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Lavigne v. James

Louisiana Court of Appeal
170 So. 3d 1163 (2015)
ELI5:

Rule of Law:

For the purpose of calculating child support, a trial court may add a self-employed parent's claimed business expenses back into their gross income if it determines those expenses are personal in nature and not ordinary and necessary for producing income. A parent with child support arrearages is statutorily barred from claiming the child tax dependency deduction.


Facts:

  • Craig James and Shameka Lavigne married in February 2008 and had one child, born in December 2011.
  • Mr. James was self-employed as the owner of Sparkling Touch, LLC, a janitorial business.
  • Mr. James used his business account to pay for personal expenses, including meals, mortgage payments, supermarket purchases, and home repairs.
  • During the marriage, Mr. James paid all household bills from the Sparkling Touch business account.
  • Mr. James provided no receipts to substantiate that numerous large cash withdrawals from the business account were for ordinary and necessary business expenses.
  • Mr. James fell behind on his child support payments, resulting in arrearages.
  • In March 2014, Mr. James lost a substantial business contract with St. John Parish.

Procedural Posture:

  • On October 3, 2013, Shameka Lavigne filed for divorce from Craig James in a Louisiana trial court, seeking child support, spousal support, and custody.
  • The parties entered into a stipulated judgment for interim child support on January 13, 2014.
  • Following a hearing on July 18, 2014, the trial court rendered a final judgment on July 24, 2014.
  • The trial court ordered Mr. James to pay $1,109.96 per month in child support, found him to be in arrears, and determined that Ms. Lavigne was entitled to claim the child for tax purposes every year.
  • Mr. James (Appellant) appealed the trial court's judgment to the Louisiana Court of Appeal, Fifth Circuit, challenging the child support amount and the tax deduction award, with Ms. Lavigne as the Appellee.

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Issue:

Did the trial court err in calculating a self-employed father's gross income for child support purposes by reclassifying certain claimed business expenses as personal income, and in awarding the tax dependency deduction to the mother every year?


Opinions:

Majority - Johnson, J.

No, the trial court did not err. A trial court has great discretion in calculating a self-employed parent's income for child support and may add back expenses that are not proven to be 'ordinary and necessary' for producing income. The court found that Mr. James, the self-employed father, failed to meet his burden of proving his claimed expenses were legitimate business deductions. By his own admission, several expenses for home repairs and mortgage payments were personal. The trial court also found Mr. James was 'less than forthcoming' regarding his finances and did not provide receipts for thousands of dollars in cash withdrawals. Therefore, the trial court was justified in adding these personal expenses back into Mr. James's gross income. Regarding the tax deduction, La. R.S. 9:315.18(B)(1) explicitly states that a non-domiciliary parent is only entitled to claim the deduction if they have no arrearages. Because Mr. James admitted he was in arrears, he is statutorily ineligible, and the trial court's award of the deduction to Ms. Lavigne was correct.



Analysis:

This case reinforces the significant discretion afforded to trial courts in domestic matters, particularly when assessing the income of self-employed individuals for child support calculations. It highlights that courts will pierce the corporate veil of a closely-held business to prevent a parent from artificially deflating their income by commingling personal and business expenses. The ruling solidifies the principle that the burden of proof is squarely on the self-employed parent to meticulously document and justify every claimed business expense. Failure to do so, especially when coupled with a lack of credibility, will likely result in those expenses being imputed as personal income, thereby increasing the child support obligation.

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