JUSTIN A. FARR, Appellant,
v.
BRANDI LITTLE, Appellee.
Appeal
from the Superior Court of the State of Alaska, Third
Judicial District, Superior Court No. 3AN-16-05573 CI
Anchorage, Patrick J. McKay, Judge.
John
C. Pharr, Law Offices of John C. Pharr, Anchorage, for
Appellant.
Notice
of nonparticipation filed by Cameron K. Compton, Law Offices
of Cameron K. Compton, Anchorage, for Appellee.
Before: Stowers, Chief Justice, Winfree, Maassen, and Carney,
Justices.
[Bolger, Justice, not participating.]
OPINION
MAASSEN, Justice.
I.
INTRODUCTION
Unmarried
parents separated and asked the superior court for a custody
and child support order. The father was receiving military
disability payments but was otherwise unemployed. In
calculating his child support liability, the superior court
imputed income to him of $40, 000 in addition to his military
disability payments. The court also apparently rejected the
father's request to deduct business losses, including
depreciation, incurred by his rental properties. The father
appeals.
We
conclude that several aspects of the superior court's
findings of fact are not sufficiently explained for purposes
of our review: (1) the basis of the imputed income figure;
(2) the effect of employment on the father's disability
payments; and (3) whether the father is entitled to deduct
claimed business losses from his income. We therefore vacate
the child support order and remand for the superior
court's further consideration of these issues.
II.
FACTS AND PROCEEDINGS
A.
Custody
Justin
Farr and Brandi Little, the parents of two children,
separated in November 2015 following an alleged incident of
domestic violence. In March 2016 Little moved for custody of
both children, and there was another alleged incident of
domestic violence a few weeks later. In November 2016 the
custody case went to trial; the court ultimately concluded
that the domestic violence presumption applied against Farr,
and it therefore awarded physical and legal custody to
Little.[1]
B.
Child Support
In July
2016 Little filed a motion for child support. The parties
disputed several distinct issues related to Farr's income
that are relevant to this appeal: his earning capacity, his
claimed loss of income from rental properties, and other
deductions from his income.
The
parties first disputed whether Farr could work at all. He had
served in the Air Force for 16 years in a variety of
capacities, including Special Operations and Pararescue. He
was medically separated from the Air Force in 2012 after
injuring his back in an explosion near his convoy. The
military considered him 80% disabled, and medical separation
resulted in disability payments of $21, 185.76 per year.
According to the superior court's later findings, Farr
"[did] not appear to have held a full-time job since his
separation" from the Air Force.
Little
disputed the extent of Farr's disability. In her motion
for child support she asked the court to impute income to him
because he was "working as a HVAC mechanic for
free" and there was "no reason that he should be
unemployed." Pointing to an average salary for an HVAC
mechanic of $61, 712, Little asserted that Farr's
adjusted annual income including his military disability
should be $70, 134.88. Farr's opposition stressed that he
was 80% disabled, making any unemployment involuntary.
Apparently in response to Little's claim that he was
working as an HVAC mechanic, Farr submitted an affidavit from
the owner of a carpet-cleaning business attesting that he
"[was] not an employee" and was not being paid for
the work he was doing to help her keep the business afloat
after her former husband "became unable to operate the
business."
Based
on the motion and opposition, the superior court issued an
interim child support order requiring Farr to pay $466.70
total per month for the two children, including a health
insurance adjustment. The court did not impute income to
Farr, but it noted that its final support calculation could
be "higher because of imputation or withheld income
sources."
Little's
trial brief did not reiterate the claim that Farr could be
making money as an HVAC mechanic, but focused instead on his
alleged "opportunity to make $225, 000 a year" as a
defense contractor and his "many job offers"; on
the basis of these allegations, Little asked the court to
impute income at the $120, 000 maximum for child support
purposes. Farr's trial brief addressed child support only
cursorily, saying that the issue had already been briefed and
that he would "present testimony from his parents about
his payment of child support to his parents" for a child
of his from an earlier relationship.
At the
trial, Little did not introduce any evidence that Farr had
previously worked or could work as an HVAC mechanic or
provide the estimated salary information. Instead, Little
focused her cross-examination of Farr on custody issues,
Farr's six-figure job offers, his rental income, and
whether he paid child support to his parents for their care
of Farr's older child.[2]
Farr
testified that after his injury he had received offers to
work for Boeing for $ 150, 000, $225, 000, and $255, 000 per
year. He also testified that he would try to get a job but
that he did not know whether he could actually get one given
his back injury and history of concussions. The court later
summarized Farr's testimony as admitting that "he
was employable and capable of earning a six figure
income." But the court saw "a bit of a catch
22": while it "believe[d] that Mr. Farr is capable
of making money above his current disability pay, " it
was "less certain" that Farr could transfer his
military skills to high-paying civilian employment. The court
nevertheless found that "Farr has the ability to have an
after-tax income for child support purposes of $40, 000
annually plus his military disability."
Farr
also raised the issue of losses he claimed to have incurred
on two rental properties he owned in Wasilla. He had not
included these on the DR-305 affidavit submitted for child
support purposes. But he had claimed significant deductions
for the properties on his tax returns from 2013 to 2015,
including depreciation and other expenses, ultimately
amounting to a loss of approximately $40, 000 each year. The
superior court appeared skeptical of these losses at trial:
"Is he really losing money on his apartments or is he
losing money because of depreciation and things of that
nature?" Ultimately the court made no findings about the
Wasilla properties and did not separately itemize any
business losses in its calculation of income. Its final child
support order found Farr's total adjusted annual income
to be $62, 207.76, which required Farr to pay $1, 646.37 per
month, including a health insurance adjustment.
On
appeal, Farr challenges the court's imputation of income,
blaming Little for the lack of evidentiary support for the
$40, 000 figure; he claims that Little "did not address
child support other than to state that Mr. Farr was not
paying any and that she was not the source of his financial
strain." He asserts that her failure to present evidence
precluded the court from imputing income to him. He also
challenges the court's failure to incorporate into its
income calculation his claimed self-employment losses from
the rental properties.
Little
did not participate in this appeal.
III.
STANDARD OF REVIEW
"We
review an award of child support for abuse of
discretion."[3] But "[w]e review the superior
court's factual findings regarding a party's income
for purposes of calculating child support for clear
error."[4] "The trial court's determination
of an obligor's imputed income is a factual finding that
we review for clear error."[5] "Whether the superior
court applied the correct legal standard to its child support
determination is a question of law that we review de
novo."[6]
IV.
DISCUSSION
A.
The Imputation Of $40, 000 In Income To Farr Requires
Reconsideration On Remand.
We have
explained that under Alaska Civil Rule 90.3(a)(4), "[i]t
is appropriate to impute income to an obligor if a
parent's current situation and earnings reflect a (1)
voluntary and (2) unreasonable decision to earn less than the
parent is capable of earning."[7] "The court must
consider the 'totality of the circumstances' in
deciding whether an obligor is unreasonably underemployed,
"[8] including "such factors as whether
the obligor's reduced income is temporary, whether the
change is 'the result of economic factors or of purely
personal choices, ' the children's needs, and the
parents' needs and financial
abilities."[9] The parent with primary physical custody
has the burden to make a prima facie case that the obligor
parent is voluntarily and unreasonably under- or unemployed;
after that initial burden is met, "the burden of
persuasion shifts to the obligor to rebut that
claim."[10]
1.
Little made a prima facie case that Farr was voluntarily and
unreasonably unemployed.
Farr
argues that it was inappropriate to impute income to him
based on voluntary and unreasonable unemployment. But the
superior court's implied conclusion - that Little made a
prima facie case that Farr failed to rebut[11] - is
consistent with our precedent.[12]
In
Sawicki v. Haxby, we affirmed a superior court's
determination that a father carried his preliminary burden to
make a prima facie case when the mother "concede[d] that
she voluntarily left her job" and the father showed she
did so "to take a job paying approximately half what she
earned before."[13] The prima facie case was "bolstered
by evidence that [the mother's] reduced income may be
temporary, that her work history and qualifications indicate
she could be making substantially more money, and that she
had significant liquid assets at her disposal from which to
satisfy her child support obligation."[14]
In
another case, Beaudoin v. Beaudoin, we remanded for
an evidentiary hearing after concluding that the father made
a prima facie case by "offer[ing] evidence indicating
that [the mother] had previously held a job, that she was
capable of obtaining gainful employment, and that she was
actually working without pay."[15] The mother gave up
employment to be a "full-time mom" but remained
unemployed after her custody changed from full-time custody
of three children to half-time custody of two.[16]
In
Little's motion for child support she asserted that Farr
was "working for free based on his own admission, "
apparently referring to his explanation at the trial setting
conference, the day before, that he was "donat[ing]
[his] time" to his neighbor's carpet-cleaning
business to help her avoid losing it.[17] This was
evidence that he was capable of working, at least part time,
but was not doing so. And the superior court found after
trial that Farr had testified "he was employable and
capable of earning a six figure income." Although the
court had doubts about this testimony, it was sufficient to
satisfy Little's burden of making a prima facie case that
Farr was voluntarily and unreasonably unemployed, shifting
the burden of persuasion to him.
2.
The superior court's findings are insufficient to support
its decision to ...