Hotz v. Hotz ( 2018 )


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    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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    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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    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. 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. 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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    Nebraska Supreme Court A dvance Sheets
    301 Nebraska R eports
    HOTZ v. HOTZ
    Cite as 
    301 Neb. 102
    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.