In RE MARRIAGE OF SCHEUER v. Scheuer
290 Wis. 2d 250, 711 N.W.2d 698, 2006 WI App 38 (2006)
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Rule of Law:
A court may base a maintenance award on a party's earning capacity, rather than their actual earnings, if the party's reduction in income resulted from a voluntary and unreasonable employment decision, such as being terminated for misconduct.
Facts:
- Bradley Scheuer and Cora Lee Scheuer were married in 1978.
- Bradley had been employed at Andersen Windows for twenty-three years, earning approximately $20 per hour, while Cora earned about $12.70 per hour.
- During their divorce proceedings, Bradley was terminated from his job at Andersen Windows.
- Cora alleged Bradley was fired for misconduct, had repeated disciplinary problems, and had previously stated he would rather quit than pay maintenance.
- Bradley admitted he skipped work for five consecutive days before his termination.
- After being fired, Bradley found a new job paying $11.74 per hour.
- To satisfy a property equalization payment of approximately $125,000 to Cora, Bradley chose to withdraw funds from his IRA, incurring tax penalties, rather than sell or refinance real estate he was awarded.
Procedural Posture:
- Cora Lee Scheuer petitioned for divorce from Bradley Scheuer in a Wisconsin trial court.
- A court commissioner entered a temporary order requiring Bradley to pay maintenance.
- After Bradley was terminated from his job, the trial court suspended the temporary maintenance order.
- Following a trial, the court entered a final judgment of divorce that ordered Bradley to pay maintenance based on his imputed earning capacity and required him to make an equalization payment to Cora.
- Bradley filed a motion for reconsideration of the property division, which the trial court denied.
- Bradley Scheuer (appellant) appealed the final judgment and the order denying reconsideration to the Court of Appeals of Wisconsin, with Cora Lee Scheuer as the appellee.
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Issue:
Does a trial court erroneously exercise its discretion by basing a maintenance award on a party's earning capacity rather than their actual earnings when the party's reduction in income resulted from their own voluntary and unreasonable misconduct?
Opinions:
Majority - Hoover, P.J.
No. A trial court does not erroneously exercise its discretion by basing a maintenance award on earning capacity when an income reduction is self-inflicted. The court applied the 'shirking' exception, which allows for the imputation of income when a party's decision to reduce or forgo income is voluntary and unreasonable under the circumstances. It is not necessary to find that the party acted with the specific intent of avoiding a maintenance obligation. Being terminated for misconduct, as the trial court found happened to Bradley, is a classic example of a voluntary and self-inflicted change in financial circumstances that is unreasonable. Therefore, the court was justified in using Bradley's demonstrated earning ability from his long-term job to calculate maintenance. Furthermore, the trial court did not err by not considering the tax consequences of Bradley's IRA withdrawal, as Bradley himself chose that method against the court's warnings and after indicating he would sell or refinance real estate.
Analysis:
This decision clarifies the 'shirking' doctrine in Wisconsin family law, reinforcing that a finding of shirking does not require proof of a specific intent to evade a support obligation. It establishes that termination for misconduct is sufficient to meet the 'voluntary and unreasonable' standard, allowing courts to impute income based on prior earning capacity. The case also underscores a party's responsibility for their own financial decisions post-judgment; a court is not required to adjust a property division to account for tax consequences that a party voluntarily incurs, especially when other, less costly options were available and contemplated at trial.
