Lundy v. Lundy

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
In re the Marriage of:
WILLIAM N. LUNDY, JR., Petitioner/Appellee,
v.
COLLEEN S. LUNDY, Respondent/Appellant.
No. 1 CA-CV 15-0612 FC
FILED 4-6-2017
Appeal from the Superior Court in Yavapai County
No. V1300DO820030110
The Honorable Richard D. Lambert, Judge Pro Tempore
VACATED AND REMANDED
COUNSEL
Aspey Watkins & Diesel PLLC, Flagstaff
By Zachary J. Markham, Staci Lynn Foulks
Counsel for Petitioner/Appellee
Berkshire Law Office PLLC, Phoenix
By Keith Berkshire, Maxwell Mahoney
Counsel for Respondent/Appellant
LUNDY v. LUNDY
Opinion of the Court
OPINION
Judge Peter B. Swann delivered the opinion of the court, in which
Presiding Judge Patricia A. Orozco (retired) and Chief Judge Michael J.
Brown joined.
S W A N N, Judge:
¶1 Colleen S. Lundy (“Mother”) appeals the superior court’s
modification of William N. Lundy, Jr.’s (“Father[’s]”) child support
obligation. We conclude that the court erroneously attributed income to
Mother from a second job, and erroneously credited Father for the full
amount paid on an insurance policy covering both the minor children and
other dependents. We therefore vacate the modification order and
remand for further proceedings. We further hold that the court erred by
awarding attorney’s fees to Father in the absence of a written request for
fees.
FACTS AND PROCEDURAL HISTORY
¶2 In 2004, Father and Mother, the parents of three then-minor
children, entered a consent decree dissolving their marriage. The decree
ordered Father to pay monthly child support and provide medical and
dental insurance for the children.
¶3 In 2014, Father filed a petition to modify his child support
obligation. He argued that modification was warranted because the
parties’ incomes had changed and their oldest child had turned 18 years
old.
¶4 After holding an evidentiary hearing in July 2015, the
superior court granted Father’s petition and modified his child support
obligation from $1,354.41 per month to $500 per month. In calculating the
new amount, the court attributed to Mother income from two jobs. The
court also credited Father for the full amount he paid to provide health
insurance coverage for the three children and his wife, relying on
testimony that Father’s cost to purchase dependency coverage would
remain the same regardless of the number of dependents added to the
policy. Finally, the court awarded Father approximately $5,000 in
attorney’s fees under A.R.S. § 25-324.
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LUNDY v. LUNDY
Opinion of the Court
¶5 Mother appeals.
DISCUSSION
I. THE SUPERIOR COURT ERRONEOUSLY CALCULATED
FATHER’S NEW CHILD SUPPORT OBLIGATION.
¶6 After the consent decree was entered, the parties’ oldest
child reached the age of majority and graduated high school. That fact
alone provided sufficient grounds for the court to revisit the issue of child
support. See A.R.S. §§ 25-501(A), –503(E). We conclude, however, that
several legal errors contributed to the calculation of the new support
obligation.
A. The Superior Court Erred by Considering Income that
Mother Earned from a Second Job.
¶7 Mother first contends that the superior court erred by
including earnings from a second job when determining her income for
the child-support calculation. We agree.
¶8 Section 5(A) of the Arizona Child Support Guidelines
provides that when determining parents’ incomes for child support
purposes:
Generally, the court should not attribute income greater than
what would have been earned from full-time employment.
Each parent should have the choice of working additional
hours through overtime or at a second job without
increasing the child support award. The court may,
however, consider income actually earned that is greater
than would have been earned by full-time employment if
that income was historically earned from a regular schedule
and is anticipated to continue into the future.
A.R.S. § 25-320 app. § 5(A). Section 5(A)’s intent is “consistent with the
concept of full-time employment.” McNutt v. McNutt, 203 Ariz. 28, 32,
¶ 17 (App. 2002). The provision “ensure[s] that the child support award is
based on both parents’ regular incomes but leave[s] to each parent the
choice of working additional hours — whether overtime or at a second job
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LUNDY v. LUNDY
Opinion of the Court
— without exposing that parent to the ‘treadmill’ effect of an ever-
increasing child support obligation.”1 Id.¶9 The court used Mother’s 2013 tax return to determine her
income, reasoning that her 2014 tax return reflected atypical earnings. The
2013 return showed that Mother’s net annual income from her job as a
financial advisor was $67,057, and that her net profit from a separate
business management job was $37,679. Her 2014 return and her testimony
established that she continued to work as a financial advisor. The 2014
return did not, however, make any mention of a business management
position (though it did report approximately $3,000 in earnings from an
“insurance” job). The court was not presented with evidence from which
it could conclude that Mother’s business management income was
“historically earned from a regular schedule and is anticipated to continue
into the future.” We conclude, therefore, that the court erred by including
that income in the child-support calculation.
¶10 We reject Father’s argument that Mother waived § 5(A)’s
application. Neither Mother nor Father specifically addressed the
business management income in the modification proceedings — they
instead disputed whether Mother’s 2014 earnings (which did not include
business management income) accurately represented her financial
situation and whether she correctly self-reported her 2015 income (which
similarly did not include business management income). Mother cannot
be said to have waived her right to challenge the court’s sua sponte
inclusion of income from the business management work she did in 2013.
B. The Superior Court Erred by Crediting Father with the Full
Amount of His Insurance Premium Payments.
¶11 Mother next contends that the superior court erred by failing
to prorate the amount Father paid to provide health insurance coverage
for the two minor children, the adult child, and Father’s wife. Again, we
agree with Mother.
1 Though the second and third sentences of § 5(A) might appear to
conflict, we interpret the Guideline as a whole, avoiding constructions that
could render any part meaningless. We read the second sentence to
prohibit inclusion of income from traditional overtime or second jobs, and
we read the third sentence to permit realistic calculation of income in
cases involving a parent whose income does not arise from such discrete
sources.
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LUNDY v. LUNDY
Opinion of the Court
¶12 Section 9(A) of the Guidelines provides that the court:
Shall add to the Basic Child Support Obligation the cost of
the children’s medical dental or vision insurance coverage, if
any . . . . In determining the amount to be added, only the
amount of the insurance cost attributable to the children
subject of the child support order shall be included. If
coverage is applicable to other persons, the total cost shall be
prorated by the number of persons covered.
Section 9(A) then provides an example of a “family option” premium
payment that “provides coverage for the employee and any number of
dependents.” (Emphasis added.) The example explains that the cost
attributable to the dependents’ coverage should be divided by the number
of dependents, then the quotient should be multiplied by the number of
the dependents who are the subject of child support, and then the product
should be used to calculate child support. The example makes clear that
the premium must be prorated even if the named insured could add any
number of non-child-support dependents to the policy at no additional
cost.
¶13 In view of the foregoing, the superior court erred by refusing
to prorate Father’s premium payments to account for the health
insurance’s coverage of the adult child and Father’s wife. Father’s
contention that Mother waived this issue is unavailing. The transcript
reveals Mother specifically argued that proration was required. Her
failure to cite § 9(A) did not constitute waiver.
II. THE SUPERIOR COURT ERRONEOUSLY AWARDED
ATTORNEY’S FEES TO FATHER.
¶14 Mother finally contends that the superior court erred by
awarding attorney’s fees to Father, arguing that he did not properly
request fees under ARFLP 78(D)(1).
¶15 ARFLP 78(D)(1) provides that “[a] claim for attorney’s fees,
costs and expenses initially shall be made in the pleadings, pretrial
statement, or by motion filed prior to trial or post-decree evidentiary
hearing.” We need not decide the temporal strictures of the rule, because
one thing is clear — the rule requires a filed, written request. There was no
such request in this case. Father did not ask for fees in the modification
petition or in any other filing. He instead asked for fees orally in closing
argument at the evidentiary hearing. That was insufficient under ARFLP
78(D)(1), and the fact that Mother requested fees in the same manner as
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LUNDY v. LUNDY
Opinion of the Court
Father does not constitute waiver — neither party would have been
eligible for fees under the rule.
CONCLUSION
¶16 We vacate the superior court’s orders modifying child
support, and we remand for further proceedings consistent with this
decision. On remand, the parties should apprise the court of any new
changes in circumstances or income that may affect child support.
¶17 In exercise of our discretion, we deny both parties’ requests
for attorney’s fees on appeal.
AMY M. WOOD • Clerk of the Court
FILED: AA
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