CH v. Child Support Enforcement Agency. ( 2021 )

FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER
Electronically Filed
Intermediate Court of Appeals
CAAP-XX-XXXXXXX
15-JUN-2021
07:53 AM
Dkt. 59 OP
IN THE INTERMEDIATE COURT OF APPEALS
OF THE STATE OF HAWAI#I
---o0o---
CH, Appellant-Appellee, v.
CHILD SUPPORT ENFORCEMENT AGENCY,
STATE OF HAWAI#I, Appellee-Appellee,
and SH, Appellee-Appellant
NO. CAAP-XX-XXXXXXX
APPEAL FROM THE FAMILY COURT OF THE FIRST CIRCUIT
(FC-AP NO. 18-1-0003)
JUNE 15, 2021
GINOZA, CHIEF JUDGE, LEONARD AND HIRAOKA, JJ.
OPINION OF THE COURT BY LEONARD, J.
This child support case concerns an administrative
agency decision to impute income to a father who was terminated
from his job and unable to secure comparable work. Income was
imputed to him commensurate with his earnings at a prior job,
which he had left in an attempt to advance his career. After he
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was abruptly fired, the father immediately sought similar
positions, but was only able to get hired at a lower-paying job.
We hold that pursuant to, inter alia, the 2014 Hawai#i
Child Support Guidelines (Guidelines): (1) either a responsible
parent or a custodial parent may request a modification of child
support less than three years after the prior support order, but
the requesting parent must show proof of a substantial or
material change in circumstances; (2) a material change of
circumstances will be presumed if child support as calculated
pursuant to the Guidelines is either ten percent greater or less
than the support provided for in the outstanding order; (3) when
a parent's change of income is the reason a request for
modification of child support is made, that request should in the
first instance be considered to be a request in the regular
course, pursuant to Section IV of the Guidelines, and not as an
exceptional circumstance; (4) the discretionary utilization of
imputed income to calculate child support is the exception, not
the rule, in the determination of child support under the
Guidelines; (5) the standard method for determining child
support, which involves completing a worksheet using the parents'
actual monthly gross income must be the starting point in every
case, including in cases involving a request to impute income at
a higher amount; (6) the family court or administrative agency
may consider what a parent is capable of earning if the parent
attempts in good faith to secure proper employment, i.e., the
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parent's full earning capacity; (7) in this case, the
administrative hearing officer's findings were clearly erroneous
in view of the reliable, probative, and substantial evidence on
the whole record, and were affected by an erroneous view of the
law with respect to imputed income; and (8) in the absence of
proper consideration of the factors required in the Guidelines,
the administrative hearing officer's imputation of income was
arbitrary and capricious, and a clearly unwarranted exercise of
discretion affecting the father's substantial rights. We further
hold that, prospectively, a decision to impute income to a parent
based on employment below full earning capacity must be
accompanied by findings of fact concerning: (1) the
determination that a parent is employed below full earning
capacity; (2) the reasons for the limited employment; and (3) the
factors utilized in the determination of the amount of the
imputed income. We affirm the judgment vacating the
administrative order in this case.
Appellee-Appellant-Custodial-Parent SH (Mother) appeals
from the August 19, 2019 Notice and Judgment on Appeal
(Judgment), which was entered in favor of Appellant-Appellee-
Responsible-Parent CH (Father) and against Mother and the State
of Hawai#i Child Support Enforcement Agency (CSEA), in the Family
Court of the First Circuit (Family Court).1 Mother also
1
The Honorable Christine E. Kuriyama presided.
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challenges the Family Court's August 19, 2019 Decision and Order
Vacating Administrative Findings and Order Filed November 5, 2018
and Remand (Decision and Order).
I. BACKGROUND
On March 29, 2016, the Family Court entered a Divorce
Decree (Decree) ending Mother and Father's marriage.2 The Decree
ordered, inter alia, Father to pay Mother monthly child support
of $720.50 per child, for a total support payment of $1,441 per
month, for the parties' two minor children (Children) "[p]ursuant
to the Child Support Guidelines Worksheet" (CSG Worksheet). The
CSG Worksheet supporting the child support ordered in the Decree
was based on Father's (then) monthly gross income of $6,318 as a
police officer with the Honolulu Police Department (HPD).
On or about March 26, 2018, Father accepted a position
as a Lateral Police Officer for the City of Federal Way,
Washington, with a start date of July 1, 2018. Father left his
job with HPD and relocated to Washington State. His gross
monthly income with the Federal Way Police Department (FWPD) was
$7,146. However, on August 13, 2018, Father was terminated from
FWPD, effective immediately, because he failed to pass the
department's service pistol skills test, even after multiple
attempts.
2
The Honorable Karen M. Radius presided.
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Almost immediately thereafter, on August 14, 2018, he
made an inquiry to CSEA, and then submitted an Application for
Services form, which requested modification of child support due
to his change in financial circumstances due to being unemployed.
He submitted further forms provided by CSEA and returned them on
or about August 20, 2018.
On or about August 28, 2018, CSEA sent Father, inter
alia, a Proposed Order entitled Administrative Findings and Order
(Proposed Order). The Proposed Order increased Father's monthly
child support payments to $882.50 per child, for a total support
payment of $1,765 per month – an increase of over 22% – rather
than decreased Father's support obligation, apparently based on a
Child Support Guidelines Worksheet (Proposed Worksheet) showing
Father's Gross Monthly Income as $7,802.3
On or about September 4, 2018, Father submitted a
Request for Hearing before the State of Hawai#i Office of Child
Support Hearings (OCSH), stating that he objected to the Proposed
Order. Father stated that due to his recent unemployment, he
objected to the increased child support.
3
The record on appeal does not include a complete copy of the
August 28, 2018 transmittal to Father. Nor does it include any document or
other record relied upon to support the increased child support reflected in
the Proposed Order. The Proposed Worksheet is unsigned and does not expressly
indicate who prepared it; however, it appears likely that the Proposed
Worksheet was prepared by CSEA. The only possible alternative is that it was
prepared by Mother. The record also does not include any document or other
evidence of Mother's apparent opposition to Father's request and Mother's
apparent request that Father's child support payments be increased.
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On October 25, 2018, a hearing was held before OCSH
Hearings Officer Michael G. Wong (Hearing Officer). Father
appeared pro se and by telephone, Mother appeared in person
represented by counsel, and Catherine Navor, CSEA legal assistant
(Navor), participated. The parties were not sworn in as
witnesses. The Hearing Officer began the hearing by asking Navor
to summarize pre-hearing discussions with the parties and go over
any exhibits she might have. Navor presented two exhibits: (1)
Father's application for modification; and (2) the Divorce
Decree. Navor stated that the Children were on QUEST, but as of
November 1, 2018, Mother would be adding them to her medical and
dental plan, which would cost her approximately $34 a month, for
which she would receive a credit on child support calculations.
Navor noted that Mother provided exhibits showing her income and
that there was no dispute concerning Mother's income. Mother
also had provided an exhibit concerning child-care costs, for
which she would receive a credit, and Father did not dispute
that.
Navor described Father's income as the disputed issue.
She said that "per the Department of Labor," Father averaged
about $7,463 per month during the first six months of the year,
when he was employed with HPD. There is no evidence in the
record supporting that statement, but Father did not contest it.
Navor also stated that Father left that employment and moved to
another state for employment, which did not work out. She
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informed the Hearing Officer that Father was currently working
full-time, but only making $2,817 per month. Navor said that she
did four calculations, but CSG Worksheets for those calculations
do not appear in the record.
The Hearing Officer next addressed Father, telling him
that as the person who applied for services with CSEA, Father
bears the burden of proof and the burden of persuasion. The
Hearing Officer then proceeded to question Father. He first
asked if Navor's summary was, in Father's opinion, accurate.
Father responded, "Yes." The Hearing Officer acknowledged
receiving a fax from Father and other documents, which the
Hearing Officer announced he was going to treat as a "cover
letter." The Hearing Officer then said that he would mark the
document as RP-1, but that he was "not going to necessarily treat
it as a piece of evidence," but would make it part of the record.
The Hearing Officer asked Mother's attorney (but not Father) if
he had any objection to that.
The Hearing Officer then noted receipt of the March 26,
2018 letter of acceptance for the FWPD job, the August 13, 2018
letter terminating Father, a letter from CSEA purportedly
including a copy of Father's income statement,4 and what the
Hearing Officer described as a bunch of emails. Father
interjected, "Applications." The Hearing Officer said, "I assume
4
The document identified in the record on appeal as the income
statement is not readable.
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these are your attempts to try and find new employment?" The
Hearing Officer stated he was going to mark the documents as RP-2
(accepted offer of employment with FWPD), RP-3 (letter
immediately terminating Father's employment with FWPD), RP-4
(transmittal letter and form completed by Father requesting
modification of child support due to termination of employment),
and RP-5 (printout of emails to and from Father concerning post-
termination employment applications). The Hearing Officer then
asked Mother's attorney, "[Y]ou want to put any objections on the
record? Honestly, they're all over your objection." Mother only
objected to RP-1 (Father's letter/statement to CSEA Hearing
Officer requesting modification of child support due to change in
financial/employment circumstances) and RP-5.
The Hearing Officer then turned to Mother's exhibits,
which consisted of Mother's pay statements. Father made no
objection. Mother's attorney noted that Mother's income was
stipulated to by the parties.
The Hearing Officer asked Mother's counsel if he had
any questions or comments concerning what Navor said. Counsel
replied that he had brief argument as to Father's income. The
Hearing Officer stated that his understanding was that Mother is
requesting that $7,463 be used as Father's monthly gross income
and Mother objected to Father's request to use $2,817. Mother's
counsel agreed.
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The Hearing Officer then questioned Father again,
saying he wanted to hear the amount Father was requesting, and
the circumstances that led Father to leave his job with HPD.
Father stated that he left "in pursuit, sir, of something more."
Father explained that he sought to advance his career in
Washington State, recognizing that if he made more money he would
be obligated to pay more, but then he was unable to pass one of
the post-hiring requirements. Father stated that, "It was not
intended to lose on a job."
The Hearing Officer continued, asking Father to confirm
that he did not just quit his job and move to the mainland, but
instead had something lined up. The Hearing Officer asked
whether the fact that Father could not pass the "gun or pistol
proficiency" was the only reason he got terminated. Father said
that was correct and explained that the standards for the FWPD
were more advanced than what he was used to qualifying for back
in Hawai#i. The Hearing Officer said, "I don't want to poke at
an owie, but how long were you at HPD?" Father responded that it
was nearly 11 years. The Hearing Officer requested that Father
"help [him] through" the part of the gun test that Father had
difficulty with. Father explained that it was distance shooting
and it was a little further than what he was used to.
The Hearing Officer questioned Father on his efforts to
get new jobs or employment in law enforcement. Father testified
that he applied to the Seattle Police Department and passed an
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"oral board consideration for hire," but that the position would
not be available until the next year. He applied to other
departments, as well, and went through all of the interviews.
Father stated that for one of them, with the Auburn Police
Department, he did not pass the oral board and was declined for
further consideration. The documents Father submitted also
showed applications to police departments in the cities of Kent,
Fife, and Des Moines, Washington, as well as applications for
public and private sector security guard positions. In response
to further examination by the Hearing Officer, Father testified
that his current job was with Emerald Queen Casino Hotels, and
that it was a security position. Father described it as being in
the scope of law enforcement, but a downward position from police
work with substantially lower income. Father stated that he was
embarrassed, but that he needed to get a job, so he could "just
try to get back to provide something at least."
Mother's counsel was then allowed to question Father,
and elicited testimony that Father had been informed that there
would be a probationary period and that he would have to pass a
shooting test. Counsel also asked whether Mother was "part of
the decision" for Father to move. Father responded that he had
apprised her of his plans, but it was solely his decision, which
he needed to make to better himself.
The Hearing Officer then asked Father to confirm that
he was not disputing Mother's income (he was not) and then let
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Mother's counsel make argument. Mother's argument was
principally that Father had made unilateral and voluntary
decisions that Mother had no part of and that his obligations
should be maintained in order for the children to be properly
supported.
Father was given an opportunity to respond to the
argument and stated that he had always been a responsible dad, he
informed Mother of his plan while he was still in Hawai#i,
including that he would be able to provide medical benefits from
the FWPD job. He really tried to pass the test and move forward
with the new job and that his decrease in pay is "kind of like
kicking me in the gut," but that was what he had to do for the
time being. Father represented that he was still trying to
pursue a career in law enforcement that pays well and he thought
it would be a "temporary lowering pay moment."
The Hearing Officer then ruled:
Parents which is [sic] requesting exceptional
circumstances have the burden of providing proof of the
exceptional circumstance, and those are determined on a
case-by-case basis. . . .
. . . .
When a parent is not employed full-time or below their
earning capacity, I need to look at -- according to Hawaii
law and the Hawaii child support guidelines, I need to look
at the reasons for why they're under employed or unemployed.
In your case, your unemployment is not due to a disabled
[sic] or an injury. It's due to choices you made and things
didn't go well for you.
. . . .
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And so when a parent is earning below their earning
capacity, according to the Hawaii child support guidelines
and Hawaii law, income for you can be imputed. What that
means is I would say even though you're not making this
amount, for purposes of calculating child support, you
should be making this amount, and in this case I looked at
mother's pay statements, I looked at the divorce decree.
Between the time of divorce and now, her income has
increased 20 percent. If I look at your pay when you got
divorced and I added 20 percent, that would be more than
what the Department of Labor reported you made in the
earlier part of this year. It would be $7,638. I'm not
going to take your old pay, add 20 percent and say that's
what you should be making. I'm going to use the Department
of Labor number, the 4,000 -- $7,463. You're a ten-year
veteran of -- almost eleven years of Honolulu Police
Department.
. . . .
This is a career you chose. It's not like a job at 7-
Eleven or some place. This is a year, and right now things
aren't going for you in your career, but this is something
you chose to do, and so for purposes of calculating your
child support, I'll be imputing your income at $7,463. . . .
I want to note under Hawaii child support law, even if
you request to reduce your child support, sometimes it gets
increased. I'm going to be preparing a written order
consistent with what I just said. . . .
On November 5, 2018, the Hearing Officer filed the
Administrative Findings and Order that, inter alia, imputed
$7,463 as Father's gross monthly income, and calculated Father's
monthly child support obligation as $922 per child, totaling
$1,844 per month commencing September 1, 2018. The monthly total
increased to $1,862, commencing November 1, 2018, as a result of
a credit to Mother for Children's insurance coverage. The
Administrative Findings and Order included the following
"Additional Findings and Order:"
1. In the Divorce Decree filed on March 29, 2016, the
Family Court awarded [Mother] primary physical custody
of the subject children with [Father] to pay child
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support in the amount of $720.50 per child per month
in the sum total of $1,441.00.
2. The child support calculation was based in part on
[Father's] monthly-gross-income being found to be
$6,318.00.
3. [Father] was employed by [HPD] at the time the Family
Court established his child support obligation.
4. [Father] left his position at HPD to join the Federal
Way Police Department ("Federal Way") in the state of
Washington. [Father's] start date with Federal Way
was July 1, 2018.
5. On August 13, 2018 [Father] was [sic] employment with
Federal Way was terminated.
6. [Father] submitted an APPLICATION FOR SERVICES dated
August 14, 2018 requesting to "change/modify the
amount of child support" due to being "released from
employer; unemployment."
. . . .
10. Following his termination with Federal Way [Father]
made efforts to become gainfully employed.
11. [Father] testified that he is currently employed
providing security for a hotel/casino and that his
monthly gross income is $2,817.00.
12. [Father] requested that for purposes of calculating
child support that [h]is current income be used.
[Mother] objected.
13. [Mother] requested that [Father's] monthly gross
income be imputed.
14. CSEA reported that according to the State of Hawaii's
Department of Labor that [Father's] monthly gross
income for the first and second quarters of 2018 was
$7,463.00 while he was still employed by HPD.
15. Income may be imputed when a parent is not employed
full-time or is employed below full earning capacity.
See Hawaii Child Support Guidelines ("Guidelines")
page 20.
16. The reasons for a parent not being employed full-time
or employed below full earning capacity must be
considered. See Guidelines page 20.
17. [Father] testified that he left HPD and Hawaii
voluntarily to work for Federal Way.
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18. [Father] was terminated by Federal Way after failing
to successfully complete probation as a police
officer.
19. [Father] testified he worked for HPD for over ten
years and desires to continue to work in law
enforcement as a police officer.
20. While [Father's] situation is disheartening it does
not discharge [Father] from his obligation to be
employed at his full earning capacity.
21. [Father's] request to calculate his child support
obligation utilizing his current pay providing
security is denied. [Father's] monthly gross income
is imputed at $7,463.00, which is the amount he was
earning while employed by HPD earlier this year.
22. Applying the foregoing findings to the Guidelines
[Father's] child support increases from $1,441.00 to
$1,844.00 from September 1, 2018 through October 31,
2018 and then to $1,862.00 on November 1, 2018.
(Hearing Officer's citations to supporting documents omitted).
On December 5, 2018, Father timely filed a Notice of
Appeal to the Family Court. On June 25, 2019, Father filed an
opening brief in which he argued, inter alia, that the Hearing
Officer deviated from the Guidelines and erred in not using
Father's actual income and that there was no basis found by OCSH
to support imputing Father's income at an amount he previously
earned with HPD. Father provided that he continued employment as
a police officer with FWPD, after leaving HPD, until he was
involuntarily terminated by FWPD. Father also pointed to
evidence showing his numerous attempts to continue employment as
a police officer, but that he had been unsuccessful in finding
such employment after he was terminated by FWPD. Father argued
that it was error for the Hearing Officer to impute his income
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because it was beyond Father's control that he could not maintain
a police officer job despite his attempts to do so.
On August 1, 2019, CSEA filed an answering brief in
which it took no position. Mother filed an answering brief,
arguing that, under the Guidelines, the Hearing Officer did not
err in imputing Father's income. Father filed a brief reply.
On August 19, 2019, the Family Court filed the Decision
and Order. In assessing Father's request for a modification of
his child support obligation based upon a material change in
circumstances and income, the Family Court emphasized that, when
he became unemployed, Father quickly made efforts to find a
comparable law enforcement job, and applied to multiple police
departments, but was rejected from one position, did not receive
official offers from three others, and had no guarantees of
employment with another department. The Family Court noted that
Father was given a written offer for a full-time security guard
position a little less than two months after he was terminated
from FWPD, albeit at a gross monthly income of roughly $2,817.
The Family Court cited the statutory framework mandating the
utilization of the Guidelines in setting and modifying child
support orders, and pointed to the principles outlined in both
the statutes and the Guidelines that "each parent is entitled to
keep sufficient income for his or her basic needs and to
facilitate continued employment, each child's basic needs are met
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before the parents retain any additional income, the basic needs
of each child includes the cost of child care and the child's
health insurance, and if income is available after the basic
needs of the parents and the children are met, each child is
entitled to share in any additional income of the parents so each
child can benefit from both parents' higher standard of living."
The Family Court explained that unless there are
exceptional circumstances, the statutory framework and the
Guidelines must be followed, and that exceptional circumstances
may exist in a broad range of scenarios, including when a parent
is unable to earn income or when the child support exceeds 70% of
the parent's net income. The Family Court stated that a
deviation from the Guidelines' calculation based on exceptional
circumstances is discretionary, but even then, the Guidelines
must be used to determine the amount of child support before a
deviation from that amount based on exceptional circumstances may
be permitted.
The Family Court reviewed the Guidelines' provisions
allowing a request for modification of child support based on a
material change in circumstances and the statutory presumption
that a material change in circumstances exists if child support,
as calculated pursuant to the Guidelines, is either ten percent
greater or less than the previously-ordered support. The Family
Court also noted that imputed income may be used to calculate
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child support when a parent is employed below full earning
capacity, but that the Guidelines require consideration of the
reasons for a parent's income falling below his or her income
capacity in the local job market, as well as that a parent's
total support obligation should not exceed his or her monthly net
income.
The Family Court concluded that the Hearing Officer
clearly erred in calculating Father's child support obligation by
using an imputed income for a job as a police officer that Father
currently is unable to secure or hold. The Family Court noted
that the issue is whether Father being unqualified to continue
employment in law enforcement after his move to Washington State
was sufficient reason for the limitation on his earning capacity.
The Family Court noted that Father had not anticipated any issue
with meeting the standards for the FWPD position, after holding
an equivalent position with HPD for over ten years. The Family
Court reiterated Father's desire and unsuccessful attempts to
secure lateral employment and, after two months without an
offer, he started a job that he was qualified for as a security
guard, at a lesser salary. The Family Court concluded that the
Hearing Officer erred in denying Father's request to use his
current salary, rather than imputing income based on his previous
salary, due to the fact that Father was unqualified to perform as
a police officer in Washington State.
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The Family Court also noted that a child support
obligation of greater than 70% of a parent's net income has been
found to be an exceptional circumstance. The Family Court found
that Father met his burden of proof, showing the existence of an
exceptional circumstance warranting departure from the child
support awarded pursuant to the Decree and the Proposed Order,
again noting Father's timely and good faith efforts to find
another law enforcement job after his termination from FWPD. The
Family Court noted that the Hearing Officer set Father's child
support obligation at roughly 171% of his net income and that
imputing Father's income based on what he previously earned as a
HPD officer denied him the ability to keep sufficient income for
his basic needs.
Finally, the Family Court found there was nothing in
the record to show that Father was actively trying to discharge
his responsibility and abandon his obligation to financially
support the Children. In other words, Father was not purposely
underemploying himself to skirt his child support obligation, but
was terminated from his job for being unqualified and was unable
to get hired at a comparable job, notwithstanding timely and good
faith efforts.
Accordingly, the Family Court ordered that the
Administrative Findings and Order be vacated and the case be
remanded to OCSH for the calculation of Father's monthly child
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support obligation using Father's current gross monthly income.
The Judgment was also entered on August 19, 2019, and Mother
timely filed a Notice of Appeal.
II. POINTS OF ERROR
Mother raises four points of error on appeal,
contending that the Family Court: (1) erred in not giving
appropriate deference to the Hearing Officer's decision regarding
Father's income; (2) erred in vacating the Hearing Officer's
finding that Father's income should be imputed; (3) improperly
found that the Hearing Officer erred by not evaluating the need
for an exceptional circumstance deviation not raised in the
initial hearing; and (4) erred by raising sua sponte and making a
determination on the existence of an exceptional circumstance not
raised at the initial hearing.
III. APPLICABLE STANDARDS OF REVIEW
Review of a decision made by the circuit court upon
its review of an agency's decision is a secondary appeal.
The standard of review is one in which this court must
determine whether the circuit court was right or wrong in
its decision, applying the standards set forth in [Hawaii
Revised Statutes (HRS) § 91-14(g) (2012)] to the agency's
decision.
Flores v. Bd. of Land & Nat. Res., 143 Hawai#i 114, 120–21, 424
P.3d 469, 475–76 (2018) (citation omitted).
We review a decision made by the Family Court upon its
review of an agency decision applying this same standard; in this
secondary appeal, we must determine whether the Family Court was
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right or wrong in its decision, applying the standards set forth
in HRS § 91-14(g) to the agency's decision.
HRS § 91-14(g) provides:
§ 91-14 Judicial review of contested cases. . . .
(g) Upon review of the record, the court may affirm
the decision of the agency or remand the case with
instructions for further proceedings; or it may reverse or
modify the decision and order if the substantial rights of
the petitioners may have been prejudiced because the
administrative findings, conclusions, decisions, or orders
are:
(1) In violation of constitutional or statutory
provisions;
(2) In excess of the statutory authority or
jurisdiction of the agency;
(3) Made upon unlawful procedure;
(4) Affected by other error of law;
(5) Clearly erroneous in view of the reliable,
probative, and substantial evidence on the whole
record; or
(6) Arbitrary, or capricious, or characterized by
abuse of discretion or clearly unwarranted
exercise of discretion.
As the appellate courts have often articulated:
"An agency's conclusions of law are reviewed de novo,
while an agency's factual findings are reviewed for clear
error[.]" Del Monte Fresh Produce (Hawaii), Inc. v. Int'l
Longshore & Warehouse Union, Local 142, AFL–CIO, 112 Hawai #i
489, 499, 146 P.3d 1066, 1076 (2006) (citations omitted). A
finding of fact is clearly erroneous when "(1) the record
lacks substantial evidence to support the finding or
determination, or (2) despite substantial evidence to
support the finding or determination, the appellate court is
left with the definite and firm conviction that a mistake
has been made." Id. (internal quotations omitted) (quoting
In re Water Use Permit Applications, 94 Hawai #i 97, 119, 9
P.3d 409, 431 (2000)). "Substantial evidence is credible
evidence which is of sufficient quality and probative value
to enable a person of reasonable caution to support a
conclusion." Del Monte, 112 Hawai#i at 499, 146 P.3d at
1076 (internal quotations omitted) (quoting In re Water Use
Permit, 94 Hawai#i at 119, 9 P.3d at 431)).
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Martinez v. State Bd. of Nursing, 137 Hawai#i 83, 87–88, 365 P.3d
1012, 1016–17 (App. 2016).
It is an abuse of discretion if a family court or
administrative agency bases its discretionary ruling on an
erroneous view of the law or on a clearly erroneous assessment of
the evidence. See Jacoby v. Jacoby, 134 Hawai#i 431, 442, 341
P.3d 1231, 1242 (App. 2014).
Decisions determining what is an exceptional
circumstance authorizing a deviation from the Child Support
Guidelines are conclusions of law reviewed de novo under the
right/wrong standard of review. Child Support Enf't Agency v.
Doe, 104 Hawai#i 449, 455, 91 P.3d 1092, 1098 (App. 2004).
Decisions whether to order deviations to child support, as such
support is calculated using the Guidelines, are discretionary
decisions reviewed under the abuse of discretion standard of
review. Id.IV. DISCUSSION
Mother argues that the Family Court erred in vacating
the Hearing Officer's determination of Father's monthly child
support obligation because the Family Court should have deferred
to the Hearing Officer's finding that Father's income should be
imputed at the amount he made during his final six months with
HPD. Mother further contends that the Family Court erred in
determining that the Hearing Officer clearly erred in not
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considering the existence of an exceptional circumstance in this
case, i.e., that the Hearing Officer's imputation of income
resulted in the Hearing Officer setting Father's monthly child
support obligation at an amount which is roughly 171% of Father's
net income (as calculated from his gross income using the
Guidelines), thus denying Father the ability to keep sufficient
income for his basic needs. Mother does not challenge the Family
Court's determination that there is nothing in the record to
support that Father is actively trying to discharge or abandon
his responsibility and obligation to financially support his
children.
A. Father's Request to Modify Child Support
HRS Chapter 576D establishes the CSEA, provides for the
establishment of the Guidelines, and addresses other matters
related to securing and enforcing child support.5 HRS § 576D-
7(e) (2018) provides the right to petition either the Family
Court or CSEA for a review and modification of a child support
order:
5
As referenced in the beginning of this Opinion, this decision is
based on the 2014 Child Support Guidelines, which were in effect at all
relevant times. We recognize, however, that the 2020 Hawaii Child Support
Guidelines (2020 Guidelines) went into effect on November 1, 2020. See Child
Support Guidelines, https://www.courts.state.hi.us/child-support-guidelines
(last visited June 9, 2021). While some of the provisions discussed herein
have been amended, it appears that this Opinion can be construed as in harmony
with the 2020 Guidelines.
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§ 576D-7 Guidelines in establishing amount of child
support.
. . . .
(e) The responsible or custodial parent for which
child support has previously been ordered shall have a right
to petition the family court or the child support
enforcement agency not more than once every three years for
review and adjustment of the child support order without
having to show a change in circumstances. The responsible
or custodial parent shall not be precluded from petitioning
the family court or the child support enforcement agency for
review and adjustment of the child support order more than
once in any three-year period if the second or subsequent
request is supported by proof of a substantial or material
change of circumstances.
HRS § 576D-7(e) (2018); see also HRS § 580-47(e) (2018) (parallel
provision in the divorce statute).
With respect to administrative child support
proceedings, HRS § 576E-14 (2018) provides, in relevant part:
§ 576E-14 Modification, suspension, or termination of
court and administrative orders. (a) The responsible
parent, the agency, or the person having custody of the
dependent child may file a request for suspension,
termination, or modification of the child support provisions
of a Hawaii court or administrative order with the agency.
Such request shall be in writing, shall set forth the
reasons for suspension, termination, or modification,
including the change in circumstances since the date of the
entry of the order, and shall state the address of the
requesting party. The agency shall thereafter commence a
review of the order and, if appropriate, shall commence
administrative proceedings pursuant to sections 576E-5
through 576E-9. The need to provide for the child's health
care needs through health insurance or other means shall be
a basis for the agency to commence administrative
proceedings pursuant to section 576E-5.
(b) Only payments accruing subsequent to service of
the request on all parties may be modified, and only upon a
showing of a substantial and material change of
circumstances. The agency shall not be stayed from
enforcement of the existing order pending the outcome of the
hearing on the request to modify.
(c) The establishment of the guidelines or the
adoption of any modifications made to the guidelines set
forth in section 576D-7 may constitute a change in
circumstances sufficient to permit review of the support
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order. A material change of circumstances will be presumed
if support as calculated pursuant to the guidelines is
either ten per cent greater or less than the support amount
in the outstanding support order. The most current
guidelines shall be used to calculate the amount of the
child support obligation.
(d) The responsible parent or custodial parent shall
have a right to petition the family court or the child
support enforcement agency not more than once every three
years for review and adjustment of the child support order
without having to show a change in circumstances. The
responsible or custodial parent shall not be precluded from
petitioning the family court or the child support
enforcement agency for review and adjustment of child
support more than once in any three-year period if the
second or subsequent request is supported by proof of a
substantial or material change of circumstances.
Thus, under Hawaii's statutory scheme, either the
responsible parent or the custodial parent is entitled to a
review and reassessment of a child support order once every three
years, without having to show a change in circumstances. HRS
§§ 576D-7(e), 580-47(e), & 576E-14(d). In addition, either the
responsible parent or the custodial parent may request a
modification of child support in a lesser period of time, but
then the requesting party must show proof of a substantial or
material change in circumstances. Id. As set forth in HRS
§ 576E-14(c), a material change of circumstances will be presumed
if child support as calculated pursuant to the Guidelines is
either ten percent greater or lesser than the support provided
for in the outstanding order.
Accordingly, upon receipt of a written request for
modification of a child support order, CSEA must first determine
whether it has been three years since the last child support
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order. If it has been three years or more, then the requesting
party is entitled to petition for a review and possible
adjustment of the existing child support order, even without a
material change in circumstances. See P.O. v. J.S., 139 Hawai#i
434, 439-40, 393 P.3d 986, 991-92 (2017) (holding that an
individual "is entitled" to child support review every three
years without showing changed circumstances). If three years
have not passed since the last child support order, the
requesting party may nevertheless request a review, but must
demonstrate a substantial or material change in circumstances to
support an adjustment.
HRS § 576E-14(c) further provides that, if a party
requesting a modification submits evidence that a calculation of
child support pursuant to the Guidelines would result in child
support that is either ten percent greater or lesser than the
child support provided for in the prior order, then there is a
presumption in favor of the requesting party that there has been
a material change in circumstances. Therefore, in the first
instance, when presented with evidence of a requesting party's
substantial decline in income, CSEA must consider whether a
present calculation of child support under the Guidelines would
result in child support that is either ten percent greater or
lesser than the child support provided for in the prior order.
CSEA is not free to ignore the statutory presumption, although
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the presumption is not necessarily determinative of whether a
child support modification is ultimately ordered. If a parent
presents evidence of income that results in a child support
calculation that is ten percent greater or lesser than the
support provided for in the outstanding order, then the burden of
proof shifts to the other parent to rebut the presumption of a
material change in circumstances.
The statutes governing the administrative process for
child support enforcement, set forth in HRS chapter 576E, require
CSEA and the OCSH Hearings Officers to follow the Guidelines, as
well as the statutory mandates. HRS § 576E-15 (2018) states:
§ 576E-15 Guidelines to be followed. When an
administrative order establishes or modifies the amount of
child support required to be paid by a party, the guidelines
established under section 576D-7 shall be applied, except
when exceptional circumstances warrant departure. The most
current guidelines shall be used to calculate the amount of
the child support obligation.
See also HRS § 576D-7(b) (2018) (providing, inter alia, that the
Guidelines are to be applied statewide and must be considered by
family court judges in establishing each support order).
Section IV of the Guidelines, entitled Modifying Child
Support, implements the above-referenced statutes. Guidelines at
17. Section IV of the Guidelines states:
A. GENERAL CONSIDERATIONS. A request for suspension,
termination, or modification of child support may be
filed either with the Court or CSEA. Child support
may increase even when the request is for a decrease,
and it may decrease even when the request is for an
increase. The most current Guidelines shall be used
to calculate the modified child support obligation.
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B. REQUEST TO REVIEW AND POSSIBLY MODIFY. A parent has a
right to request that the Court or CSEA review and
possibly adjust child support not more than once every
three (3) years without having to show a change in
circumstances.
C. WHEN A REQUEST TO MODIFY MAY BE MADE. A party may
request modification:
1. When at least three years have passed since the
existing child support order was filed;
2. When a change in the circumstances of the
parties and/or the subject children is
substantial and material enough to justify a new
child support amount (for example, a change in
income, a change in child custody, or a change
in the number of children eligible for child
support); or
3. When existing Guidelines are replaced or modified.
D. PRESUMPTIONS REGARDING MODIFICATION. The change in
circumstances is presumed to be sufficient to modify
child support if the new calculation is ten per cent
(10%) higher or lower than the existing child support
obligation.
Id. at 17 (footnotes omitted).
Pursuant to Section IV.C.2. of the Guidelines, the
first example given for a substantial and material enough change
to justify a modification to child support is a change in a
parent's income. Id. Thus, the drafters of the Guidelines
understood and anticipated that a parent's income may be subject
to material changes that can affect their ability to pay child
support, either positively or negatively, and set up a process
through which an affected parent could seek to address the
altered circumstances. Section IV.D. reflects the statutory
presumption that a change in circumstance is sufficient to
warrant modifying child support if a new calculation results in
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support that is ten percent higher or lower than the existing
support obligation. Id.
In addition, before we turn to the circumstances of
this case, it is important to note (as the Family Court did),
that the Guidelines are expressly based on the following
principles:
! Each parent is entitled to keep sufficient income for
his or her basic needs and to facilitate continued
employment.
! Each child's basic needs are met before the parents
retain any additional income.
! The basic needs of each child includes the cost of
child care and the child's health insurance.
! If income is available after the basic needs of the
parents and the children are met, each child is
entitled to share in any additional income of the
parents so each child can benefit from both parents'
higher standard of living.
Guidelines at 1.
As the Family Court recognized, these principles are
intended to inform the family courts, the CSEA and OCSH, and the
appellate courts of how we are all supposed to understand and
apply the Guidelines.
Here, it does not appear that the Hearing Officer
properly utilized the above-referenced framework when he denied
Father's request to decrease his support obligation due to the
change in Father's income, and instead, increased the child
support obligation. Near the very beginning of the hearing, the
Hearing Officer said to Father, who was not represented by
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counsel at the time, "So, father, you're the person who applied
for services with CSEA. You bear the burden of proof, the burden
of persuasion." While this was not entirely wrong, it did not
reflect the process called for in the above-referenced statutes
and Section IV of the Guidelines.
The Hearing Officer did not, for example, note that it
had been less than three years since the Decree established
Father's existing child support obligation. Nor did the Hearing
Officer's statement reflect that Father's burden was to establish
a change in the circumstances that was substantial and material
enough to justify a new child support amount. Perhaps most
importantly, the Hearing Officer's statement did not reflect or
in any way acknowledge the statutory presumption that is
addressed in Section IV.D. of the Guidelines, i.e., that "[t]he
change in circumstances is presumed to be sufficient to modify
child support if the new calculation is ten per cent (10%) higher
or lower than the existing child support obligation."
It appears from the record that, at this point, CSEA
and the Hearing Officer had before them undisputed evidence that
Father's gross monthly income had in fact fallen to $2,817, as
confirmed by Navor's summary report to the Hearing Officer and
Father's testimony, and as reflected in the Administrative
Findings and Order. While it appears from Navor's report that
CSEA may have run Guidelines calculations based on Father's
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actual income, they were not submitted as part of the record of
the proceedings. It is nevertheless clear from a review of the
Guidelines that Father's change of gross monthly income from
$6,318, at the time of the Decree, to $2,817, at the time of the
hearing, resulted in a calculation of child support that was more
than ten percent lower than the existing support order. Thus,
Father was entitled to a presumption that the change in
circumstances was sufficient to warrant modification of child
support. While entitlement to a presumption does not equate with
entitlement to a particular outcome, it should be clear from the
record that the presumption was considered pursuant to the
Guidelines, and the rationale for concluding that the presumption
was rebutted should be clear as well.
In his oral ruling, the Hearing Officer strayed even
further from the regular process set forth in the Guidelines when
he stated, "Parents which is [sic] requesting exceptional
circumstances have the burden of providing proof of the
exceptional circumstance, and those are determined on a
case-by-case basis." First, at no point in the CSEA/OCSH
proceedings did Father argue that his request for relief was
based on "exceptional circumstances." Second, a possible
modification of child support due to a substantial or material
change in a parent's income is – for lack of a better word – an
ordinary consideration; in other words, it is one that is
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expressly contemplated in Section IV of the Guidelines, which
states specific guidance as to what is substantial and material.
See Guidelines (Section IV.D.) at 17. Accordingly, when a
parent's change of income is the reason a request for
modification of child support is made, that request should in the
first instance be considered to be a request in the regular
course, pursuant to Section IV of the Guidelines. The record is
devoid of any explanation for the Hearing Officer's reference to
the burden of proof for an exceptional circumstance.
Mother argues, inter alia, that the Guidelines must be
applied and, under the Guidelines, the Hearing Officer "had the
authority" to impute income to Father in excess of Father's
actual income "prior to" completing the CSG Worksheet (i.e., the
worksheet used to calculate the parties' support obligations
here). This argument states three propositions, the first one
being the axiomatic statement that the Guidelines must be
applied. The second proposition, that the Hearing Officer "had
the authority" to impute income to Father in excess of Father's
actual income, is not necessarily wrong as a matter of law, but
requires further examination. The final proposition, that the
Guidelines support imputing income to a parent "prior to"
completing a CSG Worksheet, also requires further examination.
"Imputed income" is a term that is discussed in Section
V.J.3. of the Guidelines, which describes when imputed income may
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be utilized. Guidelines at 20-21. However, the discretionary
utilization of imputed income to calculate child support is the
exception, not the rule, in the determination of child support
under the Guidelines, as well as under the statutory scheme.
The Guidelines begin with Section I, entitled
Introduction, which sets forth the fundamental principles (quoted
above) that the Guidelines are designed to carry out. Section I
concludes with the statement that "[t]hese Guidelines provide a
standard method for determining child support while allowing
limited variations based on the specific circumstances of each
family." Guidelines at 1. This charge stems from the
Guidelines' enabling statute, which mandates that the Guidelines
shall be applied statewide and drafted "[t]o simplify the
calculations as much as practicable." HRS § 576D-7(b)(1)&(2);
cf. HRS § 576E-15 (exceptional circumstances warranting departure
by administrative agency); HRS § 571-52.5 (2018) (exceptional
circumstances warranting departure by family court).
Section II of the Guidelines introduces the CSG
Worksheet, and describes the steps to complete the basic
calculations of child support, which begin with each parent's
monthly gross income, pointing to Section V.J.1. Guidelines at
1. Section V.J.1. broadly defines gross income as income from
all sources, and sets forth a long list of sources to be included
in gross income. Id. at 19-20. Section V.J.2. identifies a
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narrow list of exclusions to gross income, which could be fairly
described as spousal support and specific forms of government
aid. Id. at 20. Section V.J.3. then described the two limited
circumstances in which income may be imputed and how a parent's
income will be determined in those circumstances. Id. at 20-21.
Accordingly, pursuant to the overarching mandate in the
underlying statutes as well as in the Guidelines themselves, the
standard method for determining child support, which involves
completing a CSG Worksheet using the parents' actual monthly
gross income should be the starting point in every case.6 As
intended, this standardized first step provides the parents and
the decision-maker with a baseline of calculations arising out of
the parents' actual circumstances at the time of the calculation.
While in limited circumstances, imputed income ultimately may be
used to calculate support obligations, the basic calculation is
nevertheless necessary to the decision-maker's consideration of
the issue of imputed income. Accord P.O. v. J.S., 139 Hawai#i at
444, 393 P.3d at 996 (holding that the standard CSG Worksheet
calculations must be completed prior to considering whether
exceptional circumstances permit deviation from the result of
those calculations).
6
There are permutations of the basic child support calculation,
which are based off of the completed CSG Worksheet, including for extensive
time-sharing, equal time-sharing, and split-custody arrangements. See
Guidelines at 4-8. Such circumstances are not present in this case, and
therefore, they are not discussed.
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The basic CSG Worksheet calculation would, for example,
inform the parties and the decision-maker of the actual parents'
monthly net income (as calculated under the Guidelines). We hold
that this information, along with other information concerning
the parents' and children's financial and other circumstances,
must be considered in conjunction with the consideration of a
request to impute income. Thus, we reject Mother's argument
that, under the Guidelines, the Hearing Officer properly imputed
income in excess of Father's actual gross monthly income prior to
completing or considering a CSG Worksheet based on Father's
actual gross monthly income.
Mother also argues that the Family Court improperly
substituted its own evaluation of the evidence when it determined
that the Hearing Officer clearly erred in calculating Father's
child support obligation by using imputed income in this case.
This argument invites a careful examination of Section V.J.3. of
the Guidelines, which states:
IMPUTED INCOME may be used when a parent is not employed
full-time or is employed below full earning capacity. The
reasons for this limitation must be considered.
If a parent's income is limited in order to care for
children to whom the parents owe a joint legal
responsibility, at least one of whom is 3 years of age or
younger, then no additional income will be imputed to that
parent. If all of the subject children are over 3 years of
age, and the parent who receives support is mentally and
physically able to work, and remains at home and does not
work, then thirty (30) hours or less of weekly earnings at
the minimum wage may be imputed to that parent. 42
If a parent's income is limited for any other reason, the
parent's income will be determined according to his or her
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income capacity in the local job market, considering both
the reasonable needs of the children and the reasonable work
aspirations of the parent. 43
42
See § 576D-7(a)(9).
43
Cleveland v. Cleveland, 1 Haw. App. 187, 616
P.2d 1014 (1980).
Guidelines (Section V.J.3.) at 20-21, 24 (format altered).7
Accordingly, the consideration of imputed income has
three parts. The first part provides that imputed income "may"
be used in one of two circumstances: (1) when a parent is not
employed full-time; or (2) when a parent is employed below "full
earning capacity." Id. at 20. In both instances, imputed income
is plainly discretionary. The Guidelines indicate that the
decision-maker "may" in one of these circumstances, enter a
support order that is not based on a parent's actual income, but
it is not a mandate. Id. The Guidelines further provide that
"[t]he reasons for this limitation must be considered," echoing
the intent of the Guidelines to apply the standard calculations
in the vast majority of cases, and providing that even if a
parent's employment situation falls below full earning capacity,
the reasons for the limited employment must be considered. Id.
(emphasis added). In context, this supports the conclusion that
7
We note that the 2020 Guidelines, like the 2014 Guidelines,
provide that income may be imputed only when a parent is not employed full-
time or is employed below full earning capacity. 2020 Guidelines at 20.
However, the 2020 Guidelines include an expanded list of special circumstances
(factors) that must be considered. Id.
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imputed income is the exception, not the rule, even when one of
the two circumstances arises, and we so hold.
The second part deals with the specific situation of a
custodial parent staying home to care for one or more of the
parties' children to whom they owe a joint legal responsibility.
Id. If there is a child 3 years of age or younger, no additional
income will be imputed. If the child or children are older, and
other specified facts are demonstrated, then earnings for thirty
hours or less, at minimum wage, may be imputed to the stay-at-
home parent. Id. Although not applicable to this case, we note
this as one of the two circumstances that may support imputed
income, and further note that this is the only circumstance that
is directly supported by statute. As referenced in footnote 42
of the Guidelines, HRS § 576D-7(a)(9) provides that the
Guidelines may include a consideration that "[i]f any obligee
parent (with a school age child or children in school), who is
mentally and physically able to work, remains at home and does
not work, thirty (or less) hours of weekly earnings at the
minimum wage may be imputed to that parent's income."
The third part is plainly intended to apply after a
determination that a parent is "employed below full earning
capacity" for any reason other than care of a joint child, and
after the reasons for the limited employment – i.e., below full
earning capacity – are considered. Guidelines at 20-21. It
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states that in that situation, the parent's income will be
determined – i.e., may be imputed to be an amount different than
his or her actual income – according to three factors: (1) the
parent's income capacity in the local job market; (2) the
reasonable needs of the children; and (3) the reasonable work
aspirations of the parent. Id. at 21. We note that the
authority identified in the Guidelines for this alternative basis
for imputed income is an Intermediate Court of Appeals (ICA)
case, Cleveland v. Cleveland, 1 Haw. App. 187, 616 P.2d 1014(1980), not a statutory provision.8
In Cleveland, the obligor-father argued that a family
court's child support order must be based on the payor's present
ability to pay child support. Id. at 191-92, 616 P.2d at 1017.
The ICA rejected the father's argument and held:
We hold that in ordering child support, the family
court may consider what the payor is capable of earning if
the payor attempts in good faith to secure proper
employment, where the payor is temporarily unemployed or is
engaged in work from which the payor does not receive the
amount he or she is capable of earning in other fields of
endeavor.
We further hold that the court may consider the size
of the payor's estate and his or her net worth.
Id. at 192, 616 P.2d at 1017 (citations omitted; emphasis added).
8
While not referenced in the Guidelines, and while not as specific
as HRS § 576D-7(a)(9), HRS § 576D-7(a)(2) provides that the guidelines
established by the family court may include consideration of "[t]he earning
potential, reasonable necessities, and borrowing capacity of both parents."
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Various aspects of the ICA's analysis in Cleveland do
not square up with the standardized determinations of child
support under the Guidelines, which were adopted years after the
Cleveland decision. Nevertheless, the drafters of the Guidelines
expressly embraced the ICA's holding that the family court (or
administrative agency) may consider "what the payor is capable of
earning if the payor attempts in good faith to secure proper
employment." Id. (emphasis added). In Cleveland, although the
father previously practiced law, he was not actively seeking
employment as an attorney and preferred farming. Id. at 190, 616
P.2d at 1016.
In this case, the Hearing Officer properly recognized
that income may be imputed when a parent is employed "below full
earning capacity" and that the reasons for being employed below
full earning capacity must be considered. (Additional Findings
15 & 16). The Hearing Officer, however, did not find that Father
was employed below full earning capacity or, put another way, did
not find that Father was in fact capable of making the salary he
formerly made, but did not attempt in good faith to secure
"proper employment." Cf. Cleveland, 1 Haw. App. at 192, 616 P.2d
at 1017. On the contrary, the Hearing Officer specifically found
that Father's situation was "disheartening," obviously referring
to Father's loss of a comparable job when he was terminated from
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FWPD, and Father's subsequent inability to secure an equivalent
job, notwithstanding evidence of attempts to do so.
The Hearing Officer's oral ruling further demonstrated
that the Hearing Officer applied a harsh standard not intended
when the drafters of the Guidelines incorporated the "below full
earning capacity" concept from Cleveland into the consideration
of imputed income. The Hearing Officer told Father, "[Y]our
unemployment is not due to a disabled [sic] or an injury. It's
due to choices you made and things didn't go well for you."9 He
continued with, "This is a career you chose. It's not like a job
at 7-Eleven or some place. This is a year, and right now things
aren't going for you in your career, but this is something you
chose to do." In Cleveland, the ICA defined earning capacity in
the context of what the father in that case could make if he
attempted in good faith to secure proper employment. Here, the
Hearing Officer disregarded the evidence of Father's good faith
attempts and simply imputed an income that Father formerly was
able to earn, without regard to whether he could still earn it.
The Hearing Officer also disregarded the undisputed evidence that
Father's "career choice" was to accept a lateral position at FWPD
with a starting pay of $7,146, roughly the equivalent of his pay
9
We note that inability to earn income due to disability or
incapacity is identified in the Guidelines (Section II.B.2.b.vi.) as an
example of a possible exceptional circumstance, although the presence or
absence of such inability would also be a reasonable consideration in
determining a parent's full earning capacity. Guidelines at 9.
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when he left HPD. The Hearing Officer did not find Father's
actions lacked good faith attempts to maintain his job as a
police officer with FWPD or lacked good faith in his attempts to
secure an equivalent position when he was unexpectedly terminated
from FWPD.
In sum, we hold that the Hearing Officer's oral and
written findings concerning the reasons for Father's decreased
income were clearly erroneous in view of the reliable, probative,
and substantial evidence on the whole record, and were affected
by the Hearing Officer's erroneous view of the law with respect
to imputed income, which we have discussed above. See HRS § 91-
14(g) (standard for judicial review). Most importantly, the
Hearing Officer failed to consider whether Father's financial
circumstances stemmed from a lack of good faith efforts to
maintain his income at a higher level, which is part of the
standard for imputed income first established in Cleveland; and,
there is no reliable, probative or substantial evidence in the
record to support a finding of a lack of good faith efforts. See
HRS § 91-14(g). Therefore, we conclude that the Hearing Officer
clearly erred in finding that "[Father's] situation . . . does
not discharge [Father] from his obligation to be employed at his
full earning capacity."10
10
The framing of this finding – in terms of whether Father is
discharged from his obligation to be employed at full earning capacity – is
(continued...)
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In addition, even if the Hearing Officer had properly
determined that Father was employed below full earning capacity,
the Hearing Officer failed to comply with Section V.J.3. (Imputed
Income) of the Guidelines because the decision is not grounded in
the three factors required by the third part of Section V.J.3.:
(1) Father's income capacity in the local job market;11 (2) the
reasonable needs of the children; and (3) Father's reasonable
work aspirations. Absent proper consideration of these factors,
as well as the other legal standards addressed above, the Hearing
Officer's imputation of income to Father was arbitrary and
capricious, and a clearly unwarranted exercise of discretion
affecting Father's substantial rights. See HRS § 91-14(g)(6).
We hold that, prospectively, a decision to impute income to a
10
(...continued)
inconsistent with the proper analysis of imputed income pursuant to the
Guidelines Section V.J.3. However, this is the principle finding underlying
the Hearing Officer's decision to impute income to Father at a level that
substantially exceeded his actual income.
11
The Hearing Officer disregarded the Guidelines' direction to
consider earning capacity in the local market. We note that Merriam-Webster's
Collegiate Dictionary defines the adjective "local" as "of, relating to, or
characteristic of a particular place: not general or widespread." Local,
Merriam-Webster's Collegiate Dictionary 682 (10th ed. 1998). Black's Law
Dictionary does not include a stand-alone definition of "local," but instead
lists definitions for "local" plus some other word (such as "local custom");
however, Black's defines "locality" as "a small area of a city, county, or
state; vicinity; neighborhood; community." Locality, Black's Law Dictionary
1125 (11th ed. 2019). In Haflich v. Haflich, 109 Hawai #i 103, 112-13, 123
P.3d 698, 707-08 (App. 2005), the ICA held that the family court erred in
imputing the mother's hourly income because, inter alia, "[i]t is not
reasonable to assume a person who has a job offer in Maine for $12.00 per hour
also has a job offer in Maui, Hawai#i, for $12.00 per hour." In other words,
the ICA held that the family court erred in failing to consider the mother's
earning capacity where she lived, i.e., her earning capacity in her local job
market, as opposed to what she could earn if she lived elsewhere.
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parent based on employment below full earning capacity must be
accompanied by findings of fact concerning: (1) the
determination that a parent is employed below full earning
capacity; (2) the reasons for the limited employment; and (3) the
factors that must be utilized in the determination of the amount
of the imputed income – e.g., income capacity in the local job
market, the reasonable needs of the children, and the reasonable
work aspirations of the parent.
For the reasons stated herein, we hold that the Family
Court was correct in concluding that the Hearing Officer clearly
erred and abused his discretion by using an imputed income based
on Father's former employment with HPD.
B. Exceptional Circumstances
Mother argues that the Family Court erred in finding
that an exceptional circumstances deviation was warranted because
(a) Father never raised the question of exceptional
circumstances, and (b) the Hearing Officer "had no obligation to
specifically identify each and every consideration of all
possible exceptional circumstances in his decision."
A family court or an administrative hearing officer may
order child support that deviates from the Guidelines only if
exceptional circumstances warrant such deviation. HRS § 576E-15
(exceptional circumstances warranting departure by administrative
agency); HRS § 571-52.5 (exceptional circumstances warranting
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departure by family court). As noted above, a determination
concerning the existence of an exceptional circumstance
authorizing a deviation from the Guidelines child support
calculation is a conclusion of law, but a decision whether to
order a deviation based on the existence of an exceptional
circumstance is an exercise of discretion. CSEA v. Doe, 104
Hawai#i at 455, 91 P.3d at 1098.
Exceptional circumstances are addressed in the
Guidelines, as part of Section II (Child Support Guidelines
Worksheet), in Appendix C-1, which is the Exceptional
Circumstances Form, and Appendices C-2 & C-3 (sample forms based
on particular exceptional circumstances). Section II of the
Guidelines is organized into two parts: Basic Calculations of
Child Support; and Attachments, which is further broken down into
two subsections explaining the Extensive Time-Sharing Worksheet
and the Exceptional Circumstances Form. The Exceptional
Circumstances Form subsection (Section II.B.2 of the Guidelines)
provides, in relevant part:
EXCEPTIONAL CIRCUMSTANCES FORM. If exceptional
circumstances exist, then enter an "X" on the CSG WORKSHEET
and complete the EXCEPTIONAL CIRCUMSTANCES FORM. The
calculation of child support using the EXCEPTIONAL
CIRCUMSTANCES FORM (Appendix C-1) is described below. An
automated form is available at the Judiciary's website
(http://www.courts.state.hi.us).
a. GENERAL CONSIDERATIONS
i. Presumptive Child Support Amount. For the
reasons stated in the Introduction to these
Guidelines, the Court or OCSH must order the
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amount of child support as calculated by the CSG
WORKSHEET and/or EXTENSIVE TIME-SHARING
WORKSHEET, unless there are exceptional
circumstances that warrant a deviation.
ii. Burden of Proof for Exceptional Circumstances.
The parent requesting the deviation has the
burden of proving that exceptional circumstances
exist and that the circumstances warrant a
departure from the child support as calculated
by the worksheets. The EXCEPTIONAL
CIRCUMSTANCES FORM should be attached.
iii. Determination on a Case-by-Case Basis. The
Court or OCSH shall determine whether
exceptional circumstances exist on a
case-by-case basis. The Court and OCSH have the
discretion to determine to what extent
exceptional circumstances, if found, will impact
the amount of the child support.
iv. Required Findings. Whenever there is a
deviation from the amount shown on the
worksheets, the Court or OCSH shall make oral
findings of fact on the record or prepare
written findings of fact regarding the
exceptional circumstances. The findings of fact
shall include the amount of support that would
have been required as calculated by the
worksheets.
b. EXAMPLES OF POSSIBLE EXCEPTIONAL CIRCUMSTANCES include
(without limitation) the following:
i. Child Support Exceeds 70% of Net Income. When
child support is greater than 70% of the
obligor's net income (as set forth in the Table
of Net Incomes) (Appendix D), there may be an
exceptional circumstance. A sample 70% of Net
Income Request is attached as Appendix C-2.
Guidelines at 8-9 (footnote omitted).12
In light of the record in this case, Mother's
assertions that (a) Father never raised the question of
exceptional circumstances, and (b) the Hearing Officer "had no
12
We note that the Exceptional Circumstances Form subsection of the
2020 Guidelines includes further specifically-required findings whenever there
is a deviation from the presumptive amount of support under the Guidelines,
including a required statement of the presumptive amount of support. 2020
Guidelines at 8-9.
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obligation to specifically identify each and every consideration
of all possible exceptional circumstances in his decision" are
not susceptible to an unconvoluted review. First, we recognize
that there is nothing in the record to indicate that Father
himself raised the question of "exceptional circumstances," as
such, in the CSEA and OCSH proceedings. Yet, at the hearing on
Father's request for modification of child support, the Hearing
Officer's oral ruling led with the concept of exceptional
circumstances. The Hearing Officer stated:
Parents which is [sic] requesting exceptional circumstances
have the burden of providing proof of the exceptional
circumstance, and those are determined on a case-by-case
basis.
It is unclear why the Hearing Officer said this, but it
seemed to follow from his earlier admonition to Father that, as
the requesting party, Father bore the burden of proof and the
burden of persuasion. It is possible that the issue of
exceptional circumstances was somehow presented in one of the
"four calculations" that Navor mentioned at the hearing, but did
not make part of the record. It is possible that the Hearing
Officer independently recognized that his imputation of income to
Father would cause child support obligations to (vastly) exceed
70% of Father's net income and was attempting to communicate that
Father nevertheless had the burden of persuading the Hearing
Officer that the possible exceptional circumstance warranted a
deviation from the child support calculation resulting from the
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use of the imputed gross monthly income. It is possible that the
Hearing Officer misunderstood the legal framework for reviewing a
request for modification of child support under Section IV of the
Guidelines. We decline to speculate as to the particular reason
that the Hearing Officer raised the issue of exceptional
circumstances, but he did.
It is difficult to find error in the Family Court's
discussion of exceptional circumstances under these
circumstances. The Family Court did not – as Mother's argument
implies – conclude that the Hearing Officer had "obligation to
specifically identify each and every consideration of all
possible exceptional circumstances in his decision." The Family
Court pointed out that it had found an exceptional circumstance
exists when a support obligation exceeds 70% of a parent's net
income, based on the Guidelines, and that it recognizes the
burden of proving that an exceptional circumstance warrants a
deviation from the CSG Worksheet calculations, as well as the
discretionary aspect of a deviation. The Family Court concluded
that Father had met his burden of proof to show the existence of
an exceptional circumstance that might warrant deviation. As
noted, the existence of an exceptional circumstance is determined
as a conclusion of law, which was freely reviewable. As the
Family Court recognized, it is the decision to deviate that is
discretionary.
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However, as the Family Court had already concluded that
the Hearing Officer erred in his use of imputed income, and in
light of the insufficiency of the OCSH record with respect to the
issue of exceptional circumstances, we conclude that the Family
Court's further discussion of exceptional circumstances is best
considered as obiter dictum. We share the Family Court's concern
that the Hearing Officer may have improperly disregarded that
imputing Father's income, based on a job he could not maintain or
secure, violated one of the Guidelines first principles – i.e.,
that each parent is entitled to keep sufficient income for his or
her basic needs. However, the agency record contains no oral or
written findings of fact and/or conclusions of law on the issue
of exceptional circumstances, and the record is otherwise
insufficient to review the issue. Therefore, sitting in its role
as a reviewing court under the authority of HRS § 91-14(g), we
conclude that the Family Court erred in directly finding that
Father met his burden and was entitled to a deviation based on
exceptional circumstances. Accordingly, if it were necessary for
the Family Court to reach the issue of exceptional circumstances,
the proper procedure would have been to remand to the agency for
further proceedings, including on that issue.
V. CONCLUSION
For the reasons we have stated in this Opinion, the
Family Court's August 19, 2019 Judgment, which vacated the
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November 5, 2018 Administrative Findings and Order entered in the
OCSH and remanded the case to OCSH, is affirmed.
On the briefs:
/s/ Lisa M. Ginoza
Seth R. Harris, Chief Judge
Caitlin N. Axe,
Kaitlyn K. Mark, /s/ Katherine G. Leonard
(Porter McGuire Kiakona & Associate Judge
Chow, LLP),
for Appellee-Appellant. /s/ Keith K. Hiraoka
Associate Judge
Gregory L. Ryan,
Rosa Flores,
for Appellant-Appellee.
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