Support Modification - substantial change


#1

Wow. I look a little closer and I discover I am not the only one to be misled by a district court judge.

The controlling case is:

Armstrong v. Droessler, NO. COA05-617 , COURT OF APPEALS OF NORTH CAROLINA, 177 N.C. App. 673; 630 S.E.2d 19; 2006 N.C. App. LEXIS 1221, March 22, 2006, Heard in the Court of Appeals , June 6, 2006, Filed

OVERVIEW: When the trial court denied a father’s motion to modify child support under N.C. Gen. Stat.


#2

“The system is broken and badly in need of repair”. I too agree! My income is over 30,000 less than the judge predicted at trial and has been brought before the Court at least twice with no changes! Income tax returns to prove it! But, this is not considered a substantial change in circumstances! The difference here is that I am the dependent spouse while the ex’s income continues to stay the same or increases! His income is over 250,000 more than mine, but I have to pay him for extracurricular expenses while he does not have to pay me! Income diffential at the present time? 273,000 per year!


#3

It seems to me based on your post that you introduced all of the evidence you could regarding your income but the court did not find that it was a sufficient change. Without reviewing the order entered in this matter it is hard to tell why the Judge made the decision that he or she did.

The law does allow for the modification of child support if there is an involuntary decrease in income, however, in your case the event that you allege decreased your income occurred prior to the entry of the last order. When either party moves to modify an order, the judge will only consider circumstances and evidence that have occurred since the last order was entered.

Helena M. Nevicosi
Attorney with Rosen Law Firm

4101 Lake Boone Trail, Suite 500
Raleigh, North Carolina 27607
919.787.6668 main phone
919.787.6361 main fax

Charlotte Office
301 McCullough Drive
Suite 510
Charlotte, NC 28262
Main Phone: (704)307.4600
Main Fax: (704) 9343.0044

Durham & Chapel Hill Office
1829 East Franklin Street
Building 600
Chapel Hill, NC 27514
(919) 321.0780

ROSEN.COM

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.


#4

THE ORDER (REDACTED TO PRESERVE ANNONYMITY)

Income was 11,029 monthly and is now 2,800 monthly.

Can you tell me how this Order is justified in light of Armstrong v. Droessler?

NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
DISTRICT COURT DIVISION X COUNTY x CvD x

DIANE XX, )
)
Plaintiff, )
)
vs. ) ORDER
)
JOHN X, )
)
Defendant. )

THIS CAUSE is coming on to be heard and being heard before The Honorable X, District Court Judge Presiding during the X, Civil Session of District Court for X County in X, North Carolina; this matter is before the Court regarding Defendant


#5

Unfortunately, I cannot give you advise with an order without scheduling a consultation without reviewing the Order and its facts with you in their entirety.

Helena M. Nevicosi
Attorney with Rosen Law Firm

4101 Lake Boone Trail, Suite 500
Raleigh, North Carolina 27607
919.787.6668 main phone
919.787.6361 main fax

Charlotte Office
301 McCullough Drive
Suite 510
Charlotte, NC 28262
Main Phone: (704)307.4600
Main Fax: (704) 9343.0044

Durham & Chapel Hill Office
1829 East Franklin Street
Building 600
Chapel Hill, NC 27514
(919) 321.0780

ROSEN.COM

The response posted above is based upon the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with an attorney, fully explain your situation, and allow the attorney sufficient opportunity to research the applicable law and facts required to render an accurate opinion. The basic information provided above is intended as a public service only, a full discussion with an attorney should be undertaken before taking any action. The information posted on this forum is available for public viewing and is not intended to create an attorney client relationship with any individual. These answers are provided for informational purposes only, a person should consult with their own individual legal counsel before taking any action that could affect their legal rights or obligations.


#6

[quote]Originally posted by Helena Nevicosi
[br]It seems to me based on your post that you introduced all of the evidence you could regarding your income but the court did not find that it was a sufficient change. Without reviewing the order entered in this matter it is hard to tell why the Judge made the decision that he or she did.

The law does allow for the modification of child support if there is an involuntary decrease in income, however, in your case the event that you allege decreased your income occurred prior to the entry of the last order. When either party moves to modify an order, the judge will only consider circumstances and evidence that have occurred since the last order was entered.

Helena M. Nevicosi
Attorney with Rosen Law Firm

Ms. Nevicosi,

The issue as I see it is whether there has to be “an event” at all? It seems that an involuntary decrease in income IS the substantial change!

Think of this… I am self employed sole proprieter. My income is market based. I have good years and bad years. I am at the mercy of the economy. Nothing has “changed”. There is no change! The economy was always fickle! BUT MY INCOME HAS CHANGED SUBSTANTIALLY through no fault of my own.

According to Armstrong v. Droessler, the Judge has to make a specific finding regarding my actual income at the time of the hearing. The judge did not! The task was too much for the judge and was avoided. my accountant’s testimony was ignored. The judge ruled I had not met my burden of proof despite admitting every financial record.

Next, without determining income and without making a substantial reduction vs. not substantial reduction decision, the judge ruled the reduction was “not involuntary”!

anyway, thanks, and i will come back and tell you the result of the appeal. again, I am appealing using armstrong v. droessler, in which your firm participated.

Thanks for the precedent.


#7

Wow…I find it hard to believe that with all the proof you had that the judge denied the reduction. Maybe he was just looking at what you’re capable of making based on previous income provided?

My husband got laid off from his job in 2001 and was collecting unemployment. His child support at that time was $600/month. He tried his best to continue to pay that amount on his reduced income but, naturally, he got behind. At that time he was private pay…wrote a check to the ex every month. She kept harassing him about the money and one day he got a nasty gram from her attorney.

He calls his attorney up and tells her to file for modification based on substantial change of circumstances. When the ex got served she realized she screwed up and tried to talk him out of going to court. He refused and when they went to court the judge reduced his child support to $400/month based on what he was getting from unemployment. He now has child support taken out through wage withholding and it goes through Raleigh.


#8
quote:
[i]Originally posted by jillb[/i] [br]Maybe he was just looking at what you're capable of making based on previous income provided?

No. The Judge dismissed my Motion and said I had not met my burden to show what my income was. The issue of “substantial reduction” was never addressed although she found that the reduction was “not involuntary”! Although, I bet that if I were seeking an increase, the Judge would have had no problem determing my income from the evidence submitted. I also bet that if child support was being set for the first time the Judge would have had no problem determining my actual income.

The Judge’s holding was essentially “I cannot tell what your income but I can tell the reduction is voluntary”. How can the judge tell there is a reduction if he cannot tell what the income is!

The Judge did not impute income or earning potential to me. That would have required proof of “intentional depression of income or bad faith”. Neither of which is present.


#9

The extensive commingling of personal & business assets (along with credit card statements in someone else’s name) most likely did not help matters for determining your income. In some businesses (such as law & insurance), commingling personal & business assets can get you in very deep trouble with the regulatory/oversight bodies for those industries.

Here’s a question for you:

Since the Court was unable to determine your income, due to extensive commingling, what would you expect the Court to do?

They can’t grant a modification downward, because if they can’t determine your income, they can’t determine what it would be modified to, even if they admit your presumption of an involuntary decrease.

Yet, you’re claiming that the denial of your modification was also in error. If you’re correct, what should the Court have done?

The denial of your medical disability wasn’t necessarily improper, IMNSHO, since the event you’re claiming had the effect did occur prior to the first hearing, and it’s reasonable to assume that you would have known about the business effects at that point.


#10
quote:
[i]Originally posted by Golfball[/i] [br]

Here’s a question for you:

Since the Court was unable to determine your income, due to extensive commingling, what would you expect the Court to do?

They can’t grant a modification downward, because if they can’t determine your income, they can’t determine what it would be modified to, even if they admit your presumption of an involuntary decrease.

Yet, you’re claiming that the denial of your modification was also in error. If you’re correct, what should the Court have done?

The denial of your medical disability wasn’t necessarily improper, IMNSHO, since the event you’re claiming had the effect did occur prior to the first hearing, and it’s reasonable to assume that you would have known about the business effects at that point.


You miss my point. The Court WAS OBLIGATED to determine my income. See Armstrong vs. Droessler. The “commingling” was not a real issue. The accountant had my register and easily determined which expenses were personal and which were home. He is the one that determined the income given the deducible expenses provided him. It will be the same expenses that the IRS will accept readily in determining my income. If the Court found any expense suspect, it could have simply moved it to the non-deductible side of the ledger. The problem for the Court was that my Gross income only slightly exceeded my net income upon which the support Order was based. Had the court fo example, only deducted my rent from the gross, it would have determined income and there would have been a substantial change.

In the worst case scenario, the Court should have determined my income to be my gross business deposits! The Court was obligated to make a determination of income at the time of the Hearing. It did not.


#11
quote:
[i]Originally posted by Czyka[/i] [br]
quote:
[i]Originally posted by Golfball[/i] [br]

Here’s a question for you:

Since the Court was unable to determine your income, due to extensive commingling, what would you expect the Court to do?

They can’t grant a modification downward, because if they can’t determine your income, they can’t determine what it would be modified to, even if they admit your presumption of an involuntary decrease.

Yet, you’re claiming that the denial of your modification was also in error. If you’re correct, what should the Court have done?

The denial of your medical disability wasn’t necessarily improper, IMNSHO, since the event you’re claiming had the effect did occur prior to the first hearing, and it’s reasonable to assume that you would have known about the business effects at that point.


You miss my point. The Court WAS OBLIGATED to determine my income.


And you missed mine. If you didn’t bring enough credible evidence to determine your income (as determined by local rules), then the Court may have had the option to dismiss your claim under local and state rules of civil procedure.

If the Court is unable to make a specific finding of fact (due to insufficient evidence) there must be some recourse for the Court, otherwise the action would be unable to proceed.

quote:
See Armstrong vs. Droessler.

I’ve read it. In that case, there was competent evidence (in the form of tax returns) that the income had been reduced.

Whether your obfuscated numbers for income qualifies as competent evidence, I don’t know. That would depend on your local court rules. But if your presentation doesn’t qualify as competent evidence, you may have a difficult time asserting the dismissal as unwarranted.

quote:
The "commingling" was not a real issue.

It may have been, especially since it was explicitly mentioned in the findings of fact. (Number 11.)

quote:
The accountant had my register and easily determined which expenses were personal and which were home. He is the one that determined the income given the deducible expenses provided him.

From the findings of fact: “but there is no evidence or way for the Court to determine which expenses are personal”


#12

I’m impressed with your analysis.

The Court had a record of every single financial transaction I had made for 6 months.
The Court had the actual cancelled checks and the bank statements.
The Court had everything and more than what the local rules required.
The Court had specifically and more than what the Court Ordered me to produce relative to this hearing.
There was nothing more I could have possibly produced.

The accountant could and did determine income readily with the information provided.

I will add that the “credible tax return” in Armstrong v. Droessler would have been completed using precisely the same kind of financial documents available to the Court at the time of my hearing. In other words, the tax return itself is actually less credible than the records I produced into evidence! In fact, these very same records will create the exact same statement of reduced income for the IRS.

Furthermore, the tax returns in Armstrong were used as evidence that income had been reduced! There were no tax returns available to the Court in Armstrong to determine income at the time of the hearing. The COA remanded the case because the Court did not determine income at the time of the hearing.

If the Court could not determine whether an individual expense were personal or business, the court could have inquired further or simply delienated the questionable expense as personal and thus, not deducted from the gross deposits.

The Court should have stated income as the gross business deposits and then deducted what it could readily determine were legitimate business expenses.


#13

Yes, the system is broken. The innocent (children) suffer the consequences. Redirect your energy to them and those you know that love you. Connect with the present, look towards a brighter tomorrow. Return to the man of power you once were that still exists within you. Reinvent your life. The rock remains a symbol of your strength. Your beauty is your mind, use it wisely.


#14

An Order was filed establishing child support in March 2007. The March Order was based directly on 2006 Schedule C earnings divided by 12 yielding monthly avearge of 11,000 monthly.

In October 2007 I filed a Motion for Modification alleging a substantial and involuntary decrease in income. The Motion was heard Friday and was Denied.

I introduced evidence in the way of accountant testimony, bank statements, cancelled checks, credit card statement and summaries that indicated my average monthly income was now 2,800 monthly. I argued the “change of circumstance” was reduced income and that it was “substantial” and involuntary.

There was no evidence introduced that the reduction in income was in bad faith. My business has simply declined for a number of reasons.

I was required to miss 60 plus days from my work (I am a sole proprietor) in late 2006 (prior to the establishment Order) due to medical necessity. I was ill and could not work. This absence has affected my earnings in 2007 today. The judge would not allow me to introduce evidence that I missed 60 plus days through no fault of my own in 2006 because that pre-dated the Order establishing support. The reality is, the work I didnt do then is decreasing my income now.

The plaintiff’s counsel argued that I “controlled” my income and could have made different deductible business expenses, etc, and that I “finagled” although he never pointed to any evidence of bad faith or finagling.

Am I completely wrong in believing the law in North Carolina allows for a Modification if there has been a substantial and involuntary decrease in income?

The Judge never determined my income based upon the documents available at the hearing, thus, never reaching the “substantially reduced income” issue. The Judge simply said I had not met my burden of proof in showing a substantial and involuntary change in cirumstance.

Any guidance is appreciated and if you can point to controlling case law that would be a tremendous help.

Thanks,