Appeal from Superior Court of King County. Docket No: 87-3-00718-2. Date filed: 04/20/95. Judge signing: Hon. Dale Ramerman.
Authored by C. Kenneth Grosse. Concurring: Susan R. Agid, H. Joseph Coleman.
The opinion of the court was delivered by: Grosse
GROSSE, J. -- In a modification action, the court determined Philip Anderson's monthly net income by assuming that if all his assets, including real property and bank accounts, were invested at five percent, Philip would earn $6,425 a month. Philip appeals, claiming that the court erred in its methods of calculating his support obligation. We agree. Although Philip's wealth would justify a deviation from the standard calculation, the court erred by not following the statutory guidelines to determine Philip's support obligation.
Under Philip and Anne Anderson's 1987 dissolution decree, Philip paid $1,750 a month in child support for their two children. In 1995, Philip sought to reduce his child support obligation after he retired from his lucrative career as a professional bicycle racer. In 1994, he earned over $300,000. In previous years he earned as much as $500,000. After retiring, he decided to be self-employed, coaching and engaging in bicycle promotion activities. He projected a yearly income of $24,000 gross and $12,000 net. By February 1995, he had received $4,260 from one bicycle promotion activity, but, at the time of his declaration, he was unaware of any future business deals.
Philip has property with a net value of $1,170,000, including a ranch in Australia where he resides, and rental properties in California.
According to his property manager's declaration, the annual net income for the rental properties is $36,682. He also has approximately $300,000 in bank accounts, and other assets of $62,500. Philip remarried in 1994 to Christi Anderson. According to their declarations, they have been mingling finances since 1992 in exchange for her traveling the racing circuit with him and cohabiting with him. Christi and Philip are now listed as joint owners of the property after Philip changed the titles.
Anne, a professional artist, currently nets $2,000 a month from her sources of income. She invested money from the property settlement in securities and has $125,000 in assets and owns a home.
The court found that "[Philip's] potential earnings from his self-employment are very speculative. Thus the usual means of determining income do not apply in this case." The court concluded that $6,425 was a reasonable amount to use for Philip's income. The court derived this figure by assuming that if his total assets of $1,542,000 were invested at a five percent rate of return, they would produce a monthly income of $6,425.
Calculating the proportional share based on Anne's and Philip's incomes, the court ordered him to pay $1,382 a month, plus $41.80 for health care costs, totaling $1,423 a month. The court also ordered him to pay the majority of Anne's attorney fees. Philip appeals the court's method of calculation. Anne cross-appeals, arguing the court set the amount too low.
Philip claims that the court erred in its method of calculating his support obligation when it imputed income based on all his assets. Philip is correct. The court erred by devising an ad hoc method of calculating child support. If a court decides to take into account equities (such as the possession of wealth) that would justify a special support obligation, it may only utilize the statutory methods that enable it to exercise its discretion, such as ordering a deviation. *fn1 Because the court found Philip's income speculative, it "imputed" his net income by assuming that if all his assets were invested at five percent, Philip would earn $6,425 a month. This was an incorrect method for several reasons.
First, although Philip's income was speculative, by not making findings as to whether Philip was employed full or part-time or whether he was voluntarily unemployed or underemployed, the court erred in its method of imputing income under RCW 26.19.071(6).
Second, the court erred by not completing the portions of the worksheets relating to Philip's monthly income, including the lines for business income and interest and dividend income. A court must completely fill out the child support worksheets; the failure to ...