In Re the Marriage of Natalie Rae Hammer and Christopher Michael Holland Upon the Petition of Natalie Rae Hammer, petitioner-appellee/cross-appellant, and Concerning Christopher Michael Holland, respondent-appellant/cross-appellee. ( 2017 )

IN THE COURT OF APPEALS OF IOWA
No. 16-1947
Filed September 13, 2017
IN RE THE MARRIAGE OF NATALIE RAE HAMMER
AND CHRISTOPHER MICHAEL HOLLAND
Upon the Petition of
NATALIE RAE HAMMER,
Petitioner-Appellee/Cross-Appellant,
And Concerning
CHRISTOPHER MICHAEL HOLLAND,
Respondent-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Winnebago County, DeDra L.
Schroeder, Judge.
A father appeals the denial of his petition to modify child support and a
mother appeals the court’s denial of her request for trial attorney fees.
AFFIRMED ON BOTH APPEALS.
Sarah A. Reindl of Reindl Law Firm, Mason City, for appellant/cross-
appellee.
Becky S. Knutson of Davis, Brown, Koehn, Shors & Roberts, P.C., Des
Moines, for appellee/cross-appellant.
Considered by Vogel, P.J., and Potterfield and Mullins, JJ.
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VOGEL, Presiding Judge.
Christopher Holland (Chris) appeals the modification court’s decision to
deny modification of the dissolution of marriage decree between him and Natalie
Hammer. Chris asserts because the initial stipulated decree failed to state how
child support was calculated it cannot serve as the basis in future modifications.
He further asserts the modification court should have found child support anew.
On cross-appeal, Natalie requests we reverse the modification court’s denial of
attorney fees and further seeks appellate attorney fees. Because the
modification court appropriately considered the child support amount as set forth
in the decree, and Chris failed to show a substantial change of circumstances,
we affirm. We also affirm the modification court’s denial of attorney fees for
Natalie, but we award her $5000 fees on appeal.
I. Backgrounds Facts and Proceedings
Chris and Natalie’s marriage in 1999 produced four children, all of whom
are still minors. A stipulation and decree of dissolution of marriage were filed on
April 27, 2015, granting the parties joint legal and physical custody of the
children, with Natalie having somewhat more parenting time than Chris. Chris
was responsible for paying Natalie $2200 each month in child support. The
stipulation provided uncovered medical expenses “shall be paid by the parents in
proportion to their respective net incomes.” Accordingly, Chris was responsible
for the children’s health insurance and eighty-five percent of uncovered medical
expenses, while Natalie was responsible for fifteen percent.
Not directly related to child support, but clearly contemplated by the
parties, was the substantial division of assets. The parties agreed Chris would
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pay Natalie $350,000 for her share of his business, $2500 per month for 120
months in additional property settlement, and $75,000 per year payable as
“salary” for twelve years as a former employee of C.R. Holland. No spousal
support was ordered.
At the time of the dissolution, Natalie was not employed; however, her
imputed income as reflected on her October 28, 2014 affidavit of financial status
was $24,000 annually. Since the decree was filed, she has taught one year at
Waldorf College as an adjunct faculty earning $29,000, as well as worked at the
YMCA, two hours per week at $8.25 per hour. Her financial affidavit filed prior to
the modification hearing listed her annual gross income at $29,124. Chris owned
and worked for numerous businesses including C.R. Holland, Holland Moving
and Rigging Services, Atlas Enterprises, and Grok, L.L.C. Chris submitted a
financial affidavit on October 14, 2014, showing his gross annual income at
$68,775. His affidavit filed prior to the modification hearing listed his gross
monthly income as $12,526.76 or approximately $150,321.12 per year.
In spite of this apparent increase in his income, Chris filed an application
to modify child support on April 8, 2016, less than a year after the entry of the
decree, asserting he had an involuntary reduction of his income. Natalie
resisted. The matter came on for trial in September 2016. While reviewing the
original child support stipulated amount, the court found “many factors went into
the parties’ agreement” as to how the child support figure was determined.
Additionally, as the record was developed, the modification court noted Natalie’s
expert opined Chris’s 2014 to 2015 income changed from a loss of $566,801 to a
gain of $294,000, an increase of $861,000. Finding no support for Chris’s
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assertion his income had significantly decreased, and hence no evidence to
support his claim of a substantial change of circumstances not contemplated by
the decree, the modification court denied Chris’s petition to modify.
Chris appeals, and Natalie cross-appeals.
II. Standard of Review
We review the modification of a dissolution decree de novo. In re
Marriage of Wessels, 542 N.W.2d 486, 490 (Iowa 1995). However, we will not
disturb the trial court’s conclusion unless there has been a failure to do equity. Id.III. Child Support
Chris asserts the modification court should not have used the child
support from the stipulated decree to determine whether modification was
appropriate, as the decree failed to make the requisite findings as to how the
agreed-upon child support deviated from the guidelines. Instead, Chris asserts
the modification court should have applied the child support guidelines as if it
were looking at the dissolution anew. “A stipulation and settlement in a
dissolution proceeding is a contract between the parties; however, it becomes
final only when accepted and approved by the court.” In re Marriage of
Handeland, 564 N.W.2d 445, 446 (Iowa Ct. App. 1997). When a stipulation
merges into a decree, it is then to be interpreted and enforced as a final
judgment of the court, not as a separate contract between the parties. Id.Additionally, if the court varies from the guidelines, it must determine whether the
variance is justified and appropriate, and include reasons for the variance. Id.Here, the modification court stated the parties’ stipulated decree appeared
to vary from the child support guidelines for a variety of possible reasons.
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However, even without detailed findings in the original decree, the stipulation
stated, “[t]hese calculations were based on the Child Support Guideline
Worksheets.” Thus, the modification court merged the stipulated amount of child
support into the dissolution decree, which became the judgment of the court.
Therefore, the modification court was correct in using the amount of child support
set in the stipulated decree as the starting point for determining child support in
future modifications.
A child support amount may be modified if there is a substantial change in
circumstances, as in “changes in the employment, earning capacity, income, or
resources of a party.” Iowa Code § 598.21C(1)(a) (2016). If the court order for
child support varies by ten percent or more from the amount which would be due
pursuant to the most current child support guidelines, a substantial change of
circumstances exists. Id. § 598.21C(2)(a). The court shall not vary from the
amount of child support resulting from application of the guidelines unless a
substantial injustice would result to the payor, payee, or child or to do justice
between the parties under the special circumstances of the case. Iowa Ct. R.
9.11.
Our supreme court has held:
(1) not every change in circumstances is sufficient; (2) it must
appear that the continued enforcement of the decree would, as a
result of the changed circumstances, result in positive wrong or
injustice; (3) the change in circumstances must be permanent or
continuous rather than temporary; and (4) the change in
circumstances must not have been within the contemplation of the
district court when the original decree was entered.
In re Marriage of Maher, 596 N.W.2d 561, 565 (Iowa 1999) (noting further that
“the district court has reasonable discretion in determining whether modification
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is warranted, and we will not disturb that discretion unless there is a failure to do
equity.”).
From evidence presented at the modification hearing, the modification
court found Chris’s income actually increased. While Chris’s accountant
disagreed Chris’s “personal income” increased, he agreed Chris’s businesses
have increased profitability, but testified it would be irresponsible for a sole
shareholder to allocate too much income to personal income. We agree with the
modification court there is no evidence that Chris experienced an involuntary
reduction in income.
On the other side of the ledger, Chris asserts Natalie’s income is
underreported as the property settlement of $75,000 per year he pays to Natalie
should be considered by the court as her income, in addition to the salary she
earns from teaching. Thus, he claims her real income is $104,858.
The modification court determined the parties’ property settlement—
including the $75,000 annual payment—was not contemplated to be considered
as a wage or income for purposes of calculating child support, but rather, it was
clearly set out as part of the structured property settlement. The modification
court found structuring the property settlement payment as the parties did in their
stipulation actually provided Chris with a tax benefit. Thus, the parties created
the property settlement structure after contemplating the larger financial picture
with attendant tax consequences. The record establishes the property
settlement was not contemplated as traditional income for Natalie for purposes of
calculating child support.
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Given the credible evidence that Chris’s income did not decrease, and
Natalie’s income did not significantly increase, the modification court
appropriately decided a substantial change in circumstances did not occur, and
appropriately dismissed Chris’s petition.
IV. Attorney Fees
On cross-appeal, Natalie asserts the modification court should have
awarded her trial attorney fees. The court’s decision on whether or not to award
attorney fees is reviewed for an abuse of discretion. In re Marriage of Sullins,
715 N.W.2d 242, 255 (Iowa 2005). The district court considers the needs of the
party making the request and the ability of the other party to pay. Id. Finding no
abuse of discretion, we affirm the denial of Natalie’s trial attorney fees.
Natalie also requests an award of appellate attorney fees. In re Marriage
of Applegate, 567 N.W.2d 671, 675 (Iowa Ct. App. 1997). An award of appellate
attorney fees is not a matter of right but rests within our discretion. Id. In
determining whether to award appellate attorney fees, we consider the needs of
the party making the request, the ability of the other party to pay, and whether
the party making the request was obligated to defend the decision of the trial
court on appeal. Id. Natalie was not only required to defend the original decree
filed in April 2015, but also required to defend the modification court’s decision on
appeal. After considering these factors, we award Natalie $5000 in appellate
attorney fees.
V. Conclusion
Because we conclude Chris failed to show a substantial change in
circumstances since the original decree, we affirm the modification court’s denial
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of the petition to modify child support. We similarly affirm the district court’s
denial of Natalie’s request for trial attorney fees, but award her $5000 in
appellate attorney fees.
AFFIRMED ON BOTH APPEALS.