Scott v. Scott

• Citation: 668 N.E.2d 691
• Decision Date: 25 June 1996
• Docket Number: No. 36A05-9506-CV-216,36A05-9506-CV-216
• Parties: Larry SCOTT, Appellant-Respondent v. Sharon SCOTT, Appellee-Petitioner.
• Court: Court of Appeals of Indiana

Page 691

668 N.E.2d 691

Larry SCOTT, Appellant-Respondent v. Sharon SCOTT, Appellee-Petitioner.

No. 36A05-9506-CV-216.

Court of Appeals of Indiana.

June 25, 1996.

Nancy G. Endsley, Indianapolis, for Appellant.

William E. Vance, Vance & Phillips, Seymour, for Appellee.

OPINION

SHARPNACK, Chief Judge.

Larry Scott appeals the trial court's child support award and the distribution of assets in the dissolution proceedings against his wife, Sharon Scott. Larry raises four issues for our review which we restate as the following five issues:

1. whether the doctrine of collateral estoppel prevented the trial court from determining Larry's potential income in accordance with the Indiana Child Support Guidelines;

2. whether the trial court was required to deduct from Larry's support obligation the social security disability benefits which Larry's son received as a result of Larry's disability;

3. whether the trial court provided an adequate basis for its child support award;

4. whether the trial court failed to make a just and reasonable distribution of the marital property; and

5. whether the trial court abused its discretion by awarding attorney's fees to Sharon.

We affirm in part, reverse in part, and remand.

The facts most favorable to the judgment follow. Larry and Sharon married on August 31, 1975. During the marriage, the couple had two children named Ryan and Nathan. Larry owned and operated Scott Sales & Service, a used car lot, since 1973. In 1981, Larry was burned in an accident and suffered third degree burns on more than one third of his body. Larry continued to own the business.

On March 16, 1994, Sharon filed a petition for dissolution of marriage. On February 28, 1995, the trial court entered its findings of fact and conclusions thereon for the dissolution of the marriage, the amount of child support, and the distribution of assets. Larry now appeals.

Standard of Review

When reviewing the trial court's findings of fact and conclusions thereon, we apply a two-tiered standard of review. W & W Equip. Co. v. Mink, 568 N.E.2d 564, 569 (Ind.Ct.App.1991), reh'g denied, trans. denied. First, we consider whether the evidence supports the findings. In determining whether findings are clearly erroneous, we construe the findings liberally in support of the judgment. Citizens Progress Co. v. James O. Held & Co., 438 N.E.2d 1016, 1022 (Ind.Ct.App.1982). The findings are clearly erroneous only when a review of the record leaves us firmly convinced a mistake has been made. Cooper v. Calandro, 581 N.E.2d 443, 444-445 (Ind.Ct.App.1991), reh'g denied, trans. denied.

Next, we determine whether the findings support the judgment. A judgment is clearly erroneous when unsupported by the findings of fact and conclusions thereon. DeHaan v. DeHaan, 572 N.E.2d 1315, 1320 (Ind.Ct.App.1991), reh'g denied, trans. denied. In applying this standard, we neither reweigh the evidence nor judge the credibility of the witnesses. Donavan v. Ivy Knoll Apts. Partnership, 537 N.E.2d 47, 50 (Ind.Ct.App.1989). Rather, we consider the evidence that supports the judgment and the reasonable inferences to be drawn therefrom. Id. Finally, we must affirm the judgment of the trial court unless the evidence points incontrovertibly to an opposite conclusion. Id.

I.

The first challenge raised by Larry is whether the trial court erroneously calculated his potential income, which in turn was used to calculate the child support award. Child support orders are governed by the Indiana Child Support Rules and Guidelines, which are based on our statutory framework. See Child Supp. G. 1, commentary; see also, Ind. Code § 31-1-11.5-11(c). An award of child support is committed to the sound discretion of the trial court and will not be overturned unless clearly erroneous. Carr v. Carr, 600 N.E.2d 943, 945 (Ind.1992). An order is clearly erroneous when it is clearly against the logic and effect of the facts and circumstances before the reviewing court. McGinley-Ellis v. Ellis, 638 N.E.2d 1249, 1252 (Ind.1994).

The first step in establishing a child support award is to determine the weekly gross income of each parent. To do so, we are bound by the guidelines, which provide in part:

"1. Definition of Weekly Gross Income .... For purposes of these Guidelines, 'weekly gross income' is defined as actual weekly gross income of the parent if employed to full capacity, potential income if unemployed or underemployed and imputed income based upon 'in-kind' benefits....

2. Self-Employment, Business Expenses, In-Kind Payments and Related Issues. Weekly Gross Income from self-employment, operation of a business ... is defined as gross receipts minus ordinary and necessary expenses. In general, these types of income and expenses from self-employment or operation of a business should be carefully reviewed in order that the deductions be restricted to reasonable out-of-pocket expenditures necessary for the production of income....

3. Unemployed, Underemployed, and Potential Income. If a parent is voluntarily unemployed or underemployed, child support shall be calculated based on a determination of potential income. A determination of potential income shall be made by determining employment potential and probable earnings level based on the obligor's work history, occupational qualifications, prevailing job opportunities, and earnings level in the community...."

Child Supp. G. 3(A)(1-3).

In 1981, Larry was burned in an accident in which he received third degree burns on approximately 35% of his body. The burns severely limited Larry's use of his left hand and arm, limited his neck movement, and caused extreme sensitivity to heat and cold. In 1982, as a result of the accident, the Social Security Administration ("SSA") determined that Larry was disabled and began to forward social security disability payments to him. Currently, Larry receives $693.00 per month. In addition, Nathan, Larry's youngest son, receives a payment of $178.00 per month as a result of Larry's disability. ¹

Larry testified at the dissolution proceedings that the disability payments were his sole source of income. However, he still owned the business at that time. Notwithstanding Larry's testimony, the trial court found that Larry was capable of earning additional money based on his ownership of the business. The trial court determined that the business could generate a profit providing income to Larry because:

"The Husband has continued to operate Scott Sales & Service, ostensibly at a nominal profit or at a loss, at least back to 1990, the earliest year addressed by the evidence presented. The Court finds that the success or failure of the business depended primarily upon the Husband' efforts, despite assistance contributed by the Wife. He testified that from some point in time not long before the separation of the parties, he has operated the business as an informal partnership with Ryan, the oldest son of the parties, with Ryan selling the vast majority of the automobiles and the Husband paying the bills. The Husband testified that this arrangement is to assist Ryan in paying for his college education. However, Ryan's [sic] resides with his mother and brother without contribution to room and board and his college expenses are, ... paid for essentially by gifts from the paternal grandparents. This seemingly inconsistent testimony is reconcilable only by finding that the Husband has paid the overhead of the business, exclusive of cost of goods sold by Ryan, and that both the Husband and Ryan have traded and sold vehicles at the location, each keeping for himself the net profit from the sale of any vehicle purchased or traded for and subsequently sold by him.

Whether or not the Husband has minimized his own sales since the marital situation worsened, resulting in separation and this dissolution, attributing most of the sales to Ryan as he paid the overhead associated with the business, is a fair question which cannot be expressly resolved by the evidence presented.

* * * * * *

The Husband's contention is that the real estate has little or no net value and that the business is, at best, a break even proposition. However, he is adamant about being awarded the real estate and maintaining the auto sales. The evidence shows that Ryan has been an adept young businessman, accumulating ten unencumbered vehicles of his own, paying his own transportation and other expenses, and accumulating a net worth, exclusive of gifts from his grandparents, of approximately $30,000.00, largely over the last couple of years, all while going to high school and college and working only on evenings and weekends. The Husband's summarized and undocumented records show a reasonable profit in the first quarter of 1994 (even after full payment of the annual insurance premium during the quarter) and a loss for the remainder of the year, during which time he contends that he inexplicably sold vehicles for essentially what he had in them, contrary to logic and the documented results of other periods of operation.

The Court finds that the Husband's evidence is not credible and rejects his contention that the business is unprofitable. Construing the Husband's evidence against him and in the light most favorable to the Wife, it would appear from the Operating Statement for the first quarter of 1994 that the business is capable of generating net profit, prior to taxes, in the order of $400.00 net per week, or approximately $20,000.00 per year. An absolute rock-bottom reasonable assumption would be the equivalent of minimum wage, or $174.00 per week. Allowing for the possibility that the first quarter of 1994 was an exceptionally good quarter, giving consideration to Ryan's sales and financial results at the same site, and choosing to remain within the extremes of calculation, something in the order of $300.00 per week, or an amount roughly equal to the Wife's wages, would be a reasonable conclusion. The Court finds that the...