ELIZABETH GRANT JOHNSON, NOW KNOWN AS ELIZABETH D'ALLURA, APPELLANT AND CROSS-APPELLEE,
KARI JOHNSON, APPELLEE AND CROSS-APPELLANT
[Copyrighted Material Omitted]
Petition for further review from the Court of Appeals, Moore, Chief Judge, and Irwin and Pirtle, Judges, on appeal thereto from the District Court for Douglas County, SHELLY R. STRATMAN, Judge. Judgment of Court of Appeals affirmed in part and in part reversed, and cause remanded with directions.
Rodney C. Dahlquist, Jr., and Christine A. Lustgarten, of Dornan, Lustgarten & Troia, P.C., L.L.O., for appellant.
Virginia A. Albers, of Slowiaczek, Albers & Astley, P.C., L.L.O., for appellee.
HEAVICAN, C.J., WRIGHT, CONNOLLY, STEPHAN, MCCORMACK, MILLER-LERMAN, and CASSEL, JJ.
[290 Neb. 839] I. NATURE OF CASE
Kari Johnson filed a petition for further review of the Nebraska Court of Appeals' decision which affirmed in part [290 Neb. 840] and reversed in part the order of the district court for Douglas County which modified his child support obligation. We conclude that (1) the Court of Appeals correctly determined that the district court erred when it imputed to Elizabeth Grant Johnson, now known as Elizabeth D'Allura, a wage-earning capacity of $52,000 per year and reversed the order and remanded the cause for a hearing on Elizabeth's wage-earning capacity, (2) the Court of Appeals did not err when it affirmed the district court's conclusion that the Social Security benefits paid to the children were a gratuity and that Kari should not be given a credit for them upon remand, and (3) although the Court of Appeals correctly affirmed the district court's decisions that a downward modification in Kari's child support could be retroactive to the month after the filing of the application to modify,
that the judgment against Elizabeth for $25,472.11 should be reversed, and that a judgment against Elizabeth for $2,357.90 should be entered, it erred when it reasoned that upon remand, Kari could not receive credit for overpayments, if any, made during the pendency of the modification proceedings for the reason that Kari had continued to pay the $3,000-per-month child support ordered in the original decree. To the contrary, the fact that Kari continued to pay what had been ordered does not preclude consideration of a potential credit after receipt of additional evidence upon remand. Accordingly, we affirm in part, and in part reverse and remand with directions.
II. STATEMENT OF FACTS
Kari and Elizabeth were married in 1996. Two children were born to the marriage: one born in May 1995 and one born in July 1998. Kari and Elizabeth were divorced in January 2010, when the district court entered a stipulated decree and parenting plan. The dissolution decree, inter alia, provided for joint legal custody of the children and awarded physical custody to Elizabeth. Per the stipulation, the decree required Kari to pay child support of $3,000 per month while both children were minors and $1,500 per month when only the younger child was a minor.
[290 Neb. 841] Approximately 6 months after entry of the decree of dissolution, Kari moved for an order nunc pro tunc, in which motion he asserted that the dissolution court was not aware of the Social Security payments the children were receiving and that had the dissolution court been aware of the Social Security benefits, Kari " would be responsible for far less than the $3,000" monthly amount of child support. Kari later withdrew the motion, and thus the dissolution court never entertained it.
At the January 2013 modification trial which gives rise to this appeal, Kari acknowledged that when he stipulated to the terms of the original decree, filed on January 10, 2010, he understood that the children were receiving Social Security benefits by virtue of his status as a retired taxpayer. He acknowledged that the receipt of the Social Security benefits was in addition to his obligations for child support and alimony. The record shows that the children received Social Security benefits in 2010, 2011, and part of 2012.
Nine months after the decree of dissolution was entered, Kari moved to vacate the decree, asserting that the decree was void because the district court lacked personal jurisdiction over him. We affirmed the district court's order denying the motion to vacate the decree of dissolution. Johnson v. Johnson, 282 Neb. 42, 803 N.W.2d 420 (2011). At the modification trial, Kari testified that he pursued the personal jurisdiction issue rather than first applying for a modification, because he wanted a " do-over" and to have the entire decree overturned.
In September 2011, Kari filed an application to modify the decree, in which he sought to be awarded physical custody based on the children's preference and to have child support recalculated accordingly. Elizabeth filed a cross-application in which she sought sole legal custody based on Kari's uncooperative behavior and his failure to pay his share of medical bills and to maintain his life insurance. Kari thereafter amended his application to allege that in the event physical custody remained with Elizabeth, his child support obligation should be modified downward because he had experienced a decrease in income which constituted a material change in [290 Neb. 842] circumstances. The parties ultimately stipulated to a modification of physical custody to a joint physical (as well as legal) custody arrangement.
In January 2013, trial was eventually held on the issue of appropriate modification of child support. A review of the supplemental transcript shows that during the pendency of Kari's motion to modify which had been filed in September 2011, a trial was set for April 10, 2012; the parties " settled" the matter, but after the trial date had passed, Elizabeth repudiated the settlement. On September 6, Kari sought temporary abatement of child support. And on October 19, 2012, Kari filed an additional motion for temporary adjustment of child support and a motion for credit. Elizabeth successfully sought continuance of Kari's temporary motions to adjust or credit child support. Specifically, the district court ordered that Kari's motions for abatement or credit of child support were to be addressed at trial. The trial was set for January 2013. The judge who heard the modification matter was not the judge who entered the decree.
At the time of trial, Kari was 69 years old and Elizabeth was 47 years old. Both parties testified that Elizabeth had remained in the family home because they wanted to maintain stability for the children. The record reflects that at the time of trial, Elizabeth's only income was payments she received from a blind trust. She testified that she generally received about $27,000 to $28,000 per year from the trust, or approximately $2,300 per month. Her monthly expenses at the time of the modification trial for the mortgage, utilities, and food totaled more than $4,000, but she admitted that her food expenses would be reduced by the joint custody arrangement. Elizabeth testified that she did not have any money. In its ruling on the modification, the district court found that the evidence showed that Elizabeth received a $95,000 inheritance during the marriage, the equity in the $500,000 marital home in the divorce, and an unexplained deviation upward in child support, and that her new husband contributed to the family's home expenses.
Elizabeth had previously been employed by an aircraft charter company as a pilot; in 2004, she was employed full [290 Neb. 843] time and earned $23,000. There was evidence that Elizabeth would be eligible for a copilot position with her former employer at a salary of $1,500 per month, or $18,000 per year. However, to accept the position, she would have to move from Omaha, Nebraska, to California and undergo a minimum of 4 weeks' requalification training, which training Elizabeth testified would cost $10,000 and would be deducted from her pay. Elizabeth testified that there were no jobs available for her as a pilot in the Omaha area. Elizabeth further testified that she had an ongoing medical condition which prevented her from attaining the medical clearance necessary to work as a commercial pilot. Neither party elicited an explanation of Elizabeth's medical condition.
At the time of trial, Kari was employed as a director of safety at a charter management company for aircraft. Kari testified that he had been involved in the aviation industry for 50 years. Kari testified that while he " may not be an expert witness," in his opinion, Elizabeth could earn " anywhere from 60 to 80,000 a year" as a licensed pilot. Kari testified that he could provide " lots of names" of companies paying in the $60,000 to $80,000 range, " but they're supposed to be confidential." Kari testified that Elizabeth could earn $52,000 per year at her former workplace, though he had " no idea" whether she had achieved such earnings there previously. He requested that the district court impute a wage-earning capacity of $52,000 per year to Elizabeth.
The parties submitted their respective proposed support calculations. Kari proposed that his child support obligation,
based on joint physical custody, be reduced to $1,692 per month, retroactive to October 2011 (the month after he filed for modification), and that after the date of the modification order, his obligation be set at $450 per month for two children. He requested a " credit" of more than $19,000 which would reflect the difference between the $3,000 per month he had paid for child support since October 2011 (during the pendency of the modification) and the new amount he proposed as his obligation during that time. He also requested a credit for almost $63,000 for Social Security benefits received by the children but never credited against his support obligation.
[290 Neb. 844] Elizabeth testified that she inadvertently removed $2,357.90 from an account of Kari's to pay her American Express bill. Kari requested a judgment to reimburse him for that amount.
Elizabeth proposed that Kari's child support obligation, based on joint physical custody, be set at $1,095 per month. She testified that adjusting the support obligation to give Kari a credit for past Social Security benefits paid to the children would present a significant hardship for her and the children. Elizabeth's counsel also informed the district court that Kari had previously filed a motion seeking to address the Social Security benefits but had withdrawn it. Elizabeth's counsel argued that to allow a retroactive credit after the accumulation of such benefits for more than 3 years since the decree had been entered would be inequitable.
The ensuing orders are complicated and summarized here. In summary, the district court entered an order in May 2013; then later in May, entered a nunc pro tunc order clarifying certain issues; and on August 16, filed an order ruling on Kari's motion to alter or amend in which the district court amended aspects of its prior order. The August order is the order appealed from, but earlier orders found facts relevant to our consideration on further review. For purposes of the issues relevant to this appeal concerning child support, the district court ultimately made rulings as follows:
Reasonable expenditures for the children, such as clothing and extracurricular activities, were allocated between the parents, commencing October 1, 2011, such that Elizabeth would be responsible for 40 percent and Kari would be responsible for 60 percent.
The district court applied the Nebraska Child Support Guidelines, and in connection with its calculation of Kari's child support obligations, the district court used Kari's earnings at the time of the modification trial, which were less than his earnings at the time of the divorce, to calculate his monthly income. The district court found Kari's testimony concerning Elizabeth's earning capacity to be credible and reasonable, based on his experience as a pilot and his knowledge of the aviation industry, and determined that Elizabeth had a wage-earning capacity of $52,000 per year, even though she was [290 Neb. 845] not employed at the time of trial. The district court calculated Elizabeth's monthly income based on the $52,000 potential wage earnings as well as the approximately $27,000 per year that she received as payments from a blind trust. The district court did not find Elizabeth's testimony to the effect that she was unable to work due to an unspecified medical condition to be credible.
In determining Kari's child support obligation, the district court noted that Kari's child support obligation from January 2010, when the divorce decree was entered, through September 2011, when he filed his application to modify the decree, was $3,000 per month ...