Family Law Review: R.R.F v. L.L.F.

Case: R.R.F. v. L.L.F.

Case Summary – by Mike Kohlhaas  (with thanks to Katie Rudis) 

HELD: The Indiana Court of Appeals held that Father’s appeal of a trial court order, requiring Father and Mother to take independent action in determining college expense obligations after taking tax credits into account, was an appealable final judgment. The Court then held that granting Father an up-front setoff of his proportional share of education expense tax credits available to Mother would be inequitable, as it would result in a financial hardship to Mother, who would be required to pay more at the time the college expenses become due.

FACTS AND PROCEDURAL HISTORY: Father and Mother were married and had two children. The parties’ marriage was dissolved by decree in 2001. The parties’ settlement agreement provided that Mother would have primary physical custody of the children and Father would have visitation and pay child support.

In September, 2009, Mother filed a petition to modify child support. In the petition, Mother alleged a substantial change in circumstances and requested that support be modified to reflect the emancipation of the oldest child, as well as the post-secondary educational expenses of the youngest child. The dissolution court held a hearing in November, 2009, at which Father asked the trial court to grant him an offset against his share of the youngest child’s post-secondary educational expenses based on the tax credits available to Mother as a result of the youngest child’s enrollment in college. In December, 2009, the dissolution court entered an order granting Mother’s petition and rejecting Father’s request for setoff, based on its conclusion that Father was not entitled to the tax credits at issue pursuant to the federal tax laws, and that the court was “without jurisdiction to usurp federal tax law which allows said credits.”

Father appealed. Father argued “that the dissolution court did not properly consider the significant tax credit Mother would receive for her contribution to youngest child’s college expenses before the court assigned each party’s responsibility for those expenses.” The Court agreed and remanded to the trial court with instructions “to first consider the reduction in the parents’ obligation toward youngest child’s college expenses realized by Mother’s tax credit and then apportion Father’s and Mother’s obligations accordingly.”

In February, 2011, the trial court entered its order on remand, which ordered “both parties to apply for all applicable college tax credits for which he or she may qualify and to prepare a return without the credits to determine the actual dollar benefit realized by each party in his or her tax obligation or refund as a result of the credit(s). This actual dollar benefit realized shall be used as the financial subsidy awarded to each party for post-secondary education expenses . . . so as not to be a hardship on any one party, the Court hereby orders Father to reimburse Mother 35.93% of any tax credit subsidy he receives and Mother to reimburse Father 64.07% of any tax credit subsidy she receives.”

Father appealed the dissolution court’s order on remand, arguing that the dissolution court’s order was clearly erroneous.

On cross-appeal, the State became a party through the intervention of the Title IV-D Prosecutor. The State argued that the dissolution court’s order on remand was not an appealable final judgment because it “leaves for further determination the actual amounts resulting from the parties’ calculation of their respective college expense obligations after taking into account Mother’s tax credits, or any tax credits Father may receive.” Thus, the State asserted that the Court was required to dismiss the appeal for lack of subject matter jurisdiction.

The Court found that the trial court left nothing for its future determination, as the parties were ordered to undertake independent action, without further intervention of the trial court. Therefore, the Court concluded that the trial court’s order on remand was a final judgment, and Father’s appeal was properly before the Court.

After the Court determined it had jurisdiction, it considered Father’s argument that the trial court’s order was clearly erroneous in light of certain tax credits available to Mother. The trial court had ordered each parent to pay a set percentage of the youngest child’s college expenses. The trial court also ordered the parties to apply for relevant tax credits and to reimburse the other party of their proportional share of any educational expense credit subsidy received. Father argued that the trial court should have setoff his share of the college expenses against his proportional share of the tax credits available to Mother. The Court disagreed. The Court found that granting Father an up-front setoff for his proportional share of the tax credits would increase the amount Mother would be required to pay, at the time the college expenses become due. Thus, the Court held that an up-front setoff would be inequitable, as it would result in a financial hardship to Mother, who has a considerably smaller income than Father.

Father also asserted that the trial court’s order amounted to an automatic, year by year modification of the parties’ relative contributions. The Court disagreed. The Court found that while the actual dollar amount of the tax credit subsidies may vary from year to year, the percentage of the tax credit owed to the parties would remain the same. Said differently, unless the order was to be amended, Mother would always be required to reimburse Father for 64.07% of any applicable tax credit subsidy she received. Likewise, Father would always be required to reimburse Mother for 35.93% of any applicable tax subsidy he received. Thus, the Court found that the trial court’s order, which allocated tax credit reimbursement by a set proportion, was not clearly erroneous and did not constitute an automatic modification of the parties’ contribution to the youngest son’s college expenses.

Outcome: Father’s appeal was found to be properly before the Court, as an appeal from final judgment. The trial court’s order on remand was not clearly erroneous, and thus was affirmed.

To view the text of this opinion in its entirety, click here: R.R.F. v. L.L.F.

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