IN THE MATTER OF MARRIAGE OF STOKES, 050665

• Decision Date: 31 March 2010
• Docket Number: A136795.,050665
• Citation: 234 Or. App. 566,228 P.3d 701
• Parties: In the Matter of the MARRIAGE of Jennifer Jo STOKES, Petitioner-Appellant, AND Christopher Joseph STOKES, Respondent-Respondent.
• Court: Oregon Court of Appeals

228 P.3d 701
234 Or. App. 566

In the Matter of the MARRIAGE of Jennifer Jo STOKES, Petitioner-Appellant, AND
Christopher Joseph STOKES, Respondent-Respondent.

050665; A136795.

Court of Appeals of Oregon.

Argued and Submitted March 25, 2009.

Decided March 31, 2010.

228 P.3d 702

COPYRIGHT MATERIAL OMITTED

228 P.3d 703

George W. Kelly, Eugene, argued the cause and filed the brief for appellant.

Scott J. Schaub, Lincoln City, argued the cause for respondent. With him on the brief was Kulla, Ronnau, Schaub & Chambers, P.C.

Before LANDAU, Presiding Judge, and SCHUMAN, Judge, and ORTEGA, Judge.

ORTEGA, J.

Wife appeals a judgment dissolving the parties' marriage. She assigns error to the trial court's calculation of child support, to the calculation of her share of husband's military pension, to the trial court's failure to require husband to elect a survivor's annuity, and to the trial court's allowance of an offset of temporary spousal and child support arrearages. Because we agree with wife that the trial court erred in each respect, on de novo review, ORS 19.415 (2007),¹ we remand the judgment for entry of a modified judgment.

The facts are largely undisputed. Husband and wife were married in January 1993 and have one child, a son, born in 1997. At the time of trial in August 2006, wife was 34 years old and husband was 36. Husband has been in the Air Force since 1991. He was stationed overseas from August 2003 to August 2004, and when he returned, the parties separated. We will describe other facts later on as they pertain to the issues discussed.

The first issue on appeal concerns the calculation of child support—specifically, whether husband's military allowances for housing and food are included in his "gross income" for the purpose of calculating his child support obligation. The "basic allowance for housing" (BAH) is a monthly sum paid to active duty members of the military who do not reside in government-supplied housing and is intended to offset the cost of civilian housing. 37 U.S.C. § 403(a)(1). The amount varies according to the member's pay grade, geographic location, and dependency status. Id. The "basic allowance for sustenance" (BAS) is an additional monthly sum paid to active duty members to subsidize the cost of meals purchased for the benefit of the individual member on or off base. 37 U.S.C. § 402(a)(1). Both allowances are excluded from gross income for federal income tax purposes. 26 U.S.C. § 134(a) ("Gross income shall not include any qualified military benefit.").

228 P.3d 704

Together, husband's BAH and BAS come to about $1,275 per month, and that amount is included in his semi-monthly paychecks

The trial court ruled that, because husband's BAH and BAS are excluded from income for federal income tax purposes, they do not constitute income for purposes of calculating child support. On appeal, wife contends that, although the BAH and BAS are not subject to federal income taxation, they are nonetheless part of husband's "gross income," as that term is defined in the Child Support Guidelines, OAR 137-050-0340. Husband contends that the guidelines unambiguously exclude those allowances from gross income.

ORS 107.105(1)(c) is the source of the trial court's authority to make provision in the dissolution judgment "for the support of the children of the marriage by the parties." The trial court is required to calculate the amount of support by using the formula established pursuant to ORS 25.275. ORS 107.105(1)(c).

ORS 25.275 provides, in part:

"(1) The Division of Child Support of the Department of Justice shall establish by rule a formula for determining child support awards in any judicial or administrative proceeding. In establishing the formula, the division shall take into consideration the following criteria:

"(a) All earnings, income and resources of each parent, including real and personal property;

"* * * * *

"(2) The formula described in subsection (1) of this section must also comply with the following standards:

"(a) The child is entitled to benefit from the income of both parents to the same extent that the child would have benefited had the family unit remained intact or if there had been an intact family unit consisting of both parents and the child.

"(b) Both parents should share in the costs of supporting the child in the same proportion as each parent's income bears to the combined income of both parents."

The Oregon Department of Justice has, in turn, developed a formula for the calculation of child support, and that formula is set forth in the Oregon Child Support Guidelines, OAR 137-050-0320 to 137-050-0490. OAR 137-050-0320(5) provides that a parent's "basic child support obligation" is determined by "applying the parent's adjusted gross income * * * to the scale in the manner set out in OAR 137-050-0490." Under OAR 137-050-0320(8), "gross income" means "the income of the parent calculated pursuant to OAR 137-050-0340, 137-050-0350 relating to self-employment, and 137-050-0360 income presumptions in special circumstances." OAR 137-050-0340(1) states that "gross income" includes

"income from any source including, but not limited to, salaries, wages, commissions, advances, bonuses, dividends, severance pay, pensions, interest, honoraria, trust income, annuities, return on capital, Social Security benefits, workers' compensation benefits, unemployment insurance benefits, disability insurance benefits, gifts, prizes, including lottery winnings, and alimony or separate maintenance received."²

Gross income also includes "expense reimbursements or in kind payments received by a parent in the course of employment, self employment, or operation of a business * * * if they are significant and reduce personal living expenses." OAR 137-050-0340(2). The question on appeal is whether father's BAH and BAS are part of his "gross income" for purposes of child support.

In construing the child support guidelines, our role is to determine the intent of the enacting body by looking first to the text and context of the rule. Perlenfein and Perlenfein, 316 Or. 16, 20, 848 P.2d 604 (1993). We note, initially, that the texts of OAR 137-050-0320(8) and OAR 137-050-0340(1) do not

228 P.3d 705

define "gross income" in terms of taxable income. Nor do they cross-reference the Internal Revenue Code's definitions of "gross income" or "adjusted gross income."³ Rather, OAR 137-050-0340(1) sets forth a nonexclusive list of sources that make up "income from any source." We note, further, that some of the listed sources, such as Social Security and disability benefits, are potentially not taxable. See 26 U.S.C. § 86; 26 U.S.C. § 105. In at least one case, we have held that earned income that is not subject to federal income tax should nonetheless be treated as part of "gross income" in the child support calculation. See Halpert and Leonard, 157 Or.App. 276, 970 P.2d 253 (1998) (husband's nontaxable voluntary contributions to a 401(k) retirement account are part of his gross income under OAR 137-050-0340(1)). Contrary to the trial court's reasoning, we conclude that "gross income" as defined in OAR 137-050-0340 is not limited to taxable income; rather, as the rule explicitly provides, it includes "income from any source," if it is available for support of the child

Our conclusion is consistent with the policies underlying the child support guidelines. ORS 25.275(1)(a) provides that the formula for calculating child support awards "shall take into consideration * * * all earnings, income and resources of each parent." ORS 25.275(2)(a) provides that the formula must ensure that the child benefits from the income "of both parents to the same extent that the child would have benefited had the family unit remained intact." See Nieth and Nieth, 199 Or.App. 330, 338, 111 P.3d 746, adh'd to as clarified on recons., 200 Or.App. 582, 116 P.3d 234 (2005) (a child support award is "an attempt to simulate the economic benefits that the child would enjoy had the family remained intact"); Petersen and Petersen, 132 Or.App. 190, 201, 888 P.2d 23 (1994) ("ORS 25.270(4) expresses a policy that child support awards be based on economic factors that address the needs of the dependent children."). In furtherance of those policies, we conclude that sources of income that are available to the parents— whether or not they are taxable—should be considered in determining the parent's child support obligation.

We further conclude that husband's BAH and BAS fall within the broad category of "income from any source." Those allowances are paid to husband in his semi-monthly paychecks and are available to him to spend as he desires. There is no reason why they should not be considered income for purposes of calculating husband's support obligation. We conclude, therefore, that the trial court erred in excluding husband's BAH and BAS from his gross income.

228 P.3d 706

We next address wife's contention that the trial court erred in its calculation of her share of husband's military pension. As a member of the military, husband will be entitled to a military pension after 20 years of service. At the time of trial, husband had served 15 years and two months. He testified that he had recently reenlisted and that his reenlistment was scheduled to take him past 20 years of service. After 20 years of service, husband's pension amount will be determined by a formula that uses husband's three highest years of pay.

The Uniformed Services Former Spouses' Protection Act (FSPA), 10 U.S.C. § 1408, authorizes state courts to treat "disposable retired pay" as divisible property for purposes of state dissolution laws. State law applies in determining the treatment of a military pension.⁴ In Oregon, pensions, including military pensions, are personal property and, pursuant to ORS 107.105,⁵ the "marital asset" portion of a pension (that is, the portion that accumulated during the marriage) is subject to division when a marriage is...