Lessons in imputed income from the Court of Appeals

Posted Wednesday, September 1st, 2010 by Gregory Forman
Filed under Alimony/Spousal Support, Attorney's Fees, Child Custody, Of Interest to Family Law Attorneys, South Carolina Appellate Decisions, South Carolina Specific

Have some sympathy for Family Court Judge Leslie K. Riddle, whose decision in the case of Marchant v. Marchant, 390 S.C. 1, 699 S.E.2d 708 (Ct.App. 2010), was affirmed as modified by the Court of Appeals with Wife successfully challenging one of the numerous decisions by Judge Riddle on whether and how to impute income to the Marchants.  A review of the factual disputes described in this opinion left me as confused as I am watching a game of Three-Card Monte.

Evidently Judge Riddle correctly determined Husband’s income.  Husband’s employer allowed him to live rent-free for six months in a property while Husband was overseeing improvements.  Husband claimed he would soon be paying his employer $800.00 a month in rent for the property.  The family court determined–according to the Court of Appeals correctly–that this free rental property should not be treated as income to Husband.

Husband’s employer also provided him with a vehicle.  The payment for the vehicle was $596 per month, with the business paying property taxes and insurance on the vehicle as well.  According to Husband’s testimony, the truck was not his property and was not solely for his use.  The truck was primarily for Husband’s business and personal use.  Nevertheless, at the conclusion of the term of the loan for the truck, the truck will belong to the company, not Husband.  Additionally, while Husband was the primary user of the truck, the truck was occasionally utilized by the other members of the company.  Husband declared a benefit in the amount of $300 per month for use of the vehicle.  The family court determined–according to the Court of Appeals correctly–that Husband’s claim of $300.00 per month imputed income for use of the vehicle was reasonable and that it was proper to not impute him the full cost of the vehicle as income.

Husband’s employer also provided him $27,000, which Husband claimed were pay advances or loans from his employer to aid in his paying his child support and alimony obligations pendente lite.  There were no formal documents associated with the loans but Husband testified he was nevertheless obligated to repay them based on a handshake deal with his partners.  The employer’s records show when advances were made and in what amount.  The family court determined–again, according to the Court of Appeals, correctly– that this $27,000 was a loan and not income to Husband.

Finally Wife argued that Husband was underemployed and should be imputed a higher income.  The Court of Appeals found this issue wasn’t preserved for appeal, as she had failed to get a ruling on this issue from the family court.

Wife also argued that the family court erred in setting her earning capacity.  The fact pattern of Wife’s earning capacity reads like the bar examination of my nightmares: Wife had worked sporadically and infrequently during the marriage.  She had worked in her father’s office, where she made $10.00 an hour, as a day-care worker, and in her Husband’s company, all for a brief time.  She had obtained her bachelor’s degree in journalism and her teaching certificate prior to the marriage but had never used it.  Wife was by-and-large a stay-at-home mother as agreed upon by the parties.

According to Husband’s vocational rehabilitation expert, Wife was capable of earning a gross income of around $28,000 per year with minimal additional training if she were willing to work in the field of education. Wife would need to take six credit hours of classes and pass the Praxis examination to obtain a current teaching certificate.  However, Wife indicated she had no desire to teach and instead hoped to obtain a degree in radiology, in which she would be guaranteed job placement. Wife had custody of the parties’ younger child and testified her radiology coursework would require her to attend school full time.

So the question for the family court and, later, the Court of Appeals was: what is the proper income to impute to Wife to set child support and alimony?  Is it the $10.00 per hour she made working for her father?  Is it what a beginning school teacher would make?  Is it what a beginning radiology worker would make?  Is it $0.00 because she wasn’t working and was attending radiology school full time?  Is it $28,000.00 per year, as Husband’s vocational rehabilitation expert testified?  Is it the minimum wage at the time of trial ($5.85 per hour)? Is it some other figure?

Judge Riddle set Wife’s earning capacity at $10.00 per hour; the Court of Appeals set it at then-minimum wage, and adjusted Wife’s child support and alimony accordingly.  The Court of Appeals recognized that Wife had shown a lack of initiative in finding any employment, but, in determining that the family court imputed too much income to her, noted she had no real recent work experience and her prior employment had been primarily working for family.  Damn if I can figure out why to prefer one of the myriad potential earning capacities over another and, if the Supreme Court is asked to weigh in, we may see a third ruling on Wife’s earning capacity. To the extent that Judge Riddle got it “wrong,” and the Court of Appeals got it right, it’s only because the Court of Appeals gets to tell a family court judge when she got it wrong and not visa versa.  If there’s any guidance in Marchant to the family court bench or bar on how to determine an unemployed homemaker’s income, I can’t recognize it.

Finally the Court of Appeals rejected Wife’s claim that an award of only $2,000 of her $12,000 in attorney’s fees was insufficient, as neither party was really in a position to pay their attorney’s fees but Husband had a little more disposable income than Wife.

As I note at the beginning, figuring out the Marchants’ earning capacity was daunting.  Judge Riddle should be proud that the Court of Appeals only modified one of her decisions on the myriad issues presented.

3 thoughts on Lessons in imputed income from the Court of Appeals

  1. I would like to know more about the husband’s employment, whether he is self-employed or operates a company. The exact wording from Reg. 114-4720 is “In-kind income; however, the 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.” It does not appear that either party or either court considered the critical language “from self-employment or operation of a business,” nor did the court in Mobley v. Mobley, 309 S.C. 134, 420 S.E.2d 506 (1992), cited with approval by the Marchant court.

  2. steve says:

    Interesting twist/question:

    Ex H is scion of wealthy family – never worked a day in life. His elderly parents just kept giving $ from a $400+ mm trust (they are sole beneficiaries). Imputed income for support = $190K/yr.

    Ex H dies penniless, intestate. Can/would/might court order continuing support payments (or lump sum) to be paid by Ex H parents/the trust?

    I know decree and trust language important, but for the sake of argument, assume it’s ambiguous.

  3. Is this a trick question? Under what possible theory could a non-party with no duty of support be required to make support payments?

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.




Put Mr. Forman’s experience, knowledge, and dedication to your service for any of your South Carolina family law needs.