Condron v. Condron

2024 S.D. 43

• Court: South Dakota Supreme Court
• Decided: July 24, 2024
• Docket: 30436
• Status: Published

Opinion

#30436-r-SRJ 2024 S.D. 43

IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA

****

STEVEN CONDRON, Plaintiff and Appellant,

v.

JENNIFER CONDRON, Defendant and Appellee.

APPEAL FROM THE CIRCUIT COURT OF THE SECOND JUDICIAL CIRCUIT MINNEHAHA COUNTY, SOUTH DAKOTA

THE HONORABLE ROBIN J. HOUWMAN Judge

GREGORY T. BREWERS of Strange, Farrell, Johnson & Brewers, P.C. Sioux Falls, South Dakota Attorneys for plaintiff and appellant.

JASON R. ADAMS of Tschetter & Adams Law Office, P.C. Sioux Falls, South Dakota Attorneys for defendant and appellee.

CONSIDERED ON BRIEFS JUNE 4, 2024 OPINION FILED 07/24/24 #30436

JENSEN, Chief Justice

[¶1.] Steven and Jennifer Condron were granted a divorce in September

2019. As part of the divorce decree, the circuit court divided the parties’ assets and

ordered Steven to pay Jennifer “a combination of permanent and rehabilitative

alimony[.]” Steven was also ordered to pay $3,218 per month in child support.

Three years after the divorce was finalized, Steven petitioned to modify child

support. When determining Steven and Jennifer’s respective incomes to calculate

child support, the child support referee declined to include in Jennifer’s income the

alimony payments she was receiving from Steven and refused to exclude those

payments from Steven’s income because it found the payments were a part of

property division rather than an award of alimony. The circuit court adopted the

referee’s findings and conclusions. Steven appeals, arguing that the circuit court

erred when it concluded that the monthly alimony payments were a part of the

property division and refused to adjust the parties’ incomes for these payments in

its child support calculation. We reverse.

Factual and Procedural Background

[¶2.] Steven and Jennifer were married on May 23, 1997. During their

marriage, they became parents to two children. Steven filed for divorce in 2017.

Following a trial, the court granted Jennifer a divorce on the grounds of adultery on

September 16, 2019.

[¶3.] In dividing property, the court valued the marital assets at $2,904,624

and the marital debt at $2,467,173. Steven was awarded $2,629,214 in assets and

all the marital debt for a net asset award of $162,041. Jennifer received the

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remaining marital assets for a net award of $275,310. The court further stated that

“[n]o cash equalizing payment shall be made by [Steven] or [Jennifer] to the other

party in this matter.”

[¶4.] After dividing the marital assets, the court found that Steven’s gross

annual income exceeded $1,000,000 as a gastroenterologist. The court also found

that Jennifer did not earn any income. The court ordered Steven to pay Jennifer “a

combination of permanent and rehabilitative alimony in the amount of $15,000 per

month for four years (48 months); and thereafter [Steven] shall pay [Jennifer]

permanent alimony in the amount of $11,000 per month until [Jennifer’s] death or

remarriage or [Steven’s] death.” The divorce decree further stated:

This alimony obligation shall be considered separately from any child support and shall continue following Plaintiff’s retirement. These alimony payments were considered as part of the Court’s overall property division.

[¶5.] The parties stipulated that Jennifer would receive primary physical

custody of the children and that Steven would pay Jennifer $3,218 per month in

child support. The court adopted the parties’ agreement for child custody and

support in the judgment and decree of divorce.

[¶6.] On November 28, 2022, Steven filed a petition to modify child support.

Steven’s petition asserted that his circumstances had substantially changed due to

being terminated from his employment at Avera McKennan Hospital, which

“significantly reduced” his income. 1 The petition further stated that the parties’

1. Steven earlier filed a motion to modify alimony alleging the same grounds for modification of alimony. The alimony motion is still pending before the circuit court.

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oldest child would soon be turning 18. 2 A hearing was scheduled before the child

support referee.

[¶7.] Due to a change in Steven’s employment, the referee found that

Steven’s gross monthly income had reduced to approximately $45,639.42. The

referee further found that Jennifer was still unemployed, despite being capable of

working, and calculated her monthly income at the minimum wage amount of

$1,638. The referee found that Steven was paying $15,000 per month in alimony,

which would be reduced to $11,000 per month beginning in September 2023.

Despite these findings, the referee declined Steven’s request to exclude these

payments from his income and include the payments in Jennifer’s income for the

purpose of calculating child support. Instead, the referee concluded that the

payments were a form of property division. In doing so, the referee highlighted the

language of the divorce decree that the alimony payments were to “be considered

separately from any child support obligation and shall continue following [Steven’s]

retirement. These alimony payments were considered as part of the Court’s overall

property division.” Based on its findings and conclusions, the referee calculated the

parties’ total child support obligation to be $3,651 per month for one child and

recommended Steven pay Jennifer the sum of $3,436 per month in child support.

2. The original order for support was entered prior to July 1, 2022, thus Steven was not required to show a change in circumstances since the entry of the original child support order. See SDCL 25-7-6.13 (“All orders for support entered and in effect prior to July 1, 2022, may be modified in accordance with this chapter without requiring a showing of a change in circumstances from the entry of the order.”).

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[¶8.] Steven filed objections to the referee’s report asserting that the referee

failed to consider a deviation from the child support schedules because Jennifer was

underemployed due to voluntarily refraining from work. Steven also argued that

the “referee failed to acknowledge the alimony payments to [Jennifer] as a source of

income, and a reduction of [Steven’s] income.”

[¶9.] At the hearing before the circuit court, Steven withdrew his objection

concerning a deviation for Jennifer’s underemployment but continued to argue that

the monthly alimony payments should be deducted from his income and included in

Jennifer’s income before calculating child support. In rejecting his argument, the

court determined that Steven’s monthly payments were an “award of [] alimony

slash property division[.]” The court further reiterated that at the time it entered

the original divorce decree, it “clearly indicated that [the $15,000 per month] award

was part of the court’s overall property division as well as alimony, and so I don’t

believe that the referee has made any error in determining that it should [not] be

excluded[]” from Steven’s income and included in Jennifer’s income for child support

calculation purposes. The court adopted the referee’s findings and

recommendations and modified Steven’s child support obligation to $3,436 per

month.

[¶10.] Steven appeals and raises a single issue which we restate as follows:

1. Whether the circuit court erred when it concluded that the monthly payment obligations, denominated as alimony, were a part of the property division and unable to be considered when calculating the parent’s income for child support.

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Standard of Review

[¶11.] This Court reviews child support decisions under the abuse of

discretion standard. Kauth v. Bartlett, 2008 S.D. 20, ¶ 8, 746 N.W.2d 747, 750

(citation omitted). “Findings of fact are reviewed under the clearly erroneous

standard.” Roberts v. Roberts, 2003 S.D. 75, ¶ 8, 666 N.W.2d 477, 480 (citation

omitted). “Questions of law, however, are reviewed de novo.” Dahl v. Dahl, 2007

S.D. 64, ¶ 9, 736 N.W.2d 803, 805 (citation omitted). The question before us of

whether the monthly payments were alimony that should have been considered in

calculating each party’s income for the purpose of child support is a legal

determination subject to de novo review.

Analysis and Decision

[¶12.] “The parents of a child are jointly and severally obligated for the

necessary maintenance, education, and support of the child in accordance with their

respective means.” SDCL 25-7-6.1. South Dakota utilizes an “income shares

method” to calculate child support under which:

a child support figure is established by adding together the [net monthly] income of both parents and [by] using [a statutory] chart to determine what the proper amount of support is for that income level. The child support is then allocated between . . . both parents in proportion to their relative [net monthly] incomes, with the payment being made by the non-custodial parent to the custodial parent.

Peterson v. Peterson, 2000 S.D. 58, ¶ 15, 610 N.W.2d 69, 71 (alterations in original)

(citation omitted).

[¶13.] In calculating each parent’s respective income for determining child

support, SDCL 25-7-6.3 provides that the “monthly net income of each parent shall

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be determined by the parent’s gross income less allowable deductions[.]” SDCL 25-

7-6.3 further provides a list of sources of income that are includable in each parent’s

net monthly income calculation. Additionally, SDCL 25-7-6.6 provides that gross

income encompasses various sources of income, including “other sources” of income

that are “shown on any or all schedules filed as part of the parents’ federal income

tax returns[.]” SDCL 25-7-6.7 permits certain deductions to be made from each

parent’s monthly gross income, including “[p]ayments made on other support and

maintenance orders.”

[¶14.] Applying these statutes, this Court has required alimony payments to

be considered in determining the monthly gross income of each parent for the

purpose of calculating child support. See Haanen v. Haanen, 2009 S.D. 60, ¶ 19,

769 N.W.2d 836, 843; Peterson, 2000 S.D. 58, ¶ 15, 610 N.W.2d at 71. We have

stated that “[s]ince alimony is a payment for the support and maintenance of a

dependent spouse, it is deducted from the payor’s gross monthly income as another

support and maintenance order.” Peterson, 2000 S.D. 58, ¶ 16, 610 N.W.2d at 71

(citation omitted). In turn, the income received from permanent alimony must be

included in the receiving spouse’s gross monthly income. Id. at ¶ 26, 610 N.W.2d at

73. 3 Conversely, unless the parents’ income does not meet a child’s needs, the

parents’ assets are not considered when calculating child support. SDCL 25-7-6.5.

3. Our decision in Peterson v. Peterson relied on SDCL 25-7-6.3 and SDCL 25-7- 6.6 to conclude that the child support statutes authorized courts to include alimony paid to the recipient spouse when calculating their gross monthly income. Peterson reasoned that the sources of income listed by the Legislature in SDCL 25-7-6.3, were “not intended to be exhaustive.” 2000 S.D. 58, ¶ 22, 610 N.W.2d 58, 72. Peterson further determined that alimony (continued . . .) -6- #30436

[¶15.] Steven argues the circuit court’s statement in the child support

modification proceeding that it “clearly indicated that [the $15,000 per month]

award was part of the court’s overall property division as well as alimony” is

inconsistent with the court’s treatment of these payments during the divorce

proceedings and with well-established South Dakota law. He points out that

throughout the divorce proceedings, the court consistently referred to the monthly

payments as alimony rather than property division. He also highlights that the

court expressly declined to order any form of equalization payment by either party

as a part of the property division. Since his future earnings did not exist at the time

of the divorce, Steven argues that they could not be considered as a part of the

property division.

[¶16.] Jennifer cites Kolbach v. Kolbach, 2016 S.D. 30, ¶ 16, 877 N.W.2d 822,

828, to assert that this Court has repeatedly stated that “the court’s equitable

division of property and spousal support are to be considered jointly because ‘an

award of more assets can eliminate or reduce the need for spousal support.’” In

________________________ (. . . continued) payments were also includable as income under SDCL 25-7-6.6 because they are a form of “other sources” of income that the Internal Revenue Code specifically defined as income. Id. at ¶¶ 23–24, 610 N.W.2d at 73. The Court cited IRC § 61(a)(8), which at the time included “alimony and separate maintenance payments” as “gross income.” Id. IRC § 61(a) was amended in 2017 by Congress and no longer includes alimony as “gross income.” Tax Cuts and Jobs Act of 2017, Pub. L. 115-97, § 11051(b)(1)(A), 131 Stat. 2054, 2089–90. Despite these changes to the federal tax code, neither party asserts that alimony payments are not includable in the receiving parent’s gross monthly income calculation, or that Peterson is no longer good law. In absence of such an argument, we decline to reconsider our decision in Peterson since it was also premised on the non-exhaustive list of income includable under SDCL 25-7-6.3.

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relying on this principle, Jennifer argues that the court categorized the $15,000

monthly payments as a hybrid of alimony and property settlement. As such,

Jennifer claims that the court was correct not to include the monthly payments in

her income or reduce them from Steven’s income when calculating child support.

[¶17.] From our review of the divorce decree, it is readily apparent that

Steven’s monthly payment obligation to Jennifer is alimony rather than a part of

property division or a combination of the two. In the decree, the court described the

monthly payments as “a combination of permanent and rehabilitative alimony[.]”

The decree further referred to these payment obligations as alimony when it stated

that “[t]hese alimony payments were considered as part of the [c]ourt’s overall

property division.” (Emphasis added). Additionally, the court separately divided all

the marital assets and debts and awarded Jennifer a larger net award of property

before the court considered any need for future support. In establishing an

equitable division of property, the court specifically determined that “[n]o cash

equalizing payment shall be made by [Steven] or [Jennifer] to the other party in

this matter.”

[¶18.] The circuit court’s treatment of the alimony payments as a part of

property division is also contrary to our decisions distinguishing between property

division and spousal support. In Oman v. Oman, this Court rejected a spouse’s

claim that a monthly payment obligation was a part of the parties’ property division

and instead determined it to be alimony, subject to future modification. 2005 S.D.

88, ¶¶ 11–13, 702 N.W.2d 11, 15. We reasoned that “[t]he provision on which [the

wife] relie[d] [made] no reference to alimony as a lump-sum neither [did] it specify a

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gross amount payable in installments. The agreement [was] for a specified monthly

amount for a duration of years. It [was] referred to throughout the agreement as

‘alimony.’ Nothing in the language of the agreement indicate[d] that alimony was

agreed to in lieu of property.” Id. ¶ 12. Similar to our decision in Oman, here, there

was nothing stated in the decree or at the hearing to indicate that alimony was

awarded in lieu of a greater property division award or for anything other than

Jennifer’s future support.

[¶19.] In distinguishing between an award of property and spousal support,

we have considered not only how the award is labeled but also “the nature of the

award.” Vandyke v. Choi, 2016 S.D. 91, ¶ 11, 888 N.W.2d 557, 563–64 (quoting

Saxvik v. Saxvik, 1996 S.D. 18, ¶ 16, 544 N.W.2d 177, 180). In Vandyke, the parties

stipulated to a divorce settlement agreement that required the husband “to make

payments of ‘$1,500 each month for a period of 19 consecutive months, or until

remarriage/cohabitation of Wife or the death of either party.’” Id. ¶ 12, 888 N.W.2d

at 564. In analyzing this provision, we stated that a common characteristic of

permanent alimony is “payments which continue until death of the recipient or

some other significant event such as remarriage, which terminates the need for

continuing support.” Id. ¶ 11 (quoting Sanford v. Sanford, 2005 S.D. 34, ¶ 24, 694

N.W.2d 283, 290). We further stated that “[t]he presence of conditions like these is

typical of an arrangement for permanent alimony[,]” and because “rights inuring to

a party as part of a property settlement are final,” “it would seem strange for

payments made pursuant to a property settlement to end under these conditions.”

Id. at ¶¶ 13, 19, 888 N.W.2d at 564, 566 (citations omitted).

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[¶20.] Steven is obligated to make monthly payments to Jennifer “until

[Jennifer’s] death or remarriage or [Steven’s] death.” Just as was the case in

Vandyke, “[t]he presence of such conditions in the [decree] that could terminate

future payments suggests that the provision of alimony was not intended to be a

property division.” Id. at ¶ 19, 888 N.W.2d at 566. Given the ability to terminate

the payments upon the occurrence of certain significant life events, it would be

inconsistent to categorize these payments as a form of property division.

[¶21.] Nonetheless, Jennifer argues that the court valued Steven’s future

income by identifying that he was likely to earn $1,200,000 per year as a

gastroenterologist. Accordingly, she argues that his future income was a critical

consideration by the court to assess the marital estate’s value and award monthly

payments to Jennifer as a part of the property division. Contrary to Jennifer’s

claim, it would be inconsistent with the fundamental principles for the equitable

division of property to categorize the monthly payments here as anything other

than alimony. See Johansen v. Johansen, 365 N.W.2d 859, 862 (S.D. 1985) (stating

that the division of property in a divorce decree relates only to the property rights

that each party has at the time the divorce decree is entered). Additionally, we have

consistently stated that “the potential earning capacity stemming [from professional

degrees] is not distributable property[,]” because “[t]he factors and variables

involved in such a consideration are simply too speculative[.]” Wehrkamp v.

Wehrkamp, 357 N.W.2d 264, 266 (S.D. 1984). In Saint-Pierre v. Saint-Pierre, we

held that a professional license or degree is not a divisible asset because:

Equitable distribution of a professional degree would . . . require distribution of “earning capacity”—income that the degree

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holder might never acquire. The amount of future earnings would be entirely speculative. Moreover, any assets resulting from income for professional services would be property acquired after the marriage; the statute restricts equitable distribution to property acquired during the marriage[.]

357 N.W.2d 250, 260 (S.D. 1984) (quoting Mahoney v. Mahoney, 453 A.2d 527, 531–

32 (N.J. 1982)).

[¶22.] Finally, the circuit court’s statement in its ruling that the alimony

“award is also based upon and takes into consideration the property division and

the award is part of the [c]ourt’s overall property division scheme” does not support

Jennifer’s claim that the alimony payments were a hybrid of both alimony and

property division. Rather, the financial condition of each party after the division of

property was a factor that the court must consider in awarding alimony. See Straub

v. Straub, 381 N.W.2d 260, 261 (S.D. 1986) (stating that in awarding alimony, there

are several factors that the circuit court “must rest its decision upon[,]” one of which

includes the parties’ “financial condition after the property division[.]”).

[¶23.] In summary, the monthly payments Steven is obligated to pay Jennifer

were consistently referred to throughout the divorce proceedings and the divorce

decree as “alimony.” The payments possess a hallmark feature of alimony because

they are modifiable and terminable upon the death of either party or Jennifer’s

remarriage. Additionally, the court’s oral findings of fact show that the monthly

payments were primarily based on Steven’s future earning capacity, a consideration

unique to alimony determinations and one that is unable to be considered when

dividing property. Given these considerations, the $15,000 monthly payments,

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which have since been reduced to $11,000 per month, are alimony payments rather

than a component of property division.

[¶24.] Finally, Jennifer has filed an application for attorney fees on appeal

pursuant to SDCL 15-26A-87.3 and requests a total of $6,087.56. She also filed a

motion for the costs associated with this appeal for $106.11, pursuant to SDCL 15-

30-6. We have not received similar motions from Steven. Based on our resolution of

the case, we deny Jennifer’s motion for appellate attorney fees and costs.

Conclusion

[¶25.] The circuit court’s determination that the payments were a form of

property division instead of alimony and its failure to deduct these payments from

Steven’s income and include them in Jennifer’s income when calculating child

support was a legal error. We reverse and remand for the circuit court to

recalculate child support consistent with this opinion.

[¶26.] KERN, SALTER, DEVANEY, and MYREN, Justices, concur.

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