notes
In 2012, the Indiana Supreme Court and Court of Appeals issued more than thirty decisions on various facets of Indiana family law. This is the second of a two-part post. It looks at the decisions generally interpreting substantive areas of family law.
The Court of Appeals reaffirmed in two decisions that deviations from the presumption of an equal property division lie within a trial court’s discretion.
In Morgal-Henrich v. Henrich, 970 N.E2d 207 (Ind. Ct. App. 2012), the court found that the trial court was not required to balance a property division to account for assets initially brought into a marriage but since spent or lost.
The wife in this appeal contended the trial court should have deviated from an equal division because she had brought most of the assets into the marriage – monies that she used to make a substantial down payment on the marital residence and life insurance policies. Id. at 211. By the time of the dissolution, however, the marital residence had been fully mortgaged and payments were made on the life insurance policies during the course of the marriage. Id. The Court of Appeals held that the trial court was not required to set off property to account for the initial assets. Id. at 212.
(The court did require the trial court to recalculate a child support obligation using an income averaging method when the husband varied widely from year to year as a result of his affirmed the trial court’s division. Id. at 212.)
The Court of Appeals also affirmed that a decision to set aside premarital assets that were not commingled lies within the trial court’s discretion as well. Wortkoetter v. Wortkoetter, 971 N.E.2d 685 (Ind. Ct. App. 2012).
The husband in this appeal had testified that his retirement account, which he acquired prior to marriage, was never commingled with marital property or treated as such. Id. at 688.
The appellate court held that the trial court did not abuse its discretion by including the retirement account among the marital assets. Id. at 689. It noted that the appreciation of the account was a divisible marital asset. Id. But the trial court was required “to follow the statutory presumption absent evidence that an equal division would not be just and reasonable.” Id.
Other cases involving the review of property divisions focused on the mechanics of the division.
In Hardin v. Hardin, 964 N.E.2d 247 (Ind. Ct. App. 2012), the Court of Appeals found the trial court had incorrectly calculated the wife’s entitlement to part of her husband’s pension by counting the years that she remained married to her husband after he had retired. A pension only accrues during an employee’s years of service. Id. at 251. While an appeals court normally only reviews a trial’s court’s division of martial assets as a whole, the court found that the error resulted in such a large and continually compounding error that its review of this issue qualified as a “as a whole.” Id. at 252.
The Court of Appeals also found that a trial court erred when it failed to include a marital debt in determining the property divison. Birkhimer v. Birkhimer, 2012 Ind. Ap. LEXIS 636 (Ind. Ct. App. 2012).
The debt stemmed from the wife’ acquisition of a car dealership and other business interests from her father, and the trial court had included the debt in a chart listing the couple’s assets and liabilities that was part of the dissolution decree. Id. at *22-23. However, the trial court’s property division failed to account for the debt and the appellate court ordered the trial court to recalculate the property division or adjust the percentage division of the marital property between the husband and wife. Id. at *23-24.
Ed.’s Note: See the Child Custody and Support section below for the court’s determinations regarding child support.
The Indiana Supreme Court has agreed to review a case in which the Court of Appeals determined that continuing monthly housing payments made pursuant to a settlement agreement were part of a property division even though the payments shared characteristics of maintenance payments. Horner v. Carter, 969 N.E.2d 111 (Ind. Ct. App. 2012) transfer granted 976 N.E.2d 40 (Ind. 2012).
Property divisions cannot generally be modified whereas maintenance payments are subject to modification following a substantial change of circumstances..
Drawing on the factors outlined in Deel v. Deel, 909 N.E.2d 1028, 1033 (Ind. Ct. App. 2009), the Court of Appeals noted that the husband’s agreement to make certain monthly housing payment ended on the death of his ex-wife and the payments appeared to come from his future earnings, both factors suggesting the payments were a form of maintenance. Id. at 118. However, it concluded that the parties intended the payments to be part of the property settlement because the payments were included in that portion of the agreement, and the payments were not expressly made subject to modification as other provisions in the agreement were. Id. at 118-19. Moreover, the wife had given up her share of the husband’s pension in exchange for the monthly payments. Id. at 119.
Child Custody and Child Support
As might be expected, most child custody and support decisions in 2012 involved the review of highly fact sensitive cases. However, in ruling on these cases the court decided a range of issues with significance to other practitioners.
In Miller v. Carpenter, 965 N.E.2d 104 (Ind. Ct. App. 2012), for example, the Court of Appeals held that even when a parent has agreed to pay support in excess of the amount that could be ordered by the court, the parent can still seek a modification if he or she has been ordered to pay an amount that differs by more than 20% from the amount that would be ordered under the Child Support Guidelines. See Ind. Code § 31-16-8-1(b)(2).
Mother had argued that because father had agreed at dissolution to take credit only for a specified number of nights he could not rely on his increase in parenting time to establish the 20% deviation from the guidelines to allow the initial support order to be modified. Miller, 965 N.E.2d at 114.
The court rejected this argument, joining a number of other panels that have disagreed with or distinguished a 2000 Court of Appeals decision in which a panel “stated that ‘when a parent has agreed to pay support in excess of the guidelines and which could not be ordered by a trial court, that parent must show a substantial change in circumstances independent of the twenty percent deviation to justify modification.’” Id. at 114 (quoting Hay v. Hay, 730 N.E.2d 787 (Ind. Ct. App. 2000). The court described the Hay court’s comments as dicta and noted that concern should simply be “to provide the children with continuity in their standard of living.” Id.
The court also found that the father had not established, as required by Ind. Code Section 31-17-2-21, a substantial change in one of the “best interests of the child” factors to justify a change from the mother’s initial award of legal and primary physical custody. Id. at 110.
However, the court disagreed that an increase in father’s parenting time, from roughly 35% of overnights to 40% of overnights was “so close to an even division of parenting time that it should be viewed as a defacto modification of physical custody. Id. at 111.
The Court of Appeals also addressed a conflict between the Child Support Guidelines and the Guidelines Commentary about the exclusion of survivor benefits from gross income. Martinez v. Deeter, 968 N.E.2d 799, 805-07 (Ind. Ct. App. 2012).
While Guideline 3A has a specific exclusion of the survivor benefits “by or for other children residing in either parent’s home,” from the parent’s income, whereas the commentary to Guideline 3(A) is more expansive, simply stating that survivor benefits for the children generally should be excluded. Id. at 809.
The court acknowledged the apparent conflict, and sided with the more expansive interpretation. Id. at 809. It ordered the trial court to exclude the Social Security survivor benefits that the children were receiving from the death of Mother’s subsequent husband. Id. at 809. In following the language of the commentary, it reasoned that the purpose of the survivor’s benefits was simply to replace income lost by the death of the Mother’s husband and inclusion of the children’s survivor’s benefits “would result in a windfall to Father.” Id.
The court also ordered the trial court to recalculate a father’s child support obligation on his irregular income, resulting from an “exceptional year” when he had earned more than $300,000. Id. at 807.
In appellate court noted that the percentage method for calculating child support due on irregular income can, as noted in the Guidelines, overstate the obligation, and it asked the court to review the percentage used. Id.
It also asked the trial court to clarify the tax rate used as Father contended that his unusually large income had resulted in an effective tax rate higher than the 21.88% rate assumed by the Guidelines. Id. at 808.
(The court also questioned, but did not decide, whether the trial court had any authority, in the absence of an award of attorney fees or an attorney lien, to order the payment of attorney fees from the ordered payment of past child support. Id. at 811.)
In a decision interpreting the driver’s license suspension statute, the Court of Appeals found that a trial court could reinstate a delinquent parent’s driving privileges if the parent establishes a payment plan to pay the arrearage regardless of the plan’s likelihood of erasing the arrearage. Mertz v. Mertz, 971 N.E.2d 189 (Ind. Ct. App. 2012).
Indiana law requires a court to seek the suspension of a parent’s driving privileges for a child support delinquency resulting from an intentional violation of a child support order. Ind. Code §. 31-16-12-7. However, the law also allows a court to stay the suspension if the arrearage is paid in full or an income withholding order is implemented and “a payment plan to pay the arrearage is established.” Id. at § 31-16-12-11.
The trial court had ordered the reinstatement of the father’s driving privileges after modifying his child support obligation. Mertz, 971 N.E.2d at 190. While the father’s total obligation remained about the same as before, the court reduced the amount for child support to about a fifth of what it had been before and ordered the remainder to be applied to educational support and the arrearage. Id.
The mother appealed, arguing the trial court could not reinstate the father’s driving privileges absent “a plan that is reasonably calculated to remedy the arrearage in full as reasonable.” Id. at 195.
The appellate court acknowledged that the adopted payment plan would take “many years” to pay the arrearage. Id. at 196. However, it that the statutory language in Section 31-16-12-11 “does not impose any constraints upon that plan” and that trial court was best suited to judge the sufficiency of a plan. Id.
The court also upheld trial court’s modification, finding that the trial court “had properly imputed income to Father over and above what he showed as wagers from his two jobs due to his unreported self-employment income.” Id. at 194.
The Court of Appeals upheld a trial court’s decision not to impute income to a mother, who had left a higher paying job, because the evidence showed substantial reasons for her decision to take another career path. Sandlin v. Sandlin, 972 N.E.2d 371 (Ind. Ct. App. 2012).
The appellate court noted that the Child Support Guidelines “do not require or encourage parents to make career decisions based strictly upon the size of potential paychecks, nor to the Guidelines require that parents work to their full economic potential.” Id. at 375.
The mother had provided substantial testimony about the reasons for her job change, which included a company reorganization and her desire to avoid a relocation. Id. at 375-76. Such testimony supported the trial court’s conclusion that mother did not leave her job to avoid child support obligations and therefore income should not be imputed her. Id. at 376.
The appellate court did find inconsistencies in the trial court’s determination of the mother’s actual income and ordered the trial court to redo its calculations. Id. at 377.
The Court of Appeals also found that a trial court erred when it deducted taxes in excess of the spouse’s actual tax liability and improperly credited the parent who was paying the controlled expenses with a parenting time credit. Birkhimer v. Birkhimer, 2012 Ind. Ap. LEXIS 636 (Ind. Ct. App. 2012).
While the Child Support Guidelines allow courts to deviate from the guideline amount when a parent’s taxes are substantially different than the average tax rate of 21.88% that is factored into the calculations, the trial court had deducted all of the wife’s taxes from her income, resulting in a deduction exceeding 100 percent of her taxes. Id. at *26-30.
The court also determined that the trial court had erred in giving the wife a parenting time credit when she was paying the controlled expenses. Id. at *31-32.
The Indiana Supreme Court has agreed to review the Court of Appeals’ ruling in Schwartz v. Heeter, 975 N.E.2d 820 (Ind. Ct. App. 2012), transfer granted 2013 Ind. LEXIS 51 (Ind. 2013) that a “true up” provision in a child support agreement did not automatically incorporate changes to the Child Support Guidelines.
The 2009 agreement required father at year’s end to recalculate his child support obligation based on his actual income and pay mother the difference owed, if any. Id.at 821-22. Revisions to the Guidelines that took effect in 2010 substantially increased the child support calculations for higher income parents.
The Court of Appeals reversed the trial court’s decision to apply the new formula. Id. at 826. It noted language in the agreement stating that, aside from entering a new number on line 1 of the child support worksheet, all other factors remained the same. Id.
Judge Mathias dissented, stating that any ambiguity in the agreement’s language should be construed in the manner that benefited the children. Id. at 830.
In deciding otherwise, the majority panel indicated that it had its eye, at least partly, on the effect that an affirmance might have on other agreements. “We recognize the trial court’s decision appears more equitable. Writ large, however, that decision would have the effect of modifying numerous preexisting and unchallenged support arrangements through the operation of law.” Id. at 826 n. 4.
The Court of Appeals also issued a couple of decisions in 2012 constraining entitlements to spousal maintenance.
In the first of these, the Court of Appeals upheld a trial court’s denial of incapacity maintenance to a wife even though she was receiving disability payments from her former employer and a vocational therapist had testified that her ability to support herself was material impaired. Alexander v. Alexander, 2012 Ind. App. LEXIS 621 (Ind. Ct. App. 2012).
While a court has discretion not to award maintenance, it should normally award maintenance where a spouse has shown his or her ability to support his or her self to be materially affected. Id. at *6; see also Ind. Code § 31-15-7-2(1). However, in this case, the trial court determined that she was not incapacitated because she was college educated, had recently provided child care for pay, and was not entirely precluded from sedentary work. Alexander, LEXIS 621 at * 7-8. “We will not reverse a judgment merely because we might have, on the same evidence, reached a different conclusion.” Id. at 8.
The Court of Appeals also affirmed a trial court’s reduction in spousal maintenance in Banks v. Banks, 2012 Ind. App. LEXIS 623 (Ind. Ct. App. 2012). The trial court had ordered the husband to pay maintenance of $500 a month originally because of the wife’s chronic kidney disease and need for dialysis. Id. at *1-2. However, the husband had suffered his own health problems, resulting in a substantial loss of income, leading the trial court to reduce spousal maintenance to about $173 a month. Id. at 2-4.
Wife argued that spousal maintenance could not be modified or reduced absent a showing that the incapacitated spouse’s health had improved. Id. at 7-8. However, the appellate court held that the court can consider all the factors underlying the original award, including the financial resources of the party seeking to continue maintenance, the standard of living established in the marriage, and the ability of the spouse paying maintenance to meet his or her own needs. Id. at 8.
Ed.’s Note: See also the discussion in the Property Division section above Horner v. Carter, 969 N.E.2d 111 (Ind. Ct. App. 2012) transfer granted 976 N.E.2d 40 (Ind. 2012) pertaining to whether continuing payments made pursuant to a settlement agreement are maintenance or part of a property settlement and therefore not subject to modification.
Emancipation and Educational Support
The courts also defined in 2012 what it means for a child to be enrolled in a post-secondary school or living on her or his own, and whether a modification can be sought for a denial of educational support.
In Hirsch v. Oliver, 970 N.E.2d 651, 659 (Ind. 2012), the Indiana Supreme Court held that, for purposes of deciding support issues, a child is “enrolled” in school or a post-secondary institution when the child (1) accepted to the institution, (2) registered, and (3) in good faith attending to intending to attend.
The court also “clarified” that when the duty of child support ends under Indiana Code section 31-16-6-6, the child is considered emancipated. Id.at 655.
The Court remanded the case to the trial court to determine when a child, as result of being eighteen years old, capable of supporting herself, and not attending school for four months, had become emancipated. The record indicated that child had not been emancipated at the date of filing but had become emancipated some time later
The Court of Appeals also reaffirmed, in Ashabranner v. Wilkins, 968 N.E.2d 851 (Ind. Ct. App. 2012), that a child is not emancipated simply because she is living on her own. To be emancipated under Indiana Code Section 31-16-6-6(b)(3), the child must have moved out on his or her own accord and be self-supporting. Id. at 856 (citing Dunson v. Dunson, 769 N.E.2d 1120 (Ind. 2002)).
The court reasoned that were the rule otherwise, some parents might evict their children to avoid their support obligations. Id.
In the case before the court, the mother had moved out of the federally subsidized Section 8 housing to be with a friend, and left her daughter alone in the apartment. While upholding the trial court’s denial of the father’s emancipation petition, the court also ordered the trial court to calculate the mother’s child support obligation. Id.at 857.
The court lastly noted that the minor child’s income should not be considered in the child support calculation because an unemancipated minor is not responsible for supporting his or herself. Id.
Finally, the Court of Appeals, in upholding a trial court’s denial of educational support, concluded that the mother could still seek a modification of that denial, even though the child had since turned 19, because her petition was filed prior to the child’s emancipation. Svenstrup v. Svenstrup, 2012 Ind. App. LEXIS 649 (Ind. Ct. App. 2012).
The original decree had addressed educational support but only for the children who were in college at the time. Id. at * 2-4.
The appellate court noted that while a trial court can award educational expenses, there is no absolute legal duty for parents to provide a college education for their children. Id. at *14. Instead the trial court must consider the extent to which the parents would have contributed to their child’s college expenses had they remained married, and the ability of each parent and the child to contribute. Id. at 14-15.
Ed.’s note: While the Court of Appeals stated it was “holding” that such denials are subject to modification – and it advised the trial court as much in affirming its denial of mother’s petition for an allocation of college expenses – this exact issue does not appear to have been before the court.