Family Law Case Review: Ashworth v. Ashworth – Modified Child Support

Case: Matthew Banks Ashworth v. Kathryn (Ashworth) Ehrgott 
by Mike Kohlhaas and Tamara McMillian, Bingham Greenebaum Doll

HELD: Trial court calculating the child support due on irregular bonus income erred when it applied the parties’ 2009 income information to develop the percentage of a 2012 bonus that would be due as child support. The trial court should have instead used the ratio calculated using the parties’ more recent income information.

HELD: Trial court did not impermissibly modify child support in a retroactive manner when it ordered Father to pay a portion of his bonus as child support, even though the bonus was paid before Mother filed a petition to modify child support, because Father had fraudulently concealed his receipt of the bonus income.

FACTS AND PROCEDURAL HISTORY: This is second appeal from a prior child support dispute. See Ashworth v. Ehrgott, 934 N.E.2d 152 (Ind. Ct. App. 2010). Relevant facts from the first appeal are as follows. Father and Mother married in 1999 and had two minor children. On October 31, 2006, Mother and Father dissolved their marriage in Knox County, Tennessee. Mother obtained sole legal and physical custody of the minor children. The Tennessee court ordered Father to pay Mother alimony of $306,000 in monthly installments of $1,500. Father was to pay the first nineteen months of alimony at $1,000 and defer $500, incurring interest at 8%. Father’s total allowed deferred amount of $9,500, plus interest, was due on or before December 31, 2008. The alimony payments were non-dischargeable in bankruptcy, terminable only upon Mother’s death, tax deductible to Father, and income to Mother on both her state and federal income taxes. Further, Father’s child support obligation was $2,500 monthly based on an upward deviation of $650 in favor of Mother. The court would recalculate Father’s child support obligation in May of 2008.

In 2007, Mother remarried and relocated to Indiana and Father moved to California for work. Beginning in June 2008, Father paid Mother $1,160 monthly in child support, less than the $2,500 divorce decree amount. In February 2009, Mother entered the Tennessee child support order in the Marion County Superior Court in Indianapolis, Indiana. In March of 2009, the Marion County trial court entered a child support income withholding order instructing Father’s employer to withhold $576.92 per week, totaling approximately $2,500 per month.  On April 14, 2009, Father filed an emergency petition to stay the income withholding order. On June 2, 2009, Father filed a verified motion to modify his child support obligation and included his financial declaration with his 2009 annual income. On June 11, 2009, the trial court reduced Father’s child support obligation to $500.75 per week. Father appealed. The first Ashworth court determined that the trial court erred by including alimony payments in determining Father’s gross income and remanded this issue to the trial court. Further, the appellate court affirmed the trial court’s calculation of the disparate tax rate between Indiana and California as 10.72%. On December 7, 2010, Mother filed a verified petition for modification for child support alleging Father was $27,000 in arrears on his alimony. Thus, Father should not be allowed to adjust his income to modify his child support. On December 22, 2010, Mother filed a pre-hearing submission. The trial court held a hearing on Mother’s verified petition and it issued an income withholding order of $422 per week for child support.  On October 27, 2011, Mother’s counsel deposed Father and he revealed that he failed to previously disclose two bonuses in years 2010 and 2011 totaling $180,000.

On December 12, 2011, Mother filed another verified petition for modification for child support to address Father’s undisclosed bonus checks. After holding a hearing, the trial court found Father failed to disclose his 2010-2012 bonuses which constituted irregular income according to the Ind. Child Support Guidelines. When Father withheld information relating to his bonuses he knowingly concealed under Ind. Trial Rules 26(E)(2) and (3) along with Marion County Family Law Rule 504 regulating financial declarations. Father’s conduct also equated to fraud on the court. In calculating Father’s child support obligation, the trial court first started with Father’s regular 2012 salary of $141,000. Second, the trial court subtracted Father’s alimony amount of $18,000. Third, the court reduced the remaining amount of $123,000 by a tax deferential of 5.7% (.9475) between Indiana and California which resulted in Father’s 2012 salary as $115,927.50 for child support purposes. The trial court calculated Father’s weekly child support at $339.46, commencing on April 4, 2012. However, an income withholding order was incorrectly entered on April 24, 2012 at $343.

The trial court calculated Father’s additional child support by allocating a fixed percentage of the amounts according to an irregular income ratio under the Indiana Child Support Guideline 3(A), comment 2(b) to address Father’s irregular income from the bonus checks. The trial court applied the irregular income ratio of .1841 to Father’s bonuses from years 2010-2012 for a total lump sum of $41,487.26. Subsequent bonus child support would be calculated similarly utilizing the .1841 ratio relating to the irregular income. Father appealed the trial court’s Order relating to child support modification favoring Mother.

Father raised six issues on this appeal which the Court of Appeals consolidated into three primary issues addressing whether the trial court abused its discretion in the following: 1) Calculating Father’s 2012 and subsequent child support obligation and income withholding order, 2) Determining Father’s additional child support obligation from his 2010-1012 bonuses and future irregular income, and 3) Declining to credit Father for his overpaid child support obligations.

2012 Child Support Obligation

The Court of Appeals determined that the trial court properly calculated Father’s child support obligation consistent with Ashworth. The trial court accounted for the approximate weekly amount of Father’s alimony payments. Father failed to demonstrate that alimony he remitted to Mother by garnishment represented payment on the current amount of alimony because Father’s evidence failed to show what the employer’s deductions were for. Further, the inconsistent amount between the trial court’s Income Withholding Order and the amount ordered was a scrivener’s error. This court remanded to the trial court to calculate the amount of credit Father is owed and to determine how it should be applied. Also, the appeals court instructed the trial court to correct the scrivener’s error on the April 24, 2010 Income Withholding Order and recalculate the Father’s credit and its repayment method.

Irregular Income Allocation

The trial court was permitted to use the equitable method requiring Father to pay a percentage of his irregular income and include the amount in Father’s gross income calculation. However, the Court of Appeals reversed the trial court’s use of the .1841 irregular income ratio applied to Father’s 2012 and subsequent bonuses and remand to the trial court to calculate another irregular income ratio with the 2012 CSOW data. The appellate court found that the trial court’s 2012 Order based off of the parties 2009 income allocated ratio data was illogical. This court instructed the trial court to apply the income allocation factor of .1549 to Father’s 2012 and future bonuses.

Methodology

Father argued that the lower court erred by utilizing percentages to determine his irregular income. Father failed to raise this issue at the trial court so it is waived. However, a trial court could determine an irregular income ratio at its discretion.

2011 Bonus

Father contended that when the trial court allocated his 2011 bonus as irregular income its actions were an impermissible retroactive modification of child support obligation.  The Court of Appeals reasoned that neither the divorce decree nor a modification order addressed Father’s irregular income. Thus, there was no impermissible retroactive modification of child support. The trial court’s award of $20,301.17 additional child support was affirmed. The trial court did not abuse its discretion by awarding a portion of Father’s 2010 bonus as additional child support.

Overpayment

Father alleged that he overpaid child support from June 2008 to December 2010, totaling $5,794. This court determined that Father was not entitled to reimbursement for this amount because he failed to raise this issue at the trial court or offer sufficient information to support his claims.

The trial court’s order was affirmed in part, reversed in part, and remanded.

To view the text of this opinion in its entirety, click here: Matthew Banks Ashworth v. Kathryn (Ashworth) Ehrgott


The Indiana Family Law Update is a free service provided by Bingham Greenebaum Doll, LLP. While significant efforts are made to ensure an accurate summary and reproduction of each opinion, readers are advised to verify all content and analysis with a traditional case law reporter before relying on the content and analysis offered here.

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