Markey v. Carney

• Decision Date: 14 October 2005
• Docket Number: No. 04-0519.,04-0519.
• Citation: 705 N.W.2d 13
• Parties: Kristy M. MARKEY, Appellee, v. Joseph Dale CARNEY, Appellant.
• Court: Iowa Supreme Court

705 N.W.2d 13

Kristy M. MARKEY, Appellee, v. Joseph Dale CARNEY, Appellant.

No. 04-0519.

Supreme Court of Iowa.

October 14, 2005.

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Patrick H. Payton of Payton & Assocs., P.C., Des Moines, for appellant.

Frank Steinbach of McEnroe, McCarthey & Gotsdiner, P.C., West Des Moines, for appellee.

CADY, Justice.

This appeal from an order establishing paternity and support of a child provides an opportunity for us to consider two areas of uncertainty in our law regarding child support. First, we consider the manner in which extra income is to be used in determining child support. Second, we consider the general approach to be followed to arrive at the amount of back child support due when a parent has failed to pay for an extended period of time. In addition, we consider whether and to what extent a party's legal insurance policy impacts a potential attorney fee award. For the reasons set forth in this opinion, we vacate the decision of the court of appeals and affirm the judgment of the district court as modified. We also remand the case to the district court to determine the amount of the appellee's attorney fees and enter judgment in her favor for that amount.

I. Background Facts and Proceedings

Kristy Markey and Joseph Carney grew up in Winterset. They had known each other since Kristy was in grade school. Their two families were friends. Joseph was a few years older than Kristy, and Kristy was a close friend and classmate of Joseph's younger sister. Kristy and Joseph never dated, but maintained an amicable relationship over the years.

Kristy married Scott Cox in 1991, a few years after she left high school. They had two children and were divorced in June 1996. This followed an eighteen-month separation.

On May 19, 1996, Kristy attended a party at Joseph's sister's house in Des Moines. Joseph also attended the party, and the two found themselves in Kristy's motel room the next morning. They engaged in sexual intercourse for the first and only time. Joseph spoke to Kristy a few times in the weeks that followed, but the two did not see each other again.

Kristy learned she was pregnant in July 1996. She was confident that Joseph was the father and first informed Joseph's sister and mother, who greeted the news with happiness. Joseph, however, did not. He distanced himself from Kristy and soon began a relationship with another woman. Nevertheless, the Carney family supported Kristy throughout her pregnancy.

Kristy gave birth to a boy on February 12, 1997. She named the child Dylan. Joseph's sister and mother continued to maintain contact with Kristy, and even gave a baby shower on her behalf. The Carney family also maintained regular contact with Dylan. On the other hand, Joseph had no contact with the child, or with Kristy. After a period of time, the relationship between Kristy and the Carney family became strained and eventually ended.

Kristy is employed in an accounting department of a Des Moines business, and earns $31,200 annually. She has supported Dylan since birth. Joseph has never provided any support, and he questioned whether he was the biological father.

Joseph is now married and has a child from the marriage. He is employed as the manager of an automobile transmission repair company in Coralville. His base salary is $25,000. He is also capable of earning additional income in the form of commissions from the sale of abandoned cars. The company repairs the transmission of abandoned cars and sells the cars to the public. In 2003, Joseph earned $4584 in commissions in addition to his base salary. Joseph's wife is also employed.

Joseph was employed since Dylan was born, except in 1998, when he suffered a medical condition that prevented him from working. In the three years prior to his employment at the transmission company, Joseph worked as a car salesman and earned an average annual salary of nearly $50,000.

Kristy contacted several lawyers for the purpose of pursuing a support action against Joseph in the years prior to the filing of this case. However, she did not have enough money to pay the required retainer to obtain their services. She also contacted the state child support recovery office. Kristy claimed she was told that they could not file an enforcement action against Joseph because of the legal presumption that Kristy's former husband was the father of Dylan.

In 2002, Kristy had an opportunity to enroll in a prepaid legal services plan through her employer. She then retained the services of an attorney, and she filed the present action to establish paternity and support in November 2002. Even with the plan, Kristy has been required to pay approximately $2000 in fees and costs up to the time of trial.

Paternity tests were performed after the petition was filed. The tests revealed a 99.99% probability that Joseph was Dylan's father. Following a trial on February 28, 2004, the court entered an order establishing Joseph as Dylan's father, granting sole custody and physical custody of Dylan to Kristy, setting Joseph's monthly child support obligation at $425, entering a judgment against Joseph for $21,000 in back child support, apportioning the responsibility for Dylan's uncovered medical expenses exceeding $250 per year, and awarding Kristy attorney fees.

Joseph appealed. We transferred the case to the court of appeals. The court of appeals affirmed the district court order, and Joseph sought further review.

II. Standard of Review

Generally, in paternity actions, we review issues "ancillary to the question of paternity, such as support," de novo. Dye v. Geiger, 554 N.W.2d 538, 539 (Iowa 1996) (citing Mason v. Hall, 419 N.W.2d 367, 369 (Iowa 1988)).

III. Monthly Child Support

A child support obligation is required to be set in a paternity action pursuant to the Uniform Child Support Guidelines. See Iowa Code § 600B.25(1) (2001) (directing support to be set pursuant to section 598.21(4)); id. § 598.21(4) (directing the supreme court to maintain uniform child support guidelines). A rebuttable presumption exists that the guidelines determine the correct amount of the monthly support obligation. Id. § 598.21(4)(a). Additionally, the court "may" order a back child support obligation. Id. § 600B.25(1).

The guidelines establish the amount of child support largely by determining the "net monthly income" of each parent derived from their "gross monthly income." See Iowa Ct. R. 9.26 (setting forth the guidelines); id. R. 9.5 (defining net monthly income). Except in cases involving high incomes, and some other instances supporting a deviation from the guidelines, a chart is used to determine the amount of monthly child support based upon a predetermined percent of the parents' net monthly income. Id. R. 9.2. Of course, the guidelines work to meet the goal of establishing adequate support for a child only if the correct figures are used to arrive at the "net monthly income."

"Net monthly income" under the guidelines is determined by first establishing gross income. See id. R. 9.5 (stating net monthly income is gross monthly income minus applicable deductions). The guidelines do not define gross income, but we have on a number of occasions included such items as overtime income, incentive pay, and bonuses as gross income. See State, Dept. of Human Services ex rel. Hammons v. Burge, 503 N.W.2d 413, 415 (Iowa 1993) (incentive pay); In re Marriage of Brown, 487 N.W.2d 331, 333 (Iowa 1992) (overtime); In re Marriage of Lalone, 469 N.W.2d 695, 698 (Iowa 1991) (bonus). In each instance, the key to including the item of extra income primarily focused on whether it was reasonably expected to be received in the future. See Seymour v. Hunter, 603 N.W.2d 625, 626 (Iowa 1999) ("Income, for purposes of guidelines, need not be guaranteed. History over recent years is the best test of whether such a payment is expected or speculative."). If extra income is uncertain or speculative, or if it is an anomaly, it is excluded. In re Marriage of Brown, 487 N.W.2d at 333. If it is reasonably expected to be received, then it should be included in gross monthly income by averaging the extra income over a reasonable period of time so the amount included fairly reflects the amount that will be received. See Seymour, 603 N.W.2d at 626 ("[T]he court should consider and average them as earnings over recent years and decide whether the receipt of an annual payment should be reasonably expected."). The same approach should be applied to extra income in the form of commissions in this case.

Joseph argues that Kristy failed to prove the commissions were reasonably expected to be received. He points out that Kristy only presented evidence of extra income for one year, with no circumstances concerning any certain future expectation. Nevertheless, once evidence of extra income has been introduced, we think the burden is on the recipient of the income to establish that it should be excluded from gross income as uncertain and speculative. In In re Marriage of Brown, we said that overtime wages are included in gross income unless circumstances show the wages are an anomaly or speculative. See In re Marriage of Brown, 487 N.W.2d at 333 ("Overtime wages are within the definition of gross income to be used in calculating net monthly income for child support purposes. This conclusion does not necessarily mean, however, that a court must steadfastly adhere to the appropriate child support amount as determined by the guidelines using overtime pay if the amount results in injustice between the parties. . . . [I]n circumstances where overtime pay appears to be an anomaly or is uncertain or speculative, a deviation from the child support guidelines may be appropriate." (Citation omitted; emphasis added.)). The recipient of extra income is in the best position to present the underlying circumstances to the court, which makes it fair to place the burden...