Opinion issued October 15, 2015
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-14-00851-CV
———————————
KORI LYNN PLOWMAN F/K/A KORI LYNN UGALDE, Appellant
V.
PHILIP ANDREW UGALDE, Appellee
On Appeal from the 312th District Court
Harris County, Texas
Trial Court Case No. 2012-38295
MEMORANDUM OPINION
This case concerns a dispute over the amount of a father’s child support
obligation. When the parents divorced in September 2012, they agreed that their
son would live primarily with the mother, the father would have expanded standard
possession, and he would pay $3,000 per month in child support. The terms of their
agreement were incorporated into two documents: an agreement incident to
divorce and a final decree of divorce signed by the trial court.
One year later, the father filed a motion to modify his child support
obligation and, following a bench trial, the trial court reduced his monthly child
support obligation to $1,510 per month, which represents the amount of child
support that he would owe under the statutory guidelines based on his then-current
level of income.
The mother raises three issues in her appeal. First, she contends that the trial
court abused its discretion by modifying the child-support order without evidence
of a material and substantial change in the father’s circumstances or that the
reduction was in the child’s best interest. Second, she argues that the trial court
abused its discretion when it failed to award her a money judgment for damages,
representing the difference between what the father had agreed to pay and the
amount the trial court was ordering him to pay subject to contempt. Third, she
argues that the trial court’s refusal to award her contract damages based on the
Agreement Incident to Divorce violated the open courts provision of the
constitution.
We affirm.
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Background
Philip Ugalde and Kori Lynn Plowman ended their marriage in September
2012, and a divorce decree was entered based on their negotiated resolution of all
aspects of their separation, including division of property, child custody, and child
support. The decree specifically references a contemporaneous agreement between
them—an “Agreement Incident to Divorce”—and provides that it “incorporates
[it] . . . by reference as part of this decree as if it were recited herein verbatim . . . .”
The Agreement Incident to Divorce contains a lengthy recitation of how the
couple’s many assets were to be divided. Regarding child custody and support, it
states: “Parties agree to, and will seek in the final decree, a standard child support
order” requiring Ugalde to pay “child support of $3,000.00 per month for the
Parties’ only child.” The agreement further states that, “[t]o the extent permitted by
law, the parties stipulate that this agreement is enforceable as a contract.”
The divorce decree names both parents as managing conservators, with
Plowman granted the exclusive right to designate their son’s primary residence. It
orders Ugalde to pay $3,000 per month in child support and to maintain health
insurance for their son. The decree contains a finding by the trial court “that the
provisions in this decree . . . constitute the parties’ agreed parenting plan.” It
further provides that, “[t]o the extent permitted by law, the parties stipulate the
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agreement is enforceable as a contract.” The decree also contains a provision
concerning future disputes over its terms:
Settlement of Future Disputes
It is agreed that before setting any hearing or initiating discovery in a
suit for modification of the terms and conditions of conservatorship,
possession, or support of the child . . . the parties shall mediate the
controversy in good faith. . . . It is agreed that the party wishing to
modify the terms and conditions of conservatorship, possession, or
support of the child shall give written notice to the other party of a
desire to mediate the controversy. If . . . the parties cannot agree . . . ,
the party desiring modification shall be released from the obligation to
mediate and shall be free to file suit for modification.
At the time of the couple’s divorce, Ugalde had been employed for seven
months as a commercial loan officer, making an annual salary of $170,000, plus a
one-time signing bonus of $50,000 and the possibility of annual, commission-
based bonuses moving forward. That employment ended seven months after the
divorce. A letter of resignation indicated that Ugalde had voluntarily resigned from
his position; however, he testified at the modification hearing that his employer
had given him the choice between (1) resigning and paying back only a portion of
his $50,000 signing bonus or (2) being fired and required to return the entire
signing bonus. Thus, according to Ugalde, his decision to leave his employment
was not voluntary.
Ugalde was unemployed for approximately five months before he obtained a
position as a vice president of portfolio development at a much-reduced salary of
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$75,000 per year, again with the possibility of commission-based bonuses. Around
that time, Ugalde filed his motion to modify the child-support obligation.
Ugalde held the vice president position for about seven months but was fired
for performance reasons. He was unemployed for two more months. Then, in
March 2014—one day before the hearing on the pending motion to modify—he
accepted a new position as a vice president of market banking at a different lending
institution earning an annual salary of $125,000, plus the possibility of
discretionary bonuses.
Thus, to summarize, between the date of the divorce and the date of the
hearing on the modification request, Ugalde was employed at the $170,000 salary
for approximately seven months; employed at the $75,000 salary for approximately
seven months; unemployed, intermittently, for approximately six months; and,
finally, employed in a new position that paid a $125,000 salary.
Ugalde testified that, during his periods of unemployment and lower
compensated employment, he “ended up basically cashing in all [of his] retirement
accounts,” an amount he estimated was “[p]robably more than $150,000,” leaving
him with substantially less savings and retirement funds at the time of the
modification hearing. Ugalde used these funds to maintain his living situation, fund
his job search, continue to pay his monthly $3,000 child-support obligation,
replace a vehicle damaged in a car accident, and cover various other expenses.
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Ugalde pointed to both his reduction in salary and his loss of retirement
funds and savings as evidence of a material and substantial change in his financial
circumstances to justify modification of his child-support obligation. He asked the
trial court to reduce it from $3,000 per month—which was more than would have
been required if the Family Code child-support guidelines had been used to set the
amount—to a lesser amount of $1,510 per month. According to Ugalde and the
admitted financial documents, the $1,510 amount corresponded to the statutory
guidelines for his current employment at $125,000 gross annual income.
Plowman argued that Ugalde had not established a material and substantial
change in circumstances, noting that his tax return actually showed an increase in
salary during the period he was unemployed 1 and that, because he chose to access
and spend such a large amount of his retirement funds, he wasted more money than
he would have had access to had he continued in his earlier employment and not
withdrawn anything from the retirement account. Plowman argued that Ugalde
should not benefit from squandering his retirement funds unnecessarily.
The trial court also received evidence of Plowman’s net monthly income,
which was demonstrated to be approximately $8,700 and was higher than
Ugalde’s.
1
This is because the $150,000 withdrawal of funds from the retirement account was
treated, for tax purposes, as income.
6
The trial court made findings of fact and conclusions of law and found that
Ugalde had established a material and substantial change in his circumstances. The
trial court granted his motion to modify, applied the statutory guideline
percentages, and ordered that his child support obligation be reduced to $1,510 per
month, which the court found was in the child’s best interest.
Material Change in Circumstances
In her first issue, Plowman contends that the trial court abused its discretion
by finding that Ugalde had established a material and substantial change in his
circumstances to support modification of his child support obligation from the
agreed-to amount of $3,000 per month to the guideline-based amount of $1,510 per
month and that such modification was in the best interest of the child.
A. Standard of review
“A trial court has discretion to set child support within the parameters
provided by the Texas Family Code.” Iliff v. Iliff, 339 S.W.3d 74, 78 (Tex. 2011).
The court is also given broad discretion to modify the amount to increase or
decrease the obligation. In re D.S., 76 S.W.3d 512, 520 (Tex. App.—Houston
[14th Dist.] 2002, no pet.). “A court’s order of child support will not be disturbed
on appeal unless the complaining party can show a clear abuse of discretion.”
Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990) (per curiam). A trial court
abuses its discretion when it acts arbitrarily or unreasonably, without reference to
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guiding rules or principles. Id.; Downer v. Aquamarine Operators, Inc., 701
S.W.2d 238, 241–42 (Tex. 1985). A trial court also abuses its discretion by failing
to analyze or apply the law correctly. Id.
In a bench trial, “the trial court’s findings of fact have the same weight as a
jury’s verdict.” Brejon v. Johnson, 314 S.W.3d 26, 30 (Tex. App.—Houston [1st
Dist.] 2009, no pet.). Challenged findings of fact are not determinative unless they
are supported by the record. Id. We review the sufficiency of the evidence to
determine whether the trial court abused its discretion in making such findings. Id.
In this context, “legal and factual sufficiency of the evidence are not independent
grounds for asserting error, but they are relevant factors in assessing whether the
trial court abused its discretion.” Dunn v. Dunn, 177 S.W.3d 393, 396 (Tex.
App.—Houston [1st Dist.] 2005, pet. denied). “A trial court does not abuse its
discretion when there is some evidence of a substantive and probative character to
support the trial court’s judgment.” Miles v. Peacock, 229 S.W.3d 384, 389 (Tex.
App.—Houston [1st Dist.] 2007, no pet.).
The trial court, as factfinder, is the sole judge of the credibility of the
witnesses, and the trial court’s resolution of issues of credibility are not subject to
reevaluation on appeal. See Puntarelli v. Peterson, 405 S.W.3d 131, 135 (Tex.
App.—Houston [1st Dist.] 2013, no pet.); Sw. Bell Media, Inc. v. Lyles, 825
S.W.2d 488, 493 (Tex. App.—Houston [1st Dist.] 1992, writ denied).
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B. Modification of agreed-to child support amount
Agreed child support amounts are subject to modification. In re G.J.S., 940
S.W.2d 289, 294 (Tex. App.—San Antonio 1997, no writ). Section 156.401 of the
Family Code provides as follows:
If the parties agree to an order under which the amount of child
support differs from the amount that would be awarded in accordance
with the child support guidelines, the court may modify the order only
if the circumstances of the child or a person affected by the order have
materially and substantially changed since the date of the order’s
rendition.
TEX. FAM. CODE ANN. § 156.401(a-1) (West 2014) (emphasis added).
The trial court may consider the child-support guidelines to determine
whether there has been a material or substantial change of circumstances to
warrant a modification of an existing child-support order. TEX. FAM. CODE ANN.
§ 156.402(a) (West 2014); Rumscheidt v. Rumscheidt, 362 S.W.3d 661, 666 (Tex.
App.—Houston [14th Dist.] 2011, no pet.). However, “[a] child support order that
is not in compliance with the guidelines does not by itself establish such a material
and substantial change in circumstances.” In re G.J.S., 940 S.W.2d at 294; In re
A.T.A.L., No. 05-11-01666-CV, 2013 WL 1912618, at *2 (Tex. App.—Dallas May
8, 2013, no pet.) (mem. op.). Disparity between the statutory guideline amount and
the agreed-to amount is just one factor to be considered by the trial court. Cole v.
Cole, 882 S.W.2d 90, 92 (Tex. App.—Houston [14th Dist.] 1994, writ denied);
Elliott v. Elliott-Weber, No. 14-04-00130-CV, 2005 WL 481353, at *3 (Tex.
9
App.—Houston [14th Dist.] Mar. 1, 2005, no pet.) (mem. op.). The court also may
consider “other relevant evidence.” TEX. FAM. CODE ANN. § 156.402(b) (West
2014); Rumscheidt, 362 S.W.3d at 666.
“To determine whether there has been a substantial and material change, the
court must compare the financial circumstances of the child and the affected
parties at the time the order was entered with their financial circumstances at the
time the modification is sought.” Melton v. Toomey, 350 S.W.3d 235, 238 (Tex.
App.—San Antonio 2011, no pet.); In re C.C.J., 244 S.W.3d 911, 917–18 (Tex.
App.—Dallas 2008, no pet.); Cole, 882 S.W.2d at 92. “Without evidence setting
out the financial circumstances” of the parties at these relevant times, “the family
court cannot make a determination that there has been a material and substantial
change.” Cole, 882 S.W.2d at 92; see In re C.C.J., 244 S.W.3d at 917–18. As the
movant, it was Ugalde’s burden to present evidence of historical and current
financial circumstances. Melton, 350 S.W.3d at 238.
Not all changes in income qualify as material and substantial. “Temporary
slumps do not rise to the level of a material and substantial change in condition and
should not support a permanent change in child support levels.” Starck v. Nelson,
878 S.W.2d 302, 308 (Tex. App.—Corpus Christi 1994, no writ). Instead, what is
required is a marked decrease in income or steady decline without offsetting
circumstances. See Blanco v. Garcia, 767 S.W.2d 896, 898 (Tex. App.—Corpus
10
Christi 1989, no writ); Watkins v. Austin, 590 S.W.2d 830, 832 (Tex. App.—Dallas
1979, no writ).
Trial courts look not only to a paying parent’s salary, but also to other
sources of income. In re G.J.S., 940 S.W.2d at 293; Clark v. Jamison, 874 S.W.2d
312, 317 (Tex. App.—Houston [14th Dist.] 1994, no writ). For example, a trial
court may take into consideration whether a parent has other assets at his disposal
with which to pay child support. See In re G.J.S., 940 S.W.2d at 293. Courts also
can consider the parent’s earning potential, not just actual income, to set the child
support amount. Id.; In re Striegler, 915 S.W.2d 629, 638 (Tex. App.—Amarillo
1996, writ denied). Unless a movant has established a material and substantial
change, there is no basis for reducing a child-support obligation to be in line with
statutory guidelines. See TEX. FAM. CODE ANN. § 156.401(a-1); Cole, 882 S.W.2d
at 92.
The presumptively applicable percentage of net resources that should be
paid as child support for a single child is 20%. 2 TEX. FAM. CODE ANN.
§ 154.125(b) (West 2014). Ugalde contends that applying that percentage to his net
resources results in a child-support obligation of $1,510. Plowman does not dispute
that the guidelines, if applied, would result in a $1,510 monthly obligation. Instead,
she argues that Ugalde has not demonstrated a material and substantial change in
2
Unless the parent’s income reaches into the high-income bracket designated by the
statute. TEX. FAM. CODE ANN. § 154.125(b).
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his circumstances to permit the modification or that the modification is in the
child’s best interest.
C. Trial court did not abuse discretion
At the time Ugalde agreed to pay $3,000 per month, he was earning
$170,000 annually. Between then and the hearing on his motion to modify child
support, he had six months without employment, seven months of employment at
less than half the earlier salary, an unexpected obligation to repay $20,000 of his
signing bonus, and, ultimately, a job earning $125,000 annually.
The statutory provisions on modification of child support permit the trial
court to consider, as a factor, the amount of support that would be required under
the guidelines. TEX. FAM. CODE ANN. § 156.402(a). Ugalde had been timely paying
much more than that amount, even during his periods of unemployment and less-
paid employment. During a period of unemployment, he withdrew approximately
$150,000 from his retirement account, which allowed him to remain current on his
child-support obligation and pay his other expenses, but doing so, he argued,
“wiped out” his savings and retirement and left him without a cushion if he were
to, again, face unemployment.
The trial court received evidence that Plowman had significant net resources
to contribute to the support of the child. Ugalde testified that he believed a
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reduction in his support obligation to the statutory amount would be in the child’s
best interest.
We conclude that Ugalde supplied legally and factually sufficient evidence
and the trial court did not abuse its discretion in concluding that Ugalde had
experienced a material and substantial change in his circumstances to warrant
modification of his child-support obligation. See Starck, 878 S.W.2d at 308
(change in paying parent’s income can qualify as material and substantial change);
Rumscheidt, 362 S.W.3d at 666 (trial court may consider child support guidelines
to determine whether material and substantial change in circumstances has
occurred to warrant modification); see also TEX. FAM. CODE ANN. § 156.402(a); cf.
In re G.J.S., 940 S.W.2d at 293 (whether other assets are available is relevant to
parent’s ability to pay child support).
We further conclude that there was legally and factually sufficient evidence
that modification was in the child’s best interest. Without modification, Ugalde
would have been obligated to pay double the statutory amount in child support
while making 26% less in a new job and without the cushion that the withdrawn
retirement funds had provided in the past. It was within the trial court’s discretion
to determine that it was in the child’s best interest to have his father’s financial
obligation reduced to a more manageable level, subject to the possibility of future
modification should his situation improve. See Gillespie v. Gillespie, 644 S.W.2d
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449, 451 (Tex. 1982) (noting broad discretion given to trial court to determine best
interest of child); see also TEX. FAM. CODE ANN. § 154.122(a) (child support
amount that conforms to statutory guidelines presumed in best interest of child); In
re A.M.P., 368 S.W.3d 842, 846 (Tex. App.—Houston [14th Dist.] 2012, no pet.).
Accordingly, we overrule Plowman’s first issue.
The Parties’ Agreement as an Enforceable Contract
In her second issue, Plowman argues that “the trial court should have
granted [her] the difference between the present value of the agreed child support
and the court ordered child support as a money judgment subject to collection
[under contract law] based on the Agreement Incident to Divorce.” She contends
that the trial court abused its discretion by not “awarding [her] the benefit of the
bargain” based on that agreement.
Ugalde responds that the issue of contract damages has been waived because
Plowman’s live pleading did not seek breach-of-contract damages and she has not
appealed the trial court’s decision denying her trial amendment, in which she
sought to add a claim for breach-of-contract damages. According to Ugalde, the
trial court could not have erred by denying Plowman damages that she had not
pled.
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A. Denial of trial amendment
During the modification hearing, Ugalde objected to Plowman’s question
whether Ugalde planned to continue paying $3,000 even if the trial court were to
reduce his obligation. Ugalde argued that the agreement to pay $3,000 was not an
enforceable contract and Plowman could not recover contract damages for its
breach. There was a lengthy discussion among the trial court and the parties,
during which it was discussed that the breach-of-contract claim would equal at
least $180,000. Ugalde argued that Plowman’s live pleading had only included a
defensive argument against modification without any affirmative claim for breach
of contract or request for contract damages. According to Ugalde, the pleading did
not inform him that she would be seeking money damages.
The discussion culminated with the trial court ruling that Plowman’s
pleadings did not support the relief she was requesting. The trial court allowed
Plowman to submit a proposed amended pleading for its consideration. Plowman
did so, but Ugalde objected, arguing surprise and attempted delay. The trial court
denied Plowman’s trial amendment. However, the court did allow Plowman to
question Ugalde about whether he intended to pay the full $3,000 per month if the
court were to modify the child support order. He stated that he would not. The
court informed the parties that it would enter a finding concerning whether the
agreement was a contract but would not entertain a claim for contract damages.
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The trial court made findings of fact and conclusions of law, including that
(1) under Section 153.007 of the Family Code, the child-support amount that the
parties had agreed to was part of an Agreed Parenting Plan; (2) under Section
153.007(c), it was not enforceable as a contract; (3) the child support obligation
was subject to modification based on a material change in circumstances; (4) the
section of the divorce decree on “child support” provides only for court-ordered
child support, not a contract obligation; and (5) the divorce decree does not
expressly incorporate into its terms a contractual support agreement.
B. Without a pleading to support the award of damages or an appeal of the
denial of a trial amendment to request such relief, Plowman cannot
successfully argue trial court error in denying her damages claim
A judgment of the court must conform to the pleadings and cannot award
more than requested, absent trial by consent. TEX. R. CIV. P. 301; Binder v. Joe,
193 S.W.3d 29, 32 (Tex. App.—Houston [1st Dist.] 2006, no pet.). Ugalde did not
consent to trial on Plowman’s damages claim. Neither did the trial court allow it.
Instead, the trial court denied Plowman’s request for a trial amendment. Plowman
has not appealed that ruling. Under these facts, we agree with Ugalde that
Plowman cannot prevail on her unpleaded claim for breach-of-contract damages.3
3
We note that a since-repealed provision of the Family Code allowed enforcement
of child-support agreements as contracts. ACT OF MAY 20, 2003, 78TH LEG., R.S.,
ch. 480, § 1, 2003 Tex. Gen. Laws 1747, 1747. That provision was replaced with
Section 154.124(c), which no longer allows enforcement of child-support
agreements as contracts. Compare Bruni v. Bruni, 924 S.W.2d 366, 367–69 (Tex.
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TEX. R. APP. P. 38.1(f), (i); Walling v. Metcalfe, 863 S.W.2d 56, 58–59 (Tex. 1993)
(discussing unassigned error); Stoll v. Lewis, No. 01-08-00556-CV, 2009 WL
1331351, at *3 (Tex. App.—Houston [1st Dist.] May 14, 2009, pet. denied) (mem.
op.) (“Except in cases of fundamental error, neither claimed or at issue here, we
may not reverse a lower court’s judgment without an assignment of error, whether
by issues or points.”).
We overrule Plowman’s second issue. Given our resolution of this issue, we
do not reach Plowman’s third issue.
Conclusion
The judgment of the trial court is affirmed.
Harvey Brown
Justice
Panel consists of Justices Jennings, Higley, and Brown.
1996) (enforcing child support agreement in contract under earlier version of law)
to Kendrick v. Seibert, 439 S.W.3d 408, 410–11 (Tex. App.—Houston [1st Dist.]
2014, no pet.) (holding that, under Section 154.124(c), child-support agreements
“are not enforceable as a contract” but agreements concerning other aspects of
divorce may be enforceable as contracts) (internal citations omitted).
Plowman admits that Section 154.124(c) does not allow enforcement of a child
support agreement as a contract; however, she attempts to avoid this provision by
arguing that she is not seeking to “enforce” a contract but to obtain “damages . . .
for breach of contract.” While we fail to see a distinction where Plowman suggests
one exists, we do not reach the merits of her claim due to her failure to plead a
cause of action for breach of contract.
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