Schneithorst v. Schneithorst
| Decision Date | 27 October 2015 |
| Docket Number | No. ED 102017,ED 102017 |
| Citation | 473 S.W.3d 239 |
| Parties | Penny Schneithorst, Respondent, v. James Schneithorst, Jr., Appellant. |
| Court | Missouri Court of Appeals |
For Appellant: Alan E. Freed, Alisse C. Camazine, 165 N. Meramec Ave., Ste. 110, St. Louis, MO 63105.
For Respondent: Cary J. Mogerman, Joseph J. Kodner, 100 South Brentwood Blvd., Ste. 325, St. Louis, MO 63105.
James Schneithorst, Jr. ("Father") appeals the trial court's judgment modifying his child support and maintenance obligations to Penny Schneithorst ("Mother"). We reverse and remand.
The parties were married in May 1998, and four children were born of the marriage. By consent of the parties, the trial court entered a judgment dissolving the parties' marriage in March 2011.
At the time of the dissolution proceedings, Mother was unemployed. However, Mother's Form 141 imputed a gross income to her in the amount of $4,000 per month.
Father was the sole owner of Schneithorst Catering Company ("the family business" or "the business") at the time of the dissolution proceedings. The family business operates the Schneithorst restaurant and owns mixed-use retail and office space located on the same premises as the restaurant.
Over the course of several years, Father had accumulated 15% of the stock in the family business from gifts of stock from his father James Schneithorst, Sr. ("Mr. Schneithorst"). Father purchased the remaining 85% of the business's stock from Mr. Schneithorst's revocable trust, and the purchase was subject to a loan from Mr. Schneithorst in the amount of $1.35 million, secured by a promissory note. According to the Form 14 Father submitted to the trial court, Father's gross income from the family business was $27,083 per month at the time of the dissolution proceedings.
Under the terms of the dissolution judgment, the parties were awarded joint legal and joint physical custody of the children. In addition, the parties agreed Father would pay Mother $2,500 per month in child support for the children,2 and the parties agreed Father would pay Mother $7,500 per month in maintenance.
After the dissolution judgment was entered, Mother filed a motion to modify the custody arrangement, increase Father's child support obligation, and reduce Father's maintenance obligation.3 The issues pertaining to custody were resolved by an agreement of the parties before trial which was memorialized in a parenting plan approved by the trial court. Under the terms of the agreement, Mother was awarded sole legal custody and sole physical custody of the children, and Father was awarded supervised visitation.
With respect to the unresolved issues of child support and maintenance, a bench trial was held in March 2014. The following evidence was presented at trial pertaining to Father's involvement in the family business, funds Father received from the business, Father's history of alcohol abuse, financial assistance Father received from his parents, the parties' financial resources and expenses at the time of trial, and the children's expenses at the time of trial.
The family business paid Father a salary of $60,080 in 2012 and a salary of $26,923 in 2013. From 2012 through the end of September 2013, Father was the sole owner of the family business, and he either directly or indirectly received payments from the business which were sometimes classified as dividends and/or distributions. The payments included checks issued directly to Father from the business's general ledger and payments made to Father's American Express credit card. The payments were not considered ordinary and necessary business expenses but instead were considered advances to Father due to his personal overspending. For example, in 2013, the family business paid expenses charged to Father's American Express credit card including $40,000 in St. Louis Blues hockey tickets, $7,000 in other tickets from Live Nation, and travel expenses to St. Thomas.
In 2012, Father received $220,623 in dividends from the business. In 2013, Father received $92,169 in dividends from the family business, he received $65,239 in other distributions from the business, and the business paid $70,000 in expenses charged to Father's American Express credit card. According to James Huber, a certified public accountant who worked for the family business and Father, the dividends paid to Father or on Father's behalf did not represent profits the family business made in 2012 and 2013; instead, the dividends represented business profits from prior to 2002.
The finances of the family business were affected by Father's overspending on matters which were not considered to be ordinary and necessary business expenses. Although Father had taken $100,000 from an irrevocable life insurance trust and put those funds into the family business in order to help keep the business afloat, the business did not operate at a profit from 2012–2013, and the business was behind in payments to its vendors.
The evidence at trial indicated Father's overspending was tied to Father's problem with alcohol abuse, which began when Father was eighteen years old and resulted in Father going into rehabilitation multiple times. Father's problem with alcohol abuse took place during the course of his marriage to Mother and after the dissolution proceedings. In September 2013, Father went into a rehabilitation facility in Florida for alcohol abuse after an intervention based upon Father "[o]verspending, not maintaining [his] sobriety, [and] not fulfilling [his] obligation to [his] sobriety and [ ] treatment plan." After Father went into rehabilitation in September 2013, Mr. Schneithorst hired a restaurant manager at a salary of $60,000 per year, and Father's fiancé, who began working for the business in May 2013, continued to work for the business.
In October 2013, Mr. Schneithorst exercised a warrant and purchased back Father's 85% of the stock in the family business that Mr. Schneithorst had previously sold to Father, and the transaction resulted in Father owning only 15% of stock in the business. Mr. Schneithorst took that action because Father failed to make payments on the note for the $1.35 million loan Mr. Schneithorst had given to Father to buy those shares, and because Father had been drinking heavily and neglecting the business. The business was in a lot of debt when Mr. Schneithorst took over as the majority shareholder, and Mr. Schneithorst testified4 he realized leaving Father in control of the family business was a mistake. Mr. Schneithorst also testified he felt he had to take over control of the family business in order to protect the business and the Schneithorst family name.
After October 2013 and through the time of the March 2014 trial on Mother's motion to modify, Father continued to own 15% of the stock in the family business, but Father had no power over or direct involvement in the family business, and there were no plans for Father to be involved in the operations of the family business in the future. Mr. Schneithorst, who controlled and "ran" the business since October 2013, testified he was not going to make Father a part of the company in the future and had no plans to hire Father as an active employee.
Nevertheless, Father remained an employee of the business for "insurance purposes" only, and the business paid for Father's and the parties' children's medical and dental insurance, with the cost of insurance for the children totaling $675 per month. As of the date of trial, Father's fiancé used a stamp bearing Father's name to write payroll checks for the family business, and Father remained the registered agent for the business.
Between the time of the dissolution judgment and the trial on Mother's motion to modify, Father's parents provided financial assistance to Father by paying: (1) approximately $76,600 for Father's alcohol rehabilitation treatment; (2) approximately $140,000 for Father's attorney's fees; (3) $100,000 to $200,000 for improvements to Father's home; and (4) five $2,500 payments for Father's monthly child support obligation to Mother.
By the time of the trial on Mother's motion to modify, trust funds Father had previously used to pay his mortgage, child support, and maintenance payments had been exhausted. In addition, Father owned 15% of the stock in the family business at the time of the trial, as he did beginning in October 2013. However, this Court can find no evidence in the record indicating Father received or would receive any financial resources as a result of owning 15% of the stock in the family business.
Father did not testify at the trial on Mother's motion to modify because he returned to rehabilitation for alcohol abuse approximately one week prior to trial. However, Father's deposition, which was taken a few weeks before trial, was admitted into evidence.
No testimony was adduced regarding any current employment for Father, and Mr. Schneithorst testified Father was not receiving any income from the family business. However, a vocational expert evaluated Father's employment options and determined Father could earn between $30,187 and $63,270 per year in a variety of jobs.
According to Father's first amended statement of income and expenses, Father had $0 in monthly gross income and Father's total average monthly expenses were approximately $7,992. Father's fiancé testified at trial that she had been making payments on Father's car while he was in rehabilitation and her name was on the loan for the car. Father's fiancé also testified she was going to return the car to the lender and stop...
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