Dallas Divorce Lawyer & Attorney : Verner & Brumley Law Firm : Serving Dallas, Plano, Fort Worth, Texas

In a puzzling opinion, Chafino v. Chafino, the El Paso Court of Appeals appears to have limited the extent to which a court may consider fault in the breakup of a marriage in dividing the parties' community estate. 

Ms. Chafino sued her husband for no-fault divorce ("insupportability") as well as for divorce on the grounds of adultery and cruelty.  At trial, Mr. Chafino denied adultery, but Ms. Chafino's private investigator videotaped Mr. Chafino entering a room at a local Motel 6 with a woman not his wife.  Three hours and twenty minutes passed before the couple emerged.  Mr. Chafino's paramour was subpoenaed to court where she admitted the affair.  She testified that Mr. Chafino had not informed her that he was married.

The trial court awarded Ms. Chafino 70% of the community estate, but Ms. Chafino appealed, arguing unsuccessfully that the trial court should have awarded her even more of the community estate given Mr. Chafino's misconduct.  At this point the El Paso Court said:  "In a fault-based divorce, the court may also, in making a disproportionate division, consider the conduct of the errant spouse."

The Court's opinion does not say whether the trial court granted the Chafino divorce on a fault ground or on insupportability, but nearly all divorces in Texas are granted based on insupportability even when a fault-based ground is proved at trial.  The Court does suggest, by its choice of language, that a spouse must plead and prove a fault-based ground for divorce if the trial court is to take account of fault in the property division.

If this is what the Court meant to say, then its holding departs from the many Texas cases that hold that fault in the breakup of the marriage may be considered in dividing the community estate even when no fault-based ground for divorce is pled.  Nevertheless, the Beaumont Court of Appeals, in Phillips v. Phillips, did hold that fault cannot be used as a factor in dividing the community estate when a "no-fault" divorce is sought.

What do we learn from these cases?  If the opposing party is at fault, then the divorce petition should allege both fault and no-fault grounds for divorce.  Fault in the breakup of the marriage should be specifically pled as a ground for property division.  The trial court should be encouraged to grant the divorce based on fault grounds or at least make findings of fault on the part of the other spouse.  Otherwise, the trial court might be foreclosed from considering fault in the property division.

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For cases filed after September 1, 2007, child support will go up, depending on one's income level.  In House Bill 448, the Texas legislature made three changes to child support:

1.   Although child support percentages remain the same, the "net resources" ceiling will increase from $6,000 to $7,500.  This means that the percentages will be applied up to $7,500 in net resources instead of just to the first $6,000 of net resources.

    The child support percentages are:

1 child	20% of net resources
2 children	25% of net resources
3 children	30% of net resources
4 children	35% of net resources
5 children	40% of net resources
6+ children	Not less than the amount for 5 children

2.  The second change is that the net resources ceiling ($7,500) is to be adjusted every six years to reflect inflation, according to the Consumer Price Index.

    These changes are part of amended Texas Family Code section 154.125.  The third change - requiring pro rata calculation of dependent health insurance - is reflected in Texas Family Code sections 154.182 and 154.183:

3.  The Juvenile Justice & Family Issues Committee Report describes this third major change:

Provides that in calculating expenses for health insurance coverage, if the obligor has other minor dependents covered under the same health coverage the court shall divide the total cost to the obligor of the coverage by the total number of dependents, including the child that is the subject of the order.

None of this applies if a case is pending prior to September 1, 2007.  Only if the case is filed on or after that date do these changes apply.

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Back in the days before no-fault divorce, it was important to "get the goods" on the philandering spouse.  Images of Sam Spade bursting into a room at the Notell Motel, flashbulb exploding, come to mind.

www.humphreybogart.com

But those days are no more - or are they?  A spouse's conduct can affect property division and what rights that spouse will have with respect to the children.  Moreover, investigating a spouse can yield other important information unrelated to sexual misconduct - drug or alcohol abuse, criminal activity, gambling and the like.  Locating a spouse at a specific point in time also can provide an alibi if that spouse is accused, for example, of assaulting the other spouse at that time. Although the days of Sam Spade are no more, other sources of information provide opportunities to "track" a spouse in different ways.  These ways - some obvious, some not so obvious - include:

• Credit card statements:  These statements show where a person was, often show what sorts of things were purchased, and can allow estimates of how many people were there (as in restaurant receipts).

• Florists:  It is amazing that men will use the same florist to send flowers to both their wives and their girlfriends.

• Cellphone records:  Although a cellphone record cannot pinpoint a person's location, it can yield a wealth of information about who is calling and being called.
  

• Tolltag records:  These records allow pinpointing of a person's location at a specific time - assuming, of course, that the car is bring driven by that person.  

Have you ever looked at a photo of your house taken from a satellite?  Perhaps some day we will be able to track people by photographs from space.  For now, other methods must suffice.

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Article I, § 18 of the Texas Constitution is unequivocal:  "No person shall ever be imprisoned for debt."  However, a person can be imprisoned for failure to pay child support because child support is not considered a "debt" under the law.  In In re: Green, 221 S.W.3d 645 (Tex. 2007) (orig. proceeding) (per curiam), the Texas Supreme Court was faced with the issue whether contractual alimony is considered a "debt."

The Court previously had held that alimony is a debt and so could not be enforced by imprisonment upon a finding of contempt.  Ex parte Hall, 854 S.W.2d 656 (Tex. 1993).  But after the Court decided Hall, the legislature passed the maintenance statute, which permits a court to order spousal maintenance for up to three years if the receiving spouse is disabled, cares for a disabled child, or lacks sufficient earning ability to care for himself or herself.

The question for the Court became whether the obligation to pay any "maintenance" could be enforced by contempt resulting in imprisonment, or whether imprisonment could be a remedy only when a court ordered maintenance under the maintenance statute. 

The Texas Supreme Court opted for the latter construction.  Contractual alimony, even if ordered by a court, cannot be enforced by contempt resulting in imprisonment if not paid.  But maintenance, if ordered in compliance with the maintenance statute, can be enforced by contempt resulting in imprisonment.

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Dividing retirement benefits is an area of the law that requires using precise language and following rules exactly.  The Texas Supreme Court again made this clear in Holmes v. Kent, 221 S.W.3d 622 (Tex. 2007) (per curiam).

Holmes follows an all-too-familiar pattern.  The former wife, Ms. McWhorter, was a schoolteacher.  Her retirement benefits were through the Teacher Retirement System of Texas ("TRS").  When Ms. McWhorter retired, she designated her husband, Mr. Holmes, to receive an annuity should she predecease him.

Ms. McWhorter and Mr. Holmes later divorced.  Prior to the divorce, Ms. McWhorter signed a document retracting the designation of Mr. Holmes to receive the annuity and appointing her son and his wife (the Kents) to receive the annuity instead.  The divorce decree contained the usual language awarding Ms. McWhorter all her retirement benefits and divesting Mr. Holmes of any right to them.  Ms. McWhorter also changed her will to pass her entire estate to her son.

When TRS received these documents, it notified Ms. McWhorter that the designation was ineffective because only one person, not two, could be awarded an annuity.  Further, it told Ms. McWhorter that the language in the divorce decree did not meet TRS requirements and suggested language that would meet those requirements.  However, Ms. McWhorter supplied no further documentation, and a year later, she died.

The ensuing litigation pitted the Kents against Mr. Holmes, who claimed that the annuity belonged to him because Ms. McWhorter never had changed her designation with TRS.  The Texas Supreme Court agreed, noting TRS' specific requirements for  changing an annuity designation and Ms. McWhorter's failure to follow those requirements.

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Texas Family Code § 156.006 sets forth the circumstances under which a trial court may temporarily change custody of a child while a motion to modify is pending.  One of the circumstances exists when "the order is necessary because the child's present circumstances would significantly impair the child's physical health or emotional development."  On this finding the trial court may "render a temporary order that has the effect of changing the designation of the person who has the exclusive right to designate the primary residence of the child."

So when does a temporary order have the "effect" of changing custody of a child?  The San Antonio Court of Appeals considered this issue in In re: Sanchez, 2007 Tex. App. LEXIS 2603 (Tex. App. - San Antonio Apr. 4, 2007, orig. proceeding). 

In Sanchez, the mother and father lived in San Antonio, as did the mother's parents.  The mother left the child with her parents during the week while she attended vocational school in Houston.  The mother was arrested following an unspecified "altercation."  The father moved the trial court for temporary orders granting him custody of the child.  The trial court ordered that the child stay with the father during the week in San Antonio rather than with the mother's parents.

In the court of appeals, the father argued that the trial court's order did not have the "effect" of changing custody.  The court of appeals disagreed, noting that under the prior order, the mother had greater possession and access to the child than the father and the unrestricted right "to establish the child's primary residence anywhere."  In summary, the court of appeals identified three factors underlying its decision:

• A substantial reduction in the mother's overall possession time;
• Restrictions placed on the mother's possession rights; and
• The indefinite duration of the temporary orders.

Together, these facts operated to deprive the mother "of any discretion inherent in her right to designate [the child's] principal residence."

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The Internal Revenue Code currently allows a deduction of $3,300 per dependent on federal income tax returns.  These deductions are called "exemptions."  According to IRC § 152(c)(3), dependents include your children, so long as they have not reached age 19 by the end of that tax year.  If a child is a full-time student who has not reached age 24 by the end of the tax year, the child can also be claimed as a dependent.

What happens on divorce or separation?  Many who pay child support believe that paying child support entitles them to claim a child as a dependent for tax purposes.  This widely-held misconception simply is not true.  The key fact to claiming a child as a dependent is whether the parent is the custodial parent.  Ordinarily, custodial parents are the ones who are allowed to claim children as dependents, even when the noncustodial parent pays substantial amounts of child support.

IRC § 152(e)(1) sets out the general rule, which is that a child can be claimed as a dependent by the custodial parent.  IRC § 152(e)(3)(A) says that "custodial parent" means "the parent with whom a child shared the same principal place of abode for the greater portion of the calendar year." 

According to IRC § 152(e)(2)(A), there are two ways in which a noncustodial parent can claim a child as a dependent:

1.  The custodial parent signs a Form 8332 ("Release of Claim to Exemption for Child of Divorced or Separated Parents") which the noncustodial parent attaches to his tax return; or

2.  The divorce decree, separate maintenance or written separation agreement states that the noncustodial parent shall be entitled to claim a child as a dependent.

What happens if both parents claim the same dependent?  The IRS has published what it calls the "Tie-Breaker Rule."  Under this rule, the parent with whom the child lived for the longer period of time during the year is awarded the exemption.  if the child lived with each parent the same amount of time during the year, then the parent with the higher adjusted gross income is awarded the exemption.

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The federal Office of Child Support Enforcement ("OCSE") runs a number of programs designed to locate parents who don't pay their child support.  One of these programs is called the New Hire Reporting Program.  This program requires employers to notify the state whenever they hire a new employee.  The information provided is the same as on a W-4.

The employer must send in the new hire information within twenty days of the day the new employee begins work.  If new hire information is sent in electronically, it must be done twice per month, with no transmissions being less than twelve days apart and none more than sixteen days apart.  After the state receives the new hire information, the state sends it on to OCSE.  The data become part of the National Directory of New Hires, which is a central repository of employment, unemployment insurance claimant data, and quarterly wage data.  It is also added to the Federal Case Registry, which is a national database that contains information on individuals in child support cases and child support orders.

What does OCSE do when it receives new hire information?  All new hire information is run through the National Directory of New Hires and the Federal Case Registry.  If a name pops up, then the information is sent back to the state.  The state child support agency uses this information to establish or modify a child support order, or enforce (through income withholding) an existing order.

On request of a state, OCSE's Federal Parent Locator Service will run a name through "external federal agency databases" for the purpose of establishing or enforcing a child support order.  These databases are immense and confidential.  They include IRS records, the Social Security Administration, the Department of Veterans Affairs, the Department of Defense and the FBI.

Never heard of the New Hire Reporting Program?  Perhaps this is why:  By federal law, the penalty for failing to report a new hire can be no more than $25.

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State Bar of Texas Section Report - Family Law - Fall 2007

by Jimmy L. Verner, Jr.

Alimony: A Missouri trial court properly awarded alimony of $550 per month to an unemployed, disabled wife, aged 55, with a 9th-grade education and no computer or clerical skills, despite the husband's insistence that he could not pay that much from his monthly earnings of $3,900. Russum v. Russum, 2007 Mo. App. LEXIS 275 (Feb. 20, 2007). The North Dakota Supreme Court refused to reduce alimony payments of $5,000 per month when the ex-husband's income dropped from $400,000 to $250,000 per annum. Rothberg v. Rothberg, 727 N.W.2d 771 (N.D. 2007).

Characterization: A North Carolina trial court did not believe a father's claim that he intended to give a mobile home park to his son when the deed recited that consideration had been paid. Joyce v. Joyce, 2006 N.C. App. LEXIS 2502 (Dec. 19, 2006). An Illinois court denied a stepfather's claim that his wife's child support judgment against her prior husband should be part of the marital estate because the stepfather had supported the wife's children during the wife's marriage to him. In re: Edwards, No. 5-06-0046 (Ill. App. Nov. 29, 2006). A trial court's mere recitation that various witnesses had testified to certain facts did not constitute findings of fact supporting a wife's reimbursement claims to the marital home. Stone v. Stone, 2007 N.C. App. LEXIS 394 (Feb. 20, 2007).

Child support: The New Hampshire Supreme Court held that employer-provided housing, vehicle and other benefits do not constitute "gross income" for child support purposes although they can be considered under a "special circumstances" statute. In re: Clark, No. 2005-531 (N.H. Nov. 29, 2006). A New Jersey court held that neither employer contributions to a 401k plan nor accretions of plan income are income for child support purposes because they are subject to penalties on early withdrawal and "would punish the father for investing wisely to secure a stable retirement." Forrestall v. Forrestall, 2006 N.J. Super. LEXIS 319 (Nov. 28, 2006). A federal court's restitution requirement for back child support, imposed after conviction under the federal Child Support Recovery Act, does not constitute a ceiling on a state court's back child support award. Giordano v. Giordano, 2007 N.J. Super. LEXIS 3 (Jan. 9, 2007). A lump-sum Social Security disability award to a disabled obligor's child can offset the obligor's child support obligation. Diehl v. Diehl, 2006 N.J. Super. LEXIS 339 (Dec. 21, 2006). K-1 income is not necessarily income for child support purposes because "how federal income taxation statutes define 'income' is of little relevance to our interpretation of gross income under the child support guidelines." In re: Albert, 2007 N.H. LEXIS 54 (Apr. 18, 2007). Depreciation on rental property cannot be deducted from annual gross income for child support purposes. Asfaw v. Woldberhan, 2007 Cal. App. LEXIS 269 (Feb. 27, 2007).

Grandparents: A maternal grandmother who served as a surrogate mother to her grandchild for five years after the mother's death prevailed in a grandparent suit after the father curtailed visitation. E.S. v. P.D., 2007 N.Y. Slip. Op. 01336 (N.Y. Feb. 15, 2007). A paternal grandmother who occasionally babysat her two-year-old grandson failed to obtain visitation more often than the child's mother would permit because she "failed to establish even a prima facie case of the requisite harm . . . to rebut the presumption in favor of parental decision-making." Rente v. Rente, 2007 N.J. Super. LEXIS 48 (Feb. 15, 2007).

Imputing income: Courts in Connecticut and California held that for child support purposes, a court may impute a higher than actual return to an underperforming investment. Weinstein v. Weinstein, 2007 Conn. LEXIS 4 (Jan. 2, 2007) (2.96% return imputed on investment yielding 1.24%); In re: Schlafly, 2007 Cal. App. LEXIS 521 (Apr. 10, 2007) (3% return imputed on investment yielding 1.6%). But the California court refused to impute $3,000 per month as rental FMV when the obligor lived in his mortgage-free house. In Carolan v. Bell, No. And-06-332 (Me. Mar. 1, 2007), a trial court declined to impute $300 per month income to a daughter who rented a house from her parents at $1,000 per month even though the house previously rented for $1,300 per month.

Religion: When unmarried parents disagree whether a child should attend a religious or a secular school, the court must decide the matter but without taking into account conflicting religious preferences. Yordy v. Osterman, No. 95,203 (Kan. App. Jan. 19, 2007). An Arizona trial court properly granted a motion to dismiss based on absolute immunity when a mother sued the state and a court conciliator under 42 U.S.C. § 1983, alleging that the court conciliator recommended the father as primary custodian so that the child would attend the LDS church. Burk v. State, No. 1 CA-CV 06-0029 (Az. App. Mar. 12, 2007). In a divorce between Orthodox Jews, a court had no jurisdiction to consider the wife's contention that the husband's obtaining a "heter" - ecclesiastical permission to remarry without first giving the wife a "get," or religious divorce - effectively prevented the wife from remarrying. Sieger v. Sieger, 2007 N.Y. Slip Op. 01286 (App. Div. Feb. 13, 2007).

Relocation: A mother who took the parties' child from Idaho to Montana where she made a false report of domestic violence lost custody to the father. Hopper v. Hopper, 2007 Ida. LEXIS 61 (Mar. 19, 2007). A relocation agreement by Illinois parents became subject to a "best interests" determination by the court when the father accused the mother of breaching the agreement. In re: Boehmer, No. 2-06-0796 (Ill. App. Mar. 8, 2007). When an ex-spouse marries or becomes engaged to a person living in another state, Massachusetts requires the ex-spouse to prove "a real advantage" to moving (query: when would moving not be "a real advantage" to the ex-spouse?) and that the move would be in the child's best interest. Pizzino v. Miller, 2006 Mass. App. LEXIS 1327 (Dec. 26, 2006) (trial court allowed move; reversed and remanded for redetermination); Abbott v. Virusso, 2007 Mass. App. LEXIS 209 (Feb. 28, 2007) (trial court denied move; reversed and remanded for redetermination). In In re: Matchen, 2007 Ill. App. LEXIS 339 (Apr. 11, 2007), the court affirmed denial of permission to move because of the child's close relationship with the father. Dissent: A father should not have veto power over his ex-wife's proposed move.

Same-sex: A lesbian domestic partner who filed a custody suit in Vermont failed in her bid to prohibit Virginia's full faith and credit recognition of the Vermont judgment even though a Virginia statute declares "void" any recognition of same-sex rights originating in other states. A Virginia appellate court said that Virginia's statute did not apply, and even it it did, it would be preempted by the federal Parental Kidnapping Prevention Act. Miller-Jenkins v. Miller-Jenkins, 2006 Va. App. LEXIS 539 (Nov. 28, 2006).

Valuation: The Georgia Supreme Court held that a buy-sell provision in a stockholder agreement is not conclusive of stock value upon divorce - especially when the other spouse did not sign it - because "the buy-sell price in a closely-held corporation can be manipulated and does not necessarily reflect true market value." Barton v. Barton, 2007 Ga. LEXIS 21 (Jan. 8, 2007). In contrast, a New York court affirmed a business valuation because it relied, in part, "on the yearly valuations made pursuant to the shareholders' agreement between the defendant and his brother." Daddino v. Daddino, 2007 N.Y. Slip Op. 01241 (App. Div. Feb. 13, 2007). Under the "capitalization of excess earnings" valuation method, the cost of an employee to replace the owner must be subtracted from the business' value; anything over that cost is personal goodwill. A California appellate court upheld a trial court's finding of $544,000 as an owner's replacement salary. In re: Ackerman, 2006 Cal. App. LEXIS 2056 (Dec. 27, 2006). The Iowa Supreme Court reversed a valuation of $5 million placed on trademarks owned by a business, finding the valuation to be speculative. In re: Keener, No. 05-1257 (Iowa Feb. 9, 2007).

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When a person is past due on a debt, then makes a payment, how is the payment applied?  Does the payment reduce the principal, or is the principal left intact and only interest reduced?  The answer to this question made a difference of about $30,000 in a recent Florida child support case called Vitt v. Rodriguez.

In Vitt, the ex-husband paid some child support immediately after divorce.  According to the opinion, the ex-husband then "disappeared in 1990.  He was eventually located in Tampa in 2003, at which point he was behind in his child support plus accrued interest in the amount of approximately $161,000."

Under a local court rule, payments on past due child support were to be applied first to current child support, second to the principal amount of past due child support, and finally to interest on the past due child support.  Under this system, the ex-husband reduced his debt approximately $30,000 more than he would have reduced it had the payments been applied to interest on past due child support before applying those payments to the past due principal amount. 

In an appeal of the issue, the court found no statute that directed how payments should be applied.  The court then adopted the common law rule for application of payments.  Relying on a United States Supreme Court case from 1839, the court agreed "that in applying a payment on a debt, the interest due should first be satisfied, and the balance should then to be applied to diminish the principal."  Thus, the ex-husband owed an additional $30,000 in interest on past due child support.

It is surprising, as the court said, that Florida had no rule on the application of payments.  To what extent other states have such rules is unknown, but in Texas, the Family Code clearly establishes how payments toward past due child support are to be applied - first toward current child support, second toward interest on past due child support, third toward the principal amount of past due child support, and finally toward any attorney's fees or costs ordered paid by the court.

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