Penick v. Penick

780 S.W.2d 407, 1989 Tex. App. LEXIS 2274, 1989 WL 100531

• Court: Court of Appeals of Texas
• Decided: August 29, 1989
• Docket: 9686
• Status: Published

Opinions

CORNELIUS, Chief Justice.

Maria Penick appeals from a district court order which reduced the child support payments required of her former husband, Robert Penick, from $750.00 monthly to $350.00 monthly. Ms. Penick contends that the order was improper because there was insufficient evidence to show the necessary material change in the parties’ financial circumstances since the date of their divorce decree, and that the trial court erred in excluding from evidence a stipulation showing the value of Mr. Penick’s real estate holdings at the time of the divorce. We agree and will remand the cause for a new trial.

Tex.Fam.Code Ann. § 14.08(c)(2) (Vernon Supp.1989) provides that a support order may be modified if the circumstances “of the child or a person affected by the order ... have materially and substantially changed” since the order’s entry. To determine if the required change has occurred, the court must compare the financial circumstances of the children and the affected parties at the time the order was entered with their circumstances at the time the modification is sought. Baker v. Baker, 719 S.W.2d 672 (Tex.App.—Fort Worth 1986, no writ).

In support of his motion to modify, Robert Penick testified that (1) since the divorce he had remarried; (2) his new wife has a thyroid condition resulting in quite a few doctor bills; (3) his ndw wife has an eight-year-old daughter from a prior marriage who lives partly with them and partly with her grandmother in Guadalajara, Mexico; (4) his new wife receives no child support for her daughter; (5) he contributes to the daughter’s support and pays for his new wife’s air fare to Mexico to visit her daughter when she is with her grandmother; (6) his new wife is not gainfully employed; (7) his income for 1986 was $14,-921.00; (8) in 1987, his income decreased to $13,685.23; (9) vacancies have increased in his rental property; (10) a water leak in one apartment resulted in an $800.00 water bill; (11) maintenance costs for the properties have increased and several rental houses need new roofs; (12) his property depreciation deduction has decreased; (13) he is anticipating a ten percent increase in city taxes; (14) due to the real estate market, the total value of his property has decreased by one third between the date of his divorce and the date of his motion to modify child support; (15) he has no offers from prospective buyers for any of his real estate holdings.

The trial court filed the following findings in support of its reduction of the child support payments: (1) the amount of net resources available to Mr. Penick per month is $1,140.00; (2) the amount of net resources available to Mrs. Penick is $1,718.60, plus $300.00, plus $140.00, for a total of $2,158.60; (3) the percentage applied under Tex.Fam.Code Ann. § 14.05, Child Support Guidelines, Rule 5 (Vernon Supp.1989), is 24%-28% of obligor’s net resources; (4) the amount of support per month computed by applying Rule 5 of these guidelines is $268.60 — $319.29; (5) the reasons that the amount of support per month ordered by the court varies from the amount computed by applying the percentage guidelines pursuant to Rule 5 are the income of the parties and the needs of the children.

A careful review of the record reveals that the court’s findings are not supported by the evidence. There is no evidence whatsoever of the circumstances of the Penick children, either at the time of the original order or now, and there is insufficient evidence that there has been a material and substantial change in either Mr. or Mrs. Penick’s financial circumstances.

Mr. Penick made only conclusory and self-serving statements that his income had decreased and that his expenses had increased since the time of the divorce. See Cornell v. Cornell, 570 S.W.2d 22 (Tex.Civ.App.-San Antonio 1978, no writ). The specific evidence shows otherwise, however. For example, contrary to Mr. Penick’s testimony, his admitted income at the time of the modification hearing, as shown by his financial statement and income tax return, was $16,077.04, an increase of some $1,156.00 over his stated income at the time of the initial support order.¹ Additionally, the undisputed evidence shows that Mr. Penick owns fifty-two separate parcels of rental real estate in Houston. Only three of those units were vacant at the time of the modification hearing and the properties produce approximately $8,000.00 per month in rental income when they are fully occupied. Mr. Penick lives in one unit rent free. The aggregate value of his real estate, even if it has reduced one third in value as he estimated, is $506,785.63, which does not include his personal property. Moreover, since the divorce Mr. Penick has acquired one new piece of real estate, costing $23,000.00 and for which he now pays $150.00 per month.

Mr. Penick testified that he had substantial expenses in connection with his real estate holdings, but he refused to produce any documentation of those expenses, although he admitted that he did possess records on most of them.

There is clearly no evidence that the children’s circumstances have changed. There is insufficient evidence to justify a conclusion that Mr. Penick’s circumstances have changed at all, much less materially and substantially. The trial court found that Mrs. Penick’s circumstances have changed, but the record does not support a conclusion that they have changed substantially. At the time of the divorce, she was earning approximately $1,300.00 per month as a legal secretary. She received a $200.00 per month raise since the divorce. She also receives $140.00 per month from her mother-in-law² to pay school tuition for the children, and she receives $300.00 per month as her part of the divorce property settlement.³ According to her financial statement and her testimony, her expenses equal or exceed her income.

As noted earlier, Mr. Penick testified that his expenses had increased since the divorce because he had remarried, his wife had medical problems, and she has an eight-year-old daughter by a previous marriage whom he helps support. He also testified that he pays his wife’s expenses to travel to and from Mexico to visit her daughter when she stays in Mexico with her grandmother. Economic hardship resulting from a remarriage may not be allowed to militate against the support provided for the children of the earlier marriage. Gully v. Gully, 111 Tex. 233, 231 S.W. 97 (1921); Baker v. Baker, supra.

There is insufficient evidence to show a material and substantial change in the circumstances of the children or the parents sufficient to justify a modification of the support order.

Mrs. Penick offered in evidence a stipulation used in the divorce action showing the real estate owned by Mr. Penick, its values and the expenses of maintaining it. The court did not take judicial notice of the prior evidence, and did not allow it in evidence, ruling that it was not admissible. In this ruling the court erred.

Mr. Peniek relied heavily on his assertions that his property had decreased in value since the divorce. In order to determine if and to what extent there was such a reduction, as well as its effect on the parties’ circumstances, it is necessary that the values at the time of the divorce be shown. It is proper to take into consideration the value of a party’s property, even though it is not producing income, because the party may be required to dispose of assets in order to meet his support obligations. Labowitz v. Labowitz, 542 S.W.2d 922 (Tex.Civ.App.-Dallas 1976, no writ).

For the reasons stated, the judgment is reversed and the cause is remanded for a new trial.

1 . This is excluding depreciation on his real estate, which is a "paper loss.” Depreciation may not be considered in determining net income for purposes of child support. Tex.Fam.Code Ann. § 14.05, Child Support Guidelines, Rule 3(b) (Vernon Supp.1989). The trial court here did consider it, however. There is no indication in the record whether depreciation was considered in determining Mr. Penick’s income at the time of the divorce.

2 . Child support received by a party, from any source, cannot be considered in determining that party’s net resources. The trial court here did consider this amount as income to Mrs. Penick. If it is child support, it was error to consider it. Texas Child Support Guidelines, Rule 3(b). If it is not child support, it still should not be considered in calculating Mrs. Penick’s net resources because her mother-in-law has no obligation to make such a gift and there is no assurance that she will continue to do so.

3 .This $300.00 per month which Mrs. Penick receives as part of the divorce property settlement was known to the judge at the time he entered the initial child support order. Therefore, it cannot represent a change in conditions from the last judgment. It amounts to no more than payment for her ownership of property that she owned at the time of the divorce.