Davis v. Davis (In re Marriage of Davis)

• Decision Date: 18 December 2020
• Docket Number: No. 2 CA-CV 2020-0054-FC,2 CA-CV 2020-0054-FC
• Parties: IN RE THE MARRIAGE OF TRACY ROSEMARY DAVIS, Appellee, and MICHAEL ANDREW DAVIS, Appellant.
• Court: Arizona Court of Appeals

IN RE THE MARRIAGE OF TRACY ROSEMARY DAVIS, Appellee, and MICHAEL ANDREW DAVIS, Appellant.

No. 2 CA-CV 2020-0054-FC

ARIZONA COURT OF APPEALS DIVISION TWO

December 18, 2020

THIS DECISION DOES NOT CREATE LEGAL PRECEDENT AND MAY NOT BE CITED EXCEPT AS AUTHORIZED BY APPLICABLE RULES.

NOT FOR PUBLICATION

See Ariz. R. Sup. Ct. 111(c)(1); Ariz. R. Civ. App. P. 28(a)(1), (f).

Appeal from the Superior Court in Pima County

No. D20071773

The Honorable John J. Assini, Judge Pro Tempore

VACATED IN PART AND REMANDED

COUNSEL

Gilbert Law Firm, Tucson

By Thea M. Gilbert

Counsel for Appellee

Aboud & Aboud P.C., Tucson

By John Eli Aboud

and Kristi Bang-Simon P.L.L.C., Tucson

By Kristi Bang-Simon

Counsel for Appellant

MEMORANDUM DECISION

Chief Judge Vásquez authored the decision of the Court, in which Presiding Judge Staring and Judge Espinosa concurred.

VÁSQUEZ, Chief Judge:

¶1 In this family law action, Michael Davis appeals from the trial court's order modifying his child support obligation after one of his children with his former wife, Tracy Davis, became emancipated. He argues the order should be vacated because the court failed to properly apply the Child Support Guidelines and erred in calculating Tracy's gross income. He further contends the court denied him substantial justice by relying on "prior findings" about his credibility and improperly imputing his income, and by failing to sua sponte appoint a federally authorized tax practitioner to review his income. For the reasons that follow, we vacate in part and remand.

Factual and Procedural Background

¶2 We view the facts in the light most favorable to upholding the trial court's ruling. In re Marriage of Yuro, 192 Ariz. 568, ¶ 3 (App. 1998). Michael and Tracy married in 1999 and have two children, B.D. and C.D. In 2008, the court entered a decree dissolving their marriage, ordering joint custody of the two children, and requiring Michael to pay child support to Tracy. The court has modified Michael's child support obligation several times, as recently as 2018.

¶3 In March 2019, anticipating eighteen-year-old B.D.'s graduation from high school and resulting emancipation, Michael filed a petition to reduce his child support obligation beginning June 1. See A.R.S. § 25-501(A). He asserted that his new payment amount should be $453 per month. Tracy agreed that a modification was appropriate, but argued Michael should be required to pay $876 per month. After a hearing, the trial court modified Michael's support obligation to $700 per month beginning June 1, 2019. Michael timely appealed. We have jurisdiction pursuant to A.R.S. §§ 12-120.21(A)(1) and 12-2101(A)(2).

Tracy's Income Calculation

¶4 Michael argues the trial court improperly applied the Child Support Guidelines ("Guidelines") by not including Tracy's rental income and retirement account withdrawals as income for child support purposes. He also contends the court erred in calculating Tracy's gross income because it did not properly impute full-time earnings to her. We review a child support award for an abuse of discretion but review de novo conclusions of law and interpretations of the Guidelines. Birnstihl v. Birnstihl, 243 Ariz. 588, ¶ 8 (App. 2018). A court abuses its discretion when the record is "devoid of competent evidence to support [its] decision," Platt v. Platt, 17 Ariz. App. 458, 459 (1972), or when the court "commits an error of law in the process of exercising its discretion," Kohler v. Kohler, 211 Ariz. 106, ¶ 2 (App. 2005). We will uphold the court's factual findings "if there is any reasonable evidence to support [them]." Mitchell v. Mitchell, 152 Ariz. 317, 323 (1987); see also Castro v. Ballesteros-Suarez, 222 Ariz. 48, ¶ 11 (App. 2009).

¶5 While not a "source of law," the Guidelines aid trial courts in applying the law when ordering or modifying child support. In re Marriage of Pacific, 168 Ariz. 460, 463 (App. 1991); see A.R.S. § 25-320 app. § 1(C). The Guidelines are aimed at providing children with approximately the support they would have received had both their parents lived with them. See Walsh v. Walsh, 230 Ariz. 486, ¶ 29 (App. 2012). When calculating a parent's gross income, courts shall include "income from any source" such as "salaries, wages, . . . pensions, [and] interest," but need not include income that is "not continuing or recurring in nature." § 25-320 app. § 5(A). Parents may have the option of working overtime or second jobs without increasing their obligation because courts generally "should not attribute income greater than what would have been earned from full-time employment." Id. Courts may "consider income actually earned that is greater than would have been earned by full-time employment if that income was historically earned from a regular schedule and is anticipated to continue into the future." Id. After considering the parent's specific circumstances—to the extent they are known—courts generally "may attribute income to a parent up to his or her earning capacity" and may consider the reasons that a parent is "working below full earning capacity." Id. § 5(E). Ordinarily, any attributed income should be at least minimum wage. Id.

¶6 If strict application of the Guidelines would be "inappropriate or unjust" and not in the best interest of the child, courts "shall deviate" from them. Id. § 20(A)(1-2) (emphasis omitted). To deviate from the Guidelines, courts must issue written findings that a deviation is warrantedand must show what the order would have been before and after the deviation. Id. § 20(A)(3-5); see Hetherington v. Hetherington, 220 Ariz. 16, ¶ 29 (App. 2008). "[O]nce a court finds there has been a significant and continuing change in circumstances from a previous child support order, the court must review the parties' situation anew; no presumption from a previous order [finding deviation appropriate] exists." See Nia v. Nia, 242 Ariz. 419, ¶¶ 24-25 (App. 2017) (rejecting contention that previous deviation created presumption).

¶7 In 2018—based on testimony that leaving her part-time employment for a full-time position would result in a lower hourly wage—the trial court imputed Tracy's hourly wage as $15, not the $20 she actually earned in her part-time employment. It also stated that it was "not concerned with" whether she had reached the calculated monthly amount through "a combination of two jobs, a part-time job, and rental income" and that "[a]ny additional sums of money . . . made by [Tracy] would be treated by the Court like it treats overtime earnings or second job earnings."

¶8 During the 2020 hearing, evidence showed that Tracy made $20.50 per hour as an administrative assistant for an accountant, the same position she had held in 2018. During the tax season, she worked full time, but otherwise worked part time. She also received income from a rental property, and from 2014 to 2018, she made annual withdrawals from her retirement account to pay down debt and attorney fees. Michael suggested that the trial court include these sources when calculating Tracy's income.

¶9 The trial court found Tracy's employment had not changed since 2018 and imputed her income as $16 per hour (one more dollar than in 2018) for a monthly income of $2,773. It once again did not include "any of [her] extra income" in excess of the calculated employment income, essentially stating that consistent with its 2018 findings there was no evidence of underemployment and noting that it had also not included such extra income in its 2018 ruling.

¶10 Michael argues that the trial court erred in three specific ways when calculating Tracy's gross income. First, he asserts it "failed to include any of [Tracy's rental income] in determining her gross monthly income." Rental income is continuing or recurring in nature and is specifically contemplated as income in the Guidelines. See § 25-320 app. § 5(C) (stating that gross income from rent is calculated as "gross receipts minus ordinary and necessary expenses required to produce income"). We agree with Michael as to Tracy's rental income, and the same principles apply to his rental income as well. The court therefore abused its discretion by failingto either include rental income in the parties' gross incomes, or to properly deviate from the Guidelines by making necessary findings. Thus, we remand this matter for the court to include rental income as income for both parties or to make the findings necessary to deviate from the Guidelines.

¶11 Second, Michael contends the trial court erred in failing to include Tracy's consistent retirement withdrawals in her income. He cites Milinovich v. Womack, 236 Ariz. 612 (App. 2015), for the proposition that treating withdrawals of a retirement account's principal as gross income is consistent with the Guidelines. When considering withdrawals from a retirement or other account, courts must acknowledge that "there are countless ways of investing for future needs, and [that] determining whether a particular investment vehicle falls within the definition of gross income requires consideration of the Guidelines on a case-by-case basis." Id. ¶ 16. This requires courts to consider whether income is like a second job or overtime pay, is recurring and continuous, or is "historically earned from a regular schedule and is anticipated to continue into the future." See § 25-320 app. § 5(A); Milinovich, 236 Ariz. 612, ¶¶ 11, 14, 16.

¶12 Although we detect no abuse of discretion in the trial court's excluding Tracy's withdrawals from her retirement account, the record arguably supports both parties' positions. On remand, the court may revisit its determination of the retirement account withdrawals considering factors such as Tracy withdrawing funds every year since 2014, totaling nearly $200,000 and ranging from $17,160 to $55,452; Tracy using some of the funds to pay debts while she worked below her full earning capacity; Tracy using the money to pay off attorney fees that Michael had been ordered to pay; and the fact that there is...