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Hawkins affirms denial of child support reduction to downsized, underemployed father

The April 17, 2013 Court of Appeals opinion in Hawkins v. Hawkins, 403 S.C. 228, 742 S.E.2d 677 (Ct. App. 2013) demonstrates the continued reluctance of the family courts to reduce child support obligations for downsized non-custodial parents.

In Hawkins, the parties’ divorce decree specifically allowed child support to be recalculated pursuant to the South Carolina Child Support Guidelines on an annual basis.  In January 2009 child support was recalculated by consent a third time and reduced to $640 per month.  This figure was based Father having 182 overnights per year with his income stated as $9,833 per month based his recent $130,000 severance from his job as a senior executive sales representative for GlaxoSmithKline.  When Father could not find new employment he filed a child support modification case in February 2010, asking that his support obligation be reduced or eliminated.

At the time of trial in January 2011, Father had recently started a commission real estate sales job and listed his income as $0.00, as he had yet to make any sales.  He acknowledged that his previous employer had paid a company to assist him in finding work and that he had been warned not to expect to find employment in pharmaceuticals or at the same or higher salary.   Further Father has substantial retirement assets and continued to live a lavish lifestyle on his new wife’s income, which included a maid, a power boat, a home with a $7,000 monthly mortgage, and nice vacations.  In contrast, Mother lived in modest home and had few assets.  Though employed as a school teacher, she worked other jobs during the summer to increase her income.  She was already withdrawing from her IRA to pay her living expenses and attorney’s fees and indicated that if her child support was reduced further she would not be able to maintain the home and meet the family’s other expenses.

In denying Father’s request for a child support reduction, the family court considered the equities of the parties’ respective living conditions:

The family court found Father knew of his lack of employment and the economic climate in the country when he signed the third consent order on January 22, 2009. Father had $532,606.00 in retirement assets, which the family court found he could utilize to pay his child support. The family court noted Father had remarried but did not consider his current spouse’s income in its decision. However, the family court held it would be “inequitable . . . to ignore the fact that the Father has not experienced a significant change in lifestyle despite losing his job.” Father’s spouse paid all of his expenses, and his marital situation has afforded him “the ability to consider his options and begin a new career as a real estate agent where he hopes to again earn the income he had before, rather than taking a significantly lower paying job as a medical technologist.” The family court found Father’s reduction of income alone was not enough to warrant a modification of child support and ruled he was capable of making his child support payments as evidenced by his continued high standard of living. The family court maintained he failed to show he could no longer make the child support payments required by the third consent order.

In addition to denying his request to reduce or eliminate his child support obligation, the family court ordered him to pay Mother’s attorney’s fees, which totaled $23,477.95.  Father filed a Rule 59(e) motion, which the family court also denied while ordering him to pay an additional $971.00 in fees.  Father appealed both orders.

The Court of Appeals affirmed.  The majority held that language in the divorce decree that “Child support will be revisited on an annual basis thereafter” did not relieve Father of his burden of proving a substantial change of circumstances to modify child support.  If further held that Father was underemployed and had failed to demonstrate an unanticipated change of circumstances:

Father admitted he was terminated from his employment before he signed the third consent order, and thus, he was aware of the potential to remain unemployed.  Prior to signing the third consent order, he was told it would be difficult to find a job in his former pharmaceutical field, and he should expect a decreased income with any future employment. Further, Father has since obtained employment with Carolina One, and while it is a commission based position, he has the potential to make an income. We believe his claimed current economic situation was within contemplation when the third consent order was executed. However, even if it was not within the parties’ contemplation, Father has not proven a material and substantial change of circumstances warranting a reduction in alimony [sic].

The Court of Appeals further rejected Father’s argument that the family court improperly considered his IRA account or his wife’s income in rejecting his modification request:

Here, the family court mentioned the IRA account, “which he [could] utilize to pay his child support.”The family court did not require Father to pay child support from his IRA account, and we view the order as merely noting another one of Father’s assets in comparison to Mother’s assets in determining whether he was able to pay the child support from his own resources. …

As to Father’s spouse’s income, the family court had the discretion to consider the income of Father’s new spouse in determining whether a substantial or material change of circumstances had occurred that warranted a reduction in his child support. See Fischbach v. Tuttle, 302 S.C. 555, 557, 397 S.E.2d 773, 774 (Ct. App. 1990). In the present case, the family court was given a sealed envelope containing Father’s new spouse’s salary; however, the family court never opened it, and made its determination without considering the exact salary she may have made. It appears the family court properly considered it as an additional source of income for Father’s household when determining whether he presented evidence sufficient to show a substantial or material change of circumstances warranting a reduction in his child support.

The Court of Appeals further affirmed the attorney fee award:

Here, the family court considered the proper factors in determining attorney’s fees and gave a thorough explanation of its decision. Father argues litigation would have been unnecessary had Mother followed their Settlement Agreement, but we disagree. The Settlement Agreement merely allowed for child support payments to be revisited annually and did not specifically require an automatic annual recalculation pursuant to the Child Support Guidelines. Because we affirm the family court’s decision regarding the issues above, there has been no change in the outcome of the trial, and we find the preponderance of the evidence supports the family court.

In concurrence, Judge Few held that “the phrase ‘Child support will be revisited on an annual basis’ clearly and unambiguously indicates the parties intended that child support would be recalculated annually without the need for either party to demonstrate a substantial change in circumstances.”  However he would affirm the family court because, “Even accepting the father’s contention that his current income is close to zero, his income earning capacity is substantial.”

My reading of Hawkins is that it is ambiguous whether Mr. Hawkins might have received a child support reduction had he be gainfully employed at the time of trial at an income of less than $9833 per month.  Typically when I represent downsized parents I like to seek the reduction when my client has resumed employment so I can demonstrate actual income rather than arguing over earning capacity.  While the Court of Appeals claims his downsizing was not an unanticipated change of circumstances, a perception that he was living the good life on his wife’s income while being overly picky about employment might be the actual reason his support modification was denied.

Six years into the worst economic downturn of my career the family courts are still ambivalent about basing child support obligations for a non-custodial parent on his or her current actual income.  Hawkins, and cases like it, cause me to settle such child support cases for more than the guidelines would require or offer other concessions so that my client might get child support set upon actual income.  Of course, when I represent the custodial parent, I can use this reluctance to extract concessions that my client would otherwise not be entitled to.

Even more frightening is Hawkins’ language that a new spouse’s income can be considered in a child support modification action.  While a spouse’s income should certainly be relevant if it allows a parent to be underemployed, it is ill-informed policy to start considering spouse’s incomes in actually setting child support.  If a new spouse’s income is relevant does that mean that it should be considered any time a parent marries someone with a greater income than he or she has?  And, if so, how much should of the new spouse’s income should be considered in setting child support?  The discretion to consider this factor provides the family court and additional–and I believe unnecessary–basis to deny support modifications.

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