Hill v. Hill ( 2018 )

IN THE COURT OF APPEALS OF NORTH CAROLINA
No. COA17-576
Filed: 2 October 2018
New Hanover County, No. 10 CVD 4903
LISA SMITH HILL, Plaintiff,
v.
GLENN ANTHONY HILL, Defendant.
Appeal by defendant from order entered 12 May 2016 by Judge Melinda H.
Crouch in District Court, New Hanover County. Heard in the Court of Appeals 11
January 2018.
Block, Crouch, Keeter, Behm & Sayed, LLP, by Christopher K. Behm and Linda
B. Sayed, for plaintiff-appellee.
Jonathan McGirt, and Sandlin Family Law Group, by Deborah Sandlin, for
defendant-appellant.
STROUD, Judge.
Defendant Glenn Anthony Hill (“Husband”) appeals from the trial court’s order
modifying alimony and child support. Husband argues that the trial court erred by
imputing income to him during his period of unemployment after an involuntary
termination, based on bad faith, despite its findings he was diligently seeking a job
with earnings similar to his prior jobs. Husband also argues that the trial court erred
by holding him in contempt of court for failure to pay his support obligations during
a portion of the four years prior to the hearing, since plaintiff Lisa Smith Hill’s
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Opinion of the Court
(“Wife”)’s contempt motion did not give him notice of her claim on the entire time
period, and because the trial court’s order held him in contempt for violating orders
which were not actually in force at the time of the contempt, given the trial court’s
simultaneous modification of the order effective back to the dates of filing of the
motion to modify. In addition, he argues the trial court erred in its award of attorney
fees of a lump sum, without differentiation between the amounts awarded for each of
the three claims -- modification of child support, alimony, and contempt -- and
without the required findings of fact required for every claim. For the reasons
explained below, we affirm in part and reverse and remand in part the trial court’s
order on alimony and child support; conclude the trial court did not err in finding
Husband in civil contempt for failure to pay based upon his arguments that the order
was not still “in force” and that he did not have proper notice, but reverse and remand
for any revisions needed to the purge conditions based upon arrearages owed; and
reverse and remand the trial court’s order on attorney fees.
Background
The parties were married in 1992 and have three children. They separated in
October 2010 and were divorced in July 2012. On 15 March 2011, they entered into
a consent order regarding child custody, child support, and post-separation support;
Husband was required to pay child support of $3,500.00 per month and
postseparation support of $4,500.00 per month and to maintain medical insurance on
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Wife and their children. When the consent order was entered, Wife was unemployed
and Husband was working in China. The order did not make detailed findings
regarding the parties’ expenses or Husband’s income, but Husband was employed
with Company in China and earned $543,000.00 in 2011.
The order which is the subject of this appeal addresses Husband’s motions to
modify the alimony and child support obligations set by the consent order entered in
20111 and other pending motions. On 15 January 2012, Husband was involuntarily
terminated from Company. On 7 February 2012, Husband filed a motion to modify
his child support obligation based upon his job loss. On 18 June 2012, he moved to
modify his postseparation support obligation. On 30 July 2012, the trial court held a
hearing on Husband’s motion to modify child support and Wife’s alimony claim. Both
Husband and Wife were unemployed at the time of this hearing.
On 31 August 2012, Wife began working with the New Hanover County
Schools as a speech pathologist. On 12 September 2012, the trial court entered an
order on alimony. Although Husband was unemployed, the trial court set permanent
alimony at $4,500.00 per month -- the same as when he was earning over $500,000.00
annually -- based upon his estate of $627,618.00. The order found that both parties
would have to deplete their estates since neither was employed. Also, on 12
1 In some portions of this opinion, we will refer to both the alimony obligation and the child
support obligation together as Husband’s “support obligation” since the findings of fact generally apply
to both obligations. We will differentiate between the two obligations in portions of the opinion where
only one obligation is addressed.
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Opinion of the Court
September 2012, the trial court entered an order denying modification of child
custody and child support, finding no substantial change in circumstances to justify
modification. On 19 September 2012, Husband filed another motion to modify both
permanent alimony and child support, based in part upon Wife’s having gotten a job
between the time of the hearing on modification of child support and setting alimony
and entry of the orders based upon that hearing. On 25 September 2012, Husband
filed a Rule 59 motion alleging that the trial court erred by failing to include any
findings regarding his involuntary reduction in income.
In May 2013, Husband filed a lawsuit in federal court against Company
asserting claims arising out of his termination. On 31 July 2013, the trial court heard
Husband’s Rule 59 motion, and on 30 August 2013, the court entered an order that
set aside the 12 September 2012 order denying modification of child support and
ordered a new trial on child support. Husband’s motion to modify child support filed
on 7 February 2012 remained unresolved. On 6 December 2013, Company’s motion
to dismiss Husband’s federal lawsuit was granted in part; subsequently, on 17
December 2013, Husband signed a settlement agreement with Company.
Nearly three years later, on 5 April 2016, the trial court heard all of the
pending motions: both of Husband’s motions for modification of his support
obligations (the motion for modification of child support filed on 7 February 2012 and
motion to modify alimony and child support filed 19 September 2012); Wife’s response
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Opinion of the Court
to Husband’s motion to modify permanent alimony and motion to modify child
support, including a motion to deviate from the child support guidelines; and Wife’s
motion for contempt for failure to pay child support and alimony filed on 31 July 2013.
The trial court entered its order addressing the motions on 12 May 2016, and
Husband timely filed notice of appeal to this Court.
Analysis
As noted above, Husband raises three issues on appeal. We address each in
turn.
I. Modification of Alimony and Child Support
Husband argues that the “trial court erred as a matter of law and abused its
discretion in setting awards of alimony and child support based upon imputation of
income and the trial court’s deliberate depletion of defendant’s estate.” (Original in
all caps). This argument has four sections: (a) inadequacy of the findings of fact to
support imputation of income; (b) failure to consider Husband’s actual income during
several periods of time and retrospectively basing his obligations upon his current
income; (c) improperly finding Husband’s ability to pay his obligations based upon
depletion of his estate; and (d) a mathematical error in the calculation of alimony
arrearages.
Most issues in this appeal are based upon the determination of Husband’s
income and ability to pay child support and alimony when he was unemployed.
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Opinion of the Court
Because his initial motion to modify was filed in February 2012, and the motions were
not heard until over four years later, on 5 April 2016, the trial court’s order addressed
the parties’ incomes and expenses during several distinct time periods. From
February 2012 until 31 August 2012, both parties were unemployed. From 31 August
2012 until 29 June 2015, Wife was employed and Husband was not. On 29 June 2015,
Husband began his new job with Ebara in Nevada, with an income of $275,000.00
plus an annual performance incentive and various benefits. Based upon the date of
the motions filed, the trial court considered the motion to modify child support from
March 2012 to the date of hearing, and the motion to modify alimony from October
2012 to the date of hearing. Although we understand that our trial courts are
overburdened and delays in hearings are sometimes inevitable, most of the issues
and legal and mathematical complications in this case would have probably been
avoided if Husband’s motions to modify his support obligations had not been delayed
for approximately four years after filing.
A. Inadequacy of the findings of fact to support imputation of income
The current dispute began after Husband was involuntarily terminated from
his job in China on 15 January 2012. He was then unemployed and engaged in a job
search until 29 June 2015. Since his only regular income was from his employment,
he had no income during this time. The trial court found that Husband had no income
from March 2012 until December 2013. In 2014, Husband received $351,937.52 gross
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funds from the settlement of his lawsuit against Company, and in one analysis of
Husband’s income, the trial court averaged this amount over the months of 2014,
finding Husband’s income as $29,238.00 per month. From January to June 2015, the
trial court found Husband again had no income. As of July 2015, when Husband
began working for Ebara, until December 2015, the trial court used Husband’s actual
income, which averaged to $27,250.00 per month. The trial court also did an
alternative analysis of Husband’s income, averaging Husband’s total income received
from 1 March 2012 until 31 December 2014, or 34 months; the total W-2 income was
$456,701.00, for an average monthly gross income of $13,432.00.
Although Husband had no income during most of the four year period, the trial
court’s order did not reduce his child support obligation for that time period, but set
child support at $3,500.00 per month from March 2012 to 1 June 2015 and increased
it to $4,200.00 per month, plus 15% of any annual bonuses received as of 1 July 2015.
Husband’s alimony obligation was reduced from $4,500.00 per month to $3,500.00
per month, back to 1 October 2012, to be paid for ten years. The trial court also held
Husband in willful contempt for his failure to pay child support and alimony from
June 2013 through March 2016.
Husband argues that the trial court erred by failing to set his support
obligations based upon his actual income from March 2012 until July 2015, because
the findings do not support imputation of income. Wife argues that the trial court
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made sufficient findings to support imputation of income to Husband, and in the
alternative, that the trial court actually did not impute income to Husband but
instead considered his “income from all available sources” or averaged his “income
over four years” and determined that depletion of his estate to pay his obligations
would be proper.
Normally, both alimony and child support are set based upon the parties’
actual incomes at the time of the order. See generally Frey v. Best, 189 N.C. App. 622,
627, 631, 659 S.E.2d 60, 66, 68 (2008).
Regarding alimony, this Court has explained that
Alimony is ordinarily determined by a party’s actual
income, from all sources, at the time of the order. To base
an alimony obligation on earning capacity rather than
actual income, the trial court must first find that the party
has depressed [his or] her income in bad faith. In the
context of alimony, bad faith means that the spouse is not
living up to income potential in order to avoid or frustrate
the support obligation. . . . The trial court might also find
bad faith, or the intent to avoid reasonable support
obligations, from evidence that a spouse has refused to seek
or to accept gainful employment; willfully refused to secure
or take a job; deliberately not applied himself or herself to
a business or employment; or intentionally depressed
income to an artificial low.
Works v. Works, 217 N.C. App. 345, 347, 719 S.E.2d 218, 219 (2011) (citations and
quotation marks omitted).
On child support, both case law and the Child Support Guidelines address
when income may be imputed:
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The North Carolina Child Support Guidelines state:
If either parent is voluntarily unemployed or
underemployed to the extent that the parent cannot
provide a minimum level of support for himself or herself
and his or her children when he or she is physically and
mentally capable of doing so, and the court finds that the
parent’s voluntary unemployment or underemployment is
the result of a parent’s bad faith or deliberate suppression
of income to avoid or minimize his or her child support
obligation, child support may be calculated based on the
parent’s potential, rather than actual, income.
The primary issue is whether a party is motivated by a
desire to avoid his reasonable support obligations. To
apply the earnings capacity rule, the trial court must have
sufficient evidence of the proscribed intent. The earnings
capacity rule can be applied if the evidence presented
shows that a party has disregarded its parental obligations
by:
(1) failing to exercise his reasonable capacity to earn, (2)
deliberately avoiding his family’s financial responsibilities,
(3) acting in deliberate disregard for his support
obligations, (4) refusing to seek or to accept gainful
employment, (5) willfully refusing to secure or take a job,
(6) deliberately not applying himself to his business, (7)
intentionally depressing his income to an artificial low, or
(8) intentionally leaving his employment to go into another
business.
The situations enumerated are specific types of bad faith
that justify the trial court’s use of imputed income or the
earnings capacity rule.
Lueallen v. Lueallen, __ N.C. App. __, __, 790 S.E.2d 690, 703-04 (2016) (citation,
quotation marks, and ellipses omitted).
Moreover,
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It is well established that child support obligations are
ordinarily determined by a party’s actual income at the
time the order is made or modified. . . .
It is clear, however, that before the earnings
capacity rule is imposed, it must be shown that the party’s
actions which reduced his income were not taken in good
faith. Thus, where the trial court finds that the decrease
in a party’s income is substantial and involuntary, without
a showing of deliberate depression of income or other bad
faith, the trial court is without power to impute income,
and must determine the party’s child support obligation
based on the party’s actual income.
Ellis v. Ellis, 126 N.C. App. 362, 364-65, 485 S.E.2d 82, 83 (1997) (citations, quotation
marks, and brackets omitted).
Husband contends that the trial court erred by imputing income to him during
various time periods covered by the order and requiring him to deplete his estate to
pay alimony and child support as ordered during times when he was unemployed. He
argues that the evidence and findings of fact do not show he acted in bad faith in his
job search after his involuntary termination in January 2012. Husband also contends
that the trial court had in prior orders “repeatedly endorsed [Husband’s] efforts to
seek a favorable recovery or settlement from his dispute with Company, and had also
indicated in effect that [Husband’s] pursuit of suitable executive-level re-employment
would best meet the needs of the parties.” He argues that in the order on appeal, “the
trial court made an abrupt about-face, somersaulting over its previous approval of
[Husband’s] actions, and now harshly and unreasonably began blaming [Husband]
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for his ‘bad faith’ in ‘purposely suppress[ing]’ his income during his period of
involuntary unemployment, as evidence of his ‘willful disdain’ for his support
obligations.”
Perhaps seeking to minimize the apparent inconsistency in the trial court’s
treatment of Husband’s unemployment over the course of the case since 2012, Wife
responds by arguing that the trial court did not impute income based upon Husband’s
deliberate suppression of his income but instead imputed income based upon findings
that Husband was “indulging himself in excessive spending because of a disregard of
his marital obligation to provide reasonable support for his wife and children.” In his
reply brief, Husband addresses Wife’s argument and notes that the trial court’s
findings do not establish that Husband had engaged in “excessive spending” but he
had engaged in only “perfectly ordinary human behavior” such as getting married,
buying a car, and buying a house.
Although the trial court was not entirely clear on its reasons for imputing
income -- or even if it actually imputed income -- Wife is correct that the trial court
made findings which may support imputation of income based upon its determination
that Husband had acted in deliberate disregard for his support obligations as of June
2013, when he unilaterally reduced his support payments to $300.00, in conjunction
with his increases in spending which coincided with his new relationship with his
girlfriend, now wife, although he was still unemployed. But if the trial court imputed
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income for this reason, the reason for imputation in 2012 remains in question.
Although Husband was paying his support obligations then, there were pending
motions to modify and Husband requested modification effective as of the date of his
motion.
The order on appeal is 38 pages long and has 136 paragraphs of findings of
fact, plus the 21 attached child support worksheets for calculations for various time
periods over the course of the case. Most of the findings are not challenged as
unsupported by the evidence. Despite the extensive detail in the order, we have had
difficulty reviewing the calculation of alimony and the modification of child support
because the order does not include findings of Husband’s expenses for any time period
covered by the order, although there are findings as to Wife’s and the children’s
expenses. In addition, as noted above, it is not clear if the trial court did actually
impute income to Husband and if so, the basis for imputation during the various time
periods.
Husband challenges Findings 52, 53, and 61 and these findings of fact are
important in the trial court’s determination that Husband was willfully suppressing
his income or acting in bad faith. Wife acknowledges that the date of settlement in
the findings is incorrect, but argues these findings are unnecessary to support the
trial court’s order:
52. On December 6, 2012, the federal judge in Richmond,
Virginia, granted [Company’s] motion to dismiss part of his
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lawsuit, including his request for punitive damages,
attorney’s fees and specific performance.
53. Even after this devastating evisceration of his federal
court action, Defendant Glenn Anthony Hill did not settle
the [Company] lawsuit for another year.
54. After [Company] terminated Defendant Glenn Anthony
Hill from employment in January 2012, Defendant Glenn
Anthony Hill sent out hundreds of resumes, networked
with others in his industry, and worked with headhunters
to search for executive or engineering jobs for which he is
suited. He had job interviews in London, Malaysia, several
in China and a few places in the United States.
....
61. Defendant Glenn Anthony Hill’s refusal to look for any
work outside of executive or engineering positions for such
an extended period of unemployment, his refusal to settle
the [Company] lawsuit for a year after the adverse outcome
in federal court, and his stubborn refusal to use his
substantial estate to pay reasonable support shows a naïve
indifference to fulfill support obligations and demonstrates
a bad faith avoidance of his support obligations.
(Emphasis added).
Finding No. 52 incorrectly states the date of settlement of the lawsuit as 17
December 2012, but it was actually 17 December 2013. Thus, Husband settled the
lawsuit with Company only eleven days after the “devastating evisceration of his
federal court action” against Company, not over a year later. This is not a mere
typographical error, as demonstrated by the trial court’s Findings Nos. 53 and 61,
which stress that his “refusal to settle” for a year after the adverse outcome shows
his bad faith and “naïve indifference” to his support obligations. Settling only eleven
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days later would not show bad faith or “naïve indifference,” at least not based upon
an unreasonably prolonged pursuit of the lawsuit against Company. In contrast,
Finding No. 54, above, indicates that Husband was working hard to find a new job:
he “sent out hundreds of resumes, networked with others in his industry, and worked
with headhunters to search for executive or engineering jobs for which he is suited”
and “had job interviews in London, Malaysia, several in China and a few places in
the United States.” These findings and some others addressing Husband’s efforts to
find a new job seem inconsistent with the trial court’s finding that Husband acted in
bad faith. For example, the finding that Husband was diligently seeking a new
“executive or engineering job for which he [was] suited” – apparently the entire time,
since the finding does not indicate he ever stopped seeking a new job -- seems to
conflict with Finding No. 82:
82. Despite submitting many applications for employment
and his other efforts to secure a job in his field, considering
his educational background and experience, his overall
good health and age of 50 years, remaining unemployed
continuously for 39 [sic, i.e., 42] months in a national
economy on the upswing simply cannot be rationalized as
a reasonable period of involuntary unemployment.
That fact that Husband’s job search took a long time does not mean it was in bad
faith. Husband argues no evidence was presented to the trial court regarding the
“national economy” from 2012 through 2016, and in particular, no evidence regarding
the state of the industry or job market in which Husband was seeking employment.
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Our record does not even clearly identify the industry in which he was seeking a job
because of the confidentiality agreement regarding Company, and the transcript also
includes little information on his job.
At the beginning of the trial, the parties addressed issues which may arise
during trial regarding the confidentiality agreement and sealed records regarding
Company and then made the following stipulation regarding Husband’s job search:
And we can also put on the record a further stipulation that
the plaintiff acknowledges that Mr. Hill applied for in
excess of probably 100 jobs for executive type positions for
various companies across the United States and across the
world seeking employment from--after his termination in
January of 2012 until he got a job in July--or June of 2015.2
Wife does not direct us to any evidence regarding the national economy, the job
market, or the state of the industry in which Husband sought employment. Wife’s
response to Husband’s argument is simply that “[Husband] purportedly futilely
searched for an executive job for a period of nearly 3½ years.” But Husband’s search
was not a “purported” search; it was a real search, at least according to Wife’s
stipulation and the trial court’s Finding No. 54. Nor was his search “futile,” although
it may have been prolonged, since he did eventually find the executive-level job he
was seeking. There is also no evidence that Husband was offered jobs but turned
them down.
2The only information we can find regarding Husband’s area of expertise is his testimony that
he had worked in “power generation” and in “import-export” and his background was in engineering.
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This case is quite different from Lueallen, where this Court addressed
imputation of income based upon the trial court’s determination that the mother’s
continued unemployment for three years after she had voluntarily quit her job as a
teacher. See generally Lueallen v. Lueallen, __ N.C. App. __, 790 S.E.2d 690. In
Lueallen, the mother argued that she had been persistently seeking a new job, but
the trial court found she had actually failed to apply for jobs in Mecklenburg County,
despite her allegation she was “currently actively seeking” jobs there in her verified
motion to modify child support. Id. at __, 790 S.E.2d at 704. There was also
“extensive testimony at trial regarding Mother’s educational and professional
qualifications and her work history.” Id. at __, 790 S.E.2d at 704. Based upon her
quitting her prior job without having another job lined up, her failure to seek a new
job for three years, and her job qualifications and experience, this Court affirmed the
imputation of income. Id. at __, 790 S.E.2d at 704-05.
An unsuccessful or prolonged job search after an involuntary job loss is not
necessarily evidence of a bad faith suppression of income. For example, in Ludlam
v. Miller, 225 N.C. App. 350, 739 S.E.2d 555 (2013), both the husband and wife lost
their jobs and had been unsuccessful in finding new jobs but the trial court imputed
income to both husband and wife to set child support. This Court reversed the trial
court’s order and noted that
[t]he trial court found that both Plaintiff and Defendant
had searched for employment, but both had been
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unsuccessful. Less clear from the order is whether the trial
court found that Plaintiff and Defendant had acted in bad
faith. Our general impression is that the trial court found
no bad faith. However, a literal reading of this finding of
fact suggests that the trial court found bad faith which was
insufficient to impute income at a prior income level, but
that it found bad faith that was sufficient to impute income
at the minimum wage. Neither of the above
interpretations of the trial court’s order would support
imputation of income at minimum wage.
Id. at 358, 739 S.E.2d at 560.
Based upon the prior orders for alimony and regarding discovery, Husband
argues the trial court had recognized the need for Husband to pursue his job search
for an “executive or engineering job” for which he was suited and to seek recovery for
his termination from Company, but in its order, reversed course and found he should
have settled his lawsuit with Company sooner and taken a lesser job instead of
continuing to seek a job similar to his prior employment. For example, in the original
2012 alimony order, the trial court found
10. Defendant was terminated from his employment in
2012 and has been offered a severance package that
includes compensation of $255,000, vacation pay of $12,500
and a bonus ranging from $66,000 to $89,000. Defendant
has not accepted this severance package as he believes that
he may be entitled to more money and/or reinstatement of
his position. Defendant is reasonably exercising his earning
capacity and capabilities at the present time.
(Emphasis added).
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Despite the trial court’s finding in September 2012 that “Defendant is
reasonably exercising his earning capacity and capabilities at the present time,” in the
order on appeal, the trial court found that “Defendant Glenn Anthony Hill’s naive
indifference to earn any income from January 2012 to July 2015 is not justified.”
(Emphasis added). These findings are contradictory, at least for 2012. The trial court
could perhaps find that Husband was reasonably exercising his earning capacity in
2012, even though he was unemployed and seeking a new job, but at some point
between 2012 and 2015, his delay in finding a new job became unreasonable. We
cannot determine from the order the point when this change occurred. And this date,
if it exists, would be important, because it may be a pivotal date for purposes of
looking back to impute income to Husband based upon bad faith in his job search and
for modifying his support obligations.
Although the trial court was sympathetic to Husband’s job search in 2012, it
appears from the 2016 order that the trial court changed its view of Husband’s
continued unemployment. The prior order was entered in 2012, but Husband’s
unemployment continued until June of 2015. And based on other findings of fact, as
Wife contends, the trial court might have based its imputation of income on
Husband’s excessive spending “in deliberate disregard for his support obligations”
even while he was still unemployed and at the same time, unilaterally reducing his
monthly payments to Wife from $8,000.00 to $300.00 -- although as noted above, this
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still cannot explain the trial court’s failure to modify the support obligations prior to
June 2013.
The trial court detailed the unexplained decreases in Husband’s bank account
balances along with the drastic changes in Husband’s lifestyle beginning in 2013,
which coincided perfectly with his decision to reduce his payments by 96%, to $300.00
and with meeting his girlfriend. Husband still had a balance of over $100,000.00 in
his bank account as of the end of 2012, and on 12 March 2013, he paid $27,300.00
cash for a 2009 BMW two-door convertible.3 By the end of May 2013, his bank
account was down to just over $26,000.00 -- a decrease of $46,700.00 in just two and
half months, although Husband was still “purportedly liv[ing] frugally” in a one
bedroom of a home at that time. At just about this time, Husband met his girlfriend,
now wife, on Match.com. In October 2013, Husband filled out a lease application for
a new apartment in High Point where he stated his income as $150,000.00 per year
from GA Hill and Associates -- although he testified he received no income from this
business.4
3 A two-door convertible is not exactly a car suitable for three children, but Husband was not
exercising his visitation with the children.
4 Husband organized GA Hill & Associates, LLC, through which he planned to operate “an
import/export business with partners in China” in 2012. Husband claimed the business failed and
he lost “tens of thousands of dollars.” The trial court did not find that Husband had income from this
business or from the other business he attempted to start in China, but the trial court also did not find
Husband’s testimony about these businesses credible.
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A few months later, in January 2014, Husband received the proceeds from the
settlement with Company, and he deposited $251,098.95 into his savings account. By
the end of January, Husband had withdrawn $110,500.00 from the savings account -
- but he paid Wife only $300.00 that month. By February 2014, he had moved to the
apartment in High Point with his girlfriend. In June 2014, Husband got $6,000.00
as a gift from his father to buy an engagement ring for his new girlfriend. In
November 2014, he married her, and they had two formal weddings, one in Raleigh
and one in China. By the end of 2014, his bank account balance was down to
$28,472.60 -- and he was still paying Wife $300.00 per month. And even after
Husband got his new job in June 2015, he still did not resume paying alimony.
In addition, several findings note that the trial court determined Husband was
not credible in his testimony and evidence regarding financial matters, including “his
credit card debt or other loans” and his testimony about his new wife’s “income and
employment status and her ability to share in the cost of their living expenses.” And
as Wife stresses, the trial court found that Husband “indulged in excessive and
unnecessary spending when he moved to High Point with his girlfriend (now his wife)
and even more so when they moved to Reno, and continued to avoid his financial
obligations to support his children and his ex-wife.”
Husband responds that the findings do not address why it is “excessive and
unnecessary spending” to get remarried and, after getting a new job, to buy a new
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house near his new job. The definition of “excessive” spending will vary depending
upon the parties’ circumstances and certain types of expenses, such as housing and
food, are necessities. See, e.g., Beall v. Beall, 290 N.C. 669, 678-79, 228 S.E.2d 407,
413 (1976) (“While some of [defendant’s living expenses] appear to be extravagant, or
overestimated, and several might be eliminated, others are essential. Thus, if only
the projected monthly rent ($190.00); food ($100.00); utilities ($35.00) and car
payments ($204.00) are counted, defendant would still need $529.00 monthly
($6,348.00 annually) to support himself. However, income taxes, automobile
insurance, and laundry must be paid; most certainly he will have medical expenses
and other unexpected demands for money from time to time. Even so, his projected
monthly expenditures of $1,789.00 are beyond his means. We note that considered on
an annual basis these expenses exceed defendant's total maximum income as found
by the trial court.”). Husband argues that the trial court did not distinguish what
amounts, if any, of his expenditures were “extraordinary overspending” as opposed to
reasonable living expenses. But the trial court’s findings carefully detail Husband’s
bank account balances over time along with his actions in disregard of his support
obligations. Husband was free to remarry, but payment of alimony or child support
“may not be avoided merely because it has become burdensome, or because the
husband has remarried and voluntarily assumed additional obligations.” Crosby v.
Crosby, 272 N.C. 235, 238, 158 S.E.2d 77, 80 (1967) (citations and quotation marks
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omitted); see also Frey, 189 N.C. App. at 630, 659 S.E.2d at 67 (“Payment of support
for a child of a former marriage may not be avoided merely because the husband has
remarried and thereby voluntarily assumed additional obligations. Increases in
expenses that were voluntarily assumed additional obligations, including entering
into another marital and family relationship, although they may render the child
support payments more burdensome, do not justify a reduction in such payments.”
(Citations, quotation marks, brackets, and ellipses omitted)). These findings of
Husband’s reduction in support payments coupled with his increased spending on his
new life with his girlfriend and his ultimate remarriage primarily focus on the period
when he was unemployed. Once he had a new job, there was no need for the trial
court to impute income, and it did not, so his expenses based upon his remarriage, if
any, did not affect the support calculations as reflected by the order after he began
working for Ebara.
Yet we still have some concern about whether the erroneous finding of the date
of Husband’s settlement with Company was a significant factor in the trial court’s
determination that Husband acted in bad faith and in its imputation of income to
Husband. “In orders of child support, the trial court should make findings specific
enough to indicate to the appellate court that due regard was taken of the requisite
factors.” Burnett v. Wheeler, 128 N.C. App. 174, 176, 493 S.E.2d 804, 806 (1997).
Based on Findings Nos. 52, 53, and 61, it is possible that the trial court’s change of
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Opinion of the Court
attitude toward Husband’s extended job search was influenced by the belief he had
delayed the settlement for over a year after it would be reasonable and responsible to
resolve the lawsuit, so he would have the funds from the settlement available, and
the potential cloud hanging over his ongoing job search could be removed. In addition,
although the trial court may have relied upon Husband’s excessive spending in
disregard of his support obligations as of June 2013, when he unilaterally reduced
his support dramatically, his motion to modify child support extends back to March
2012. Even though he was still paying as ordered in March 2012, he could have been
entitled to a reduction for any time period when he was involuntarily unemployed
and not excessively spending or acting in bad faith. Because we cannot determine
whether the trial court imputed income and the basis for imputation for each of the
time periods, and especially prior to June 2013, we must remand to the trial court for
correction of the date of the settlement with company and any revisions the trial court
deems appropriate to the other challenged findings which rely on the erroneous date.
If the trial court imputes income, it should state the basis for imputation for each
time period.
We therefore reverse the trial court’s erroneous findings regarding the date of
the settlement with Company and related findings regarding Husband’s delay in
settlement and the imputation of income to Husband based on this refusal. On
remand, the trial court shall correct the findings regarding the date of settlement and
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make any additional findings it deems fit based upon the correct date. In addition,
the trial court shall clarify whether it imputed income to Husband from January 2012
until July 2015 and make any additional findings it deems fit regarding imputation
of income, if the trial court is basing the support obligations upon imputation of
income based upon bad faith or suppression of income.
B. Averaging of income
Husband also argues that instead of imputing income, the trial court relied
upon funds Husband actually received while he was unemployed, averaged
retroactively over the period of unemployment. In the order, one analysis of
Husband’s income finds that he had no income for many months, but the trial court
still kept the child support obligation at the same amount as it had been when
Husband was earning over twice what he eventually began earning at his new job at
Ebara and reduced alimony only by $1,000.00 per month. The trial court also did
another analysis of Husband’s income, finding an average income over 34 months of
$13,432.00 per month.
Because the trial court considered the settlement funds from the Company and
his new job in determining whether he was entitled to any reduction of either support
obligation, Husband argues that “[t]his case exemplifies the perils of adjudication
with ‘20/20 hindsight,’ ” and specifically, the prejudice that arises when adjudication
of a motion to modify is long delayed -- in this case, roughly four years. He argues
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that by averaging out funds retroactively over the nearly four year period, the trial
court was penalizing Husband for failure to pay in 2012 and 2013 as if he actually
had those funds in 2012 and 2013. If Husband’s motions to modify had been heard
in 2012 -- before he had received any settlement funds, before he got a new job, and
before he had even met his new wife -- the circumstances would have been much
different. His job search had not been going on for long, and there would have been
no way to know when he would actually find a job or how much it would pay, or when
his lawsuit against Company would be resolved and how much the recovery would
be.
Ultimately, the trial court found that “[d]espite his extended unemployment,
there has been no significant change in [Husband]’s ability to pay child support to
[Wife] since entry of the Order.” In other words, the trial court found that although
Husband was earning $543,000.00 per year when the order was entered in 2011, and
he was unemployed with no income for 42 months, and he got a new job in July 2015
making about half what he had been making in 2011, his ability to pay was not
significantly changed even while he had no income. Mathematically, these numbers
present an obvious question: how is an involuntary decrease in income from
$543,000.00 to zero not a significant change? During the 42 months Husband was
unemployed, he would have needed $336,000.00 to pay the $8,000.00 per month he
was required to pay. His only income during that time was the settlement from
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Company, in a gross amount of $351,937.52; his net income left after taxes was
$251,098.95. He also had to pay attorney fees related to the settlement of $29,000.00,
leaving him with $213,000.00. Even if he had used all of the settlement funds to pay
his support obligations, he would still have had a shortfall of $123,000.00. The trial
court dealt with this mathematical problem by finding that “[t]he fact that
[Husband’s] income decreased does not mean that he is entitled to a reduction in
alimony or child support, especially when the needs of the minor children and [Wife]
did not decrease (and actually increased) and he is able to make the payment as
originally ordered by using his estate, notwithstanding his reduction in income.” The
trial court recognized that Husband would have to deplete his estate to pay his
support obligations.
In Finding No. 40, the trial court noted that in January 2012, Husband’s Wells
Fargo checking account had a balance of $363,227.36; he then transferred
$300,000.00 from this account to a Wells Fargo savings account. By 31 August 2013,
this savings account was depleted down to $6,009.94. The findings then detail
various other bank account balances, deposits and withdrawals. The trial court found
that “[d]uring this period, [Husband’s] total monthly support obligation to [Wife] was
$8,000.00” and at that time, Husband was living “frugally” in one bedroom
apartments and he “offered no explanation as to how or why he dissipated his large
cash accounts.” In June 2013, Husband stopped paying his support as ordered and
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Opinion of the Court
paid only $500.00 that month, then paid only $300.00 per month from July 2013 to
June 2015.
These findings show that Husband stopped receiving income as of January
2012, but continued to pay $8,000.00 support each month through May 2013, a period
of 17 months. Thus, he paid out $136,000.00 to Wife, which would explain at least
that portion of the depletion of his bank account, but would still leave $227,227.36.
Husband’s living expenses at that time were low, and the trial court is correct that
Husband was depleting his account at a rate far beyond the amount needed to pay
support, with no explanation of how he may have spent the additional $227,227.36.
In summary, the trial court determined that Husband still had or should have had
sufficient funds to continue paying support as originally ordered by depleting his
estate. It is correct that he could continue to pay $8,000.00 per month, despite having
no income, for a finite period with his savings account. The trial court also made
findings regarding his remaining estate, although Husband notes those findings show
that most of his remaining funds were in 401K accounts or other retirement accounts
not readily accessible without incurring substantial taxes and penalties. The
question is whether his support obligations can be set based upon depletion of his
estate so that he must continue to pay support at the level set when his income was
over $500,000 per year, even when he had no income.
C. Depletion of Estate
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(1) Alimony
The original consent order entered on 15 March 2011 and the alimony order
entered on 12 September 2012 both required Husband to pay alimony of $4,500.00
per month. The order on appeal reduced alimony to $3,500.00 per month, effective as
of 1 October 2012. Although the trial court reduced his alimony obligation, Husband
argues that the trial court abused its discretion by not reducing his alimony
sufficiently. His income was over $500,000.00 annually when the $4,500.00
obligation was established, but he had no income other than the settlement proceeds
from 12 January 2012 until 29 June 2015, when he was hired by Ebara. Again,
husband argues the trial court based the modified alimony on hindsight, since by the
time of trial, his period of unemployment had ended. Wife essentially acknowledges
the trial court’s hindsight, arguing that “to whatever extent [Husband] had no
income on the date that he filed his motion to modify alimony, that condition was
cured by the Company Lawsuit settlement he received in early 2014 and his
employment with Ebara in July 2015.” She argues the trial court made extensive
findings of Husband’s “excessive and unnecessary spending to avoid his support
obligations” during his period of unemployment and acted within its discretion in
modifying alimony.
An alimony order “may be modified or vacated at any time, upon motion
in the cause and showing of changed circumstances by either party or anyone
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interested.” N.C. Gen. Stat. § 50-16.9(a) (2017). The party moving for a
modification bears the burden of showing “a substantial change in conditions” so
“the present award is either inadequate or unduly burdensome.” Britt v. Britt, 49
N.C. App. 463, 470, 271 S.E.2d 921, 926 (1980). We review the trial court’s
determination of the amount of alimony for abuse of discretion. See, e.g., Kelly v.
Kelly, 228 N.C. App. 600, 601, 747 S.E.2d 268, 272-73 (2013) (“Decisions regarding
the amount of alimony are left to the sound discretion of the trial judge and will not
be disturbed on appeal unless there has been a manifest abuse of that discretion.
When the trial court sits without a jury, the standard of review on appeal is whether
there was competent evidence to support the trial court’s findings of fact and whether
its conclusions of law were proper in light of such facts. An abuse of discretion has
occurred if the decision is manifestly unsupported by reason or one so arbitrary that
it could not have been the result of a reasoned decision.” (Citations omitted)).
When setting alimony, the trial court must consider and make findings of fact
on the factors in N.C. Gen. Stat. § 50-16.3A (2017), but if the trial court has made the
required findings, the amount of alimony is not reviewable absent an abuse of
discretion. See Works, 217 N.C. App. at 350, 719 S.E.2d at 221 (“It is well-established
that the amount of alimony is determined by the trial judge in the exercise of her
sound discretion and is not reviewable on appeal in the absence of an abuse of
discretion, and that a ruling committed to a trial court’s discretion is to be accorded
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great deference and will be upset only upon a showing that it was so arbitrary that it
could not have been the result of a reasoned decision.” (Citations, quotation marks,
and brackets omitted)). To modify an alimony obligation set by a prior order, the
trial court must compare the current financial situation to the time when the prior
alimony order was entered, to see if there has been a change in the financial needs of
the dependent spouse or in the ability to pay of the supporting spouse:
As a general rule, the changed circumstances necessary for
modification of an alimony order must relate to the
financial needs of the dependent spouse or the supporting
spouse’s ability to pay.
....
To determine whether a change of circumstances
under G.S. 50-16.9 has occurred, it is necessary to refer to
the circumstances or factors used in the original
determination of the amount of alimony awarded under
G.S. 50-16.5. That statute requires consideration of the
estates, earnings, earning capacity, condition, accustomed
standard of living of the parties and other facts of the
particular case in setting the amount of alimony.
Rowe v. Rowe, 305 N.C. 177, 187, 287 S.E.2d 840, 846 (1982) (citations omitted).
As a general rule, a supporting spouse will not be required to deplete his estate
to pay alimony. See, e.g., Beaman v. Beaman, 77 N.C. App. 717, 722, 336 S.E.2d 129,
132 (1985) (“Ordinarily, the parties will not be required to deplete their estates to pay
alimony or to meet personal expenses.”). But sometimes, where the estate of the
dependent spouse is not sufficient to meet her reasonable needs, and the estate of the
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Opinion of the Court
supporting spouse is not sufficient to meet his own needs in addition to payment of
alimony, the trial court may consider whether depletion of the supporting spouse’s
estate would be fair. See, e.g., Swain v. Swain, 179 N.C. App. 795, 799, 635 S.E.2d
504, 507 (2006). Although some cases from our Supreme Court
appear to disfavor alimony awards that result in estate
depletion for one party or the other, those decisions by no
means prohibit such awards. Rather, all of these cases cite
“fairness and justice to all parties” as the principle to which
an alimony award must conform. Thus, we consider
whether the court’s award in the present case is fair to all
of the parties.
Id. (citations omitted).
In considering whether depletion of the estate is fair, the trial court must
compare the estates and needs of the parties. See generally id. In prior cases, some
of the important factors were the difference between the estates, the rate at which
each party would need to deplete his or her estate, the prospects for either party to
improve his or her earnings in the future, and the term of payment of the alimony.
See id. (“Considering that plaintiff’s estate is substantially larger than defendant’s
estate, it would be unfair to require defendant to further deplete her estate while
allowing plaintiff to maintain his. Instead, the trial court ordered a reduction in
alimony from $4,300 per month to $3,600 per month. This award does not fully meet
defendant’s living expenses and is greater than plaintiff’s disposable income after
meeting his own expenses. Because the award requires both parties to deplete their
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Opinion of the Court
estates to meet their living expenses, the trial court’s reduction of alimony was fair
to both parties, and the trial court did not abuse its discretion.”).
In Williams v. Williams, this Court discussed the comparison of estates of the
dependent and supporting spouses:
The financial worth or “estate” of both spouses must also
be considered by the trial court in determining which
spouse is the dependent spouse. We do not think, however,
that usage of the word “estate” implies a legislative intent
that a spouse seeking alimony who has an estate sufficient
to maintain that spouse in the manner to which he or she
is accustomed, [t]hrough estate depletion, is disqualified as
a dependent spouse. Such an interpretation would be
incongruous with a statutory emphasis on “earnings,”
“earning capacity,” and “accustomed standard of living.” It
would also be inconsistent with plain common sense. If the
spouse seeking alimony is denied alimony because he or
she has an estate which can be spent away to maintain his
or her standard of living, that spouse may soon have no
earnings or earning capacity and therefore no way to
maintain any standard of living.
We think, therefore, that the trial court
consideration of the “estates” of the parties is intended
primarily for the purpose of providing it with another guide
in evaluating the earnings and earning capacity of the
parties, and not for the purpose of determining capability
of self-support through estate depletion. We think this is
equally true in giving consideration to the estate of the
alleged supporting spouse. Obviously, a determination
that one is the supporting spouse because he or she can
maintain the dependent spouse at the standard of living to
which they were accustomed through estate depletion
could soon lead to inability to provide for either party.
Defendant argues that awarding alimony to this
plaintiff would result in maintaining “not the wife, but her
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Opinion of the Court
wealth.” He argues that compelling the husband to build
up by alimony a “treasure hoard for the wife” has been
consistently rejected. Nothing in this decision is designed
to allow plaintiff to increase her wealth at the expense of
defendant. Under the guidelines established, plaintiff
would be required to continue in expending all of her
annual income if she desires to maintain her present
standard of living. Should the wife’s capital assets
increase in value, through inflation, prudent investment or
otherwise, and results in an increase of her income,
defendant would, of course, be entitled to petition the court
for modification of the alimony order under G.S. 50-16.9.
Williams v. Williams, 299 N.C. 174, 183-84, 261 S.E.2d 849, 856-57 (1980) (citations
omitted).
Here, the trial court made extensive and detailed findings of fact comparing
the financial circumstances of the parties, addressing all of the factors under N.C.
Gen. Stat. § 50-16.3A. Relevant to Husband’s argument regarding depletion of his
estate, the trial court made findings comparing: (1) Husband’s excessive spending,
failure to pay any alimony, and voluntary increase in living expenses while still
unemployed to Wife’s reduction of her living expenses; (2) Husband’s substantial
estate even after his period of unemployment to Wife’s depletion of her estate; (3)
Husband’s high income to Wife’s much lower income; and (4) the time period of the
alimony payments.
In regards to the time period of the alimony payments, the term was set as 10
years from the initial order in 2012, so Husband’s obligation will end in 2022, unless
sooner modified based on future changes or terminated by Wife’s remarriage or death.
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The trial court did have the benefit of hindsight in considering the extent to which
Husband would need to deplete his estate to pay alimony over the entire ten-year
term, most of which is now past. But for purposes of considering the fairness of the
alimony award overall, it was proper for the trial court to take Husband’s current job
and earnings into account, even for prior years. As of the date of hearing, Husband
was employed and now has adequate earnings to continue paying current alimony as
ordered with little if any ongoing depletion of his estate; he also has the ability to pay
the accrued alimony without an unreasonable depletion of his estate. In comparison,
Wife has already depleted much of her estate, despite her reduction in her living
expenses, and since her income is not sufficient to meet her reasonable needs, she
would quickly deplete the remainder of her estate and still could not maintain herself
without alimony as ordered. The trial court did not abuse its discretion by basing the
alimony award on a combination of Husband’s estate and his current income,
recognizing that his estate would be depleted to maintain the alimony obligation
during his time of unemployment, even in the absence of bad faith or imputation of
income for purposes of alimony. The trial court correctly considered the comparison
of the estates of the parties for purposes of modification of alimony and did not abuse
its discretion in modifying alimony effective back to the date of Husband’s motion to
modify alimony based upon depletion of his estate.
(2) Child Support
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Opinion of the Court
Although depletion of Husband’s estate may be a proper basis to establish the
alimony obligation, the same is not necessarily true for child support. On child
support, as discussed above, it appears the trial court may have used either
imputation of income or averaging of income over Husband’s period of unemployment.
Wife argues that although the trial court could have imputed income for purposes of
child support, “the Order itself also reveals that the trial court did not actually
impute income for purposes of modifying [child support].” Although depletion of
Husband’s estate can be appropriate as to alimony, based upon the factors the trial
court may consider under N.C. Gen. Stat. § 16.3A in setting alimony, those factors do
not apply to child support. We cannot find any cases allowing an award of child
support based solely on depletion of the payor’s estate absent bad faith or suppression
of earning capacity. Therefore, the trial court was not authorized to base the child
support modification prior to Husband’s new job with Ebara solely upon depletion of
his estate, and we must remand for additional findings to clarify whether the trial
court is actually imputing income for purposes of child support, and if so, the basis
for imputing income for each time period.
D. Mathematical error in alimony arrears
Husband also argues that the trial court made a mathematical error in the
calculation of his alimony arrears. The trial court found Husband owed 35 payments
of alimony of $3,500.00 per month from June 2013 until March 2016, but alimony
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Opinion of the Court
was reduced effective as of 1 October 2012. From October 2012 to May 2013, Husband
paid eight payments of $4,500.00 per month, or $1,000.00 per month more than the
modified obligation, so he actually paid $8,000.00 for which he was not given credit
in the order. Wife did not respond to this argument in her brief. On remand, the trial
court should correct this mathematical error and determine the correct amount of
alimony arrears owed.
II. Civil Contempt
A. Application of N.C. Gen. Stat. § 5A-21
Husband first argues the trial court erred as a matter of law by holding him in
contempt based upon “its application of the civil contempt statute.” (Original in all
caps). Husband’s argument is based upon N.C. Gen. Stat. § 5A-21(a) (2017):
(a) Failure to comply with an order of a court is a
continuing civil contempt as long as:
(1) The order remains in force;
(2) The purpose of the order may still be served by
compliance with the order;
(2a) The noncompliance by the person to whom the order is
directed is willful; and
(3) The person to whom the order is directed is able to
comply with the order or is able to take reasonable
measures that would enable the person to comply with the
order.
N.C. Gen. Stat. § 5A-21(a)(1)-(3).
The order on appeal held Husband in contempt for his failure to pay child
support and alimony “from June 2013 through March 2016,” and for failure to pay
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Opinion of the Court
the children’s uninsured health care costs “through March 2016.” But the same order
also modified Husband’s alimony obligation effective as of 1 October 2012. (His child
support obligation was not modified during the time he was unemployed, although as
discussed above, it is possible that it may be modified on remand.) Therefore, the
contempt period overlaps with the modification period. Husband argues that he was
held in contempt of orders “that were either in whole or in part no longer in effect as
of the dates for which the contempt was assessed,” in violation of N.C. Gen. Stat. §
5A-21(a)(1) and (2) “because these orders did not ‘remain[ ] in force’ at the operative
time of the supposed contempt.”
Neither Husband nor Wife cites any cases directly relevant to Husband’s
argument that he cannot be held in contempt of a prior order simultaneously with
the modification of the prior order. Of course, Husband is the party who moved to
modify the prior orders asking to decrease his support obligations effective as of the
date of his filing of the motion to modify. It is well-established that the trial court
may modify a support obligation effective as of the date of the motion requesting
modification. See, e.g., Mackins v. Mackins, 114 N.C. App. 538, 546, 442 S.E.2d 352,
357 (1994) (“[J]ust as the trial court has the discretion to modify an alimony award
as of the date the petition to modify is filed, the trial court also has the discretion to
modify a child support order as of the date the petition to modify is filed.”).
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Opinion of the Court
Husband bases his argument on the language of N.C. Gen. Stat. § 5A-21(a)(1)-
(3), so we must interpret this statute. Statutory interpretation presents a question
of law, which we review de novo:
We review issues of statutory construction de novo. In
matters of statutory construction, our primary task is to
ensure that the purpose of the legislature, the legislative
intent, is accomplished. Legislative purpose is first
ascertained from the plain words of the statute. A statute
that is clear on its face must be enforced as written.
Courts, in interpreting the clear and unambiguous text of
a statute, must give it its plain and definite meaning, as
there is no room for judicial construction. . . .
In applying the language of a statute, and because the
actual words of the legislature are the clearest
manifestation of its intent, we give every word of the
statute effect, presuming that the legislature carefully
chose each word used. Finally, we must be guided by the
fundamental rule of statutory construction that statutes in
pari materia, and all parts thereof, should be construed
together and compared with each other.
In re Ivey, __ N.C. App. __, __, 810 S.E.2d 740, 744 (2018) (citations, quotation marks,
and brackets omitted).
Under the plain words of the statute, failure to comply with an order may be
contempt if “(1) The order remains in force”; and “(2) The purpose of the order may
still be served by compliance with the order.” N.C. Gen. Stat. § 5A-21(a)(1)-(2).
Husband argues that because the trial court modified alimony obligation in the prior
order effective as of the filing of his motion -- at his request – the prior order was no
longer “in force” as of the date of the order holding him in contempt. See id. But the
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Opinion of the Court
child support and alimony orders did not disappear, and there has been a support
order “in force” continuously since the entry of the first order. Id. If we read
subsection (1) along with subsection (2), the modification of some portions of the prior
order does not necessarily render it impossible for Husband to be held in contempt
for failure to pay his support obligations because the order is still “in force.” Id. It is
clear that “[t]he purpose of the order” is “still . . . served by compliance with the order.”
Id. The purpose of the order was and is to provide support for Wife and the children;
even if the exact amount of the support obligation in the prior order changed, the
other portions of the order were unchanged. A modification of an order effective as of
a date in the past is to some extent a legal fiction; it has the legal effect of reaching
back to change the past, but in reality, the past cannot change.
We must also consider the remainder of the statute along with the
modifications of the order. To be held in contempt, “(2a) The noncompliance by the
person to whom the order is directed [must be] willful; and “(3) The person to whom
the order is directed [must be] able to comply with the order or is able to take
reasonable measures that would enable the person to comply with the order.” Id.
Depending upon the particular modification of an order, it would be possible that the
noncompliance could not be considered “willful.” Id. For example, if an order were
modified to increase a support obligation, the payor could not be held in contempt for
failure to pay the increased amount in the past, as that failure to pay more in the
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Opinion of the Court
past could not be willful. Here, the trial court’s modification was a reduction of
alimony -- and child support remained the same -- so the prior order “remained in
force” for the child support obligation and for alimony up to the newly reduced amount
of $3500.00. Id. Had Husband failed to pay his full alimony obligation as previously
ordered, $4,500.00, but did pay as much as the new reduced amount of $3,500.00, he
could not be held in contempt, since in such a scenario, Husband would have paid as
much as required under the modified order -- even if the motion for contempt was
filed before the order was modified and he was obligated at the time to pay a greater
amount.
In addition, the purpose of N.C. Gen. Stat. § 5A-21 particularly in the context
of child support and alimony enforcement, could be subverted by Husband’s
interpretation of the statute. Where a child support or alimony obligor has valid
reason for a reduction of his obligation, he could simply file a motion to modify the
support obligation and stop paying support entirely until the trial court enters an
order. In the meantime, the recipient of the support could file a motion to hold him
in contempt, but he may be insulated from being held in contempt, even if he paid
nothing, if the order is later modified effective as of the date of his motion. Although
a payor has the right to file a motion to reduce his obligation and may have that
reduction effective back to the date of filing, he does not have the right to entirely
avoid his support obligation until the motion is heard simply by moving for
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Opinion of the Court
modification. See generally Chused v. Chused, 131 N.C. App. 668, 672-73, 508 S.E.2d
559, 562 (1998) (“A supporting parent has no authority to unilaterally modify the
amount of the court ordered child support payment. The supporting parent must first
apply to the trial court for modification. The trial court then has the authority to
enter a modification of court ordered child support, retroactive to the filing of the
petition of modification. If a person unilaterally reduces his court ordered child
support payments, he subjects himself to contempt.” (Citations, quotation marks,
and brackets omitted)). Thus, the trial court did not err by holding Husband in
contempt of the prior orders while also setting his arrears owed based upon the
modified alimony obligation. Nevertheless, because we must remand for a new order
addressing the modification of child support and alimony arrearages as discussed
above, it is possible that the amounts of arrears and purge payments may change.
We therefore must also reverse and remand the contempt order so the trial court may
address whether Husband is in willful civil contempt and if so, to determine the
revised amounts of arrearages owed and purge conditions in the new order.
B. Notice of acts of noncompliance
Husband’s second argument on contempt is that he did not have notice of the
acts for which he may be held in contempt because the Motion and Show Cause Order
were both filed on 31 July 2013. He argues that the Motion gave notice of alleged
noncompliance only up to 31 July 2013, but the trial court held him in contempt for
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Opinion of the Court
failure to pay child support and uninsured medical costs which accrued after that
date.
Wife argues that Husband waived any argument on notice of the acts for which
he may be held in contempt by failing to raise this objection at trial. We agree. Where
Husband actively participated in the trial without raising any objection or argument
regarding notice of the acts for which he may be held in contempt, he has waived this
argument on appeal. See Watson v. Watson, 187 N.C. App. 55, 63, 652 S.E.2d 310,
316 (2007) (“[D]efendant did not object to the presentation of evidence on this issue
at the contempt hearing. On the contrary, defendant presented evidence relating to
the credit card debt, including offering exhibits. When the contemnor comes into
court to answer the charges of the show cause order, she waives procedural
requirements. Defendant’s active participation in the hearing on this issue, without
objection, defeats her contention that she was without notice that the 5 June 2006
proceeding would include a review of her failure to take responsibility for the credit
card payments.” (Citations, quotation marks, and brackets omitted)); see also Byrd
v. Byrd, 62 N.C. App. 438, 443, 303 S.E.2d 205, 209 (1983) (“[W]hen issues not raised
in the pleadings are tried by the express or implied consent of the parties, North
Carolina allows for the pleadings to be amended to conform to the evidence. Where
a party offers evidence at trial which introduces a new issue and there is no objection
by the opposing party, the opposing party is viewed as having consented to the
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Opinion of the Court
admission of the evidence and the pleadings are deemed amended to include the new
issue.” (Citation omitted)). In this case, Husband participated in the trial on the
issues of contempt up to the date of the hearing without objecting to any of this
evidence or claiming any lack of notice. Accordingly, this argument is without merit.
III. Award of Attorney Fees
Finally, Husband argues that the trial court erred as a matter of law “in
ordering defendant to pay plaintiff’s attorney’s fees as a ‘combined’ award and
otherwise in contravention of the applicable statutes.” (Original in all caps).
Husband contends that because the fee award of $50,000.00 did not differentiate
between the amounts awarded for each claim -- modification of child support,
modification of alimony, and contempt -- this Court is unable to determine Wife’s
entitlement to the entire award. Husband also argues that the trial court erred in
awarding fees for various reasons for each claim: child support modification, alimony
modification, and contempt. As explained in more detail below, if there were
adequate findings to support Wife’s entitlement to attorney fees on all three claims,
the award would be proper, but there are a few missing pieces, so we must vacate the
award and remand to the trial court for additional findings, conclusions of law, and a
new order as appropriate based on those findings and conclusions.
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Opinion of the Court
We review the trial court’s determination that Wife is entitled to an award of
attorney fees based upon N.C. Gen. Stat. § 50-13.6 (2017) de novo, since this is a
question of law, and we review the amount of the fees for abuse of discretion:
In a custody suit or a custody and support suit, the trial
judge, pursuant to the first sentence in G.S. 50-13.6, has
the discretion to award attorney’s fees to an interested
party when that party is (1) acting in good faith and (2) has
insufficient means to defray the expense of the suit. The
facts required by the statute must be alleged and proved to
support an order for attorney’s fees. Whether these
statutory requirements have been met is a question of law,
reviewable on appeal. When the statutory requirements
have been met, the amount of attorney’s fees to be awarded
rests within the sound discretion of the trial judge and is
reviewable on appeal only for abuse of discretion. . . .
When the action is solely one for support, all of the
requirements set forth in part III A above apply plus the
second sentence in G.S. 50-13.6 which requires that there
be an additional finding of fact that the party ordered to
furnish support has refused to provide support which is
adequate under the circumstances existing at the time of
the institution of the action or proceeding. A finding of fact
supported by competent evidence must be made on this
issue in addition to meeting the requirements of good faith
and insufficient means before attorney’s fees may be
awarded in a support suit. This issue is a question of law,
reviewable on appeal.
Hudson v. Hudson, 299 N.C. 465, 472-73, 263 S.E.2d 719, 724 (1980) (citations,
quotation marks, and brackets omitted).
Husband argues that the trial court erred as a matter of law in awarding
attorney fees on all three claims. He does not challenge the amount of the award
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except to note that since the award is undifferentiated, it is impossible to break it
down into portions awarded for each claim, so if the trial court erred in awarding fees
for even one of the three claims, the award cannot stand.
A. Entitlement to fees for modification of child support
North Carolina General Statutes Section 50-13.6 sets forth the statutory
requirements for an award of attorney fees in child support claims:
Before ordering payment of a fee in a support action, the
court must find as a fact that the party ordered to furnish
support has refused to provide support which is adequate
under the circumstances existing at the time of the
institution of the action or proceeding. . . .
N.C. Gen. Stat. § 50-13.6 (emphasis added).
The trial court found: “128. [Husband] refused to provide support which is
adequate under the circumstances.” The trial court did not include the last portion
of the finding required by N.C. Gen. Stat. § 50-13.6: “existing at the time of the
institution of the action or proceeding.” See id. Husband argues that the “time of the
institution of the action or proceeding” was when he filed his motion to modify child
support, 7 February 2012. Id. The circumstances existing as of February 2012 were
that both Husband and Wife were unemployed and Husband was still paying his full
child support as required by the order. Wife relies upon the definition of an “action”
from Black’s Law Dictionary, see action, Black’s Law Dictionary (10th ed. 2014), to
argue that “the appropriate time for measuring the adequacy of Defendant’s support
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Opinion of the Court
pursuant to [N.C. Gen. Stat.] § 50-13.6 was July 31, 2013 [when she filed a motion
for contempt] through the time of trial in April 2016 . . . .” During that time period,
Wife argues, Husband had “started his spending spree” and “had access to sufficient
cash from his estate.”
We cannot find any case which specifically defines the phrase “at the time of
the institution of the action or proceeding,” N.C. Gen. Stat. § 50-13.6, perhaps because
this simple phrase has not been at issue in any prior case. But many cases refer to
the dates when various types of actions or proceedings were instituted, and
invariably, the cases use the date when a pleading or motion bringing a claim or
seeking a particular type of relief was filed with the court as the date of the
“institution of the action or proceeding.” N.C. Gen. Stat. § 50-13.6; see, e.g.; Danielson
v. Cummings, 43 N.C. App. 546, 546, 259 S.E.2d 332, 332 (1979) (“Plaintiff instituted
this action on 15 February 1978 alleging he was injured by the negligence of the
defendants in an automobile collision in the city of Greensboro.”), aff’d, 300 N.C. 175,
265 S.E.2d 161 (1980). Black’s Law Dictionary defines the verb “institute” as “to
begin or start; commence.” See institute, Black’s Law Dictionary (10th ed. 2014). We
simply cannot read the phrase “under the circumstances existing at the time of the
institution of the action or proceeding[,]” N.C. Gen. Stat. § 50-13.6, to refer to a period
of time extending from the date of a filing of a pleading to the date of the trial -- here,
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Opinion of the Court
nearly three years, according to Wife. We must consider a particular date of filing --
but many motions have been filed in this case.
Since we are now addressing entitlement to an attorney fee award for
modification of child support, not contempt, the date of the institution of the action
for purposes of determining entitlement to attorney fees under N.C. Gen. Stat. § 50-
13.6 is based upon the filing of Husband’s motion to modify child support, not Wife’s
later motion for contempt. See generally N.C. Gen. Stat. § 50-13.6. Wife has a claim
for attorney fees based upon her contempt motions as well, but the standard for that
award differs from an award for modification of child support, and the contempt issue
must be considered in its own right. See, e.g., Watson, 187 N.C. App. at 69, 652 S.E.2d
at 320 (“It is settled law in North Carolina that ordinarily attorney fees are not
recoverable as an item of damages or of costs, absent express statutory authority for
fixing and awarding them. Generally, attorney’s fees and expert witness fees may
not be taxed as costs against a party in a contempt action. However, our courts have
ruled that the trial court may award attorney’s fees in certain civil contempt actions.”
(Citations omitted)).
On child support, there is no finding as to whether Husband was providing
“support which is adequate under the circumstances existing at the time of the
institution of the action or proceeding.” N.C. Gen. Stat. § 50-13.6. Wife argues that
the essential facts are evident in the trial court’s order and there was no conflicting
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Opinion of the Court
evidence on this point. But the “essential fact” which is evident in the order is that
in February 2012, Husband was unemployed on the date he “instituted” the
proceeding by filing a motion to modify the child support obligation and he was still
paying his full child support obligation. Since he was still paying his full child
support obligation “at the time of the institution of the action or proceeding,” he did
not “refuse” to “provide support which is adequate” at that time. Id. He did stop
paying the full child support obligation later, but that is not the question under N.C.
Gen. Stat. § 50-13.6. Id.This is not the end of the analysis, since Wife also filed a motion to modify child
support on 13 November 2012. Wife alleged in this motion, upon information and
belief, that Husband was already receiving severance pay checks from Company and
also requested modifications related to the children’s medical insurance coverage.
But the trial court found that although Company had tendered checks to Husband,
he had refused to accept these payments, since he was pursuing the lawsuit against
Company seeking a greater recovery. And, as of November 2012, Husband was
continuing to pay the full child support obligation under the existing order, so he was
still paying adequate support at the time of institution of Wife’s motion to modify
child support. Therefore, the attorney fee award under N.C. Gen. Stat. § 50-13.6could not be based upon Wife’s motion to modify child support either.
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Opinion of the Court
The “circumstances existing” as of the dates of institution of both motions for
modification of child support differed greatly from those over the following two years
and at the time of trial. Id. The trial court therefore erred to the extent it awarded
attorney fees for the modification of child support based upon N.C. Gen. Stat. § 50-
13.6, since Husband was still paying his full obligation at the time of institution of
both motions to modify child support. For this reason, and because the trial court
awarded fees without specifying the basis, we vacate the attorney’s fee award.
B. Entitlement to attorney fees on other claims
Husband also argues on the award of attorney fees that there is no way for this
court to assess the “reasonableness” of the award on each claim. For example,
Husband’s child support obligation was increased, but his alimony obligation was
decreased. In addition, the required findings for an attorney fee award for
modification of alimony and contempt are not identical. We will not address these
issues further, since we must vacate the attorney fee award for the reasons already
discussed. On remand, the trial court should make the required findings of fact and
conclusions of law for the attorney fee award on each component of the award and
determine the appropriate amount of fees for each claim.
Conclusion
For the reasons stated above, we affirm in part and reverse in part and remand
the trial court’s order modifying alimony and child support. Because the trial court’s
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Opinion of the Court
alimony order was supported by its findings regarding depletion of the estates of the
parties, we affirm the trial court’s modification of alimony, both for the past and for
prospective alimony. However, the trial court shall correct the mathematical error
in the alimony arrears on remand. The basis for the modification of the child support
from the date of Husband’s motion to modify until July 2015 is unclear, so we reverse
this portion of the order and on remand the trial court must clarify whether it is
imputing income to Husband during each time period, the basis for imputation, the
amount of income imputed, and how the child support obligation was calculated. The
prospective child support order as of July 2015 is affirmed. We also conclude the trial
court did not err in finding Husband in civil contempt, but because we have reversed
and remanded the child support provisions of the order, we must also reverse and
remand the contempt portion of the order so the trial court may enter a new order to
address whether Husband is in willful civil contempt in accord with any changes to
alimony arrears or child support and child support arrears owed on remand. Finally,
we reverse the order on attorney fees and remand to the trial court for entry of a new
order on attorney fees setting forth the amounts of fees awarded for each component
of the case, with the findings of fact and conclusions of law needed to support fees
awarded for each component of the case.
AFFIRMED IN PART, REVERSED IN PART AND REMANDED.
Judges DILLON and INMAN concur.
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