Potter v. Potter

NOTICE: NOT FOR OFFICIAL PUBLICATION.
UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE

In re the Matter of:

BETSY JO POTTER, Petitioner/Appellee,

v.

PHILLIP TERRY POTTER, Respondent/Appellant.

No. 1 CA-CV 18-0357 FC
No. 1 CA-CV 18-0567 FC
(Consolidated)
FILED 9-24-2019

Appeal from the Superior Court in Maricopa County
No. FC2015-050659
The Honorable Roy C. Whitehead, Judge

VACATED AND REMANDED

COUNSEL

Joseph M. Huey PLC, Scottsdale
By Joseph M. Huey
Counsel for Petitioner/Appellee

Phillip Terry Potter, Scottsdale
Respondent/Appellant
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MEMORANDUM DECISION

Judge Jennifer M. Perkins delivered the decision of the Court, in which
Presiding Judge Samuel A. Thumma and Judge Paul J. McMurdie joined.

P E R K I N S, Judge:

¶1 Phillip Terry Potter (“Father”) appeals from a child support
order and the award of attorneys’ fees to Betsy Jo Potter (“Mother”). For the
reasons stated below, we vacate the child support order and the award of
attorneys’ fees and remand for reconsideration.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 The parties have one minor child, born in 2006. The January
2017 consent decree dissolving the parties’ marriage ordered Father to pay
child support to Mother and maintain the medical, dental, and vision
insurance (“health insurance”) for the child. Father, as the party providing
health insurance, was obligated to provide Mother with a “current and
accurate insurance card, and with all other information relating to the
insurance claims carrier, including, but not limited to, the name, address,
and telephone number of the insurance carrier, the policy number, the
group number,” and any other information necessary to submit an
insurance claim on behalf of the child.

¶3 The original child support worksheet resulted in a support
obligation of $394.21 per month, but, consistent with the parties’
stipulation, the superior court ordered Father to pay $650 per month. Less
than a year after entry of the consent decree, Father filed a petition to
modify child support under the simplified procedure, see A.R.S. section 25-
320, app. § 24(B) (“Guidelines”), based on his decreased income, Mother’s
increased income, and the increased cost of health insurance.

¶4 Instead of a simplified child support modification, this
quickly evolved into a complex, contentious battle. Before the evidentiary
hearing, the superior court held a settlement conference to address
Mother’s motion to enforce certain parts of the consent decree. At the
settlement conference, the parties agreed to several things, many of which
are not relevant here. The agreements were placed on the court record
under Arizona Rule of Family Law Procedure 69. Pertinent to the health
insurance issue on appeal, the parties agreed that Father provided Mother

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with the plan documents, “proof of the cost of the plan,” and a photocopy
of the insurance card. Father confirmed that nothing was left out of the
agreement, as stated on the record. The court ordered Mother’s attorney to
submit a written order reflecting the agreement. Unable to agree on the
terms, both parties submitted a proposed agreement, neither of which is in
the record on appeal. The precise terms of this agreement have been the
subject of substantial litigation, described in more detail below.

¶5 The superior court held a hearing on Father’s petition to
modify child support in March 2018. According to Father’s affidavit of
financial information (“AFI”), from October 2017, his gross monthly income
was $8,176 and he paid $528.18 to insure the child. Mother questioned
Father’s income and the child’s insurance cost. Mother testified that her
total monthly income, including wages and dividends, was $4,777 but
acknowledged that this did not include the “spiffs” or sales incentives she
earned. According to Mother’s tax records, she earned $4,044.31 in spiffs in
2017.

¶6 Father offered no evidence to substantiate his claim that the
child’s health insurance cost $528.18 per month and the superior court did
not include any amount for the child’s health insurance cost on the child
support worksheet. The court also rejected Mother’s claim that Father was
underemployed. The child support worksheet listed Father’s gross monthly
income as $12,498.

¶7 The superior court awarded Mother $17,500 in attorneys’ fees,
finding a substantial disparity in the parties’ financial resources and that
Father acted unreasonably in the litigation. The court later denied Father’s
motion for a new trial without comment and awarded Mother an additional
$3,500 in attorneys’ fees. The court entered a signed, final order denying
Father’s motion for a new trial in November 2018. Father timely appealed
from the child support order and the final orders awarding attorneys’ fees.
We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1), (5).

DISCUSSION

I. Child Support

¶8 We will affirm the superior court’s ruling on a petition to
modify child support absent an abuse of discretion. Milinovich v. Womack,
236 Ariz. 612, 615, ¶ 7 (App. 2015). An abuse of discretion exists when the
record, viewed in the light most favorable to upholding the court’s decision,
does not support the ruling. Id. The interpretation of statutes and guidelines
is a question of law reviewed de novo. Id.

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A. Father’s Gross Income

¶9 Father contends the superior court abused its discretion in
attributing a $12,498 monthly income to him because the evidence
established that his monthly income was $8,176, and the court found he was
not underemployed. Mother reasons the amount is justified because Father
earned that salary in the past and did not provide sufficient proof of his
current salary.

¶10 When a parent is unemployed or underemployed, the court
may impute income up to that parent’s full earning capacity if it finds the
reduction in income is voluntary or unreasonable. Little v. Little, 193 Ariz.
518, 521, ¶ 6 (1999). If a parent’s voluntary decision to change employment
places a child “in financial peril,” the court generally should not reduce that
parent’s support obligation. Id. at 522, ¶ 12. The court may attribute income
based upon its assessment of a parent’s education, past work experience,
and earning capacity. See, e.g., Taliaferro v. Taliaferro, 188 Ariz. 333, 337 (App.
1996); Williams v. Williams, 166 Ariz. 260, 266 (App. 1990).

¶11 From 2012 to 2015, Father worked in Seattle earning
approximately $12,498 per month. He testified that his weekly commute
from Phoenix to Seattle cost him approximately $2000 a month, and he was
gone for several days each week. Father explained that he left the position
because he was asked to relocate to Seattle instead of commuting. Further,
the long-distance commute was not feasible now that he had equal
parenting time. Father testified his current salary is commensurate with his
education and experience, and that it is actually above average for similar
positions elsewhere.

¶12 Father provided paystubs from July 25, 2017, through
September 24, 2017. The paystubs and his October 2017 AFI show Father
earns $8,176 per month. Mother argued that Father could earn $12,498 per
month based on his previous earnings in Seattle and before that at Arizona
State University. The evidence showed the reasons Father left his most
recent position in Seattle were not unreasonable, and his job at ASU was
more than five years before the hearing.

¶13 The superior court had the discretion to weigh the evidence
regarding Father’s employment and determined he was not
underemployed. We do not reweigh the evidence on appeal. See Clark v.
Kreamer, 243 Ariz. 272, 276, ¶ 14 (App. 2017). The record supports the court’s
conclusion that Mother failed to establish that Father was underemployed.
There was also no evidence that Father’s lower pay in Arizona placed the

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child in financial peril. See Little, 193 Ariz. at 522, ¶ 12. Although the court
found Father was not underemployed at his current job, the child support
order was based on his former monthly salary of $12,498. Based on the
court’s written findings, however, the child support obligation should be
calculated based on Father’s current $8,176 monthly income. The court
made no findings that support attributing the higher income to Father on
the child support worksheet. Accordingly, we remand for a recalculation
based on Father’s monthly income of $8,176.

B. Mother’s Income

¶14 The superior court found Mother’s monthly income was
$4,770. Father argues Mother’s current income is higher, and the court
failed to include the spiffs/sales incentives Mother earns regularly. Mother
testified that her monthly wages averaged $4,487, and she had regular
dividend earnings of $290 per month, for a total income of $4,777. Her AFI
was marked as an exhibit but not admitted.

¶15 Father offered two sets of paystubs showing Mother’s
monthly income ranged from $6,318.57 in mid-2017 to $6,084.20 in early
2018. Mother, however, testified that her earnings varied each pay period
depending on her overtime and bonuses. To determine her 2017 gross
monthly income, Mother averaged the income reported on her 2017 W-2.
However, Mother conceded that she did not include any income from
spiffs/sales incentives in her AFI because she had not yet received the 1099
tax forms from 2017 with that information. Mother acknowledged that, in
2017, she earned an additional $4,044.31, or $337.02 per month, in
spiffs/sales incentives she did not include on her AFI.

¶16 We agree with Mother that the superior court was within its
discretion to average her fluctuating monthly income. Guidelines § 5(A)
(“Seasonal or fluctuating income should be annualized.”). But based on
Mother’s admission, the figure Mother reported and on which the court
relied did not include the additional $337 monthly income from spiffs/sales
incentives. Mother did not claim this income was not continuing or
recurring. Therefore, we conclude the court abused its discretion by failing
to include this additional income in determining Mother’s average monthly
gross income. Cf. Guidelines § 5(A) (“Income from any source which is not
continuing or recurring in nature need not necessarily be deemed gross
income for child support purposes.”). We remand for the court to
recalculate the child support obligation using Mother’s total earnings,
including the income from spiffs/sales incentives.

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C. Health Insurance

¶17 When calculating the child support obligation, the superior
court must add the cost of the child’s medical, dental, and vision insurance,
if any. Guidelines § 9(A). The court shall only add the cost to insure the
child. Id. “If coverage is applicable to other persons, the total cost shall be
prorated by the number of persons covered.” Id. Here, the court found
Father failed to substantiate his claim that he paid $528.18 per month for
the child’s health insurance. Accordingly, in calculating the child support
obligation, the court did not include any amount for health insurance.

¶18 Father contends this was an abuse of discretion because
(1) the Guidelines direct the court to include the cost of health insurance,
(2) the evidence showed Father was paying for the child’s health insurance,
and (3) Mother previously agreed that Father provided proof of insurance
coverage. Mother argues the court properly calculated child support
because Father failed to establish that he paid for the child’s health
insurance without interruption since the decree was entered in January
2017.

¶19 The question of whether and how much Father paid for the
child’s health insurance is complicated by a dispute over the terms of an
agreement reached at a March 9, 2018 settlement conference. This
agreement encompassed other issues besides health insurance. At the
settlement conference, the parties stated the following on the record
regarding health insurance:

MR. HUEY [Mother’s Attorney]: Oh, with regard to the
insurance card issue, Father – the component of [Mother’s]
motion to compel is that Father provide the insurance
documentation required pursuant to the decree and provide
Mother a card from the insurance carrier that she can utilize
to obtain health insurance benefits for the child.

Father has agreed – well, Father has provided the plan
documents. He has now provided proof of the cost of the
plan. And he has provided a copy, a photocopy, of the
insurance card. Father agrees within 15 days of today’s date
to contact the insurance carrier and request that a hard copy
of the card, front and back, be provided so that he may give it
to Mother. Father shall deliver that to Mother’s counsel’s
office. . . .

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THE COURT: Thank you. Mr. Potter, do you think anything
was left out?

MR. POTTER: No, sir, I don’t believe so.

The parties have attempted to reduce this agreement to writing without
success. In fact, while this appeal was pending, Mother made a filing in
superior court in an attempt to finalize the terms of this agreement. Despite
this litigation, the agreement, as stated in the March 9, 2018 record, does not
indicate how much Father paid for the child’s health insurance. The “cost
of the plan” does not establish how much Father spent to insure the child.
Thus, contrary to Father’s position, the agreement quoted above does not
resolve the issues raised at trial and on appeal. Because the agreement does
not resolve the issue on appeal, we do not address Father’s arguments
regarding judicial estoppel, Mother’s alleged collateral attack on the
agreement, the court’s alleged failure to enforce the agreement, and the
alleged fraud upon the court.

¶20 The evidence established that Father had insured the child
since July 2017. Mother learned, in June 2017, that the child’s insurance was
cancelled as of March 1, 2017, for nonpayment. But Mother acknowledged
the child’s insurance coverage resumed in July 2017. Thus, both the
cancellation and reinstatement occurred before Father filed his petition to
modify in October 2017. Mother did not allege that Father failed to pay for
the child’s health insurance after October 2017. This is also corroborated by
Father’s paystubs from July 25, 2017 through November 10, 2017, which
show the total health insurance premiums deducted from his paychecks.

¶21 On appeal, Mother argues that Father did not provide any
evidence that the child had insurance coverage at the time of the March
2018 hearing. At trial, however, Mother only argued that Father did not
establish how much he was paying for the child’s health insurance. As
noted above, the evidence established that Father provided health
insurance for the child since July 2017, but there was no independent
evidence supporting Father’s claim that he paid $528.18 for the child’s
insurance. Father’s paystubs do not break down how much of his total
insurance premium is attributed to the child. Father’s AFI lists the amount
attributed for the child’s insurance as $528.18, but he offered no
independent documentation to verify that figure. The court need not accept
Father’s unsubstantiated testimony regarding the cost of the child’s
insurance. See Aries v. Palmer Johnson, Inc., 153 Ariz. 250, 261 (App. 1987)
(“The trial court is not bound to accept as true the uncontradicted testimony
of an interested party.”).

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¶22 At the hearing, Father claimed information regarding the cost
of the child’s health insurance was available if it needed to be verified, but
he did not offer it into evidence. This information, however, was necessary
for the court to calculate the child support obligation. Because we are
remanding for recalculation of the child support based on the parties’
income, we instruct the superior court to reopen the evidence and allow
Father to provide the evidence of the amount he paid for the child’s health
insurance beginning October 1, 2017. This may require separate worksheets
for any periods during which the premiums may have increased or
decreased. If Father does not provide a breakdown of the amount paid to
insure the child, the court shall prorate the total cost by the number of
persons covered, as provided in Guidelines § 9(A).

II. Attorneys’ Fees

¶23 The superior court awarded Mother a portion of the
attorneys’ fees she incurred in responding to Father’s petition to modify
child support and motion for a new trial. Because we vacate the child
support order and remand for reconsideration, we vacate the award of
attorneys’ fees. In light of this disposition, we need not address Father’s
arguments regarding the award of attorneys’ fees. However, we will
address Father’s claim that he was precluded from establishing there was
no financial disparity between the parties because this may be an issue on
remand. See Buckholtz v. Buckholtz, 246 Ariz. 126, 131, ¶ 17 (App. 2019) (court
may address other arguments raised by a party if the issues may occur on
remand).

¶24 The superior court awarded fees based on A.R.S. § 25-324.
Specifically, the order awarding fees for responding to the petition to
modify was based on the substantial disparity of financial resources as well
as Father’s unreasonable conduct. Although the record did not include
Mother’s AFI, her testimony and paystubs provided sufficient evidence to
support the finding of a financial disparity.

¶25 Father contends he was unable to challenge this evidence
because a protective order prevented him from discovering Mother’s
additional financial resources. The court issued this protective order after
Father sought to “compel” a substantial amount of discovery related to
several motions predating the petition to modify child support. Mother
sought a protective order from Father’s excessive discovery requests. The
court granted an order precluding Father from seeking information “not
relevant” to the issues before the court and requiring any discovery motion
to specify what items Mother allegedly withheld.

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¶26 Mother’s financial resources were relevant to the issues of the
child support and attorneys’ fees. Although Father objected to Mother’s fee
requests and noted her general lack of discovery, he did not specify what
discovery Mother allegedly withheld, as required by the order. Without
such information, the superior court could not determine if Mother
improperly withheld relevant information.

¶27 On remand, Father must comply with the protective order if
he seeks additional discovery related to Mother’s financial resources. The
protective order does not preclude discovery of relevant information, but,
because the court found Father’s prior discovery requests were improper,
Father must specify what information he seeks.

¶28 We deny Mother’s request for attorneys’ fees and costs on
appeal because neither party took unreasonable positions on appeal, and
we lack current information regarding the parties’ financial resources.
A.R.S. § 25-324. As the successful party, Father is entitled to an award of
costs on appeal upon compliance with Arizona Rule of Civil Appellate
Procedure (“ARCAP”) 21. See A.R.S. § 12-342.

III. Pending Motions

¶29 Father filed a motion for sanctions (July 26, 2019) and a
motion for clarification (September 11, 2019). We deny both motions.

¶30 Father sought sanctions after Mother filed a notice of lodging
order re: agreement reached pursuant to Rule 69, ARFLP in superior court
(filed July 19, 2019). Father argued that Mother’s proposed order altered the
agreement and violated this court’s April 24, 2019 order declining to revest
jurisdiction in the superior court to resolve issues pertaining to the Rule 69
agreement. We cannot ascertain whether Mother’s proposed order is
consistent with or violated any agreements reached on March 9, 2018
because the proposed order is not attached to the Notice.

¶31 Moreover, this court’s April 24, 2019 order specifically noted
that the “superior court retains jurisdiction to rule on any matters that do
not negate or frustrate this appeal.” According to the March 9, 2018
transcript, the parties agreed to several items unrelated to this appeal. For
example, Father agreed to authorize the release of the child’s personal
injury proceeds, the parties agreed to submit the names of accountants to
review their 2014 tax returns, Mother agreed to withdraw her motion to
appoint a special real estate commissioner, and Father agreed to arrange a
conference call with a loan servicer to discuss removing Mother from a lien.
Although we cannot comment on Mother’s proposed order because it is not

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in the record, Mother asserts that her proposed order seeks only to enforce
matters not related to the appeal. The superior court may sign an order
regarding issues that are unrelated to the child support order while this
appeal is pending. See State v. O’Connor, 171 Ariz. 19, 22 (App. 1992). For
these reasons, we deny Father’s motion for sanctions.

¶32 Father’s September 11, 2019 motion requests clarification of
this court’s April 24, 2019 Order Re: Motion to Revest and Motion to
Dismiss / Strike. To the extent Father seeks available relief from this court,
we deny his motion.

CONCLUSION

¶33 We vacate the child support order and the award of attorneys’
fees and remand for reconsideration consistent with this decision. We
award Father his costs on appeal.

AMY M. WOOD • Clerk of the Court
FILED: AA

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