Braun and Braun

461 P.3d 1086, 302 Or. App. 778

• Court: Court of Appeals of Oregon
• Decided: March 11, 2020
• Docket: A169190
• Status: Published

Opinion

Argued and submitted December 13, 2019, reversed and remanded March 11, 2020

In the Matter of the Marriage of Rhonda Darlene BRAUN, Petitioner-Respondent, and Lavelle Herman BRAUN, Respondent-Appellant. Umatilla County Circuit Court CV151772; A169190 461 P3d 1086

After losing his job, husband moved to terminate his $1,800 monthly spou- sal support obligation to wife. The trial court held a hearing, at which husband offered evidence regarding his financial circumstances. The court made express findings, including that husband did not leave his prior employment voluntarily or to avoid the support obligation, that husband hoped to grow the restaurant business that he had recently purchased, and that husband’s current monthly income was “less than $1000 per month.” The court then ordered that husband’s spousal support obligation to wife would continue but in the reduced amount of $900 per month. On appeal, husband argues that, on the existing record, the trial court abused its discretion in ordering husband to pay nearly all of his income as spousal support. Held: The trial court abused its discretion. Given the record and the trial court’s express findings, the support obligation ordered by the trial court falls outside the range of reasonableness. Reversed and remanded.

Ronald J. Pahl, Judge. (Supplemental Judgment entered October 9, 2018) Eva J. Temple, Judge. (Supplemental Judgment entered October 31, 2018) George W. Kelly argued the cause and filed the brief for appellant. John L. Barlow argued the cause and filed the brief for respondent. Before Armstrong, Presiding Judge, and Tookey, Judge, and Aoyagi, Judge. AOYAGI, J. Reversed and remanded. Cite as 302 Or App 778 (2020) 779

AOYAGI, J. After losing his job, husband moved to terminate his spousal support obligation to wife, under ORS 107.135. The trial court entered a judgment continuing the sup- port obligation but reducing its monthly amount from $1,800 to $900. On appeal, husband argues that the trial court abused its discretion, given its express finding that husband’s monthly income is “less than $1000” and the absence of any other findings to support his being ordered to pay nearly all of his income as spousal support. For the reasons that follow, we reverse and remand for further proceedings. Husband requests de novo review but has not explained why this is an exceptional case, so we decline to conduct de novo review. See ORS 19.415(3)(b); ORAP 5.40(8). Accordingly, “[w]e state the facts consistently with the trial court’s express and implied findings, supplemented with uncontroverted information from the record.” Tilson and Tilson, 260 Or App 427, 428, 317 P3d 391 (2013) (internal quotation marks omitted). The parties divorced in May 2016. The trial court entered a stipulated general judgment of dissolution of mar- riage, signed by them, that included findings and addressed property distribution and spousal support. As stated in the judgment, at the time of their divorce, husband was 51 years old, wife was 58 years old, and they had been married for 17 years. The parties enjoyed a “comfortable standard of liv- ing” while married. Husband was employed by the Oregon Department of Corrections (DOC), earning a gross monthly income of $8,269, with eligibility for raises and opportuni- ties for career advancement. Wife was unable to work due to a disability but had gross monthly income of $3,200 from disability, pension, and retirement payments and, at the time of the divorce, was anticipating additional monthly income from a rental apartment. The parties’ house, farm, and farming equipment were awarded to wife. Husband’s retirement account—then valued at roughly $60,000— was awarded to husband. Husband agreed to pay $1,800 per month to wife, indefinitely, as maintenance spousal support. 780 Braun and Braun

In late December 2017, husband was terminated from his DOC job. In January 2018, he moved to terminate spousal support, based on the change in his financial cir- cumstances. Wife opposed the motion. The trial court held a hearing in September 2018, which lasted less than an hour, and at which husband was the only witness. The next five paragraphs recount husband’s testimony.1 Husband testified that, after losing his job, he sub- mitted about three job applications per week but was unable to find employment. He had three job interviews, but he did not get one job because he does not have a college degree, and he did not get the other two jobs because the reason for his DOC termination—termination for cause based on a false statement on a travel expense report—had been publicized in the newspaper. In the past, husband owned a construc- tion company, but he has hip problems that now restrict his ability to do that type of work. After going “about three months without work,” husband saw “an opportunity” and bought a restaurant for $225,000 in April 2018. His partner, JS, who lives with him, contributed $40,000; his mother contributed $35,000; and husband took a loan from the seller. Husband testified that his business expenses are $19,720 monthly, which includes paying two employees. JS does not receive any wages but receives $460 monthly as repayment of her investment. Husband pays himself $1,000 monthly from the business. Husband’s bank statement from June 2018 shows a $1,000 deposit, which husband testified was from the business. After paying business expenses and paying himself $1,000, the business “nets between $500 and $700 a month.” Prior to buying the restaurant, in the months imme- diately following his DOC termination, husband received money from DOC for his “final check” and “[his] deferred comp that [he] cashed out.”2 After buying the restaurant, 1 The record is very slim, and husband’s testimony, albeit uncontested, is imprecise on certain issues. We therefore describe the record with caution, so as to avoid engaging in any factfinding. Nothing in this opinion should be viewed as constraining the trial court’s factfinding on remand. 2 According to the record, husband received $14,489.54 in late December 2017, $4,132.04 in January 2018, $4,295.14 in February 2018, and $6,702.85 in March 2018. Cite as 302 Or App 778 (2020) 781

husband received another $15,000 or $16,000 from DOC as part of a settlement related to his termination. At the time of the hearing, husband was in the pro- cess of purchasing a house for $150,000. He had recently been living in a camper for about four months. Husband had taken an $80,000 loan from an individual (not a bank) to purchase the house. Husband had also cashed out his retirement, netting him about $68,000 after federal taxes but before state taxes, to buy the house. Husband testified that his personal expenses are $3,041.15 per month, of which “half” is paid by JS. That is, husband and JS each pay about $1,520 per month for hus- band’s personal expenses. It is unclear whether that amount includes the $670 house payment that husband will owe when his house purchase closes.3 At the close of the evidence, the parties gave clos- ing arguments. Wife moved to dismiss, arguing that hus- band had not proved a change in circumstances, that his job loss was “voluntary,” and that spousal support should be continued at $1,800 per month. Wife made no arguments as to what an appropriate amount of spousal support might be in the event that the trial court continued support but reduced the amount. For his part, husband summarized the evidence of his financial circumstances and argued that he could not afford spousal support. The court took the case under advisement. The trial court subsequently issued a written opin- ion with findings. As to husband, the court found that hus- band is 53 years old, does not have a college education, was terminated from his employment in December 2017, did not leave his employment voluntarily or to avoid the support obligation, was denied unemployment, cashed out the retire- ment that he was awarded in the divorce to buy a business, has current monthly income of “less than $1000 per month,” 3 While testifying about his business expenses, husband mentioned that he “ha[s]n’t had a house payment” and that, “[i]f the papers all go through today, that’s another $670 a month.” When husband later testified about his personal expenses, he did not say whether the $3,041.15 included an amount for rent or the house payment. The trial court did not make a finding about husband’s living expenses. 782 Braun and Braun

and hopes to grow the business. As to wife, the court found that wife has income of $2,863 per month,4 is “disabled and unable to obtain future employment income or assets,” and received the home and farm in the divorce. After stating its findings, the court concluded: “Based on the totality of the circumstances the court finds that Husband did not make a voluntary reduction of income or act in bad faith or for the purpose of avoiding his support obligation. Husband’s earned income has reduced and [he] has cashed in his retirement account to buy an ongoing business. “The Court will modify the spousal support award to wife to $900 per month as of 1 February 2018. Wife is awarded her reasonable and necessary attorney fees pur- suant to ORS 107.135.” The court thereafter entered a supplemental judg- ment of modification, ordering husband to pay spousal sup- port to wife in the amount of $900 per month, indefinitely, as well as ordering him to pay $9,900 in arrears, plus interest. The court later entered a supplemental judgment regarding attorney fees, ordering husband to pay $3,781 to wife for her attorney fees and costs. Husband appeals both supplemen- tal judgments. In his first assignment of error, husband challenges the supplemental judgment of modification, arguing that the trial court abused its discretion when it continued spousal support at $900 per month. When a party seeks modifica- tion or termination of spousal support, the trial court “must determine whether there has been a substantial, unantici- pated change in economic circumstances since the time of the earlier award.” Davis and Lallement, 287 Or App 323, 327-28, 401 P3d 1230 (2017) (emphases, internal quotation marks, and brackets omitted); see also ORS 107.135. If there has been, the trial court “must determine what amount of support is just and equitable under the totality of the cir- cumstances.” Davis, 287 Or App at 328 (internal quotation 4 As previously noted, the general judgment contained a finding of a higher income amount for wife. The finding in the supplemental judgment appears to be based on a more recent uniform support declaration by wife and is unchallenged on appeal. Cite as 302 Or App 778 (2020) 783

marks omitted). Here, no one challenges the trial court’s change-in-circumstances determination. The only disputed issue is the trial court’s “ultimate determination about a just and equitable amount of support,” which we review for abuse of discretion. Tilson, 260 Or App at 432 (internal quo- tation marks omitted). “[T]here is a range of reasonableness for a ‘just and equitable’ award of spousal support.” Brown and Brown, 259 Or App 618, 627, 315 P3d 422 (2013).

Husband argues that the trial court abused its dis- cretion in ordering him to pay $900 per month of spousal support, particularly given the court’s express finding that husband’s income is “less than $1000 per month.” Husband argues that the court should have terminated support altogether—given that, as husband puts it, his “prior employ- ment has ended, his new employment pays less than mini- mum wage, and wife is financially better off than he is”—or at least temporarily reduced support to a “nominal” amount. Noting the trial court’s lack of explanation for its ultimate determination, husband argues that, if the court implicitly found that the restaurant would generate more income in the future, there was no evidence to support such a finding. Further, husband argues, the trial court’s “decision took no account of husband’s present reality (i.e., an income of but $1,000 monthly)” when ordering him to pay $900 per month starting immediately. Husband requests that we remand to the trial court for reconsideration.

In response, wife makes three arguments. Her pri- mary argument is that it is reasonable to infer from hus- band’s testimony that he has “confidence in his investment,” as “demonstrated by his willingness to cash in his retire- ment and take on debt to purchase the business,” and that he “expects [it] to ultimately generate substantial income to him.” Wife argues that $900 is therefore an appropriate sup- port amount, because husband “is capable of earning much more than the income he testified to during the trial, given that he was just starting a new business.” (Husband had purchased the restaurant about six months before the hear- ing.) In wife’s view, the court “can and did reasonably infer from [h]usband’s testimony that [h]usband’s business will generate more income in the future.” 784 Braun and Braun

Wife’s other two arguments are made only briefly. She argues that some of the restaurant’s $500 to $700 of net monthly profits should be attributed to husband as income— although that argument appears to be inconsistent with the trial court’s express finding that husband’s income is “less than $1000 per month.” And she argues that the trial court “can and did take into account that [h]usband’s house- hold benefits from the business, in that his domestic part- ner is also paid monthly from the business”—although it is unclear how the court could have taken that into account to reach the result that it did, given that the only evidence was that JS receives no wages from the business, receives $460 monthly as repayment of her investment, and pays at least $1,520 toward husband’s monthly expenses. “In determining whether a modification of a sup- port award is appropriate, the overriding consideration is what is just and equitable under the totality of the circum- stances.” Harp and Harp, 214 Or App 520, 524, 167 P3d 457 (2007) (internal quotation marks and ellipses omitted). “[I]n modifying a support award, the court focuses on all of the circumstances that have changed since the dissolution.” Id. With respect to income, the court is “not restricted to consideration of what either party is presently receiving but may consider the parties’ earning capacities and potential future income.” Id. At the same time, “in imputing poten- tial income, a court may not merely speculate”; it only “may impute potential income based on earning capacity where there is sufficient information to make an informed assess- ment.” Id.; see also Hendgen and Hendgen, 242 Or App 242, 250-51, 255 P3d 551 (2011) (concluding that, even if the hus- band was unlikely to remain retired and had “greater earn- ing capacity” than his current income level, it “would be pure speculation to place a dollar figure on what that additional income might be,” given “the absence of evidence” on the issue—while also noting that, “[s]hould the parties’ earning capacities become less speculative in the future, that could constitute a substantial change in circumstances justifying a reconsideration of the spousal support”). Further, a party’s ability to pay the support is necessarily part of the “just and equitable” determination. See Hendgen, 242 Or App at 250- 51 (concluding that the trial court’s spousal support award Cite as 302 Or App 778 (2020) 785

of $4,000 per month “was purely speculative, far exceeds husband’s ability to pay, and was not just and equitable”). Here, the trial court expressly found that husband’s income was “less than $1000 per month” and then con- cluded, without explanation, that it was just and equitable for him to pay spousal support of $900 per month to wife, who has $2,863 per month of her own income (before spousal support), and to do so indefinitely. The court did not make any findings about husband’s living expenses, but husband’s uncontested testimony put his personal expenses at $1,520 per month or more. On this record, we are unable to discern any basis for the trial court’s ultimate determination that would not be an abuse of discretion. If the trial court based its decision solely on its express factual findings—as one might expect, given that it issued a written opinion with express factual findings—those findings are insufficient to support the ulti- mate determination. Conversely, to the extent that the trial court relied in part on unexpressed factual findings, we cannot discern what those additional factual findings might have been or, in any event, how they could combine with the court’s express findings in such a way as to permit its ulti- mate determination. On appeal, wife points to the court’s finding that “[h]usband and his live-in partner hope to grow the [restaurant] business,” but “hope” alone cannot explain the court’s decision. A finding that a person generally hopes that business will improve is not a finding regarding his actual future earning capacity, nor is there any evidence in the record regarding husband’s actual future earning capac- ity. And, as previously noted, wife’s other appellate argu- ments regarding potential bases for the trial court’s ruling do not explain how the court’s support determination could fall within the range of reasonableness, given the express findings that the court made. We therefore agree with husband that the appropri- ate disposition is to reverse the supplemental judgment of modification and remand for further proceedings. We can- not say that the trial court’s only option was to terminate support altogether. However, given the court’s express find- ings, ordering husband to $900 monthly in spousal support 786 Braun and Braun

falls outside the range of reasonableness, and the judgment cannot stand. That leaves husband’s second assignment of error, in which husband challenges the supplemental judgment regarding attorney fees. Because we have reversed the under- lying supplemental judgment of modification, we reverse the supplemental judgment regarding attorney fees as well. See ORS 20.220(3) (“When an appeal is taken from a judgment under ORS 19.205 to which an award of attorney fees or costs and disbursements relates[,] * * * [i]f the appellate court reverses the judgment, the award of attorney fees or costs and disbursements shall be deemed reversed[.]”). Reversed and remanded.