In The Interest Of P.C.S. ,l.R.S., Children.

• Decision Date: 12 August 2010
• Docket Number: No. 05-08-00438-CV.,05-08-00438-CV.
• Citation: 320 S.W.3d 525
• Parties: In the Interest of P.C.S. and L.R.S., Children.
• Court: Texas Court of Appeals

320 S.W.3d 525

In the Interest of P.C.S. and L.R.S., Children.

No. 05-08-00438-CV.

Court of Appeals of Texas Dallas.

Aug. 12, 2010.

COPYRIGHT MATERIAL OMITTED

Georganna L. Simpson, Law Offices of Georganna L. Simpson, Dallas, TX, for Appellant.

Julie C. Reedy, Attorney at Law, Jimmy L. Verner, Jr., Verner & Brumley, Dallas, TX, for Appellee.

Before Justices FITZGERALD, LANG, and SMITH.¹

OPINION

Opinion By Justice LANG.

Stacy Scannell (Mother) appeals the trial court's order granting the motion of Stephen Scannell (Father) to modify his child support obligation. Mother asserts five issues on appeal. In issues one and two, Mother argues the trial court erred as a matter of law by not including in the calculation of Father's “net resources” a cash inheritance Father received subsequent to the parties' divorce, the value of Father's personal use of his company's truck, and a $1000 monthly health insurance premium paid on Father's behalf by his company. Alternatively, in her third issue, Mother asserts the trial court abused its discretion by not considering Father's inheritance, the value of his personal use of his company's truck, and the health insurance premium paid on his behalf by his company as “additional factors” supporting departure from the statutory child support guidelines. In her fourth and fifth issues, Mother contends the trial court abused its discretion by not requiring Father to contribute to the children's private school tuition and by finding that there had been a material and substantial change of circumstances that warranted modification of the parties' prior child support provisions.

We conclude the trial court erred by failing to include Father's $400,000 cash inheritance in calculating his net resources, but did not err by not including the value of Father's personal use of his company's truck or the health insurance premium paid on his behalf by his company in calculating such resources. Further, we conclude the trial court did not abuse its discretion by (i) failing to consider the value of Father's use of the company truck or the health insurance premium paid on his behalf as factors supporting departure from the statutory child support guidelines, where the evidence did not support such consideration; (ii) failing to require Father to contribute to the children's private school tuition; or (iii) finding there had been a material and substantial change in circumstances that warranted modification of the prior order regarding child support. We affirm the trial court's order in part, reverse in part, and remand this case to the trial court for further proceedings consistent with this opinion.

I. FACTUAL AND PROCEDURAL BACKGROUND

The parties have two children, P.C.S. and L.R.S., who were eighteen years old and fifteen years old, respectively, at the time of trial. Both children have developmental and psychological issues, including Asperger's syndrome, and L.R.S. is also bi-polar. Witnesses testified that the children will require medication and counseling all their lives. The children are enrolled in private schools specializing in teaching children with such issues. Each child also regularly sees a therapist for counseling and a psychiatrist for medication management.

The parties were divorced pursuant to a September 12, 2003 agreed divorce decree. Under the decree, both parents were designated as joint managing conservators, and Mother had the right to establish the children's primary residence. The decree required Father to pay regular child support of $1500 per month for both children, provide them with health insurance, and pay half of the children's school tuition and sports-club charges. By the time of trial, half of the children's tuition was $1850 per month, and half of the sports-club charges was $62.50 per month. The decree required each party to pay half of the children's medical expenses incurred with in-network medical providers. Any expenses for non-network medical providers were to be borne by the party who took the children to that medical provider. The children's therapists and psychiatrist selected by Mother are not part of either parent's medical insurance network, so Mother receives little assistance in paying those expenses from medical insurance and no assistance from Father.

At the time of the divorce in 2003, Father was employed as a mechanical engineer in the food-processing industry, earning about $110,000 per year. Mother was a psychologist working for a veterans' hospital, earning about $160,000 per year. In 2004, Father remarried and bought a house in Plano. In early 2005, he was laid off from his job and given a severance package of six-months' salary and benefits. Despite applying for many positions in the food-processing industry, he was unable to obtain employment in that field. Between the time he was laid off and July 2005, Father used retirement funds, which were “liquidated through deferred compensation,” to pay back loans and cover living expenses. In July 2005, Father filed a motion to modify his child support. The trial court issued temporary orders in August 2005 reducing Father's child support to $305 per month and suspending his obligation to pay a portion of the children's tuition and sports-club charges.

Between August 2005 and early 2006, Father had two short-term consulting jobs. On January 26, 2006, the parties agreed to modify the temporary orders. Under the modified temporary orders, Father's child support was raised to $686.03, retroactive to November 2005. In addition, Father agreed to pay P.C.S.'s tuition for November and December 2005. Further, the parties agreed that in future months where Father's net resources exceeded $6000, Father “shall additionally pay a proportionate share of the school tuition” for P.C.S.

In late 2005 and early 2006, Father received, in at least two installments, a cash inheritance of approximately $400,000 from his aunt's estate.² Having been unable to find steady employment in the food-processing industry, Father decided to go into business for himself. With $30,000 from his inheritance, he purchased a franchise from “Andy OnCall,” a home-handyman business, in January 2006. Also, he invested about $30,000 more from the inheritance in setting up the business. Father's wife then left her job at the post office and went to work for the new business,³ which “got off the ground” in March 2006. During the first year of business, Father and his wife were unable to pay themselves salaries because the business was not yet profitable. Accordingly, Father used money from his inheritance to pay their living expenses, child support, and some accumulated debts. In the second year of operation, the business was doing well enough that it paid them each a salary of $6000 per month and paid $1000 per month for the health insurance that covered Father, his wife, and her adult son. Father used $150,000 of the money remaining from the inheritance to purchase an annuity retirement investment to replenish the retirement funds he had used during 2005 to pay debts and cover living expenses,⁴ and he provided $1000 of the inheritance to his wife's son to help him purchase a vehicle. The remainder of the inheritance, about $75,000, was placed in a money market fund to be used during periods when business was slow. The money market fund earns $38 interest per month.

Father filed an amended motion to modify on February 14, 2007. On March 2, 2007, an associate judge modified Father's child support obligation to $1750 per month. On September 12, 2007, the trial court again modified the temporary orders to require Father to pay child support of $921.86 per month.

The case went to trial before the trial court on November 29, 2007, with a second hearing on February 5, 2008. Mother testified that because of the reduced child support and loss of assistance with the children's tuition, she had gone into debt to keep the children in their schools and to pay their therapists. Mother took out a home equity loan, borrowed $36,000 from an education-services lender to pay the children's tuition, and, in addition to those debts, owed P.C.S.'s school over $44,000. She could no longer afford child care, had used up all her vacation and sick leave to care for the children, and was facing the prospect of having to take leave without pay if she missed any more work to care for the children.

In its March 13, 2008 final order on the motion to modify, the trial court found in relevant part (1) “the circumstances of the child or a person affected by the order have materially and substantially changed,” requiring modification of the order; (2) Father's monthly net resources are $4097; (3) child support under the guidelines of the family code would be twenty-five percent of net resources, or $1024.25; (4) application of the family code's child support guidelines “would be inappropriate” because both children have special needs necessitating deviation from the guidelines; and (5) Father should pay additional support in the amounts of $170 per month for reimbursement of the insurance carried by Mother and $400 per month “to cover additional special medical needs of the children.” As in the original decree, the modified order required each of the parents to pay one-half of the children's uninsured and non-reimbursed medical expenses incurred with in-network health-care providers, but any out-of-pocket expenses for non-network medical providers were to be borne by the party who took the children to that medical provider. Finally, the trial court found the “amount of actual child support ordered to be paid” by Father was $1594.33 per month, which was approximately thirty-nine percent of his monthly net resources before payment of medical expenses. In its May 1, 2008 findings of fact and conclusions of law, the trial court concluded in relevant part that an inheritance is not included in the statutory definition of “net resources” for the purpose of setting the...