In re the Marriage of Healy

In re the Marriage of Healy, 2016 MT 154 (June 21, 2016) (Cotter, J.) (5-0, aff’d)

Issue: (1) Whether the district court had jurisdiction to decide the CSED motion when there was no showing of changed circumstances making the existing child support obligation unconscionable; (2) whether the district court misapprehended the evidence when it made findings about John’s future income potential; and (3) whether the district court erred when it imposed a 10% interest penalty on the parents’ required college trust contributions.

Short Answer: (1) Yes; (2) no, but it abused its discretion in making it retroactive to February 2014; and (3) no.

Affirmed in part, vacated in part, and remanded

Facts: The Healys married in 1998. They had a daughter in 199 and a son in 2000. The parties divorced in 2003, and entered into a final parenting plan and property settlement agreement, which was approved by the district court. The agreement provided that the parties would share parenting with Stephanie being the primary custodial parent; John would pay $300/child/month child support; John would establish an irrevocable college trust account and deposit $1,000/year beginning June 1, 2004; Stephanie would deposit $300/year into the college trust beginning June 1, 2005; and John would provide health insurance for the children, and the parties would split any uninsured expenses.

John made consistent child support payments but did not establish the college trust. Instead, he deposited the $1,000 a year into his 401(k) and then transferred it to a segregated account at a federal credit union. Stephanie established savings accounts for the children and deposited her annual contributions there.

Stephanie applied to CSED for review and modification of the child support order in 2013. In January 2014, CSED calculated that John owed $571/child/month beginning February 2014. CSED served the modification order on the parties, and told them they had 20 days to object before CSED would submit it to the district court and it would become final. Neither party objected and in March 2014, CSED filed its modification motion with the district court.

In June 2014, Stephanie learned John had not paid their daughter’s tuition for the previous year, as per their agreement. In July 2014, she asked CSED to recalculate John’s child support to include school tuition. CSED submitted a revised modification order to the court in August 2014 under which John owed $1,024/child/month.

The district court held a hearing in November 2014. John argued the court lacked jurisdiction, and the district court disagreed. Both parties testified.

Procedural Posture & Holding: In April 2015 the district court issued its findings, conclusions and order modifying John’s child support as requested by CSED, retroactive to February 2014. The district court further concluded that John’s failure to pay tuition was a substantial change in circumstances justifying a modification of the 2003 agreement. He ordered the parties to establish a 529 account for each minor child, and ordered John to deposit $17,531.18, or his annual mandated contribution from 2003-2014 plus 10% interest, and ordered Stephanie to deposit $4,481.23. Both parties were to make their respective deposits within 60 days of the order. John appeals and the Supreme Court affirms.

Reasoning: (1) CSED had statutory authority to review the 10-year-old child support order, and was required to submit that order to the district court for approval. Therefore, the district court had statutory authority to review the CSED-modified child support order under § 40-5-277.

(2) John testified that his employer would no longer give employees overtime opportunities beginning in 2015, and argues it was error for the district court to ignore this evidence and calculate child support based on past income that reflects substantial overtime. The Court holds that the district court’s reliance on past pay stubs to establish child support was not error.

However, the district court abused its discretion by ordering John to pay recalculated child support retroactively to February 2014. Increased child support payments may only be imposed subsequent to the actual notice of the motion for modification. CSED notified John in January 2014 that his support obligation would increase to $1,142/month. CSED filed a second notice in August 2014 that it was modifying the support obligation to $2,048 month. The district court had authority to impose $1,142/month effective February 2014, and $2.048/month effective September 2014.

(3) The parties’ delinquent payments to the college trust became a money judgment subject to statutory interest under § 25-9-205.