Stephen Franklin, II v. Kelly Franklin ( 2022 )

THIS OPINION HAS NO PRECEDENTIAL VALUE. IT SHOULD NOT BE
CITED OR RELIED ON AS PRECEDENT IN ANY PROCEEDING
EXCEPT AS PROVIDED BY RULE 268(d)(2), SCACR.
THE STATE OF SOUTH CAROLINA
In The Court of Appeals
Stephen Roy Franklin II, Respondent,
v.
Kelly Simpson Franklin, Appellant.
Appellate Case No. 2019-000201
Appeal From York County
Thomas Henry White, IV, Family Court Judge
Unpublished Opinion No. 2022-UP-321
Heard December 8, 2021 – Filed August 3, 2022
AFFIRMED IN PART, REVERSED IN PART
Thomas Franklin McDow, IV, of McDow and Urquhart,
LLC, and Barrett Wesley Martin, of Barrett W. Martin,
P.A., both of Rock Hill, for Appellant.
Thomas M. Neal, III, of Law Offices of Thomas M. Neal,
III, of Columbia, and Pamela Michele Pearson, of Rock
Hill, both for Respondent.
PER CURIAM: Kelly Simpson Franklin (Mother) appeals the family court's final
order, arguing the family court erred in: (1) failing to make findings of fact
regarding witness credibility, (2) calculating Stephen Franklin's (Father) income
for purposes of its child support determination, (3) not reducing Father's visitation
based on his failure to exercise it, and (4) not awarding Mother attorney's fees. We
modify Father's parenting time, award Mother $12,000 in attorney's fees, and
affirm the family court's order in all other respects.1
Father and Mother were married in 2008; two children were born of the marriage. 2
The parties separated in 2016, and Mother subsequently filed an action seeking,
inter alia, a divorce, child custody and support, spousal support, and equitable
apportionment. Following mediation, the parties executed a partial settlement
agreement, which the family court approved on January 25, 2017.
On March 30, 2017, Father filed an action seeking a divorce, incorporation of the
prior order, modification of child support, and attorney's fees. He then filed a
motion for temporary relief and an action seeking modification of child support,
visitation, and attorney's fees. Mother timely answered and likewise requested a
divorce and modification of visitation. Following a June 1, 2017 hearing, the
family court granted the parties a divorce.
On June 8, 2017, Mother filed a return to Father's motion for temporary relief, in
which she admitted a modification of child support was warranted. The next day,
she filed an action for contempt, alleging Father violated the order of separate
support and maintenance.
On July 13, 2017, the family court issued the decree of divorce and consolidated
the remaining claims, including those for modification of child support and
visitation. In a temporary order, the family court modified Father's child support
obligation to $2,133 per month and changed Father's midweek parenting time from
alternating Thursdays to alternating Wednesdays. On January 2, 2018, Father filed
a motion to recalculate his child support obligation.
1
The family court used the terms "parenting time," "custody schedule," and
"visitation" interchangeably in describing the parties' joint custody arrangement.
The parties had agreed to "joint custody." Mother received primary custody, and
Father received secondary custody. For consistency, we refer to the time the
children spent with a parent as "parenting time."
2
At the time of trial, the children were three and five years old.
On October 15, 2018, the family court began the trial of the consolidated issues.
By order dated December 18, 2018, the family court found Mother failed to
demonstrate a basis for amending the parenting schedule. The family court
modified Father's child support obligation for six time periods, retroactive to April
l1, 2017, based on which parent had paid the children's health insurance and
childcare costs during those periods. The family court calculated Father's child
support obligation during the specified time to range from $1,879 to $2,907.
Father's current child support obligation was calculated to be $2,021. Mother
appealed.
Standard of Review
On appeal from the family court, the appellate court reviews factual and legal
issues de novo. Stoney v. Stoney, 422 S.C. 593, 596, 813 S.E.2d 486, 487 (2018)
(per curiam). Thus, the appellate court has the authority to find facts in accordance
with its own view of the preponderance of the evidence. Lewis v. Lewis, 392 S.C.
381, 384, 392, 709 S.E.2d 650, 651, 655 (2011). However, this broad scope of
review does not require the appellate court to disregard the fact that the family
court, which saw and heard the witnesses, was in a better position to evaluate their
credibility and assign comparative weight to their testimony. Id. at 385, 392, 709
S.E.2d at 651–52, 655. Therefore, the appellant bears the burden of convincing the
appellate court that the family court committed error or that the preponderance of
the evidence is against the family court's findings. Id. at 392, 709 S.E.2d at 655.
Law and Analysis
I. Witness Credibility
Mother argues the family court erred by failing to make specific findings of fact
addressing the credibility of the witnesses. We disagree.
"Although this court reviews the family court's findings de novo, we are not
required to ignore the fact that the family court, which saw and heard the
witnesses, was in a better position to evaluate their credibility and assign
comparative weight to their testimony." Whitesell v. Whitesell, 431 S.C. 575, 584,
848 S.E.2d 588, 592 (Ct. App. 2020). "The appellant has the burden of showing
this court the greater weight of evidence is against the family court's findings." Id."We know of no authority requiring the family court to give a witness-by-witness
account of its credibility assessments. . . . [A]n order is sufficient as long as a
reviewing court can determine the basis for the family court's ruling." Id. at 584,
848 S.E.2d at 593.
In its final amended order, the family court stated:
The Court considered the testimony of the parties and
their witnesses and reviewed the exhibits, the court-
requested post-trial memorandums and tax-related
transcripts and the case file. The Court considered the
credibility of the witnesses, the manner in which they
testified, and all other factors to be considered in
weighing credibility of witnesses.
However, the family court noted its concern about some of Father's testimony,
specifically regarding his alleged payment of an IRS debt. The family court stated:
Given the liberties taken by [Father] in taking
questionable deductions and the unorthodox and
cumbersome business expense reimbursement process
adopted, and apparently followed, by his employer, it is
no mystery to the Court that [Father's] return is "being
reviewed"; however, the Court is concerned with the
obvious discrepancy in [Father's] bold sworn testimony
that he had paid "about $10,000 and maybe another
$1,000" on the tax debt subject of this action, when in
reality to date he had paid $985.56 just prior to trial of
this matter.
Despite this clear reference to Father's credibility, Mother argues the family court's
order "lacked any analysis of credibility." Our review of the record reveals the
family court properly evaluated the credibility of the parties and considered the
expert testimony presented by each side.
II. Calculation of Father's Gross Monthly Income
Mother argues the family court erred in calculating Father's income for purposes of
determining child support. She contends Father's monthly income should include
deposits to all of his accounts, which totaled $200,872.17, and asserts Father's
gross monthly income should have been calculated to be $22,319.13. We find no
support in the record for Mother’s argument.
"The guidelines define income as the actual gross income of the parent, if
employed to full capacity, or potential income if unemployed or underemployed.
Gross income is used in order to avoid contention over issues of deductibility
which would otherwise arise if net income were used." S.C. Code Ann. Regs. 114-
4720(A)(1) (Supp. 2021). "Gross income includes income from any source
including salaries, wages, commissions, royalties, [and] bonuses . . . . Unreported
case income should also be included if it can be identified." S.C. Code Ann. Regs.
114-4720(A)(2) (Supp. 2021) (emphasis added).
"For income from self-employment, proprietorship of a business, or ownership or a
partnership or closely held corporation, gross income is defined as gross receipts
minus ordinary and necessary expenses required for self-employment or business
operation, including employer's share of FICA." S.C. Code Ann. Regs. 114-
4720(A)(4) (Supp. 2021). "In general, the court should carefully review income
and expenses from self-employment or operation of a business to determine actual
levels of gross income available to the parent to satisfy a child support obligation.
As may be apparent, this amount may differ from the determination of business
income for tax purposes." Id. "[T]he court should count as income expense
reimbursements or in-kind payments received by a parent from self-employment or
operation of a business if they are significant and reduce personal living expenses,
such as a company car, free housing, or reimbursed meals. . . ." S.C. Code Ann.
Regs. 114-4720(A)(3) (Supp. 2021).
Father first began working with Argsoft Cloud Services (Argsoft) as a business
development manager in January 2017, selling IT security software and
maintaining accounts throughout the Southeast, the Midwest, and Bermuda.
Pursuant to his employment agreement, his salary was $100,000 for the first twelve
months, after which time it was subject to review. Father was eligible to earn
commissions and bonuses. As an employee, Argsoft directly booked and paid for
Father's hotel stays, flights, and car rentals, and it reimbursed him for food,
incidentals, client entertainment, and trade shows.
In November 2017, Father's employment position changed, and he entered an
Independent Contractor Agreement (the Agreement) with Argsoft. According to
Father, Argsoft terminated five salespersons in the United States due to cash flow
issues. Father explained he asked Argsoft about working as a contractor so if "they
ever did have to get rid of another person, then they could get rid of me quickly."
Under the Agreement, Father earned a monthly income of $8,840—forty hours per
week at his contracted fifty-one-dollar hourly rate. Father booked his own travel,
and Argsoft reimbursed him for his expenses upon receiving copies of his receipts.
Father incurred large expenses as an independent contractor because his territory
increased due to Arsoft's reduction of salespersons, resulting in Father maintaining
larger accounts throughout Europe, the Caribbean, the United States, and Toronto.
Father introduced three months' worth of receipts into evidence to demonstrate the
types of work-related expenses he incurred. Father testified he was reimbursed for
hotel stays, car rentals, meals, gifts for customers, and IT support equipment for
customers. Wife has not provided any evidence that would directly dispute this,
nor did she provide evidence that Father received commission or bonus checks.
Notably, Mother's accounting expert testified she only assumed the deposits were
income and admittedly did not review the reimbursement receipts Father provided.
Further, Mother's case at trial seemed to be focused on proving Father was an
employee of Argsoft, rather than an independent contractor. Regardless of whether
Father was an employee or independent contractor, Mother did not present
evidence to support her position that any challenged deposits were not
reimbursements for expenses, and we note Father also received reimbursement
checks when he was classified as an Argsoft employee.
We acknowledge Reg. 114-4720(A)(3)(C) instructs the family court to consider
expense reimbursements in determining gross income "if they are significant and
reduce personal living expenses, such as a company car, free housing, or
reimbursed meals. . . ." The record in this case shows Father's reimbursed
expenses were often travel-related business expenses on international trips. And
while some of the receipts Father provided reflected reimbursements for meals in
Myrtle Beach or near Lake Murray, Mother has not demonstrated these were not
client meals or business-related expenses.
Much of Mother's argument that Father's gross monthly income should include the
reimbursed expenses is based on whether such expenses are tax deductible. Even
though the record indicated Father took improper deductions on his taxes, child
support is determined based on gross income, not deductibility. See S.C. Code
Ann. Regs. 114-4720(A)(1) ("The guidelines define income as the actual gross
income of the parent, if employed to full capacity, or potential income if
unemployed or underemployed. Gross income is used in order to avoid contention
over issues of deductibility which would otherwise arise if net income were
used."). In any event, the family court specifically noted Father's credibility
problem in referencing the "liberties" Father took with respect to his tax
deductions, Father's "bold"—and impliedly, false—testimony about payments on
the tax debt, and the fact that it is "no mystery" to the family court that the IRS is
reviewing his return. Accordingly, we find the family court properly evaluated
Father's credibility problems, and we affirm the family court's determination of
Father's gross income.
III. Terms of Father's Contract
Mother argues the family court erred in allowing Father to introduce hearsay
contradicting the terms of his contract with Argsoft. Mother also contends the
admission of testimony addressing the terms of the contract violated the parol
evidence rule. We find Mother was not prejudiced by any erroneous admission of
such evidence as it was cumulative.
"'Hearsay' is a statement, other than one made by the declarant while testifying at
the trial or hearing, offered in evidence to prove the truth of the matter asserted."
Rule 801(c), SCRE. "Hearsay is not admissible except as provided by these rules
or by other rules prescribed by the Supreme Court of this State or by statute." Rule
802, SCRE.
During Father's testimony, the following discussion ensued:
Q. All right. Mr. Franklin, is there a commission plan
associated with your status as an independent contractor?
A. No ma'am.
Q. Was there a commission plan associated with your
work with Arg Soft when you were an employee?
A. Yes ma'am.
....
Q. Okay. So why is there no commission plan
associated with your status as an independent contractor?
A. As an independent contractor, I'm not an employee of
the company; they told me that a contractor—
Mother then objected based on hearsay. In overruling Mother's hearsay objection,
the family court stated, "Well, I'm going to allow him to talk about his
understanding of the contract, so to that extent, I overrule the objection."
Thereafter, Father testified, "As an independent contractor, I was told that I would
not be eligible for bonuses or commissions because I made more than most people
do, from an hourly wage."
Father's testimony that he "was told" that as an independent contractor, he was
ineligible for bonus or commissions was likely inadmissible hearsay. However,
any error in allowing this testimony was harmless because Father's expert, Bernard
Ackerman, determined Father was an independent contractor based on the
Agreement, the method in which Father was paid, and the way Father kept track of
his expenses. Ackerman acknowledged the Agreement stated Proud Distribution
(Father's business) would participate in the commission plan, but he testified he did
not see any commissions or bonuses paid in his review of Proud Distribution's
accounts. Moreover, Ackerman specifically noted that "as an independent
[interruption] contractor, he could be servicing several companies." See Bojilov v.
Bojilov, 425 S.C. 161, 178, 819 S.E.2d 791, 800 (Ct. App. 2018) ("[T]o warrant
reversal based on the erroneous admission or exclusion of evidence, the
complaining party must show both error and resulting prejudice. When evidence is
merely cumulative to other evidence, its admission is harmless and does not
constitute reversible error." (citation omitted)).
Mother's parol evidence argument is not preserved for our review because before
the family court, she objected to Father's testimony only on the basis of hearsay.
See Doe v. Doe, 370 S.C. 206, 212, 634 S.E.2d 51, 54 (Ct. App. 2006) ("To
preserve an issue for appellate review, the issue cannot be raised for the first time
on appeal, but must have been raised to and ruled upon by the [family] court.")
IV. Parenting Schedule
Mother argues the family court erred in failing to eliminate Father's alternating
Wednesday evening parenting time and Sunday overnights during his parenting
weekends. She further contends Father's Wednesday evenings and Sunday
overnights should be eliminated if Father does not exercise this parenting time.
Mother asserts the family court erred in analyzing this case as though she were
asking for a change in custody, not visitation or parenting time. Pursuant to our de
novo review, we find it is in the best interests of the children to modify the
parenting schedule.
When the family court has previously established a parenting schedule, "the
moving party must show a change of circumstances to warrant a change of
visitation." Ingold v. Ingold, 304 S.C. 316, 320, 404 S.E.2d 35, 37 (Ct. App.
1991). "As with child custody, the welfare and best interests of the child are the
primary considerations in determining visitation." Buist v. Buist, 399 S.C. 110,
122, 730 S.E.2d 879, 885 (Ct. App. 2012), aff'd as modified on other grounds, 410
S.C. 569, 766 S.E.2d 381 (2014).
In its final order, the family court noted the marital settlement agreement contained
a "custody schedule," and the family court approved the schedule in its January 25,
2017 order. The schedule included the alternating midweek parenting time and
Sunday overnights Mother now seeks to eliminate. Mother challenges the family
court's findings that she failed to demonstrate a substantial change in circumstances
affecting the children's welfare or that changing the parenting schedule was in the
children's best interests.
We agree with Mother that it is in the children's best interests to modify the
parenting schedule. Mother testified that both she and the children need a
consistent schedule for stability and planning purposes. We share Mother's
concern regarding Father's inconsistent exercise of his midweek parenting time and
his failure to provide sufficient notice of such to Mother. Therefore, we modify
the parenting schedule to require that Father must notify Mother by 10:00 a.m. on
the Monday during the week of his scheduled midweek parenting time if he intends
to exercise the midweek parenting time. If Father does not notify Mother by 10:00
a.m. on Monday, then he will not be entitled to the midweek parenting time in that
week.
Moreover, we find it is in the children's best interests to eliminate Father's
overnight parenting time on Sundays during his weekends with the children. Both
children are now attending elementary school. By staying overnight with Father in
Chapin, the children would be required to wake up early on Monday mornings to
travel to Fort Mill to attend school. This would be unduly burdensome for these
young children. Returning to Mother by 6:00 p.m. on Sunday evenings would
allow the children to maintain their normal routine prior to the start of the school
week.
To reiterate, we modify the family court's parenting schedule as follows: (1) In
weeks during which Father is entitled to midweek parenting time, he must notify
Mother by 10:00 a.m. Monday if he intends to exercise this parenting time;
otherwise, he shall not have midweek parenting time that week, and (2) Father's
overnight parenting time on Sunday nights during his weekends with the children
is eliminated; Father must return the children to Mother by 6:00 p.m. on Sunday
evenings on those weekends.
V. Attorney's Fees
Mother argues she is entitled to an award of attorney's fees. She asserts the family
court's findings address only the amount of attorney's fees, not whether to award
them.
In determining whether to award attorney's fees, the family court considers "(1) the
party's ability to pay his/her own attorney's fee; (2) [the] beneficial results obtained
by the attorney; (3) the parties' respective financial conditions; [and] (4) [the]
effect of the attorney's fee on each party's standard of living." E.D.M. v. T.A.M.,
307 S.C. 471, 476–77, 415 S.E.2d 812, 816 (1992). "Failing to cooperate and
prolonging litigation can serve as an additional ground for awarding attorney's
fees." Daily v. Daily, 432 S.C. 608, 630, 854 S.E.2d 856, 868 (Ct. App. 2021). In
determining the reasonableness of attorney's fees, the family court considers "(1)
the nature, extent, and difficulty of the case; (2) the time necessarily devoted to the
case; (3) [the] professional standing of counsel; (4) [the] contingency of
compensation; (5) [the] beneficial results obtained; [and] (6) [the] customary legal
fees for similar services." Glasscock v. Glasscock, 304 S.C. 158, 161, 403 S.E.2d
313, 315 (1991). "The family court can also consider a litigant's uncooperative and
evasive behavior when determining the reasonableness of the fees." Daily, 432
S.C. at 630–31, 854 S.E.2d at 868.
Here, both Mother and Father are capable of paying their own fees. As the family
court noted, Father has already liquidated many of his assets, but his income is
significantly higher than Mother's. Mother earns a gross monthly income of
$5,086.97. It appears Mother and Father are in relatively good financial condition.
As to the income and child support calculations, Father's expert acknowledged,
"The beneficial result here, I don't know that there is a beneficial result for these
folks. The father asked for a modification; he didn't ask for a decrease. The
mother didn't ask for an increase, from what I read in the pleadings, they just
agreed to a modification, whatever it is."
Father earns significantly more than Mother, and it is likely that both parties'
standards of living would be affected by having to pay the nearly $60,000 in
attorney's fees incurred in this action.3 Father testified his standard of living would
be affected if he had to pay Mother's attorney's fees because he does not have
much left to liquidate to pay them as he previously liquidated his retirement
accounts during the process of the divorce. However, Mother testified things were
financially harder for her as she and the children were still living with her brother.
In light of the parties' standards of living, Father's greater ability to pay, and the
beneficial results Mother has obtained with respect to the visitation modification,
we find it appropriate for Father to pay $12,000 of Mother's attorney's fees, either
by lump sum, or monthly at a rate of $1,000 per month until the full sum is
satisfied. We reach this result through our analysis of the Glasscock factors and
our recognition that Father's evidence was at times inconsistent, likely increasing
the complexity of this case and any financial determination involved. The family
court referenced Father's evasive testimony in addressing Father's tax situation, and
we note our difficulty in tracking Father's independent contractor payments versus
his reimbursements due to the various bank accounts in which he commingled
funds.
Conclusion
Based on the foregoing, we modify the family court's parenting schedule, award
Mother $12,000 in attorney's fees, and affirm the family court's order in all other
respects.
AFFIRMED IN PART, REVERSED IN PART.
WILLIAMS, C.J., MCDONALD, J., and LOCKEMY, A.J., concur.
3
Father had incurred $26,000 in attorney's fees and costs associated with the
modification action, and Mother had incurred approximately $35,000.