Lambert v. Lambert, 32S01-0604-CV-136.

• Decision Date: 22 February 2007
• Docket Number: No. 32S01-0604-CV-136.,32S01-0604-CV-136.
• Citation: 861 N.E.2d 1176
• Parties: In re the Marriage of, Jeffrey LAMBERT, Appellant (Petitioner below), v. Jill LAMBERT, Appellee (Respondent below).
• Court: Indiana Supreme Court

861 N.E.2d 1176

In re the Marriage of, Jeffrey LAMBERT, Appellant (Petitioner below), v. Jill LAMBERT, Appellee (Respondent below).

No. 32S01-0604-CV-136.

Supreme Court of Indiana.

February 22, 2007.

Mark Small, Indianapolis, IN, Attorney for Appellant.

Richard A. Clem, Indianapolis, IN, Attorney for Appellee.

Steve Carter, Attorney General of Indiana, Thomas M. Fisher, Solicitor General of Indiana, Frances Barrow, Julie A. Hoffman, Deputy Attorneys General, Indianapolis, IN, Attorneys for Amicus Curiae State of Indiana.

On Petition to Transfer from the Indiana Court of Appeals, No. 32A01-0412-CV-535

SHEPARD, Chief Justice.

When appellant Jeffrey Lambert and his former wife were about to be divorced, it was already apparent that Lambert was soon headed for prison. The trial court issued a child support order based on Lambert's wages from his existing private employment. It was appropriate to base support after release on that rate of income, and thus place the burden on Lambert to establish after his release, through petition to modify, that his income might be lower than it had been before his conviction. While our Child Support Guidelines obligate every parent to provide some support even when they have no apparent present income, it was error to set support based on employment income that plainly would not be there during incarceration.

Facts and Procedural History

Jeffrey Lambert and Jill Lambert married in October 1995. Seven years later, two of Jill Lambert's nieces accused Jeffrey of molesting them. The couple subsequently separated and filed for divorce.

As part of a provisional agreement, Jeffrey agreed to pay $277 per week to support the couple's two children. Apparently, this figure was based on Jeffrey's biweekly income at the time, about $3,100, derived from rental properties and his work as a computer consultant. After the provisional order took effect, but before the final hearing on the dissolution, Jeffrey was convicted of two counts of "improper and inappropriate physical contact with [Jill's] minor nieces" and sentenced to a period of incarceration. (Appellant's App. at 17; Tr. at 18.) Jeffrey was in jail at the time of the final hearing and, therefore, earning virtually nothing. Still, the Final Decree ordered that he continue to pay the $277 per week in support. The court concluded that because Jeffrey's "incarceration [was] due entirely to his own voluntary actions" it was proper "to impute income to [him] consistent with the original child support calculation." (Appellant's App. at 18.)

Jeffrey appealed, arguing that the court erred in imputing to him pre-incarceration income in calculating the child support payment. A divided panel of the Court of Appeals rejected this argument and affirmed. Lambert v. Lambert, 839 N.E.2d 708, 717 (Ind.Ct.App.2005), vacated. The majority concluded that criminal activity constituted voluntary unemployment or underemployment under Ind. Child Support Guideline 3(A)(3), and justified the calculation of the child support payment based on Jeffrey's potential, or pre-incarceration, income. Id. at 712-15.

We granted transfer, vacating the decision of the Court of Appeals.¹ Guided by the lodestar of support issues—the best interests of the child—and following examination of the various approaches to this issue, we hold that incarceration does not relieve parents of their child support obligations. On the other hand, in determining support orders, courts should not impute potential income to an imprisoned parent based on pre-incarceration wages or other employment-related income, but should rather calculate support based on the actual income and assets available to the parent.

I. Alternative Approaches Reflected in Other States

By some estimates, nearly a quarter of all state prisoners are parents who have open child support cases. Re-Entry Policy Council, Report of the Re-Entry Policy Council: Charting the Safe and Successful Return of Prisoners to the Community 190, 198 (2004).² It is thus not surprising that several states have dealt with how to treat incarceration for the purposes of determining income when setting or modifying child support obligations. Most of these reported cases deal with whether incarceration should justify the reduction of an existing support order, and we must be careful to distinguish that issue from the case at hand. See Frank J. Wozniak, Annotation, Loss of Income Due to Incarceration As Affecting Child Support Obligation, 27 A.L.R. 5th 540 (1995).

Among the relatively small number of cases that deal directly with this issue, a number of separate approaches have been articulated. We examine these approaches here briefly to provide the basis for further discussion.

A. Absolute Justification Rule. Some seven states consider imprisonment absolutely

sufficient grounds to justify modifying or suspending child support. Yerkes v. Yerkes, 573 Pa. 294, 300 n. 4, 824 A.2d 1169, 1172 n. 4 (2003). A typical example of this approach is the case of Leasure v. Leasure, 378 Pa.Super. 613, 549 A.2d 225 (1988). There, the Pennsylvania Superior Court ordered a non-custodial parent's support obligation suspended during incarceration because imprisonment represented a change in circumstances sufficient to justify modification. Id. at 618, 549 A.2d at 228. The court rejected the argument that imprisonment constituted voluntary unemployment or underemployment, and instead noted that continuing the support order would excessively burden the parent least likely to be able to pay the debt. Id. at 616-17, 549 A.2d at 227.

While the Pennsylvania Supreme Court later disapproved Leasure, we mention it here because it typifies other state authority and is roughly analogous to the issue presented here in the sense that the outcome is the same no matter when the support order is set. That is, if incarceration is a sufficient non-voluntary change in circumstances to justify a modification or suspension of the obligation, it could also support an approach where no obligation is imposed on an individual who is imprisoned at the moment the order is set.

B. Imputation of Pre-Incarceration Income Allowed. A number of states have concluded that it is appropriate to impute pre-incarceration income to the non-custodial parent. See Wozniak, supra, at 587-91.

In most of these cases, the question turns on whether incarceration constitutes a voluntary reduction of income. In In re Marriage of Olsen, 257 Mont. 208, 848 P.2d 1026 (1993), for example, the Montana Supreme Court considered whether a trial court had improperly imputed pre-incarceration income to an individual who was imprisoned at the time the final order was entered. Affirming the decision to impute that income, the court specifically rejected the parent's contention that "while his criminal conduct was voluntary, the resulting unemployment . . . was involuntary and unforeseeable under the circumstances." Id. at 215, 848 P.2d at 1031. Instead, the court followed the reasoning of its prior cases that "a criminal should not be offered a reprieve from [his] child support obligations when we do not do the same for one who becomes voluntarily unemployed." Id. (citing Mooney v. Brennan, 257 Mont. 197, 200-01, 848 P.2d 1020, 1022-23 (1993)).

Similar decisions linking criminal conduct with the voluntary reduction of income are found elsewhere. See, e.g., In re R.H., 686 N.W.2d 107 (N.D.2004); Proctor v. Proctor, 773 P.2d 1389 (Utah Ct.App. 1989).

C. Disallowing Imputation of Pre-Incarceration Income. In at least one case, a state supreme court has cited the state's child support guidelines as a basis for holding that a trial court cannot impute pre-incarceration income to an individual imprisoned at the time the order is set.

In State v. Porter, 259 Neb. 366, 372-74, 610 N.W.2d 23, 28-29 (2000), the Nebraska Supreme Court concluded that imposing pre-incarceration income on a felon would conflict with the state's child support guidelines precisely because an imprisoned individual had no "earning capacity." It likened the situation to other cases in which it had "approved the use of earning capacity instead of actual earnings in an initial determination under [the guidelines]" and concluding that in those cases, "there has been evidence that the parent had the present ability to achieve his or her earning capacity." Id. at 372-73, 610 N.W.2d at 28. Unlike those cases, the court concluded, a prisoner has no present ability to achieve the income. Id. at 374, 610 N.W.2d at 29.

The court specifically rejected the notion that his voluntary choice to commit a crime led to the reduction in his income by stating that so long as "earning capacity is used as a basis for an initial determination of child support . . . there must be some evidence that the parent is capable of realizing such capacity." Id. It imposed the minimum child support obligation as outlined in the state's guidelines and noted that income does not consist solely of wages, thus leaving open the possibility for a higher support obligation. Id.

II. What Is Most Likely to Produce Support?

We conclude that the approach taken in Nebraska is the most consistent with the Guidelines and applicable statute, with one caveat. It seems appropriate to impute pre-incarceration income to the obligor after release and place the burden on the obligor to seek modification if such is warranted. We lay out below the basis for this holding.

A. Suspending Support Inconsistent with Statute. Adopting a system that considers incarceration an absolute justification for the reduction or suspension of child support appears inconsistent with the policy embedded in Indiana's statutes.

The Indiana Code provides that "[t]he duty to support a child under [law] ceases when the child becomes twenty-one (21) years of age" unless the child is emancipated, or the court determines that the child is at least eighteen, not attending school, and supporting herself through...