Walker v. Grow

• Decision Date: 12 September 2006
• Docket Number: No. 2613, September Term, 2004.,2613, September Term, 2004.
• Citation: 907 A.2d 255,170 Md. App. 255
• Parties: Elinor WALKER v. Ronald GROW.
• Court: Court of Special Appeals of Maryland

907 A.2d 255

170 Md. App. 255

Elinor WALKER v. Ronald GROW.

No. 2613, September Term, 2004.

Court of Special Appeals of Maryland.

September 12, 2006.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Jonathan Isaacs, Rockville, for appellant.

Neal Meiselman (Nogah B. Helfant, Terry M. Shuch, on brief), Rockville, for appellee.

Panel EYLER, JAMES R., KENNEY, and KRAUSER, JJ.

ON MOTION FOR RECONSIDERATION

KENNEY, J.

Appellant, Elinor Walker, appeals the modification of the child support obligation of appellee, Ronald Grow, and the denial of attorney's fees by the Circuit Court for Montgomery County. She presents four questions, which we have reordered as follows:

1. Was the trial court's decision to disregard aspects of appellee[']s income for the purposes of calculating child support, including funds distributed to appellee through his corporation, error and an abuse of discretion?

2. Did the trial court err or abuse its discretion in failing to include work-related child care expenses and extraordinary monthly medical expenses when modifying child support in this matter?

[3.] Was it [an] abuse of discretion to order child support at an amount insufficient to provide the minor children with the material advantages enjoyed by appellee?

[4.] Did the trial court err in failing to grant appellant's request for attorney fees?

For the following reasons, we shall vacate the circuit court's judgment.¹

FACTUAL AND PROCEDURAL HISTORY

The parties, who have never been married, have two minor children together— fifteen year old Noah and twelve year old Hope. They have engaged in several child support disputes over the years, the last of which resulted in a consent order dated November 14, 1995. According to the order, the parties agreed to child support payments by Grow in "the sum of $925 per month, plus 75% of the cost of the minor children's day care."

On May 7, 2004, Walker moved for a modification of child support, alleging that the children's expenses had increased, and that Grow's income had increased. Walker requested that the court "recalculate child support on the basis of an `above Guidelines' analysis of the joint income of the parties, the minor children's expenses and other related factors." Additionally, Walker requested attorney's fees. The court held a hearing on December 7-8, 2004.

Grow is the chief operating officer of Aliron International, Inc. ("Aliron"), and a shareholder in the company. According to Grow's 2003 federal income tax return, his adjusted gross income was $272,835. In his financial statement to the court, Grow listed his gross monthly wages at $12,499.06 ($149,988.72 per year). At trial, he was examined and cross-examined extensively on his expenditures, investments, and the perquisites of his employment. Grow testified that he has vacationed abroad in the last five years, pays a housekeeper, has had cosmetic surgery, makes $5,000 monthly payments on "a piece of artwork," has a gym membership, and drives a Mercedes Benz. He has provided financial assistance to his mother in dealing with her ownership of real property, and was paid a fee for management of his mother's property. He owns various mutual funds, stocks, and real property in Maryland, Florida, and Costa Rica, including a 30 percent ownership interest in Aliron's office building. His company provides his health insurance, pays for his cellular phone, and pays his expenses for overseas business trips.

Gabrielle Kaufman, the accountant for Aliron and Grow, testified that Aliron is a Subchapter S corporation. Grow is the minority shareholder, owning thirty percent, and Cora Alisuag, the president and chief executive officer, is the majority shareholder, owning the remaining seventy percent. Alisuag has the "ultimate authority" as to all business decisions, including "total discretion" with regard to distributions. Kaufman described Aliron's financial structure, and testified to Grow's income from the business.

Walker testified that she is employed as an attorney for the County in the "Pro Se Project." On her financial statement, she listed her gross monthly wages as $4,162. She testified to various expenses associated with her home, and the costs of raising the children.

The court found Walker's monthly actual income to be $4,165, and Grow's to be $12,442, for a combined adjusted actual income of $16,607. That amount exceeds the highest figure in the statutory schedule of basic child support obligations. In such a case, the court has discretion in setting the amount of child support. The court reasoned: "After listening to all the testimony and arguments of counsel I view this as, really, a guidelines case. . . . I think this case, actually, in my view, proves the wisdom of using the guidelines in most circumstances." Extrapolating from the statutory schedule, the court determined that Grow's support obligation would be $1,609 per month, and denied Walker's request for counsel fees. The court issued an order to that effect on December 21, 2004, which was entered on the docket on December 28, 2004. On January 7, 2004, Walker moved to vacate or, alternatively, to alter, amend, or revise the order. On January 25, 2005, she noted this timely appeal. The circuit court denied Walker's motion on February 14, 2005.

DISCUSSION

"The parents of a child are his natural guardians and, quite apart from the moral obligations of parenthood, owe the child a legal, statutory obligation of support." Lacy v. Arvin, 140 Md.App. 412, 422, 780 A.2d 1180 (2001). "A parent owes this obligation . . . to the child regardless of whether the child was the product of a marriage." Id. "The court may modify a child support award subsequent to the filing of a motion for modification and upon a showing of a material change of circumstance." Md.Code (1984, 2004 Repl.Vol.), § 12-104(a) of the Family Law Article ("Fam.Law").

If the combined adjusted actual income of the parents is $10,000 per month or less, the court must calculate the proper amount of child support using the statutory child support guidelines. Fam. Law § 12-202; Johnson v. Johnson, 152 Md.App. 609, 614, 833 A.2d 46 (2003). When the combined adjusted actual monthly income is over $10,000, "the court may use its discretion in setting the amount of child support." Fam. Law § 12-204(d). See also Johnson, 152 Md. App. at 614, 833 A.2d 46. "Several factors are relevant in setting child support in an above Guidelines case. They include the parties' financial circumstances, the `reasonable expenses of the child,' and the parties' `station in life, their age and physical condition, and expenses in educating the child[ ].'" Freeman, 149 Md.App. at 20, 814 A.2d 65 (quoting Voishan v. Palma, 327 Md. 318, 329, 332, 609 A.2d 319 (1992)). "Nevertheless, in above Guidelines cases, calling for the exercise of discretion, the rationale of the Guidelines still applies." Malin v. Mininberg, 153 Md. App. 358, 410-11, 837 A.2d 178 (2003). Here, the court calculated the amount of child support by extending the scheduled support to a combined actual income of $16,607 per month.

"Child support orders ordinarily are within the sound discretion of the trial court." Shenk v. Shenk, 159 Md.App. 548, 554, 860 A.2d 408 (2004). Likewise, "the question of whether to modify an award of child support `is left to the sound discretion of the trial court, so long as the discretion was not arbitrarily used or based on incorrect legal principles.'" Tucker v. Tucker, 156 Md.App. 484, 492, 847 A.2d 486 (2004) (quoting Smith v. Freeman, 149 Md.App. 1, 21, 814 A.2d 65 (2002)).

"[W]here the order involves an interpretation and application of Maryland statutory and case law, our Court must determine whether the lower court's conclusions are `legally correct' under a de novo standard of review." Child Support Enforcement Admin. v. Shehan, 148 Md. App. 550, 556, 813 A.2d 334 (2002).

I. Grow's Actual Income

Walker argues first that the circuit court erred in computing Grow's actual income by failing to include in the computation "pass-through" corporate income appearing on Grow's income tax return. She also argues that the court erred in failing to include other income in its calculation.

"When the chancellor exercises discretion with respect to child support in an above Guidelines case, he or she `must balance the best interests and needs of the child with the parents' financial ability to meet those needs.'" Freeman, 149 Md. App. at 20, 814 A.2d 65 (quoting Unkle v. Unkle, 305 Md. 587, 597, 505 A.2d 849 (1986)). "[T]he parties' financial circumstances" is among the relevant factors the trial court must consider. Freeman, 149 Md.App. at 20, 814 A.2d 65. Indeed, "`the central factual issue is the "actual adjusted income" of each party.'" Johnson, 152 Md. App. at 615, 833 A.2d 46 (quoting Reuter v. Reuter, 102 Md.App. 212, 221, 649 A.2d 24 (1994)). Accordingly, even in a case in which the statutory schedule of basic child support obligations does not apply, the trial court must ascertain each parent's "actual income." Fam. Law § 12-204(d) (providing for the court's use of "discretion in setting the amount of child support" when the "combined adjusted actual income exceeds the highest level specified in the schedule"); Johnson, 152 Md.App. at 615-22, 833 A.2d 46 (using the statutory definition of "actual income" to determine that a "bonus" received by the obligor should be included in the calculation, which caused the combined income to exceed $10,000).

"`Actual income' means income from any source." Fam. Law § 12-201(b)(1). "For income from self-employment, rent, royalties, proprietorship of a business, or joint ownership of a partnership or closely held corporation, `actual income' means gross receipts minus ordinary and necessary expenses required to produce income." Fam. Law § 12-201(b)(2). According to the statute:

(3) "Actual income" includes:

(i) salaries;

(ii) wages;

(iii) commi...