NO. 92-116
IN THE SUPREMECOURT OF THE STATE OF MONTANA
1993
IN RE THE MARRIAGE OF:
MARILYN ANNE OLSEN,
Petitioner and Respondent,
and
RAYMONDCHARLES OLSEN,
Respondent and Appellant.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Leif B. Erickson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Patrick D. Sherlock, Sherlock & Nardi, Kalispell,
Montana
For Respondent:
Katherine R. Curtis, Kaplan & Curtis, Columbia
Falls, Montana
Submitted on Briefs: August 6, 1992
Decided: March 5, 1993
Filed:
Chief Justice J. A. Turnage delivered the Opinion of the Court.
Raymond Olsen (Raymond) appeals the findings of fact,
conclusions of law, and order entered in this dissolution of
marriage by the District Court for the Eleventh Judicial District,
Flathead County. We affirm the District Court.
Raymond raises five issues for our consideration. We rephrase
those issues as:
1. Did the District court require Raymond to Pay
unreasonable child support?
2. Was the District Court correct in denying Raymond's
motion for retroactive modification of a temporary child support,
maintenance, and health insurance order?
3. Did the District Court err in requiring Raymond to pay
medical insurance and part of the uncovered future medical expenses
of his children?
4. Was the District Court's award of maintenance
unreasonable?
5. Was the District Court's apportionment of the parties'
assets equitable?
Raymond and Marilyn Olsen (Marilyn) were married on June 27,
1971, in Bigfork, Montana. Two children were born to the parties:
a daughter, born July 19, 1973; and a son, born July 10, 1975.
Raymond and Marilyn separated in February 1990 after Raymond was
arrested for sexual assault of their daughter. Raymond plead
guilty to one count of sexual assault and was sentenced to sixteen
years in prison with six years suspended. Raymond was incarcerated
in the Montana State Prison on October 25, 1990.
2
Through Raymond's employment as a truck driver for the
Columbia Falls Aluminum Company, and Marilyn's efforts as a
homemaker, the parties enjoyed a decent standard of living during
their marriage. Their home in Columbia Falls had a market value of
$63,500 with no encumbrances. They had accumulated $43,882.33 in
a joint money market account at the time of separation.
Additionally, they had various items of personal property and
liquid assets for a marital estate totaling $156,704. Raymond's
employment also provided medical insurance for the family.
After their separation, Marilyn moved the District Court for
temporary child support and maintenance. Following a hearing, the
District Court ordered Raymond to pay child support of $401.50 per
month per child. Raymond was also ordered to pay maintenance in
the amount of $200 per month. The order allowed Marilyn to make up
any deficiencies in the support and maintenance payments from
Raymond's share of the money market account. In addition,
approximately one year after their separation, Marilyn obtained
employment as a bartender/cocktail waitress. Her net earnings from
this job were approximately $1000 per month.
In December 1991, after a bench trial, the District Court
entered its findings of fact, conclusions of law and decree of
dissolution of marriage. The District Court divided the total
marital estate, valued at $156,704, equally between the parties.
However, Marilyn actually received $124,341 of the marital estate.
The District Court deducted from Raymond's half of the estate, and
3
added to Marilyn's share, Raymond's obligation for child support,
maintenance, medical insurance, uncovered future medical expenses
and incurred liabilities, for a total addition of $43,289. The
District Court ordered the deductions in lieu of cash payments
because Raymond would be earning no income while incarcerated.
Raymond appeals the decision of the District Court.
I
Did the District Court require Raymond to pay unreasonable
child support?
In this appeal, we again address what effect loss of income
due to incarceration should have upon a child support obligation.
We first addressed this issue in Mooney v. Brennan (1993),
Mont. -, P.2d -, (Cause No. 92-089, decided March 5,
1993). Moonev involved modification of a child support order which
was based upon pre-incarceration income. In the instant case, we
decide a similar, although not exactly parallel, issue. Here, we
address what effect incarceration should have upon an original
child support order arising from a dissolution of marriage. In
addition, we determine what effect an inability to earn income due
to incarceration for a voluntary criminal act should have upon
maintenance and other family support obligations arising from a
dissolution of marriage.
In Mooney, this Court determined that incarceration does not
constitute a change in circumstances so substantial and continuing
as to make the terms of a child support order based upon pre-
4
incarceration income unconscionable. Mooney, Slip op. at 6. We
held the District Court was incorrect as a matter of law in ruling
that incarceration met the requirements of § 40-4-208(2)(b)(i),
MCA, and justified a modification of child support payments because
of a resultant loss of income. Mooney, Slip op. at 8.
In reviewing the District Court's findings of fact, the
standard of review to be applied is whether the findings are
clearly erroneous. In re the Marriage of Eschenbacher (1992), 253
Mont. 139, 142, 831 P.2d 1353, 1355. Our standard of review as to
the District Court's conclusions of law is "whether the tribunal's
interpretation of the law is correct." Steer, Inc. v. Department
of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.
Raymond contends the District Court erred in its determination
of child support because it failed to "annualize" his income for
the immediate two-year period preceding the dissolution of
marriage, the last of which he was incarcerated and earned no
income. He argues that had the District Court done so, his income
over this time frame would have been $18,828, and, therefore, his
child support obligation would have been lower. However, Raymond
misinterprets the term "annualized income" and merely averages his
income over a two-year period.
When an order concerning child support is issued, part of the
criteria used in determining the child support obligation requires
the district court to determine the support obligation
5
by applying . . . the uniform child support guidelines
adopted by the department of social and rehabilitation
services pursuant to 40-5-209 . . . .
Section 40-4-204(3)(a), MCA. In referring to annualized income,
the Child Support Guidelines state:
"Annualized income" refers to gross income and deductions
from gross income used to derive a figure for net
resources available for child support . . . .
Section 46.30.1513(1)(e), ARM (1990). Income should be annualized
to accurately reflect a parent's income oroducincr abilities.
Section 46.30.1513(1)(e), ARM (1990).
Raymond supports his argument that his income for the two
years immediately preceding his dissolution should have been
"annualized" by relying upon the District Court Rules on Child
support. Under these rules it was recommended that:
All income should be annualized and copies of the last
two years' tax returns should accompany financial
statements as well as current wage stubs.
District Court Rules on Child Support (1987), 227 Mont. 1, 5.
Raymond argues that, had the District Court done this, his child
support obligation would have been based upon a net income of
$18,828. This argument fails for three reasons.
First, the very reason it is recommended by the District Court
Rules on Child Support that two years of annualized income be
examined is:
Without such examination a temporary period of present
unemployment or underemployment may indicate an
unwarranted low amount of income available for support.
6
District Court Rules on Child Support (1987), 227 Mont. 1, 5
(emphasis added).
Second, under § 40-4-204(3)(a), MCA, which was in effect at
the time of this dissolution of marriage, the District Court is
required to determine the child support obligation by, inter alia,
applying the standards in the Uniform Child Support Guidelines
promulgated by the Department of Social and Rehabilitation
Services, § 46.30.1501, ARM (1990), et.seq., and not the District
Court Rules on Child Support.
Third, where a parent is voluntarily unemployed or
underemployed, the District Court may impute income "based upon the
parent's ability or capacity to earn net income." Section
46.30.1513(1)(b), ARM (1990) (emphasis added).
The District Court found that Raymond's gross income for 1989,
his last full year of employment, was $40,659. Raymond's gross
income for 1990, through October, was $42,951. Raymond was ordered
to pay a total of $702 per month in child support through May 1992,
when his daughter completed high school. Thereafter, Raymond was
ordered to pay a total of $452 per month in child support through
July 1993, when his son turns eighteen.
In using the $42,951 figure for imputing income upon which
child support was based, the District Court reasoned that Raymond's
lack of employment was the result of a voluntary criminal act. The
District Court imputed income to Raymond and calculated his child
support obligation "as though he had continued in his pre-
7
incarceration employment." Raymond contends that while his
criminal conduct was voluntary, the resulting unemployment arising
from his incarceration was involuntary and unforeseeable under the
circumstances. Therefore, Raymond argues, the District Court
failed to impute income based upon one year of involuntary
unemployment as well as his final year of employment before he was
incarcerated. We do not agree.
In Moonev, we held that a criminal should not be offered a
reprieve from their child support obligations when we do not do the
same for one who becomes voluntarily unemployed. Mooney, Slip op.
at 6-7. Furthermore, we held it was the public policy of this
state that the "provisions of Title 40, Chapter 4 are to be
liberally construed to promote the underlying purposes of the
chapter." Mooney, Slip op. at a. One such purpose requires
parents to provide support for their children. Section 40-4-
101(4), MCA. We now extend the reasoning in Mooney to the case at
bar. We hold under the facts of this case, the District Court's
decision to impute income to Raymond for purposes of child support
based upon his pre-incarceration income was not clearly erroneous
nor incorrect as a matter of law.
II
Was the District Court correct in denying Raymond's motion for
retroactive modification of a temporary child support, maintenance,
and health insurance order?
Raymond contends the District Court erred as a matter of law
in denying his motion for retroactive modification of the temporary
a
order entered on October 18, 1990. He argues that under § 40-4-
208(2) (b) (i), MCA, retroactive modification was warranted because
his unemployment due to incarceration constitutes a change in
"circumstances so substantial and continuing as to make the terms
[of the temporary order] unconscionable." Section 40-4-
208(2)(b)(i), MCA. We do not agree, and hold the District Court
was correct in denying Raymond's motion for retroactive
modification of the temporary child support, maintenance, and
health insurance order.
The District Court concluded that Raymond's unemployment due
to incarceration did not constitute a change in circumstances so
substantial and continuing as to make the terms of the temporary
order unconscionable. Therefore, a modification under §40-4-
208(2)(b)(i), MCA, was not appropriate. We hold this conclusion is
correct as a matter of law, and in line with our holding in Mooney.
III
Did the District Court err in requiring Raymond to pay medical
insurance and part of the uncovered future medical expenses of his
children?
Raymond next contends the District Court erred in requiring
that he pay the medical insurance premiums and a disproportionate
share of uncovered future medical expenses for the parties'
children. As to the medical insurance, the temporary order
required Raymond to provide medical coverage for his children. In
its final order, the District Court ordered Raymond to continue to
provide medical insurance for his children.
9
Raymond contends health insurance is not mandatory and he
should not be required to bear the full brunt of medical insurance
because he is no longer employed. In addition, he argues that
Marilyn is working and has funds with which to purchase medical
insurance.
Under § 40-4-204(4)(b), MCA:
(4) Each district court judgment, decree, or order
establishing a final child support obligation under this
title . . . must include a provision addressing health
insurance coverage in the following cases:
. . .
(b) In the event that health insurance required in a
child support judqement, decree, or order becomes
unavailable to the party who is to provide it, through
loss or change of employment or otherwise, that party
~,
must in the absence of an agreement to the contrary,
obtain comparable insurance or request that the court
modify the requirement. [Emphasis added.]
At the time the temporary order was entered, Raymond was still
employed and had insurance coverage for his children through his
employer. When he became incarcerated and unemployed, Raymond lost
his medical insurance benefits. After the insurance became
unavailable to him, 5 40-4-204(4)(b), MCA, required that he obtain
comparable insurance. Raymond was incarcerated and had no
employment with which to replace the insurance. However, he did
have assets in the marital estate as a means to obtain comparable
insurance.
The District Court found that $2,775 would be required to
cover the cost of medical insurance for the parties' children until
10
they were emancipated. Because Raymond could not purchase
insurance, the District Court ordered $2,775 to be deducted from
Raymond's share of the marital estate. The District Court reasoned
that deducting the insurance obligation was the only reasonable
means to insure that Raymond fulfilled his obligation to provide
medical insurance. We hold the District Court did not err in
requiring Raymond to provide medical insurance.
Raymond also contends the District Court erred in requiring
him to pay a disproportionate share of expected uncovered future
medical expenses of the parties' children. He argues the future
medical expenses are speculative and the parties should split any
expenses fifty/fifty rather than seventy-five/twenty-five.
The District Court found that the children had significant
medical problems which would necessitate attention and treatment in
the future. The District Court also found the expected cost of
such expenses, not covered by insurance, to be $1700. The District
Court deducted $1350, or 75 percent, of the expected cost from
Raymond's share of the marital estate. The District Court derived
the 75 percent figure by comparing Raymond's net available
resources to the parties' net available resources as a whole. As
we have held the District Court did not err in determining the
amount of income available for child support, we too hold it was
not clearly erroneous for the District Court to find that Raymond
was responsible for 75 percent of expected medical expenses not
covered by health insurance.
11
IV
Was the District Court's award of maintenance unreasonable?
An award of maintenance may be proper after the District Court
has equitably divided the marital estate pursuant to § 40-4-202,
MCA, and has properly applied the criteria of § 40-4-203, MCA.
Eschenbacher, 831 P.2d at 1355. In the case at bar, the District
Court divided the $156,704 marital estate in the amount of $78,352
to each party. Raymond does not contend this division was
inequitable. Rather, he contends the District Court should not
have awarded Marilyn more than $100 per month in maintenance
because she has sufficient employment or assets with which to
support herself. We do not agree with this contention.
Under § 40-4-203, MCA, the District Court may grant a
maintenance order only if it finds the spouse seeking maintenance:
(a) lacks sufficient property to provide for his
reasonable needs; and
(b) is unable to support himself through appropriate
employment . . . .
Section 40-4-203(1)(a) and (b), MCA. In addition,
(2) The maintenance order shall be in such amounts and
for such periods of time as the court deems just, without
regard to marital misconduct, and after considering all
relevant facts including:
(a) the financial resources of the party seeking
maintenance, including marital property apportioned to
him, and his ability to meet his needs independently,
including the extent to which a provision for support of
a child living with the party includes a sum for that
party as custodian;
12
(b) the time necessary to acquire sufficient education
or training to enable the party seeking maintenance to
find appropriate employment;
(c) the standard of living established during the
marriage:
Cd) the duration of the marriage;
(e) the age and the physical and emotional condition of
the spouse seeking maintenance; and
(f) the ability of the spouse from whom maintenance is
sought to meet his needs while meeting those of the
spouse seeking maintenance.
Section 40-4-203(2)(a) through (f), MCA.
The District Court ordered Raymond to pay $200 per month in
maintenance through July 1993, when the youngest child turns
eighteen. Thereafter, the District Court ordered Raymond to pay
$500 per month in maintenance through August 1995. The total
maintenance obligation was $16,500.
Raymond argues that because Marilyn was awarded the house, the
silver dollar collection, a 1984 automobile, and the parties' money
market account, she had sufficient property to provide for her
reasonable needs. However, for property to be "sufficient
property" under 5 40-4-203(1)(a), MCA, the property must be income-
producing rather than income-consuming. In re the Marriage of Van
Atta (1992), 252 Mont. 310, 313, 829 P.2d 3, 5. Although it is
arguable that the house and the silver dollar collection will
produce income due to appreciation in value, they would have to be
sold to realize any income production. These items cannot be
considered sufficient property because they will not provide income
13
sufficient for Marilyn's reasonable present needs. Van Atta, 829
P.2d at 5-6. Furthermore, although the money market account will
earn interest, Marilyn will have to deplete the funds at a greater
rate than interest accrues to meet the needs of herself and the
parties' children. After a thorough review of the record, we hold
the District Court did not clearly err in finding the property
awarded to Marilyn was not sufficient property to provide for her
reasonable needs.
Raymond also argues Marilyn has appropriate employment from
which she can provide for her reasonable needs. During the
marriage, Marilyn enjoyed a reasonably decent standard of living.
After the parties separated, because she had no job skills or
education greater than a high school diploma, Marilyn took a job as
a bartender/cocktail waitress and earned approximately $1000 per
month net, with no benefits. The District Court found the
reasonable monthly expenses of Marilyn and the two children to be
$1600. Furthermore, the District Court found Marilyn was barely
able to support herself through her employment much less achieve
the standard of living enjoyed during the marriage.
"'Appropriate employment' under !j 40-4-203(1)(b), MCA, 'must
be determined with relation to the standard of living achieved by
the parties during the marriage."' Van Atta, 829 P.2d at 6
(citation omitted). We hold the District Court did not err in its
finding that Marilyn could not properly support herself in relation
14
to the standard of living achieved during the marriage. The
requirements of 5 40-4-203(l), MCA, have been satisfied.
Finally, Raymond contends the District Court erred in awarding
increased maintenance payments so that Marilyn could seek further
education after the youngest child turns eighteen. The District
Court found it would take Marilyn two years to acquire sufficient
education and training in order that she might find appropriate
employment. The District Court also found that Marilyn would not
be able to maintain full-time employment while pursuing this
education. Therefore, Raymond was ordered to pay increased
maintenance in the amount of $500 per month beginning in August
1993. The increased payments were to continue for two years.
Because we have held Marilyn did not have appropriate employment
under § 40-4-203(l), MCA, we also hold the District Court did not
err in awarding Marilyn increased maintenance.
V
Was the District Court's apportionment of the parties' assets
equitable?
In his final assignment of error, Raymond claims that if the
District Court erred in determining his obligation of child
support, maintenance, medical insurance, and future medical
expenses, those amounts should not be deducted from his share of
the property settlement. As we have held the District Court did
not err in its determination of the amount of these obligations, we
do not address this issue in detail. In passing, we do note that
15
it was within the province of the District Court to deduct these
amounts from Raymond's half of the marital estate after finding
that this was the only means with which the obligations would be
met. See e.g.: In re the Marriage of Crabtree (1982), 200 Mont.
178, 651 P.2d 29; In re the Marriage of Karr (1981), 192 Mont. 388,
628 P.2d 267.
The judgment of the District Court is affirmed/
We concur:
16
Justice Karla M. Gray, specially concurring.
I concur in the opinion of the majority on issues 3, 4 and 5.
I specially concur in that opinion on issues 1 and 2, notwith-
standing my disagreement with the majority's approach and
rationale.
As indicated by my joining of Justice Trieweiler's dissent in
Mooney, it is my view that black and white rules of law with
regarding to child support and maintenance owed by an incarcerated
former spouse are neither necessary nor wise. Nor does the case
before us fall within the facts of Mooney. Because respondent in
this case has sufficient assets to meet appropriate child support
and maintenance obligations, I would distinguish this case from
Mooney and affirm the District Court on the basis that its findings
are not clearly erroneous. On the record before us, I cannot say
that the District Court erred in determining that respondent's
unemployment due to incarceration did not constitute a change in
circumstances so substantial and continuing as to make the terms of
the temporary order unconscionable.
17
March 5, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
PATRICK D. SHERLOCK
Sherlock & Nardi
30 Fifth Street East
Kalispell, MT 59901
Katherine R. Curtis
KAPLAN & CURTIS
P.O. Box 329
Columbia Falls, MT 59912
ED SMITH
CLERK OF THE SUPREME COURT
STATE%F MONTANA