Bell v. Bell, 2012–SC–000026–DG.

• Decision Date: 20 February 2014
• Docket Number: No. 2012–SC–000026–DG.,2012–SC–000026–DG.
• Citation: 423 S.W.3d 219
• Parties: Michael S. BELL, Appellant v. Mary H. BELL, Appellee.
• Court: United States State Supreme Court — District of Kentucky

423 S.W.3d 219

Michael S. BELL, Appellant

v.Mary H. BELL, Appellee.

No. 2012–SC–000026–DG.

Supreme Court of Kentucky.

Feb. 20, 2014.

William R. Erwin, Helton, Erwin & Associates, Danville, KY, for Appellant.

John Wesley Oakley, II, Marshall, Oakley & Oakley, for Appellee.

Opinion of the Court by Chief Justice MINTON.

We accepted discretionary review of the decision by the Court of Appeals reversing the trial court order setting the amount of Michael Bell's monthly child-support obligation. To calculate the amount of the obligation, the trial court used the child-support guidelines in Kentucky Revised Statutes (KRS) 403.212 but deviated from the statutory language of the guidelines by deducting from Michael's gross income his unreimbursed business expenses even though Michael was not self-employed. The issue before us is whether the trial court abused its discretion and misapplied the statute by deducting these unreimbursed business expenses from Michael's gross income rather than, if satisfied from the evidence that the unreimbursed expenses constitute an extraordinary factor, making an appropriate adjustment in the guideline award as allowed by statute.

We conclude the Court of Appeals properly held the trial court abused its discretion by deducting Michael's unreimbursed business' expenses from gross income because Michael was not self-employed. When dealing with family matters, a trial court has broad discretion; but that discretion does not include deviating from the statutory method of determining gross income when calculating child support. In order to deduct unreimbursed business expenses from gross income, a trial court must find the parent is self-employed. If the parent is not self-employed, the trial court may nevertheless exercise its discretion regarding unreimbursed business expenses by reducing the guideline award if deduction is warranted by the evidence. Accordingly, we now affirm the decision of the Court of Appeals and remand this case to the trial court for further proceedings not inconsistent with this Opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND.

The trial court held a hearing in Michael and Mary Bell's divorce action to resolve all remaining issues before the entry of a final decree. One of the remaining issues was to establish the amount of support for Michael to pay to support their only child.

The trial court found Michael capable of earning $125,086 in gross annual income through his employment as a sales representative for a dental products supplier. Testimony established that Michael's sales job requires that he incur significant expenses for client development, which entails client entertainment and overnight travel. According to Michael's supervisor, Michael is expected to maintain and increase the market value of his clients. To this end, Michael regularly must remove a client from the workplace environment. And, further, Michael's employer pays him solely on commission from the sales he makes. Mary has not, either at the hearing or on appeal, disputed the reasonableness or necessity of these expenses.¹

In the trial court's estimation, Michael incurs, on average,² $36,000 in annual unreimbursed business expenses. As a result of this finding, ³ the trial court reduced Michael's gross income from $125,086 to $89,086 and issued an order calculating his support obligation accordingly.

Both parties filed motions to alter, amend, or vacate the trial court's order. For purposes of this appeal, only Mary's motion is relevant. Particularly, Mary's motion alleged the trial court erred by reducing Michael's gross income by the amount of alleged unreimbursed business expenses. The trial court denied Mary's motion and she appealed. The Court of Appeals found the trial court abused its discretion by reading into KRS 403.212 a deduction that is not present. According to the Court of Appeals, Michael did not prove he was self-employed, so he was not entitled to have his unreimbursed business expenses deducted from his gross income for the purposes of the statutory child-support calculation. The Court of Appeals reversed the trial court's order and remanded the matter for further proceedings. Michael now appeals the decision of the Court of Appeals.

We granted discretionary review because the use of KRS 403.212 in this manner is an issue unresolved by this Court. We now affirm the Court of Appeals and attempt to offer guidance to trial courts when dealing with similar situations in the future.

II. ANALYSIS.

This case presents a single issue for our resolution: May a trial court deduct unreimbursed business expenses from an earner's gross income when calculating the proper amount of child support? This question requires us to interpret KRS 403.212 and its application to the circumstances presented in the case before us.

Generally speaking, a trial court enjoys “broad discretion in the establishment, enforcement, and modification of child support.” ⁴ Accordingly, we review a trial court's decision in this context for an abuse of discretion. An abuse of discretion will only be found when a trial court's decision is arbitrary, unreasonable, unfair, or unsupported by sound legal principles.⁵ And statutory interpretation is a question of law for the court to be reviewed de novo.⁶ Mary contends the trial court abused its discretion in deducting unreimbursed business expenses from Michael's gross income because KRS 403.212 does not allow such deduction unless the income earner is self-employed.

Through its enactment of KRS 403.212, the General Assembly established the child-support guidelines for trial courts. KRS 403.212, enacted in 2009, is a recent addition to this state's child-support framework. We find no published opinion interpreting the statute.⁷ Relevant to the instant case, KRS 403.212 reads:

(2) For the purposes of the child support guidelines:

(a) “Income” means actual gross income of the parent if employed to full capacity or potential income if unemployed or underemployed.

(b) “Gross income” includes income from any source, except as excluded in this subsection, and includes but is not limited to income from salaries, wages, retirement and pension funds, commissions .... Specifically excluded are benefits received from means-tested public assistance programs, including but not limited to public assistance as defined under Title IV–A of the Federal Social Security Act, and food stamps.

(c) For income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership or closely held corporation, “gross income” means gross receipts minus ordinary and necessary expenses required for self-employment or business operation.... Specifically excluded from ordinary and necessary expenses for purposes of this guideline shall be investment tax credits or any other business expenses inappropriate for determining gross income for purposes of calculating child support. Income and expenses from self-employment or operation of a business shall be carefully reviewed to determine an appropriate level of gross income available to the parent to satisfy a child support obligation. (emphasis added) (footnote omitted).

The trial court found KRS 403.212 silent on the issue now before us. And the trial court believed the policy underlying KRS 403.212 supported its decision to deduct the expenses from Michael's gross income. The Court of Appeals not only disagreed with the trial court's reading of the statute but also found the trial court acted outside its authority by essentially writing a provisioninto the statute. Again, we agree with the Court of Appeals.

When this Court engages in statutory interpretation, our main goal is “to give effect to the intent of the General Assembly.” ⁸ The clearest indicator of that intent is the “language the General Assembly chose, either as defined by the General Assembly or as generally understood in the context of the matter under consideration.” ⁹ And “[w]here the words used in a statute are clear and unambiguous and express the legislative intent, there is no room for construction and the statute must be accepted as written.” ¹⁰ Here, we find the language of KRE 403.212 unambiguous and straightforward.

In KRS 403.212, the General Assembly laid out the proper method for calculating gross income for purposes of child support. Initially, we note that Michael's income, although paid on a commission basis, is explicitly included in gross income. Indeed, subsection (2)(b) provides a rather broad definition of gross income, excluding only the monies provided through federal or state assistance programs.

For a certain category of individuals, then, subsection (2)(c) allows business expenses to be deducted from gross income. Seeming to illustrate the potential members of this highlighted category, the subsection begins with “[f]or income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership or closely held corporation.” The language used is unambiguous in that proving self-employment or ownership of a business is a prerequisite to entitlement to this particular calculation of gross income.¹¹ And general employees who simply incur unreimbursed expenses do not fall within the class described by subsection (2)(c).

Unfortunately, the General Assembly has not provided a definition for self-employed. The crux of Michael's argument is that his job as a salesman who works on commission classifies him as self-employed. The clear language of KRS 403.212 belies this assertion. Subsection (2)(c)'s list of employments consists only of work associated with an ownership stake in the operation of a business. The import of subsection (2)(c)'s language is that an individual like Michael, whose job classification does not equate to an ownership stake in the operation of the business, is not within the categories of employment for which the deduction of business expenses is allowed.¹² In this...