Hotz v. Hotz , 301 Neb. 102 ( 2018 )

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www.nebraska.gov/apps-courts-epub/
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Nebraska Supreme Court A dvance Sheets
301 Nebraska R eports
HOTZ v. HOTZ
Cite as 301 Neb. 102
Barbara F. Hotz, appellee, v.
James P. Hotz, appellant.
___ N.W.2d ___
Filed September 21, 2018. No. S-17-1152.
1. Modification of Decree: Child Support: Appeal and Error.
Modification of child support is entrusted to the discretion of the trial
court. An appellate court reviews proceedings for modification of child
support de novo on the record and will affirm the judgment of the trial
court absent an abuse of discretion.
2. Evidence: Appeal and Error. In a review de novo on the record, an
appellate court reappraises the evidence as presented by the record and
reaches its own independent conclusions with respect to the matters
at issue.
3. Judgments: Words and Phrases. A judicial abuse of discretion
requires that the reasons or rulings of the trial court be clearly unten-
able insofar as they unfairly deprive a litigant of a substantial right and
a just result.
4. Child Support: Rules of the Supreme Court. Interpretation of the
Nebraska Child Support Guidelines presents a question of law.
5. Judgments: Appeal and Error. When reviewing questions of law,
an appellate court resolves the questions independently of the lower
court’s conclusions.
6. Statutes: Rules of the Supreme Court. For purposes of construction,
Nebraska Supreme Court rules are treated like statutes.
7. ____: ____. Absent a statutory indication to the contrary, language
contained in a Nebraska Supreme Court rule is to be given its plain and
ordinary meaning.
8. ____: ____. Just as statutes relating to the same subject are in pari mate-
ria and should be construed together, Nebraska Supreme Court rules
should be read and construed together.
9. Rules of the Supreme Court. A court must attempt to give effect
to all parts of a Nebraska Supreme Court rule, and if it can be
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avoided, no word, clause, or sentence will be rejected as superfluous
or meaningless.
10. Rules of the Supreme Court: Appeal and Error. An appellate court
should try to avoid, if possible, the construction of a Nebraska Supreme
Court rule that would lead to an absurd result.
11. Child Support: Alimony: Rules of the Supreme Court. The Nebraska
Child Support Guidelines exclude alimony between parents from their
total monthly incomes for the purpose of calculating child support obli-
gations for their children in modification proceedings.
12. Child Support: Rules of the Supreme Court. In general, child sup-
port payments should be set according to the Nebraska Child Support
Guidelines.
13. ____: ____. A court may deviate from the Nebraska Child Support
Guidelines if their application in an individual case would be unjust or
inappropriate; the court must specifically find that a deviation is war-
ranted based on the evidence and state the reason for the deviation in
the decree.
14. ____: ____. A deviation from the Nebraska Child Support Guidelines
without a clearly articulated justification is an abuse of discretion.
15. ____: ____. Deviations from the Nebraska Child Support Guidelines
must take into consideration the best interests of the child or children.
16. Modification of Decree: Child Support: Proof. A party seeking to
modify a child support order must show a material change in circum-
stances that (1) occurred subsequent to the entry of the original decree
or previous modification and (2) was not contemplated when the decree
was entered.
Appeal from the District Court for Lincoln County: R ichard
A. Birch, Judge. Affirmed.
Kent A. Schroeder, of Ross, Schroeder & George, L.L.C.,
for appellant.
R. Bradley Dawson, of Lindemeier & Dawson, for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Funke, J.
The district court dissolved the marriage of Barbara F. Hotz
and James P. Hotz, split custody of their three minor children;
ordered James to pay child support until the parties’ oldest
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HOTZ v. HOTZ
Cite as 301 Neb. 102
child, Josee Hotz, reached the age of majority; and awarded
alimony to Barbara. Barbara later moved to modify the amount
of child support James paid, alleging James’ income had mate-
rially increased. The court declined to include James’ alimony
payments to Barbara in its calculation of the parties’ total
monthly income for the purpose of recalculating child sup-
port obligations. The court also rejected other arguments from
James regarding the calculation of the parties’ total monthly
income and abated part of Barbara’s child support obligations
after Josee reaches the age of majority.
We hold that the Nebraska Child Support Guidelines (NCSG)
exclude alimony between parents from their total monthly
income for the purpose of calculating child support obligations
for their children. Further, we find that the court did not abuse
its discretion in calculating the parties’ child support obliga-
tions or abating Barbara’s child support payments. Therefore,
we affirm.
I. BACKGROUND
In 2015, the court entered a decree dissolving the mar-
riage of Barbara and James and awarding custody of their
three minor children. The court awarded Barbara custody of
Josee and James custody of their other two children. The court
ordered James to pay Barbara $253 per month in child support
until Josee reached the age of majority, and then Barbara to pay
James $302 per month for two children and $244 per month
for one child. Further, the court ordered James to pay Barbara
$750 per month in alimony for 70 months.
In 2016, Barbara filed a complaint to modify the decree,
seeking a change in custody, child support, and alimony.
Concerning alimony and child support, the complaint alleged
that James’ income had increased and that the change would
increase the support paid by him by more than 10 percent. At
trial, the parties testified about and produced evidence of their
current employment and income.
Barbara testified that she has a part-time job with a hospital
service company and a part-time job at a livestock company,
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HOTZ v. HOTZ
Cite as 301 Neb. 102
working 1 day per work at each job. The evidence showed that
she works about 8 hours per week, at a rate of $15.47 an hour,
for the hospital service and that her monthly income from the
livestock company is about $400. She also testified that she
owns rental homes that are not currently income producing
and runs a corporation that operates at a loss. James submit-
ted Barbara’s Social Security statement into evidence, which
shows her annual earnings for the purposes of Social Security
taxes. James testified that his earning capacity had decreased
since the divorce decree. He submitted into evidence his per-
sonal and S corporation income tax returns from 2016.
Each party presented a demonstrative exhibit of proposed
child support calculations. James calculated his gross monthly
income at $3,116 and Barbara’s at $3,431. Barbara calculated
her gross monthly income at $1,560 and James’ at $5,794.
She calculated her income as $9 per hour for a 40-hour
workweek.
The court accepted Barbara’s calculation of James’ total
monthly income and determined Barbara’s total monthly
income based upon an earning capacity of $1,784, finding she
could work 8 hours per week at $15.47 per hour and 32 hours
per week at $9 per hour. The court modified its support order
to require James to pay Barbara $156 per month in child sup-
port until Josee reaches the age of majority, and then Barbara
to pay James $424 per month for two children and $292 per
month for one child.
Both parties filed a motion to alter or amend the decision.
The court denied James’ motion. It ruled that it had correctly
disregarded James’ claimed depreciations, under Neb. Ct. R.
§ 4-204 (rev. 2016), and that the NCSG does not allow for the
inclusion of alimony as income in child support calculations
on a complaint to modify. It reasoned that Neb. Ct. R. § 4-213,
read in conjunction with § 4-204, excludes alimony from total
monthly income.
The court, in part, granted Barbara’s motion, requesting an
adjustment of her child support obligation when the parties
had alternating weeks of custody, by granting an 80-percent
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abatement of her obligation during the months of June, July,
and August. It reasoned that the abatement was warranted
because James’ total monthly income is substantially higher
than Barbara’s and, during those months, Barbara will have
equal days of custody, whereas James otherwise has full cus-
tody of the children after Josee reaches the age of majority.
James filed an appeal, and we granted his motion to bypass
the Nebraska Court of Appeals.
II. ASSIGNMENTS OF ERROR
James assigns, restated and consolidated, that the district
court abused its discretion in (1) failing to accurately calculate
the parties’ child support obligations; (2) failing to include ali-
mony payments in the calculation of the parties’ total monthly
incomes; (3) calculating Barbara’s earning capacity; (4) finding
James failed to prove he was entitled to depreciation deduc-
tions; and (5) abating Barbara’s child support obligation by 80
percent for the months of June, July, and August.
III. STANDARD OF REVIEW
[1] Modification of child support is entrusted to the discre-
tion of the trial court.1 An appellate court reviews proceedings
for modification of child support de novo on the record and
will affirm the judgment of the trial court absent an abuse
of discretion.2
[2,3] In a review de novo on the record, an appellate court
reappraises the evidence as presented by the record and reaches
its own independent conclusions with respect to the matters at
issue.3 A judicial abuse of discretion requires that the reasons
or rulings of the trial court be clearly untenable insofar as
they unfairly deprive a litigant of a substantial right and a
just result.4
1
Schwarz v. Schwarz, 289 Neb. 960, 857 N.W.2d 802 (2015).
2
Id.
3
Connolly v. Connolly, 299 Neb. 103, 907 N.W.2d 693 (2018).
4
McCullough v. McCullough, 299 Neb. 719, 910 N.W.2d 515 (2018).
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[4,5] Interpretation of the NCSG presents a question of
law.5 When reviewing questions of law, an appellate court
resolves the questions independently of the lower court’s
conclusions.6
IV. ANALYSIS
1. Court Did Not A buse
Discretion in Calculating
Child Support Obligations
James does not argue that the court erred in finding that a
material change in circumstances warranting a modification of
child support obligations has occurred. Instead, he challenges
only specific findings of the court regarding the parties’ total
monthly incomes for the purpose of calculating their new
child support obligations. Specifically, he argues that the court
should have considered his alimony obligation to Barbara in
calculating the parties’ incomes, deducted his depreciations,
and calculated Barbara’s earning capacity at the hourly rate of
her current employment.
(a) Alimony Obligation Between Parents
Is Excluded From Calculating Total
Monthly Income for Determining
Child Support Obligations
Between Them
James concedes that the NCSG and Nebraska case law
establish that alimony payments cannot be included in the
calculation of child support during the initial decree, because
alimony is calculated after child support. However, he asserts
that alimony payments are required to be included in the cal-
culation of total monthly income, under Neb. Ct. R. § 4-201
and § 4-204, in modification proceedings, because alimony
5
Schwarz, supra note 1.
6
Cullinane v. Beverly Enters.-Neb., 300 Neb. 210, 912 N.W.2d 774 (2018).
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payments are not specifically excluded. He also argues that
such an interpretation would be more consistent with the
way other states with the same model for calculating child
support treat alimony payments in calculating child sup-
port obligations.
Barbara responds that § 4-213 requires that alimony pay-
ments not be included in child support calculations.
The main principle behind the NCSG is to recognize the
equal duty of both parents to contribute to the support of
their children in proportion to their respective net incomes.7
Section 4-204 of the NCSG, titled “Total monthly income”
provides:
This is income of both parties derived from all sources,
except all means-tested public assistance benefits which
includes any earned income tax credit and payments
received for children of prior marriages. . . .
....
If applicable, earning capacity may be considered in
lieu of a parent’s actual, present income . . . . Earning
capacity is not limited to wage-earning capacity, but
includes moneys available from all sources.
We have stated that the “[NCSG is] very specific—all
income from all sources is to be included except for those
incomes specifically excluded.” 8
Section 4-213 states that the “[NCSG] intend[s] that spousal
support be determined from income available to the parties
after child support has been established.” As James acknowl-
edges, this court and the Court of Appeals have previously
interpreted the interaction of these rules.
In Gallner v. Hoffman,9 this court ordered a husband to pay
alimony and child support to his wife, and after the alimony
7
Gangwish v. Gangwish, 267 Neb. 901, 678 N.W.2d 503 (2004); § 4-201.
8
Simpson v. Simpson, 275 Neb. 152, 156, 744 N.W.2d 710, 714 (2008).
9
Gallner v. Hoffman, 264 Neb. 995, 653 N.W.2d 838 (2002).
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obligation had expired, the former husband moved to modify
his child support obligation. The trial court denied the motion,
finding the former wife’s current income, while higher than
when the decree was entered, was substantially the same as
her previous income plus alimony. On appeal, we held that the
trial court erroneously interpreted the NCSG by treating the
former wife’s prior receipt of alimony as an item of income in
its assessment of the child support obligation.
We reasoned that the clear language of the NCSG, paragraph
M, the precursor to § 4-213, provided that child support obli-
gations are to be calculated prior to the calculation of alimony,
so alimony could not be factored into income before the ali-
mony was determined.10 Thus, we concluded that because “ali-
mony is not properly considered as income when child support
is established, the cessation of alimony cannot be considered
a diminution in income when determining whether there has
been a material change of circumstances justifying a modifica-
tion of child support.”11
Recently, relying on our decision in Gallner, the Court of
Appeals held that alimony is not income when considering an
application to modify child support.12 In Roberts v. Roberts,13
the original decree awarded the wife alimony and the district
court included this alimony in its calculation of the wife’s total
monthly income for the purpose of recalculating child support
in a modification action. In reversing the trial court’s ruling,
the Court of Appeals reasoned that “if child support is calcu-
lated before alimony, such alimony should be excluded when
calculating income in a modification proceeding.”14
10
Id.
11
Id. at 1003, 653 N.W.2d at 845.
12
Roberts v. Roberts, 25 Neb. Ct. App. 192, 903 N.W.2d 267 (2017).
13
Id.
14
Id. at 202, 903 N.W.2d at 276. See, also, Coffey v. Coffey, 11 Neb. Ct. App.
788, 661 N.W.2d 327 (2003).
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James argues that this interpretation is incorrect, because
during a modification proceeding, alimony has already been
established and the NCSG does not specifically exclude such
as income after it has been established.
[6-10] The NCSG was created by this court through a
formal rulemaking process pursuant to a statutory grant of
administrative authority from the Legislature.15 For purposes
of construction, Nebraska Supreme Court rules are treated
like statutes.16 Absent a statutory indication to the contrary,
language contained in a Supreme Court rule is to be given
its plain and ordinary meaning.17 Just as statutes relating to
the same subject are in pari materia and should be construed
together, Supreme Court rules should be read and construed
together.18 A court must attempt to give effect to all parts
of a Supreme Court rule, and if it can be avoided, no word,
clause, or sentence will be rejected as superfluous or mean-
ingless.19 An appellate court should try to avoid, if possible,
the construction of a Supreme Court rule that would lead to an
absurd result.20
While the NCSG does not explicitly exclude alimony from
child support calculations in all circumstances, we held in
Gallner that § 4-213 clearly excludes alimony from the par-
ties’ total monthly incomes in the initial decree. If we were to
accept James’ interpretation of the NCSG limiting the effect
of § 4-213 to this circumstance, then any decree ordering both
child support and alimony obligations could be open to an
15
See Neb. Rev. Stat. § 42-364.16 (Reissue 2016).
16
See State v. Loding, 296 Neb. 670, 895 N.W.2d 669 (2017).
17
See Nebraska Protective Servs. Unit v. State, 299 Neb. 797, 910 N.W.2d
767 (2018).
18
Loding, supra note 16.
19
See Wisner v. Vandelay Investments, 300 Neb. 825, ___ N.W.2d ___
(2018).
20
See In re Trust of Shire, 299 Neb. 25, 907 N.W.2d 263 (2018).
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immediate motion for modification based on the subsequently
calculated alimony. Such an interpretation would be absurd
in that it would render § 4-213 superfluous, beyond the short
duration between the entry of a decree and a motion for modi-
fication immediately following.
[11] Accordingly, we agree with the Court of Appeals’
holding in Roberts. We hold that the NCSG excludes alimony
between parents from their total monthly incomes for the pur-
pose of calculating child support obligations for their children
in modification proceedings.
This holding is consistent with the statement of the purpose
of alimony pursuant to Neb. Rev. Stat. § 42-365 (Reissue
2016): “The purpose of alimony is to provide for the contin-
ued maintenance or support of one party by the other when
the relative economic circumstances and the other criteria
enumerated in this section make it appropriate.” Based on
§ 4-213, we have stated that the relative economic circum-
stances of the parties are to be tested based on the income
available after child support obligations, if any, have been
accounted for.21 Immediately allowing for a modification of
child support obligations based on an order of alimony would
negate the fact that the alimony was determined with such
obligations in mind and hinder the ability of the alimony to
aid in the maintenance and support of the spouse for whom it
was ordered.
We also reject James’ argument that we should disregard
§ 4-213 as a matter of policy, based on the way other states
treat alimony for calculating child support obligations. As
mentioned above, the NCSG was promulgated through a for-
mal process, including public comments and input. Thus, this
is not the appropriate venue to reevaluate the prudence of the
policy behind the NCSG.
21
Wiedel v. Wiedel, 300 Neb. 13, 911 N.W.2d 582 (2018).
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(b) James Failed to Produce
Sufficient Evidence Supporting
Depreciation Deductions
James argues that the court erred in not deducting depre-
ciation from his total monthly income because he submitted
his 2016 personal and corporate tax returns into evidence
and both included claimed depreciations. Barbara argues that
James had the burden to prove that he was entitled to a deduc-
tion and that he failed to do so.
While the NCSG does permit for an allowance of deprecia-
tion as a deduction from total monthly income, it also provides
specific instructions for proving an entitlement to the deduc-
tion and how the deduction should be calculated.22 Further,
§ 4-204 provides that “[a] party claiming depreciation shall
have the burden of establishing entitlement to its allowance as
a deduction.”
The most basic requirement for proving an entitlement to a
deduction is: “Any party claiming an allowance of deprecia-
tion as a deduction from income shall furnish to the court and
the other party copies of a minimum of 5 years’ tax returns at
least 14 days before any hearing pertaining to the allowance of
the deduction.” 23 In addition, § 4-204 requires that a depreci-
ated asset must be shown to be ordinary and necessary and
that the depreciation was calculated by using the “‘straight-
line’” method.
James submitted only his 2015 and 2016 personal and
corporate income tax returns as evidence of his entitlement
to an allowance of depreciation. This evidence is insufficient
to warrant a deduction under the minimum of 5 years of tax
returns requirement of the NCSG. Additionally, no evidence
was provided that the depreciated assets were ordinary and
necessary or that the depreciation was calculated by using the
22
See § 4-204.
23
Id.
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straight-line method. Therefore, the court did not abuse its
discretion by not deducting James’ claimed depreciations from
his total monthly income.
(c) Court Did Not Abuse Its
Discretion in Calculating
Barbara’s Earning Capacity
James contends that Barbara’s earning capacity per hour for
a 40-hour workweek is $15.47, because she is already mak-
ing that wage at her part-time job and because she has a col-
lege degree. Barbara argues that the remainder of her earning
capacity should be calculated at the minimum wage of $9 per
hour and that the evidence shows she has never made more
than $19,250 in a calendar year.
In determining a party’s total monthly income, the NCSG
provides that “[i]f applicable, earning capacity may be con-
sidered in lieu of a parent’s actual, present income and may
include factors such as work history, education, occupational
skills, and job opportunities.” 24 We have stated that use of
earning capacity to calculate child support is useful when it
appears that the parent is capable of earning more income
than is presently being earned.25 However, earning capacity
should be used to determine a child support obligation only
when there is evidence that the parent can realize that capacity
through reasonable efforts.26
The evidence regarding Barbara’s earning capacity was lim-
ited to her current employment and her Social Security state-
ment. Barbara conceded in her testimony and demonstrative
exhibit that she was capable of working a 40-hour workweek,
and there was no contrary evidence. While she is currently
working 8 hours per week for the hospital service company
24
Id.
25
Johnson v. Johnson, 290 Neb. 838, 862 N.W.2d 740 (2015).
26
Id.
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for $15.47 per hour, there was no evidence presented that she
could obtain additional hours at that job. Further, there was
no evidence presented that Barbara had any other job oppor-
tunities above the minimum wage, based on her education or
work experience.
Based on the evidence presented at trial, we conclude that
the court did not abuse its discretion in calculating Barbara’s
earning capacity. This assignment of error is without merit.
2. Court Did Not A buse Its
Discretion in A bating Barbara’s
Child Support Obligation
James argues that the court erred in abating Barbara’s child
support obligation during the summer, because the original
decree included 6 weeks of custody for each parent during
the summer and therefore changing the distribution of that
6 weeks to alternating weeks was not a material change of
circumstance.
Barbara argues that the material change in circumstances
was the court’s modification to the parties’ child support obli-
gations that resulted in her receiving less support from James
currently and increasing her obligation after Josee reaches the
age of majority.
[12-15] In general, child support payments should be set
according to the NCSG.27 However, a court may deviate from
the NCSG if its application in an individual case would be
unjust or inappropriate.28 The court must specifically find that
a deviation is warranted based on the evidence and state the
reason for the deviation in the decree.29 A deviation without
a clearly articulated justification is an abuse of discretion.30
27
Anderson v. Anderson, 290 Neb. 530, 861 N.W.2d 113 (2015).
28
Id.; Neb. Ct. R. § 4-203 (rev. 2011).
29
Id.
30
Anderson, supra note 27.
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Deviations from the NCSG must also take into consideration
the best interests of the child or children.31
Neb. Ct. R. § 4-210 of the NCSG specifically addresses
adjustments in child support related to visitation:
If child support is not calculated under § 4-212 [joint
physical custody], an adjustment in child support may
be made at the discretion of the court when visitation or
parenting time substantially exceeds alternating weekends
and holidays and 28 days or more in any 90-day period.
During visitation or parenting time periods of 28 days
or more in any 90-day period, support payments may be
reduced by up to 80 percent.
[16] A party seeking to modify a child support order must
show a material change in circumstances that (1) occurred
subsequent to the entry of the original decree or previous
modification and (2) was not contemplated when the decree
was entered.32
The court found an adjustment was warranted under § 4-210
because James had physical custody of the parties’ younger
children; Josee would reach the age of majority before the
coming summer; and the alternating custody during June,
July, and August would substantially exceed the 28 days in
a 90-day period requirement. The parties’ custody during
this period would be equal, so the court abated Barbara’s
obligation by the maximum of the 80 percent permitted. The
court’s finding that James has substantially higher income than
Barbara implies that it is in the best interests of the children
to decrease Barbara’s support obligation to James during this
period so that she may provide for the children while they are
in her custody.
While the court had an equivalent amount of shared custody
during the summer in its initial decree and Josee’s reaching
31
Pearson v. Pearson, 285 Neb. 686, 828 N.W.2d 760 (2013); § 4-203.
32
State on behalf of Fernando L. v. Rogelio L., 299 Neb. 329, 907 N.W.2d
920 (2018).
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the age of majority was contemplated when the decree was
entered, the court made a substantial increase to Barbara’s
support obligation in the modification order. This modification
was a material change in circumstances that justified ordering
an adjustment in Barbara’s support obligation. Therefore, the
court did not abuse its discretion in abating Barbara’s support
obligation for the months of June, July, and August.
V. CONCLUSION
The NCSG excludes alimony between parents from their
total monthly incomes for the purpose of calculating child sup-
port obligations for their children. We hold that the court did
not abuse its discretion in calculating the parties’ child support
obligations or in abating Barbara’s child support payments.
Therefore, we affirm.
A ffirmed.