Lichtenstein v. Barbanel, No. 2008-SC-000661-DG.

• Decision Date: 20 May 2010
• Docket Number: No. 2008-SC-000661-DG.
• Citation: 322 S.W.3d 27
• Parties: Steven LICHTENSTEIN, Appellant, v. Roberta J. BARBANEL, Appellee.
• Court: United States State Supreme Court — District of Kentucky

322 S.W.3d 27

Steven LICHTENSTEIN, Appellant,

v.Roberta J. BARBANEL, Appellee.

No. 2008-SC-000661-DG.

Supreme Court of Kentucky.

May 20, 2010.

James Michael Smither, J. Michael Smither, PSC, Louisville, KY, Counsel for Appellant.

Roberta J. Barbanel, Loveland, OH, Counsel for Appellee.

Opinion of the Court by Justice SCOTT.

This case involves Steven J. Lichtenstein's appeal of two Income Withholding Orders of the Jefferson Family Court which require garnishment of his wages under two separate orders: (1) for child support arrearage, spousal support arrearage, medical care, insurance reimbursement, and attorney's fees; and (2) for Roberta Lichtenstein Barbanal's monetary share of the marital property and reimbursement for a marital debt that she paid.

Steven now contends that the family court abused its discretion, or violated his right to due process, when it entered the Income Withholding Order “regarding child support” before it accounted for Roberta's child support arrearage pursuant to the parties 1996 Agreed Order-which had changed custody of the children to Steven and in which Roberta agreed that she would be liable to him for support.

In addition, Steven asserts that Kentucky's Uniform Interstate Family Support Act (UIFSA) (KRS 407.5101) does not apply to marital debt or property divided during a divorce action, but only to support and the other remedies that are specifically set forth in KRS 407.5101(21). ¹ Consequently, he argues that the “other support” Income Withholding Order, which includes money for property division and reimbursement of marital debt, exceeds the statutory limitations otherwise applicable to ordinary garnishment of non-child support debt. ²

I. Background

A. Procedural History

The procedural history of this case fills twenty-one volumes and includes three appeals. Even so, review of its development is important in addressing the issues now before this Court.

Steven and Roberta were married in 1978. Steven is a physician and Roberta is an attorney. Two children were born of the marriage-Ariana and Drew.

Steven filed for divorce on November 5, 1990 in the Jefferson County Circuit Court. On June 6, 1996, the court issued a ruling on all financial issues, (including child support), and determined Steven's liability to Roberta as follows:

,000.00-Marital property share for the medical practice;

,729.00-Reimbursement for child medical expenses;

,800.00-Reimbursement for marital debt Roberta paid;

,765.21-Pendente lite maintenance, child support, and medical insurance arrearages; and,

,000.00-Attorneys' fees and court costs. ³

In addition, the court assessed all martial debt, as well as the Commissioner's fee, against Steven. ⁴

On September 17, 1996, Roberta served an Order of Wage Garnishment on Steven's employer, Louisville Children's Eye Specialists, PSC (PSC). ⁵ From September 1996 through February 2000, the PSC remitted $8,817.74 to Roberta pursuant to the wage garnishment.

During the battle over money, the parties' minor children went to live with Steven. On October 2, 1996, the parties signed an Agreed Order (the 1996 Agreed Order) giving Steven physical custody of the children, discontinuing his child support for as long as the children were with him and reserving the issue of the amount of child support to be paid by Roberta. The parties agreed that the amount Roberta owed would be “set-off” as against Steven's child support arrearage.

All was quiet between Steven and Roberta during their children's high school years. Then, on January 30, 2003, after Steven had helped pay for Ariana's college education and Drew was enrolled in the Naval Academy, Roberta moved the family court to hold Steven in contempt for failing to satisfy the June 6, 1996 judgment and to hold the PSC liable for its failure to respond to the 1996 Order of Wage Garnishment.

In response, Steven requested that the court establish Roberta's child support for the time that he had custody of the children and to determine, with the off-set, the amount that he actually owed Roberta under the June 6, 1996 judgment. During contempt proceedings, Steven renewed his request for a determination of Roberta's child support.

In response to the parties' various motions, the family court issued orders addressing the terms of the parties' 1996 Agreed Order and determining the PSC's liability under KRS 425.526 for the garnishments. As to the agreed order, the family court found that the parties had modified the original child support order, that it was “an enforceable order, and that its terms are at issue in the litigation now pending before the Court.” (Emphasis added). The court went on to determine that the agreed order applied as to an off-set “ only to the child support arrearage issue against both parties.” (Emphasis in original). Regarding Steven's PSC's liability, the court found it liable to Roberta and awarded a judgment against the company for the “funds that should have been withheld from the judgment debtor's earnings ... plus 12% interest on those funds not properly withheld....” The court made a specific finding that “ none ” of the $121,586.76 (“other support”) reflected in the Order of Wage Garnishment was from child support arrearage. (Emphasis original).

Given its findings, the court reasoned that the contempt proceedings as to Steven's alleged non-payment of the $121,529.00 in debts (property/reimbursement/healthcare/attorney fees) and the non-payment of $57,765.21 (child support) would “ be heard separately as unrelated claims.” (Emphasis added). The court went onto hear evidence of Steven's alleged contempt as to “other support” and found that Steven had not paid the arrearages. Thus, although the court purportedly bifurcated the property and child support issues, it held Steven in civil contempt for failing to pay the June 6, 1996 judgment as a whole, including child support, by order dated April 26, 2006. As a result, the court scheduled a “purge” hearing but did not schedule a separate hearing on the child support issues. ⁶

B. The Income Withholding Orders

1. Order 1

In July 2005, Steven moved to Illinois and began working for Illinois Eye Center. Later, in August of 2006, Roberta moved for, and the court issued, an Income Withholding Order for $639,773.12. ⁷ This order encompassed the entire June 1996 judgment, with interest. ⁸ It also required that Steven's employer withhold 360 semi-monthly payments of $3,835.56 from his wages. The court did not determine the amount of child support that Roberta owed before entering the Income Withholding Order. Steven moved to vacate the order arguing, in part, that property division and marital debt does not constitute “support” under KRS 407.5101.

2. Orders 2 and 3

In response to Steven's arguments, Roberta requested two superseding Income Withholding Orders: one order for “monies owed for unpaid child support arrearages” and the second for “monies owed for other support” The Court denied Steven's Motion to Vacate on February 7, 2007, and on the same day entered two Amended and Clarified Income Withholding Orders: one for child support arrears ⁹ and one for “other support.” ¹⁰ It also entered an order denying Steven of “any relief requested” until he purged himself of contempt.

3. Orders 3 and 4

On March 3, 2007, Roberta moved the court again for Income Withholding Orders to supersede the February orders as those orders did not comply with Illinois law. Again, Steven objected. ¹¹ On March 12, 2007, the court entered a child support arrearage order for $247,586.08, to be withheld at $9,000.00 per month, and an “other support” arrearage order for $420,273.36, to be paid at $12,000.00 per month.

Steven appealed the issuance of the Income Withholding Orders of February 7, 2007 and March 16, 2007, asserting that the family court's failure to determine the amount to be “off-set” against the child support arrearage before the orders were entered was an abuse of discretion, or a violation of due process. He also argued that the UIFSA does not support the issuance of an Income Withholding Order for amounts due for marital property division or reimbursement of marital debt and thus there was no basis to withhold his income at the rate of 65%.

III. Analysis

A. Failure to Determine Child Support under the Parties' 1996 Agreed Order

The Court of Appeals held that the family court did not abuse its discretion in failing to determine the amount of child support that Roberta owed, reasoning that Steven “points to no discovery request nor any action taken specifically to establish Roberta's child support obligation ... and his failure to do so constituted a waiver of this issue.” Thus, Steven's abuse of discretion and constitutional arguments were dismissed. We disagree with this rationale and result and thus the issue of the amount of Steven's arrearage “off-set” must be remanded for further proceedings.

A trial court has broad discretion in the way that it conducts its business. Abuse of discretion “ ‘in relation to the exercise of judicial power implies arbitrary action or capricious disposition under the circumstances, at least an unreasonable and unfair decision.’ ... The exercise of discretion must be legally sound.” Kuprion v. Fitzgerald, 888 S.W.2d 679, 684 (Ky.1994) (citations omitted).

However, once “the validity of an order setting child support is established, the non-custodial parent bears the burden of proving that he satisfied the obligation and owes no arrearage.” Gibson v. Gibson, 211 S.W.3d 601, 611 (Ky.App.2006) ( citing Raymer v. Raymer, 752 S.W.2d 313 (Ky.App.1988)). ¹² In Gibson, the Court of Appeals considered whether the trial court abused its discretion when it failed to enforce the parties' child support agreement. In that case, the child support amount was agreed to, but the court did not agree with the custodial parent's calculations. Yet, the court did not proceed to make the correct calculations, and therefore did not enter a...