Hoegen v. Hoegen ( 2016 )

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14-P-1491 Appeals Court
PATRICK J. HOEGEN vs. CHRISTINE M. HOEGEN.
No. 14-P-1491.
Worcester. October 21, 2015. - January 22, 2016.
Present: Green, Hanlon, & Massing, JJ.
Divorce and Separation, Child support, Modification of judgment,
Separation agreement, Findings, Attorney's fees. Parent
and Child, Child support. Waiver.
Complaint for divorce filed in the Worcester Division of
the Probate and Family Court Department on March 17, 2010.
An amended complaint for modification, filed on May 23,
2013, was heard by Joseph Lian, Jr., J.
Warren M. Yanoff for Christine M. Hoegen.
Penelope A. Kathiwala (Barbara A. Cunningham with her) for
Patrick J. Hoegen.
HANLON, J. The defendant, Christine M. Hoegen (mother),
appeals from a modification judgment of the Probate and Family
Court which held that her former husband, Patrick J. Hoegen
(father), was not obligated to include income realized from
2
vested restricted stock units (RSU) in the calculation of child
support for the parties' minor children.1 We reverse.
Background. The parties were divorced by a judgment of
divorce nisi, incorporating by reference a separation agreement,
which survived as an independent contract, except as to matters
relating to the children.2 Under the agreement, the father's
child support obligation was $1,020 biweekly,3 which the parties
agreed was higher than the presumptive amount of support under
the Massachusetts Child Support Guidelines at that time. The
agreement also required that the parties "confer on April 1st of
each year to evaluate whether the child support should be
adjusted."4 Exhibit D to the agreement (captioned
"Pension/Retirement Funds, Etc.") explicitly stated that the
mother "acknowledges that she is aware that the [father] does
participate in a stock plan through his employment; the [mother]
waives all rights, title and interests in these accounts."
1
The parties have two children, one born in 2003 and one in
2004.
2
An attorney prepared the agreement, but the parties filed
pro se their joint petition for divorce pursuant to G. L.
c. 208, § 1A.
3
Every other week.
4
In April, 2010, by agreement, the father's child support
obligation increased to $575 per week, with another increase to
$582 per week in April, 2012. The modification judgment
increased the amount to $608 per week.
3
On February 5, 2013, the father filed a complaint for
modification, seeking to define more fully the shared parenting
schedule, that is, to provide more specificity about weekday,
holiday, and vacation schedules along with related
transportation, and also to incorporate language regarding
relocation of the children outside of Massachusetts; he also
sought to extend the review of his child support obligation from
every year to every three years. The father amended his
complaint on May 23, 2013, requesting not only the original
relief, but also that he be granted the tax exemption for both
children.
On June 27, 2013, the mother filed an answer to the amended
complaint and a counterclaim, seeking, in addition to
adjustments to the parenting schedule and responsibilities, to
recalculate child support to include "all" of the father's
income. On January 13, 2014, the parties resolved by
stipulation the issues relating to the parenting schedule, and
proceeded to trial only on the issues of child support and the
tax exemptions.
On March 25, 2014, the judge ordered the entry of judgment
on the father's modification complaint, incorporating the
parties' stipulation, and increasing the father's child support
obligation to $608 per week, based on base pay and bonuses, but
excluding the RSU income. The judge found that "the mother did
4
not prove that the father's income from [RSU] should be included
in calculating child support as there was no evidence that said
[RSU] income was not derived from the stock plan listed as an
asset on the father's financial statement at the time of the
divorce and in which any interest of the mother in said stock
plan was waived by the mother in the parties' separation
agreement."5 The mother timely appealed.
Discussion. RSU income. First, the mother challenges the
judge's order that the RSU income should not be included in
calculating the father's child support obligation, arguing that
income for child support purposes, as defined in the guidelines,
is "expansive and effectively constitutes income from any and
all sources." The father counters that, as part of the marital
asset division at the time of divorce, he retained sole
ownership of his "stock plan" and, under the provisions of that
agreement, which independently survived the divorce judgment,
the mother waived "all rights, title and interests" in it. He
claims that, because the mother waived her right to this asset,
using the RSU income derived from it for the purpose of
calculating child support essentially would be "double dipping."
5
Because the balance of the divorce judgment remained in
full force and effect, the status quo was maintained as to the
tax exemption issue, with each party claiming one child on his
or her income tax return until the time that only one child is
available to claim; at that point, the parties will alternate
their exemption claims from year to year.
5
"'[C]hild support is controlled by G. L. c. 208, § 28, and
the Massachusetts Child Support Guidelines.' . . . Except as
otherwise stated therein, the guidelines have presumptive
application to actions to modify existing orders." Wasson v.
Wasson, 81 Mass. App. Ct. 574, 576 (2012), quoting from Croak v.
Bergeron, 67 Mass. App. Ct. 750, 754 (2006). "In furtherance of
the public policy that dependent children shall be maintained as
completely as possible from the resources of their parents and
upon a complaint filed after a judgment of divorce, orders of
maintenance and for support of minor children shall be modified
if there is an inconsistency between the amount of the existing
order and the amount that would result from the application of
the child support guidelines.'" Morales v. Morales, 464 Mass.
507, 511 (2013), quoting from G. L. c. 208, § 28, as amended,
effective July 1, 2012. See Massachusetts Child Support
Guidelines § III-A(1) (2013). In addition, as the principles to
the guidelines state, if one parent comes to enjoy a higher
standard of living, a child is entitled to enjoy that higher
standard. It is clear, therefore, that the guidelines must be
applied in determining the amount of a parent's child support
obligation, particularly in a case such as this one, where there
is no contrary agreement between the parties and where the
6
combined income of the parties is below the guidelines maximum
of $250,000.6 See id. at § II-C. See also Wasson, supra at 577.
Section I-A of the guidelines explicitly instructs on the
definition of "income," and how that income should be calculated
when determining a child support order. "[I]ncome is defined as
gross income from whatever source regardless of whether that
income is recognized by the Internal Revenue Code or reported to
the Internal Revenue Service or state Department of Revenue or
other taxing authority"; some twenty-seven sources of income are
then listed. While income derived from stock or RSUs is not
specifically included, the last item on the sample list is a
catch-all phrase stating that "any other form of income or
compensation not specifically itemized" may be included.
Massachusetts Child Support Guidelines I-A(28).
"[A] judge's discretionary decision constitutes an abuse of
discretion where we conclude the judge made 'a clear error of
judgment in weighing' the factors relevant to the decision, such
that the decision falls outside the range of reasonable
alternatives." L.L. v. Commonwealth, 470 Mass. 169, 185 n.27
(2014), quoting from Picciotto v. Continental Cas. Co., 512 F.3d
6
There are many reasons why parties may agree to a child
support amount below that suggested by the guidelines. However,
such an agreement may not constitute a waiver. In any future
modification, the guidelines that would have been applicable in
the absence of an agreement, along with the reasons for any
deviation, must be considered.
7
9, 15 (1st Cir. 2008). We acknowledge that the judge has a
measure of discretion in how to value and how to characterize
stock, bonuses, and contingencies because "a 'one size fits all'
rule is both impractical and potentially unfair." Brower v.
Brower, 61 Mass. App. Ct. 216, 221 (2004). However, as this
court has held, income derived from stock options is considered
"gross annual employment income" for the purpose of calculating
child support orders. Wooters v. Wooters, 74 Mass. App. Ct.
839, 843 (2009). "[C]ommon sense dictates that the income
realized from the exercise of stock options should be treated as
gross employment income: It is commonly defined as part of
one's compensation package, and it is listed on W-2 forms and is
taxable along with the other income." Ibid. If not
characterized as such, "a person could potentially avoid his or
her obligations merely by choosing to be compensated in stock
options instead of by a salary." Ibid. See Champion v.
Champion, 54 Mass. App. Ct. 215, 221 (2002) (rejecting the
proposition that "an improper double benefit exists whenever
income produced by an asset included in a party's equitable
share of the marital estate is considered in determining the
need for or the ability to pay support orders").
In this case, the father received as part of the
compensation package in his offer of employment a certain number
of RSUs. In addition, as indicated by the father's employee pay
8
stubs, he regularly earned income from his employer-issued RSUs.
As a result, contrary to the father's argument, these monies
should have been included as gross income, along with his base
salary and bonus compensation, in calculating his child support
obligation. See ibid. In light of this, the judge's finding
that the mother failed to "prove that the father's income from
[RSUs] should be included in calculating child support" was
error. The error was compounded by the fact that the judge
failed to make written findings as to why he excluded the RSU
income from the child support calculation, apart from noting
that any claim to that income was waived. See Wasson, 81 Mass.
App. Ct. at 579 (judge abused discretion in failing to make
specific written findings in excluding capital gains income).
In addition, it does not appear from the modification
judgment that the judge considered the disparity in the
standards of living between the parties' households, which is
inconsistent with the principles underlying the guidelines. See
Katzman v. Healy, 77 Mass. App. Ct. 589, 599 (2010), quoting
from Brooks v. Piela, 61 Mass. App. Ct. 731, 734 (2004)
("Implicit in the judge's consideration of this disparity [in
income] is consideration of the children's needs, defined in the
light of [the father's] higher standard of living"). We are
satisfied that failure to consider the income derived from the
RSUs in determining an appropriate child support order in this
9
case would result in an inequity. See Croak, 67 Mass. App. Ct.
at 759.
As noted, the father counters that the mother waived all
interest in his RSU income at the time of the agreement. That
waiver, in his view, forecloses any consideration of RSU income
in determining child support. The mother responds that the
waiver was invalid because the father failed to disclose to her
the nature of the stock options. In her view, by listing the
stock options under "Pension/Retirement Funds, Etc.," the
father, at the time of the agreement, concealed that portion of
his income from her. In addition, at the time of the negotiated
child support increase in effect at the time of the modification
judgment, the father had "blocked out his bonus income" and RSU
income on the pay stub that he showed the mother as part of his
obligation to confer regarding child support.
We need not reach the issue whether the mother's waiver was
valid as to her own right to alimony or the division of property
because it is clear that her waiver cannot operate to waive her
children's right to appropriate child support pursuant to the
guidelines. "[I]t is axiomatic under Massachusetts law that
'[p]arents may not bargain away the rights of their children to
support from either one of them.'" Okoli v. Okoli (No. 1), 81
Mass. App. Ct. 371, 377 n.10 (2012), quoting from Knox v.
Remick, 371 Mass. 433, 437 (1976). See White v. Laingor, 434
10
Mass. 64, 66-67 (2001). See also Quinn v. Quinn, 49 Mass. App.
Ct. 144, 146 n.4 (2000) ("General Laws c. 208, § 28, was amended
to provide that after a complaint for divorce '[a] modification
of child support may enter notwithstanding an agreement of the
parents that has independent legal significance' and to require
that support obligations for minor children be consistent with
the child support guidelines promulgated by the Chief Justice
for Administration and Management. St. 1993, c. 460, § 61").
As a result, even if the mother did waive her right to any
interest in the income at issue, that waiver could not operate
to waive her children's right to child support from that income.
For all of these reasons, the judge abused his discretion, and
the modification judgment cannot stand.
Retroactive award. The mother also argues that the judge
abused his discretion in failing to modify retroactively the
increased child support order, and in failing to make written
findings explaining his rationale for not doing so. It has been
established that, during a period in which a complaint for
modification is pending, a party is entitled to retroactive
modification of a child support order "where a judge finds that
the parties' circumstances have materially changed and that such
modification is in the best interests of the children." Whelan
v. Whelan, 74 Mass. App. Ct. 616, 627 (2009). See G. L.
c. 119A, § 13(a); G. L. c. 208, § 28. "A judge is not required
11
to make an order for modification retroactive, but 'absent a
specific finding that retroactivity would be contrary to the
child's best interest, unjust, or inappropriate,' these factors
should be considered." Whelan, supra, quoting from Boulter-
Hedley v. Boulter, 429 Mass. 808, 812 (1999). The judge here
failed to make any such findings.
Although the father contends that a retroactive order is
not warranted because he has been paying more than the
guidelines amount, he fails to account for the fact that the
child support he has been paying has never included the
substantial income realized from his RSUs. It appears from this
record that, when the father's RSU income is included in his
gross weekly income (along with his base salary and bonus
amount), it is not unlikely that the father has been underpaying
significantly. "If the father has been paying less than would
otherwise have been required under the Guidelines, this
'necessarily implies that the child has been receiving
insufficient support during the pendency of the complaint.'"
Ibid., quoting from Boulter-Hedley, supra.
Attorney's fees. Finally, the mother asserts that she is
entitled to an award of her attorney's fees, and the judge
abused his discretion in denying her request without
explanation. We recognize that a judge has discretion in
awarding attorney's fees in appropriate circumstances. In
12
addition, a "judge has discretion to award fees even in the
absence of bad faith or frivolous claims or defenses." Wasson,
81 Mass. App. Ct. at 582. See G. L. c. 208, § 38. In the
present case, it appears that the judge considered the motion
and denied it, but he did not provide any explanation for the
denial. See Coppinger v. Coppinger, 57 Mass. App. Ct. 709, 714
(2003).
Conclusion. The modification judgment of March 25, 2014,
is vacated and the matter is remanded to the Probate and Family
Court for the recalculation of an appropriate child support
order based on the father's gross weekly income including his
base salary, bonus income, and RSU income. The new modification
judgment shall be retroactive to February 5, 2013. On remand,
the judge shall determine, based on affidavits or hearing,
whether to award attorney's fees to the mother and, if so, the
appropriate amount of attorney's fees to be awarded. Until a
new modification judgment enters, the modification judgment of
March 25, 2014, shall remain in full force and effect.
So ordered.