In re Madrigal

469 P.3d 108 (Table)

In the MATTER OF the MARRIAGE OF Lindsey MADRIGAL, Appellee, and Daniel Madrigal, Appellant.

No. 120,930

Court of Appeals of Kansas.

Opinion filed August 21, 2020.

Terry L. Malone, of Martin, Pringle, Oliver, Wallace & Bauer, L.L.P., of Wichita, for appellant.

Brian R. Carman, of Stinson, Lasswell & Wilson, L.C., of Wichita, for appellee.

Before Malone, P.J., McAnany, S.J., and Burgess, S.J.

MEMORANDUM OPINION

Per Curiam:

Daniel Madrigal appeals the district court's decision to increase his child support obligation and impose sanctions under the Kansas Child Support Guidelines § V.B.2. (2020 Kan. S. Ct. R. 93) (Guidelines). He argues that the district court erred in using the extended income formula to recalculate the amount of child support he pays to his ex-wife Lindsey Madrigal for their two children. As for sanctions, which were imposed for not disclosing material increases in his income, he contends that they should be reduced to reflect the earliest that he could have known that his income had increased and to credit him for extra expenses he paid to support the children. He also says that Lindsey's sanctions claim was untimely under the applicable statute of limitations and the doctrine of laches. Finding no reversible error, the district court's decision is affirmed.

FACTUAL AND PROCEDURAL BACKGROUND

The divorce

Daniel and Lindsey Madrigal divorced in May 2010. Daniel is a self-employed real estate agent; Lindsey, a self-employed hair stylist. They had two children during the marriage—B.L.M. (born in 2003) and B.A.M. (born in 2008). Under a settlement agreement incorporated into the divorce decree, both parents received joint custody of and equal time with the children. Daniel agreed to pay Lindsey $1,500 per month in child support.

The agreement also awarded Daniel the marital residence, three rental properties, and a cabin. For the marital residence, Daniel had to keep it on the market for sale but would keep any profit or loss. When the house later sold for a loss, Daniel took a $40,000 loan to pay off the mortgage. He paid off that loan in 2016. Daniel also assumed all unpaid taxes and penalties that arose during the marriage. A few years later, he agreed to pay the Internal Revenue Service $165,846.42 for unpaid taxes. He also paid about $30,000 in delinquent taxes to the State of Kansas. Because Daniel took on the tax obligation, Lindsey received no spousal support.

The agreement also split many expenses to care for the children. Each parent would pay for half of any childcare expenses; Daniel would keep providing medical insurance for the children; future medical expenses not covered by insurance would be split 80-20 between Daniel and Lindsey respectively; Lindsey would pay for school lunches; and each parent would claim one child as a dependent on their tax return.

Daniel's modification motion

In December 2010, Daniel asked the district court to reduce child support because "his income ha[d] been reduced by approximately 40% due to the sales decrease in the housing market." On the same day, Daniel filed a child support worksheet stating that his gross annual income was $62,519 and calculating an appropriate monthly child support amount of $799. The court delayed a hearing on Daniel's motion several times until he completed his taxes.

A year later, the district court adopted the parties' agreement to reduce child support to $800 a month. The court applied this new support figure starting January 1, 2011. See K.S.A. 60-1610 (now K.S.A. 2019 Supp. 23-3005 [b] ).

Lindsey's modification and sanctions motions

In March 2017, Lindsey moved to modify child support based on a material change in Daniel's income. After requesting information about Daniel's income, and not receiving any information after several months, Lindsey requested attorney fees for costs she incurred to obtain that information. In early June, the district court temporarily increased Daniel's support obligation from $800 to $1,800 (effective April 1) and set an evidentiary hearing for the modification and attorney fee issues.

Later that month, Lindsey asked the district court to sanction Daniel under § V.B.2. of the Guidelines for not disclosing material changes in his income for several years. Daniel eventually produced his income-tax returns from 2012-2015, but he had not provided his 2016 return as he said it had not yet been prepared. The returns showed that Daniel's income had increased every year since 2012. Lindsey alleged that not disclosing these increases violated Daniel's duty under the Guidelines to notify her of material changes in his income.

Lindsey's requested sanctions were based on the dollar value of Daniel's nondisclosure, which equates to the amount by which he had underpaid child support. She attached exhibits that calculated the sanctions by taking the difference between what Daniel would have paid in child support had disclosure occurred and the amount he actually paid. The exhibits included two sets of calculations for what Daniel should have paid. The first set used the highest monthly income capped income figure on the child support schedules in the Guidelines. The second used an uncapped figure, which reflected actual monthly income which exceeded the highest figure on the schedules. She then calculated a capped and uncapped sanction for each year in which Daniel's income materially increased without disclosure by comparing the amount he would have paid to the amount he did pay.

Lindsey calculated the 2016 and 2017 sanctions using Daniel's 2015 income because she had not received his income information for those years. For 2012 and 2013, she did not include an uncapped sanction because the parties' combined income was still below the highest amount on the schedules at that point. And she split 2017 into two periods—January to March and April to June—because the district court had temporarily increased Daniel's support amount effective April 1.

The table below shows the capped and uncapped sanction amount that Lindsey proposed for each year based on Daniel's taxable income on his Kansas returns:

Year	Daniel's Income	Capped Sanction	Uncapped Sanction
2012	$96,207	$2,192	N/A
2013	$120,688	$4,740	N/A
2014	$201,646	$11,916	$14,328
2015	$267,162	$12,576	$20,016
2016	(2015 income)	$14,052	$21,696
2017 (Jan. – Mar.)	(2015 income)	$3,513	$5,424
2017 (Apr. – June)	(2015 income)	$513	$2,424

The calculations used the same income figure of $15,800 for Lindsey each year, which is an imputed income figure that reflects the amount a person would earn working 40 hours a week at the federal minimum wage.

Lindsey's calculations produced a total capped sanction of $49,502 and a total uncapped sanction of $63,888. Lindsey also requested an increase in child support to $1,971 per month to reflect Daniel's higher income. The district court added the sanctions motion to the list of issues it would decide at the evidentiary hearing.

The evidentiary hearing

At the hearing in November, Lindsey testified that she had contacted her attorney about child support modification because she had noticed a change in Daniel's lifestyle. He had built a new home and bought an RV and a boat. At some point in 2017, she had asked Daniel about whether his income had changed and if he should pay more child support. She said that Daniel's response was no and "that if [she] tried, [she] would actually get less child support."

Lindsey also testified that about a month before the hearing she bought a house; she said that she could do so because of the recent increase in child support. Daniel lives in Derby, where the children attend school. That is about half an hour from where Lindsey used to live on the other side of Wichita.

When Daniel testified, he said that an accountant prepares his taxes every year. Sometimes Daniel received an extension on his taxes, filing them in October rather than April. According to Daniel, he never knows what his income and reasonable business expenses are until his accountant finishes his tax return each year. Because he is self-employed, paid on commission, and the real estate market fluctuates month-to-month, Daniel said he cannot know in advance what his income will be each year. He agreed that many self-employed parents pay child support and that it would be fair that "when [his] income is up, [his] child support the following year would be higher," and that if he had a down year financially, his "child support obligation the year after that would be down."

Daniel also testified about his annual income from 2012 to 2015. These numbers varied slightly from the numbers that Lindsey used to calculate sanctions, but they were similar:

Year	Income Used to Calculate Sanctions	Income From Daniel's Testimony
2012	$96,207	$98,475
2013	$120,688	$119,974
2014	$201,646	$201,760
2015	$267,162	$258,000

The parties testified at length about disputes over who had paid certain expenses for the children over the years. Both parents said that they had paid for clothes, school supplies, cell phones, and school enrollment fees. Lindsey said that she had paid for musical instruments and lessons for the children. Under a 2013 court order, Lindsey paid for any activities the children did at the YMCA, but both parents split any other activities. Daniel signed B.A.M. up for a football team and a traveling baseball team not at the YMCA. Lindsey had objected to enrolling B.A.M. because these activities were too expensive. Daniel had objected to enrolling B.L.M. in a gymnastics class on Lindsey's side of town.

Daniel estimated that on top of his monthly child support payments, he was paying around $800 every month in expenses to provide for the children. He provided some receipts as examples of clothes and school supplies he had bought over the years. Neither he nor Lindsey kept precise information about how much they spent on the children. All the expenses Daniel specifically listed totaled about $4,000.

The district court's initial findings

About a month after the hearing, the district court...