Cash v. Cash

880 S.E.2d 718

Katherine Gledhill CASH (McGee), Plaintiff,

v.Matthew CASH, Defendant.

No. COA21-774

Court of Appeals of North Carolina.

Filed November 1, 2022

Plumides, Romano & Johnson, P.C., by Richard B. Johnson, Charlotte, for defendant-appellant.

No brief for plaintiff-appellee.

STROUD, Chief Judge.

¶ 1 Father Matthew Cash appeals from an order modifying child support to Mother Katherine Cash (now McGee). Because the trial court had competent evidence to support the challenged Findings of Facts and because it did not abuse its discretion in imputing income to Father based on a determination he acted in bad faith, we affirm.

I. Background

¶ 2 Mother and Father married in 2007, and they had a child born in 2008. Also in 2008, they separated and were later divorced. On 10 December 2008, Mother filed a Complaint seeking, inter alia , child support. In September 2011, Mother and Father entered a "Child Support Consent Order."¹ In the consent order, Father was ordered to pay Mother $50 per month in child support plus an additional $50 per month towards $5,292 in child support arrears, and they were each to pay one half of the child's medical expenses with Mother covering the first $250 each year. At some later point, the parties voluntarily and informally agreed Father would increase his child support payments to $350 per month. Father continued making those payments through the time the trial court entered the order on appeal, the "Amended Order for Modification of Permanent Child Support" (hereinafter "Child Support Modification Order"),² which ruled on Mother's motion for "Modification of Child Support and Attorney Fees"³ filed 27 August 2020. (Capitalization altered.)

¶ 3 In the Modification Motion filed in August 2020, Mother alleged "there has been a substantial and material change in the circumstances since the" September 2011 order based on three grounds: the existing order was "more than three (3) years old and there has been at least a 15% change in the amount owed under the North Carolina Child Support Guidelines"; Mother had two children since entry of the previous order; and Father's "income has increased significantly."

¶ 4 Father filed a "Financial Affidavit" on 22 January 2021 in which he indicated he was employed by Huntley Brothers Company and made approximately $99,000 in adjusted gross income in 2019 and a current monthly gross income of approximately $9,800. (Capitalization altered.) Father had been employed with Huntley Brothers "for seven or eight years." On 12 March 2021—five days before the scheduled hearing on Mother's motion to modify child support—Father filed an "Amended Financial Affidavit" indicating he had been laid off from Huntley Brothers and as a result his monthly gross income was reduced to $0. (Capitalization altered.)

¶ 5 On 17 March 2021, the trial court held a hearing on Mother's Modification Motion. At the outset of the hearing, Mother's attorney raised before the trial court that Mother had not received updated income verification and financial information from Father. Mother's attorney argued "[t]his was an ongoing discovery issue" because "it was all part of the Request for the Production of Documents" and the trial court could "take that in consideration when rendering [its] judgment." Father's attorney responded they had "provide[d] updated statements prior to the last time" the motion was scheduled for a hearing, in late January 2021. The trial court thanked the parties and then moved on to ask about pretrial motions.

¶ 6 For the remainder of the hearing, three witnesses testified—Father, Mother, and David Huntley, one of the owners of Huntley Brothers. Father testified about: his current child support obligation; his previous employment with Huntley Brothers and when the previous child support order was entered including his income during those times; a masonry business he started in August 2020 including his recent jobs for the business as well as the deposits, debits, withdrawals, checks, and balance of the associated business banking account and credit card; and his plan to focus on his own masonry business instead of seeking new employment. The discussion of his time with Huntley Brothers included some questions about income verification documents Father provided during discovery, and Father testified he had not provided a 2020 W-2 or a paystub since 2020. Similarly, during the discussion of Father's masonry business, Mother's attorney asked Father about discovery and verification documents related to the business's income and expenses, and Father testified he had "been asked to provide everything" and "didn't – haven't just not done it, just been asked." Father later clarified he had not provided any relevant business documents past November 2020.

¶ 7 Mother testified about: the previous child support order and amount as well as her motion for modification; her income including supporting documentation and account statements; her family unit including her husband and other children; and the costs and expenses for the parties’ child. David Huntley testified about how Huntley Brothers laid off Father. On cross-examination, Mr. Huntley testified the company laid off Father rather than offer him a reduced salary with a different position because Mr. Huntley "know[s]" Father and did not think he would accept it. Finally, at the hearing, the parties argued during closing argument about whether the trial court could impute income to Father for the child support calculation based on a determination he was acting in bad faith.

¶ 8 Following the hearing, the trial court entered its initial "Order for Modification of Permanent Child Support" on 16 April 2021. (Capitalization altered.) The trial court entered the "Amended Order for Modification of Permanent Child Support" (i.e. , the Child Support Modification Order) on 21 April 2021. Father appeals from the Child Support Modification Order, so we focus on that Order's contents.

¶ 9 First, the trial court made Findings about the procedural history of the case and jurisdiction, including the previous child support order and Mother's Modification Motion. It then found "there had been a substantial change in circumstances affecting the welfare of the minor child, which warrants a modification of child support," for the three reasons listed in Mother's Modification Motion; in addition, Mother's income had "increased substantially." Next, the trial court made Findings on Mother's and Father's income. As part of these Findings, the trial court found Father had "intentionally failed to comply" with requirements to provide income verifications for his employment with Huntley Brothers or his masonry business. The trial court also found Mr. Huntley's testimony about how Father was laid off was not "credible, especially in light of Father expressing that he has no intention of looking for employment, filing for unemployment or applying for /taking another position ...." As a result, the trial court rejected Father's contention his income was $0. Based on those facts, the trial court also determined Father acted in "bad faith" and "deliberate[ly]" tried to "suppress[ ]" his income "to avoid or minimize his child support obligation," so it imputed income to him. Finally, the trial court made Findings incorporating the appropriate worksheet from the North Carolina Child Support Guidelines and modifying Father's child support retroactive to 1 September 2020 with appropriate arrears.

¶ 10 The trial court then made Conclusions of Law on its jurisdiction, Father's bad faith and the resulting imputation of income, and the reasonableness of the child support obligation that would begin 1 September 2020. As a result, the trial court ordered Father pay approximately $1140 in child support each month beginning 1 September 2020 and lasting until the child "turns 18-years-old or graduates high school, whichever is later." The trial court also awarded arrears of $5,510 and set out a payment schedule for the arrears of $363 per month and ordered him to pay a portion of the child's medical, dental, and counseling bills.

¶ 11 On 20 May 2021, Father filed a written notice of appeal from the Child Support Modification Order.

II. Analysis

¶ 12 "[C]hild support modification is a two-step process." Harnett County ex rel. De la Rosa v. De la Rosa , 240 N.C. App. 15, 23, 770 S.E.2d 106, 112 (2015) (quotations and citation omitted). First, the trial court must "determine a substantial change of circumstances has taken place." Id. (quotations and citation omitted). Second, if a substantial change has occurred, the court "calculate[s] the applicable amount of support." Id. (quotations and citation omitted). On appeal, Father does not challenge the trial court's Finding and Conclusion "there has been a substantial change in circumstances affecting the welfare of the minor child, which warrants a modification of child support." Therefore, we focus on the trial court's calculation of child support.

¶ 13 As this Court has previously explained

[N]ormally, a party's ability to pay child support is determined by that party's income at the time the award is made. However, capacity to earn may be the basis for an award where the party deliberately depressed his income or deliberately acted in disregard of his obligation to provide support. Before earning capacity may be used as the basis of an award, there must be a showing that the actions which reduced the party's income were taken in bad faith, to avoid family responsibilities.

Balawejder v. Balawejder , 216 N.C. App. 301, 312–13, 721 S.E.2d 679, 686 (2011) (quoting

Pataky v. Pataky , 160 N.C. App. 289, 306–07, 585 S.E.2d 404, 415–16 (2003), aff'd per curium , 359 N.C. 65, 602 S.E.2d 360 (2004) (quotations, citations, and alterations in original block quotation omitted)); see also State ex rel. Williams v. Williams , 179 N.C. App. 838, 840–41, 635 S.E.2d 495, 497 (2006) ("Capacity to earn, however, may be the basis of an...