David v. David

2022 Ark. App. 177

643 S.W.3d 863

James DAVID, Appellant

v.Brittany DAVID, Appellee

No. CV-21-138

Court of Appeals of Arkansas, DIVISION I.

Opinion Delivered April 20, 2022

Cullen & Co., PLLC, by: Tim Cullen, for appellant.

Clark Law Firm PLLC, by: Suzanne G. Clark, Fayetteville, and Payton C. Bentley, for appellee.

KENNETH S. HIXSON, Judge

Appellant James David appeals from the Washington County Circuit Court's order modifying child support filed on December 8, 2020, in favor of appellee Brittany David. On appeal, James contends that (1) the circuit court erred by refusing to apply the presumptive amount of child support under the revised Arkansas Supreme Court Administrative Order No. 10; (2) the circuit court erred by purporting to apply "the same child support calculation methodology articulated in the Property Settlement Agreement"; and (3) the circuit court erred by refusing to apply the modified child-support amount retroactively to the date the motion was filed. We reverse and remand.

I. Facts

The parties were married on December 22, 2006, and three children were born of the marriage. A decree of divorce was filed on May 28, 2019. The decree approved and incorporated—but specifically did not merge—the parties’ property, child-custody and support agreement (PSA). According to the PSA, the parties agreed to share joint custody and equal time with the minor children. Regarding child support, the PSA provided the following in pertinent part:

That [James] is ordered to pay child[ ] support in the amount of Two Thousand Four Hundred and Fifty-Eight Dollars and Fifty Four Cents ($2,458.54) per month, based upon offsetting the parties incomes, with the next payment being due on July 1, 2019, and on the 1st day of each and every month thereafter. The child support is offsetting and is calculated based upon the difference between the parties’ net take home pay. Specifically, [James's] full support obligation is $2,988.54 per month (based upon a net monthly take home pay of $12,410.18), and [Brittany's] full support obligation is $530.00 per month (based upon an imputed net monthly take pay of $1,282.86 per month), yielding an offsetting support obligation of $2,458.54 to be paid by [James] to [Brittany], on a monthly basis.

Additionally, the PSA required James to provide medical insurance with the parties equally splitting any uncovered medical expenses. The parties further agreed to share the dependent tax deduction by alternating years, and James was required to pay Brittany $2,500 a month in alimony for thirty months unless Brittany remarried, cohabitated with a romantic partner, or died before the expiration of the thirty months. And the divorce decree provided in pertinent part that a "change in gross income in an amount equal to more than twenty percent (20%) or more than $100.00 per month shall constitute a material change of circumstances sufficient to petition the court for review and modification of the child support."

On March 31, 2020, less than a year after the divorce decree was entered, Brittany filed a petition for modification of child support alleging that there now existed a material change in circumstances in that James's income had increased substantially while hers had not. Therefore, she requested that child support be modified and recalculated using the same formula as the parties agreed on and used in the PSA and that the increase be made retroactive. James filed his response praying that Brittany's petition be denied and filed a counterpetition for modification of child support also alleging that a material change of circumstances had occurred requiring a retroactive modification of child support in accordance Arkansas Supreme Court Administrative Order No. 10.

While the case wound through the court system, the Arkansas Supreme Court changed Administrative Order No. 10 dramatically. The new Arkansas Supreme Court Administrative Order No. 10 became effective for "all support orders entered after June 30, 2020" (referred to hereinafter as the "Revised Administrative Order No. 10"). In re Implementation of Revised Admin. Ord. No. 10 , 2020 Ark. 131, at 1, 2020 WL 1643491 (per curiam). After the Revised Administrative Order No. 10 became effective, each party filed amended petitions and added other claims, including claims for discovery violations and contempt. On the eve of the hearing, Brittany filed an amended petition, alleging that because the parties did not, and could not, anticipate the dramatic changes to Administrative Order No. 10, the PSA should be reformed due to mutual mistake, and the court should increase alimony obligations in the event child support was reduced. David filed a response essentially alleging that the court did not have jurisdiction to reform the PSA because the PSA is a contract and had not been merged into the divorce decree. After a hearing, the circuit court agreed with David and granted David's motion to dismiss Brittany's amended petition for reformation. With the exception of the competing motions to modify child support, the parties also resolved all other pending issues.

A hearing regarding the modification child support was held on October 27, 2020. Brittany orally withdrew her petition for modification to increase child support, but the circuit court heard evidence regarding James's counterpetition for modification to decrease child support. Both parties had introduced into evidence several exhibits, including each's affidavit of financial means, proposed child-support worksheets and reports, and the PSA.

James testified that he had filed an amended counterpetition to modify his child-support obligation on July 13, 2020, which was after the Revised Administrative Order No. 10 took effect. James requested that his child support be modified, decreasing the amount of his support under the provisions of the Revised Administrative Order No. 10 and made retroactive to the filing of his counterpetition. James testified that he had three sources of income at that time, including income from Simmons Foods, the City of Springdale, and the Arkansas Air National Guard and that his income had increased approximately $35,000. James testified that he provides medical insurance for the children, which costs $132.12 a month, and asked that he receive a deduction in the amount of $913 a month for work-related child-care expenses.¹ James maintained his position that a reduction in child support was in the children's best interest because he shared joint custody with equal time and because of the new revisions to the guidelines.

Chris Bedwell testified as an expert witness for James regarding the implementation of the Revised Administrative Order No. 10. He holds master's degrees in accounting and economics and is a certified public accountant. Mr. Bedwell testified that he is familiar with the new child-support guidelines under the Revised Administrative Order No. 10 and that he had read the "white paper" that the new guidelines were based on—"Review of the Arkansas Child Support Guidelines Analysis of Economic Data, Development of Income Shares Chart, and Other Considerations." Mr. Bedwell further explained that he had previously testified as an expert witness regarding financial issues in other domestic-relations cases.

Mr. Bedwell testified that the white paper outlines the methodology used to arrive at the new support charts, which is based on data on family income and expenditures on children and what it actually costs to raise children rather than just giving a straight percentage of one person's income to another. He acknowledged this was a fundamental change in the way child support is calculated. Mr. Bedwell testified that the revised rule now considers the parties’ gross incomes rather than net incomes and that alimony is now deducted in the calculation of gross income. He further stated that it is contemplated that adjustments are to be made in joint custody arrangements based on the number of days that the children stay with each parent.

Regarding this case, Mr. Bedwell produced his report and calculations based on his interpretation of the new guidelines, which were admitted into evidence. Mr. Bedwell used a gross monthly income for James of $18,511.64,² which included a deduction of the $2,500 in alimony he pays to Brittany. He then reduced that number by costs he incurred for health insurance and child care, $132.12 and $913, respectively.

He did not impute any income to Brittany other than the $2,500 in alimony James paid to her. Therefore, he determined that James would owe $2,244 a month in presumptive child support as the payor. However, Mr. Bedwell indicated that the presumptive amount needed to be adjusted to account for joint custody. Because each party has the children 182.5 nights a year, Mr. Bedwell took the presumptive amounts for each parent and multiplied it by 50 percent, arriving at an obligation of $222 per month for Brittany and $1,122 a month for James. Mr. Bedwell then netted those two numbers to "equalize the relative obligation" and recommended that James's child-support obligation be reduced from the current amount of $2,458 a month to $900 a month. Bedwell testified that he thought his methodology for cross-credit was consistent with the white paper and that his recommendation is reasonable.

Brittany testified that she and James share joint custody and stated that they had previously agreed on an amount for child support as set out in the PSA. She further testified their agreement regarding alimony was based on her need and the child-support amount that was calculated at that time. She is a full-time student at the University of Arkansas pursuing a degree in social work. Brittany explained that if the circuit court reduced James's child-support obligation to $900 as James argued, she would be unable to pay her son's tuition and that she would need to drop out of school to find employment to support the children. Brittany testified that...