Dallas Divorce Law Blog : Dallas Texas Divorce Lawyer & Attorney : O'Neil Attorneys Law Firm : TX Child Support & Custody Issues

Hat tip to Debra Cassens Weiss for this June 20, 2011 post to the ABA Journal

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From The Nerve blog:

The nation’s top court will hear the appeal of an indigent father who contends his rights were violated because he wasn’t provided an attorney before being jailed for failing to pay child support.

The U.S. Supreme Court announced it accepted the case of Michael D. Turner v. Rebecca Price and the S.C. Department of Social Services. Oral arguments could be heard as early as March, with a ruling by the nine-member court likely by the end of June 2011, based on the court's past practice, Greenville lawyer Derek Enderlin, one of Turner’s appellate attorneys, told The Nerve on Monday.

Having an appeal accepted by the top court is a rare legal feat: Out of about 10,000 petitions the justices receive annually, only about 100 are heard during a term, which started last month.

South Carolina is one of only five states in the nation – along with Georgia, Florida, Maine and Ohio – that don’t guarantee indigent parents who owe child support the right to an attorney in civil contempt hearings that can result in jail time, according to Turner’s U.S. Supreme Court petition. That situation creates modern-day debtors’ prisons, as judges are more likely to jail indigent parents without attorneys for contempt, Turner and his supporters say in court papers.

In Texas child support courts, obligors (the person owing the child support) is generally not entitled to a court appointed lawyer if the potential punishment is "petty" -- less than 6 months total in jail and less than $500 fine total. But, if the obligor could be jailed for more than 6 months total or be ordered to pay an aggregate fine over $500, then the punishment is considered "serious" and invokes the right to an attorney.

This will be an interesting case to watch and evaluate how it will impact child support collection laws and procedures across the country.

Hat Tip to the Family Law Prof Blog for the lead on this story.

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In July, Congress approved the overhaul of financial regulations protecting borrowers against abuses in credit card, mortgage, and other types of lending. However, the new law failed to reform a 2005 bankruptcy law that hurts single mothers and benefits the credit card industry. This law makes it easier for delinquent dads to avoid paying child support and alimony.

Until 2005, bankruptcy wiped out credit card debts while leaving child support and alimony obligations intact. This helped women because their ex-husbands had more funds available to fulfill their support obligations after bankruptcy. Now the credit card debts can't be discharged, so women find themselves competing with Visa and MasterCard for a share of their ex-husband's paychecks. And, women don't have the sophisticated collection departments credit card companies do.

The bankruptcy law provides a means test to determine how much income a debtor has available to pay creditors after they pay their basic living expenses. People who earn more than the median income in their states and can pay their creditors at least $6,000 spread out over 5 years are put in Chapter 13 bankruptcy rather than the traditional Chapter 7 category. Chapter 7 allows full discharge of all debts. On the other hand, Chapter 13 requires debtors to pay a portion of their credit card balances, medical bills, and other debts for 3-5 years.

The result is that divorced women are getting hit two ways by the new law -- by the new hurdles it places in the way of collecting their child support payments and by their own exposure to the provisions that make it harder to completely discharge their debts.

Special hat tip to Scott David Stewart for the lead on this important issue.

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The Dallas Court of Appeals issued an opinion today in a Dallas child support case and held that an inheritance should be included as income for the purposes of calculating child support.  The father received a one-time inheritance of approximately $400,000 and, because he was going through a hard financial time, used that money to live on.  He argued that although his “net worth has increased by virtue of his inheritance,” his income has diminished materially and substantially since the time of the divorce. Tmother contended that his inheritance should be considered part of his income for calculating child support.  Thus, the mother sought an increase in child support based on the inheritance.

Texas Family Code 154.062 defines Resources to include:

1. 100 percent of all wage and salary income and other compensation for personal services (including commissions, overtime pay, tips, and bonuses);
2. interest, dividends, and royalty income;
3. self-employment income;
4. net rental income (defined as rent after deducting operating expenses and mortgage payments, but not including noncash items such as depreciation); and
5. all other income actually being received, including severance pay, retirement benefits, pensions, trust income, annuities, capital gains, social security benefits other than supplemental security income, unemployment benefits, disability and workers' compensation benefits, interest income from notes regardless of the source, gifts and prizes, spousal maintenance, and alimony.

The court of appeals held that the inheritance amounts to "all other income" under number 5 of the statute.

However, one justice of the three judge panel disagreed.  She stated that an inheritance is not considered income in any definition.  In her opinion, the court could consider the inheritance as a factor in calculating child support over the State of Texas guidelines under Texas Family Code section 154.123.

I agree with the dissent here.  An inheritance is not "income" -- a party does not pay income taxes on an inheritance.  This is important because the court must apply the guideline percentages for figuring the amount of child support to the income numbers.  So, an unexpected inheritance could result in a dramatic and improper increase in child support based on the percentage.  However, a court can consider all of the relevant factors, such as an inheritance, in deciding whether applying the guideline percentages to a case are fair and equitable in that particular circumstance.  It seems like the more reasoned and logical approach to consideration of an inheritance would be to consider it an "other factor" rather than applying the guideline percentage to that amount.

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Dallas divorce attorney, Michelle May O’Neil, prevailed in the El Paso Court of Appeals opinion issued on February 24, 2010, in Cause No. 08-07-00228-CV, In the Interest of P.L.H., S.L.H., and C.H.H., Minor Children.  The Court overruled all seven of Appellee’s issues on appeal, upholding the judgment of the trial court, including the entry of death penalty sanctions against Mother, denial of Mother’s request for a continuance,  judgment against Mother for $60,000 in attorney’s fees incurred by Father, and a credit in Father’s favor for over $32,000 for prior overpayments of child support.

The parties were originally divorced in Oklahoma in 2000, via a Final Decree of Divorce that improperly omitted the requisite finding for child support under Oklahoma law. Unaware of this deficiency, Father paid child support from 1999 through 2004 in the amount of $981.46 per month. In 2004, the error was corrected by the Oklahoma Court’s entry of a nunc pro tunc Final Decree of Divorce, ordering Father to pay $481.20 per month, instead of $981.46. In 2005, Father filed a Petition to Modify in Dallas, which by that time had become the county of the children’s residence. Mother filed her own counter petition in the Dallas court as well, seeking to drastically reduce Father’s possession time and to increase child support. Mother then requested the Oklahoma Court to decline jurisdiction in favor of the Dallas court as to all issues regarding child support and custody.

A year after the Oklahoma court declined jurisdiction over all child support and custody issues, Mother went back to Oklahoma and obtained entry of another nunc pro tunc order, this time the changes had the effect of increasing Father’s child support obligation.  At trial, Mother attempted to argue the validity of this second nunc pro tunc order in the Dallas court. But the trial judge found that, since the correction involved a “judicial” rather than “clerical”, and since the Dallas court had already assumed jurisdiction of all issues involving child support and custody at the time the second nunc pro tunc was entered, the Oklahoma court lacked jurisdiction to make such substantive changes. The second nunc pro tunc was, therefore, void. The Court of Appeals affirmed this ruling on appeal.

The jurisdictional issue regarding the second nunc pro tunc was the most complex of the seven issues presented. The other six issues on appeal concerned mainly Mother’s repeated failure to follow the orders of the trial court and the Rules of Civil Procedure.

Here, the appellate court upheld the trial court’s imposition of death penalty sanctions against Mother as the result of her failure to comply with the pretrial scheduling order were proper. Based on Mother’s history of discovery abuse throughout the course of the litigation, and her failure to comply with the trial court’s orders, the El Paso Court of Appeals found the trial court’s decision to exclude Mother’s trial exhibits was not excessive. The Court’s opinion further states, “[t]he record demonstrates that the trial court considered, and imposed, lesser sanctions when earlier discovery abuses arose, without success. Accordingly, the court’s decision to impose a Rule 215.2(b) sanction was not an abuse of discretion.”

The appellate court also upheld the trial court’s denial of Mother’s requested continuance of trial. Mother’s Motion for Continuance was not verified or supported by an affidavit, as required by the Texas Rules of Civil Procedure. Mother acknowledge that although her Motion for Continuance was procedurally defective, the circumstances of her case, specifically that she was representing herself pro se, made a continuance appropriate regardless of procedure. The appellate court disagreed.

Mother also attempted to argue on appeal that the child support credit Father received was a debt previously discharged by Mother in bankruptcy. Not withstanding the substantive argument against this issue, the appellate court found that Mother failed to properly plead, and, therefore, waived, the affirmative defense of discharge in bankruptcy per Texas Rule of Civil Procedure 94. Therefore, the appellate court did not even reach the merits of Mother’s argument on this issue, overruling the issue on Mother’s pure procedural deficiencies.  

Although the facts of this case are somewhat complex, the principles attorneys, as well as their clients, can take away from it are simple. Review orders carefully either before or as soon as you possibly can after entry, especially divorce decrees and child support orders, because you might not have jurisdiction to correct substantive mistakes later on. Be careful what you ask for, like Mother’s request here that the Oklahoma court decline jurisdiction, because you just might get it. Also, play by the rules, the rules of civil procedure and the orders of the court, failing to do so could result in stiff penalties, like the death penalty sanctions entered here. Along those same lines, while legal representation may seem expensive to pro se litigants, the price you pay in the long run if you choose to represent yourself without knowing the rules could be much greater.

Congratulations to Michelle May O'Neil on another successful appeal for her client!

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Today, channel KDTX featured Michelle May O'Neil on the television show Joy In Our Town to discuss challenges in paying and receiving child support in a down economy.  O'Neil gave pointers to obligors (paying support) who have lost their jobs and find it difficult to make the payments, as well as to obligees (receiving support) who need to collect and enforce the payment.

UPDATE:  Unfortunately, the show's airing has been delayed until November 13, 2009 at noon.  But you can see it below!

To watch the video, click here: www.youtube.com/watch

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To Show Intentional Underemployment for Purposes of Calculating Child Support, Must Show Intent, Not Just Reduction of Income

Facts: Trial court found Father’s monthly net resources were $4,779.90 in 2006, and $3,393.40 in 2007. Trial court further found Father obligated to support 2 children, one before the court and another from a previous marriage. Divorce decree shows family code guidelines direct child support payments of $593.77/month based upon Father’s 2007 monthly net resources. Trial court, however, found that “testimony shows that the obligor [Father] was voluntarily underemployed during 2007” and set child support payments at $825/month.

Held: Affirmed final decree of divorce as modified.

Opinion: To begin the voluntary underemployment analysis, trial court contemplates obligor’s proof of cur-rent wages. Once obligor’s wages are established, burden shifts to obligee to demonstrate obligor’s intent to decrease income for purpose of reducing child support payments. Evidence of intent, such as circumstances of obligor’s education, economic adversities, business reversals, business background, and earning potential, gives rise to an inference of voluntary  underemployment. These factors, however, are not exhaustive.

Father’s employer stated that by agreement Father set his own schedule and did not work every day. Employ-er further testified that he assigned Father’s projects, and Father received a 40% commission from the profits.

Employer told trial court that Father earned $62,730 in 2005, $76,900 in 2006, & $54,300 in 2007. When asked about the earnings decline between 2006 and 2007, Employer indicated that he reduced Father’s work-load based on Father’s emotional state and that his business decreased overall because of adverse economic conditions. Employer testified Father did not ask for a reduction of his workload, and that he subsequently asked Employer to increase it. Father told trial court that in 2007 his income decreased more than the income of the business overall because Employer would assign more work in the downturn to those employees with lower commission percentages. There is no evidence to the contrary.

Mother had the burden at trial to present evidence of underemployment as a specific basis for departing from child support guidelines applied to Father’s 2007 income. Such evidence must be of a “substantive and proba-tive character” giving rise to an inference of intentional underemployment. She did not meet this burden. Therefore, final decree of divorce modified in part by substituting $593.77 for $825 as the amount of Father’s monthly CS obligation.

Comment: Given current economic conditions, in our practices we are likely to be on one side or the other of a situation in which the child support obligor loses their job or suffers a decrease in income. Naturally, the obligor is going to want to reduce their child support payments accordingly. It is also likely the obligee is going to be unhappy that there is less money coming in. Although the obligee might be unhappy and might be used to higher child support payments, in this economy, decreased income for many is a reality, and, as this opinion illustrates, does not form the basis for a claim of intentional underemployment. The moral of this case – you have to show some intent to prevail on a claim of intentional underemployment. M.M.O.

In re J.G.L., ___ S.W.3d ___, 2009 WL 2648401 (Tex. App. – Dallas 2009, no pet. h.) (08/28/09).

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On August 28, 2009, the Dallas Court of Appeals issued an opinion relating to intentional underemployment and its impact on determining child support.  Pursuant to Section 154.066 of the Texas Family Code, if an obligor is intentionally unemployed or underemployed in an attempt to reduce child support payments, the court's wage and salary income calculations are not limited to actual earnings, but instead are based on the obligor's earning potential. 

In In the Interest of J.G.L., the Dallas Court of Appeals modified the trial court's ruling finding that husband was intentionally underemployed in an attempt to reduce his child support payments.  In the Interest of J.G.L., No. 05-08-01124-CV -- S.W.3d -- (Tex. App. - Dallas, August 28, 2009).  The court noted that the Texas Family Code requires courts to make specific findings if "[t]he amount of child support ordered by the court varies from the amount computed by applying the percentage guidelines."  Id.  Thus, a finding of voluntary underemployment allows to the court to set child support at the earning potential, rather than the actual earnings, of the obligor.  Id.  Once the obligor's wages are established, the burden shifts to the obligee to show the obligor's intent to decrease income for the purpose of reducing child support payments.  Id.  Evidence of such intent can be established through examination of the obligor's education, economic adversities, business background and earning potential.  Id.  (citing In re P.J.H., 25 S.W.3d 402, 405-06 (Tex. App. - Fort Worth 2000, no pet.).  

At trial, the obligor's employer testified as to father's level of income over the preceding three years.  Specifically, employer testified that father earned $62,730 in 2005, $76,900 in 2006 and $54,300 in 2007.  The employer indicated that father's work load decreased because of his emotional state during the divorce and because the employer faced adverse economic conditions.  Id.

The court then noted that mother had the burden at trial to present evidence of intentional underemployment as a specific basis for departing from child support guidelines applied to father's 2007 income.  Of course, evidence sufficient for this purpose must be of a substantive and probative character.  At trial, however, mother did not provide any testimony or offer evidence in support of her assertion that father was intentionally underemployed.  Id.  As a result, the court held there was no evidence supporting a finding of voluntary underemployment.  Id.

J.G.L. shows how important it is to know your rights when it comes to determining child support amounts.  In light of the current economic downturn, it is understandable that income levels have dropped.  Bottom line: in order to deviate from the child support guidelines, specific evidence must be introduced supporting a claim of intentional under or unemployment.   

As a Dallas divorce lawyer, it is critical to stay up to date on new case and statutory law which affects child support orders.  If you are facing a claim of intentional under or unemployment, remember the other side bears the burden of proof.  Please feel free to contact our offices if you are navigating the child support river and need assistance in doing so.

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Dallas Divorce Lawyer Michelle May O'Neil was quoted in the July 2nd, 2009 edition of Dallas Morning News in Emily Ramshaw's article Child Support Suffers As Economy Suffers.  The story lead Thursday's edition with Ms. O'Neil's picture appearing on page 14A.  

Here's the excerpt from the article pertaining to Ms. O'Neil:

Michelle May O'Neil, a family law attorney with clients in Dallas and Collin counties, said Crouse's case is common. She's seen a steady uptick in child support-paying parents who have either lost their jobs or had their hours reduced.

O'Neil said family court judges, who traditionally have issued permanent rulings, are giving these financially strapped parents temporary relief instead.

If someone is unemployed, she said, a judge generally will temporarily reduce child support, and then call a review hearing a few months later.

"A kiddo's expenses don't go away just because the economy is tight," O'Neil said. "Judges are giving people a Band-Aid so they can find another job."

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