Carolan v. Bell
2007 Me. LEXIS 35, 916 A.2d 945, 2007 ME 39 (2007)
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Rule of Law:
For child support calculations, a court errs in imputing income based on a non-contractual rent reduction lacking a legal obligation, and in imputing income for additional hours to a parent who works all available hours from their employer, consistent with their training and experience, even if it constitutes less than a 40-hour work week.
Facts:
- Christina C. Cardan and David A. Bell are the parents of a son, who is seven years old.
- In 2005, a court ordered shared parental rights and responsibilities, with Bell having custody from Sunday evening to Thursday end-of-school, and Cardan having custody from Thursday end-of-school to Sunday evening.
- Christina Cardan has a high school diploma and a technical school degree for work in a dental laboratory, and previously worked in dental labs and the service industry.
- At the time of the child support hearing, Christina Cardan was working as a dental assistant, earning $13.50 per hour, and worked approximately 33-35 hours per week, Monday through Thursday, because her employer's office is closed on Fridays.
- Christina Cardan's employer covers her health insurance costs, and she stated she had not received a pay raise in two years due to rising premiums.
- Christina Cardan rents a small single-family home owned by her parents for $1000 per month and pays all utilities; her parents previously rented the home for $1300 per month.
- David Bell lives rent-free in a home owned by his employer (his family’s corporation), which also covers most of his expenses, including utilities, insurance, and the health insurance for his children.
- Christina Cardan testified that she takes her son to school on Friday, a 28-mile trip, and typically volunteers at the school that day.
Procedural Posture:
- Christina C. Cardan filed a parental rights action seeking child support for her son in District Court (Lewiston).
- The District Court (Cote, J.) entered an order on nonfinancial parental rights issues on December 23, 2005, establishing shared parental rights and responsibilities.
- In April 2006, the District Court (LaVerdiere, J.) held a hearing on the child support issue.
- The District Court adopted David Bell's suggestions to impute additional income to Christina Cardan for: (1) the difference between her rent and the previous tenant's rent, (2) the value of her employer-paid health insurance, and (3) voluntary underemployment for additional work hours.
- The District Court calculated Christina Cardan's gross income at $32,802.00 and David Bell's gross income at $48,516.00.
- The District Court ordered David Bell to pay Christina Cardan $28.46 per week for child support and to maintain health insurance for their son.
- Christina C. Cardan appealed the District Court's judgment.
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Issue:
Does a court err in imputing income for child support purposes when it considers (1) the difference between a party's rent paid to parents and the rent charged to a previous tenant, and (2) income for additional hours to a party who works all available hours offered by her employer consistent with her training and experience but less than 40 hours per week?
Opinions:
Majority - Alexander, J.
Yes, a court does err in imputing income for child support purposes based on a non-contractual rent reduction and for additional hours to a parent who works all available hours offered by her employer. The court first determines that the difference between the rent Christina Cardan paid her parents ($1000) and the rent previously charged ($1300) cannot be considered income from an "ongoing source" under 19-A M.R.S. § 2001(5)(A). There was no evidence of a legal obligation for her parents to continue the reduced rate, nor that the $1000 rent was significantly below prevailing market rates. Imputing income based on speculative rental rates would be inappropriate, and this rent was not an "in-kind payment" related to her employment. Second, the court affirms that employer-paid health insurance, like that received by both Cardan and Bell, is an "in-kind benefit" that reduces personal living expenses and is received in the course of employment, thus properly subject to imputation as gross income under 19-A M.R.S. § 2001(5)(B). The court's estimation of its value for Cardan was reasonable based on Bell's employer's rates. Third, the court finds that the trial court clearly erred in imputing income for eight additional hours of work, concluding that Christina Cardan was not "voluntarily underemployed" under 19-A M.R.S. § 2001(5)(D). Cardan's employment of 33-35 hours per week as a dental assistant is consistent with her training and experience and utilizes all hours available from her employer. A parent working a full-time job consistent with their qualifications, but less than 40 hours due to employer's schedule, is not automatically considered underemployed for child support purposes. The judgment is vacated and remanded for recalculation.
Dissenting - Levy, J.
No, the trial court's findings regarding Christina Cardan's imputed income were supported by competent evidence in the record and were not clearly erroneous. First, regarding the rent reduction, Cardan's testimony that she performed yard work and painting, and that her parents charged her $300 less than the previous tenant, allowed the trial court to reasonably infer a tacit agreement for services, not mere speculation. The trial court had the opportunity to judge her credibility. Second, the dissenting justice agrees with the majority that employer-paid health insurance is properly imputed as income as an "in-kind payment" under 19-A M.R.S. § 2001(6)(B), as it reduces personal living expenses, and no proof is required that the employer would have paid equivalent cash compensation. Third, concerning the imputed income for additional hours, Cardan's testimony that she chose not to work Fridays to spend time with her son, and her concession that she could find employment on Fridays, provided competent evidence from which the trial court could infer she was voluntarily underemployed. The trial court's determination was not clear error, and appellate courts should not re-evaluate witness testimony from a "cold transcript." Therefore, the judgment should be affirmed.
Analysis:
This case significantly clarifies the discretion of courts in imputing income for child support calculations, particularly concerning non-traditional forms of income and employment patterns. It establishes a more stringent standard for determining 'voluntary underemployment,' especially for parents who work substantial hours consistent with their skills but are limited by employer scheduling. The ruling reinforces that gifts or non-contractual benefits without a legal obligation generally should not be imputed as income, reducing speculation in child support orders. While confirming that employer-provided health insurance is an 'in-kind' benefit, the decision limits the circumstances under which a court can inflate a parent's income based on assumptions about their earning capacity or family arrangements, promoting a more evidence-based approach to determining gross income.
