RENDERED: MAY 5, 2016 TO BE PUBLISHED
,Suprrtur Gurf of Murky 2015-SC-000271-DGE
REBEKAH MCCARTY APPELLANT
ON REVIEW FROM COURT OF APPEALS V. CASE NO. 2014-CA-000113-ME BATH CIRCUIT COURT NO. 12-CI-00123
KENNETH FARIED APPELLEE
OPINION OF THE COURT BY JUSTICE KELLER
REVERSING
Following an evidentiary hearing, the trial court found that the parents'
combined monthly adjusted gross income exceeded the statutory guidelines
and ordered the noncustodial parent to pay $4,250 a month in child support.
The Court of Appeals, considering the issue a matter of first impression,
vacated the child support order, holding that the amount was arbitrary. We
reverse the Court of Appeals and reinstate the trial court's order establishing
child support.
I. BACKGROUND.
Rebekah McCarty and Kenneth Faried were friends while they were
students at Morehead State University. On March 12, 2010, McCarty gave
birth to their daughter, Kyra. Following the birth, McCarty dropped out of
college to care for. Kyra and returned to live with her parents in Bath County.
Faried graduated and was drafted by the National Basketball Association (NBA)'s Denver Nuggets in June 2011. The parties never married and never
cohabitated.
Because Faried was drafted during a lockout, he did not begin drawing
his NBA salary until December 2011. In the interim, he took out a loan of
between $100,000 and $300,000 for living expenses and began voluntarily
paying $500 a month to support Kyra. Sometime later, McCarty asked for an
increase, and Faried began paying $1,000 a month.
On September 27, 2012, McCarty filed a motion for child support in Bath
Circuit Court and requested $7,500 a month from Faried. In a subsequent
temporary order, the trial court ordered Faried to pay $2,000 a month in child
support and to provide for Kyra's health insurance and daycare costs. The
court also stated in the order that if it ultimately awarded a different amount of
child support, that award would be retroactive to the date of McCarty's motion
for child support.
On June 27, 2013, the trial court held an evidentiary hearing to
determine child support. McCarty testified that she continues to live in her
parents' four-bedroom house, where she shares a bedroom with Kyra; her
later-born son, Malachi; and occasionally Malachi's father, with whom she is in
a committed relationship. McCarty's father, mother, brother, sister, and niece
occupy the other bedrooms. McCarty also testified that she works 30 to 35
hours a week at a gas station and earns about $1,050 a month. Her only other
sources of "income" are groceries bought by her parents and voluntary,
inconsistent child support payments from Malachi's father. At the time of the
2 hearing, McCarty estimated that she had received approximately $300 in child
support from Malachi's father.'
As for her monthly expenses, McCarty testified that she pays $239 to her
grandmother for the use of a 2007 Chevy Equinox, $400 to $500 to fill the car
with gas, $58 for car insurance, $200 to $300 for food, $150 for cell phone
service, and $200 for personal expenses. She also stated that she is covered
under her parents' health insurance policy and that Kyra's health insurance
and out-of-pocket medical expenses are covered by Faried. Faried also pays
$75 a week directly to Kyra's daycare facility.
McCarty requested court-ordered child support because her minimal
income could not support Kyra's needs and because she hoped to better Kyra's
quality of life. Specifically, McCarty wanted to move out of her parents' house,
but she could not afford to do so with her current amount of income.
McCarty's interest in moving was driven by wanting Kyra to have her own
bedroom, a backyard, and internet access—in part so that Kyra could video-
conference with Faried in Denver. She testified that she had spoken to a
carpenter who was building a house in neighboring Rowan County that would
rent for about $900 a month (excluding utility costs) and that he agreed to hold
the house for her. Furthermore, McCarty introduced a summary and
supporting documents detailing five other houses for sale in the Morehead
area.
1 Malachi's father also played basketball at Morehead and hopes to play professional basketball in Europe.
3 McCarty estimated that, without the support of her parents, her monthly
food costs would be $300 to $500. McCarty testified that if she had more
money she would like to spend approximately $100 a month on clothes for
Kyra. However, she also stated that Faried had twice sent Kyra two boxes of
clothing that he had received because of his endorsement contract and that
she had no more room in her parents' house for clothes for Kyra. Finally,
McCarty also requested child support because she wanted Kyra to be able to
enjoy cultural activities—such as going to the zoo, museums and on
vacations 2—and perhaps enroll in gymnastics classes or other extracurricular
activities.
In further support of what she believed Kyra's monthly needs to be,
McCarty submitted the following list:
A comfortable and stable home, in a safe neighborhood, $2,000 with her own bedroom and places to play:
Standard utilities, access to reliable phone, internet $350 connection:
Safe and reliable transportation: $800
Healthful, varied and nutritious meals: $600
Routine medical, dental, and vision care: $50
Clothes that fit and she looks and feels good in: $200
Cultural, educational, and extracurricular opportunities: $250
Entertainment, gifts, simple luxuries: $250
McCarty testified that she was able to take Kyra to Florida once, but only 2 because she was able to stay with Malachi's father's family for free.
4 Education Planning and Savings: $500
Total: $5,000
Faried testified and submitted exhibits detailing his income and
expenses. As a professional basketball player, Faried's NBA salary is
$1,434,665; 3 plus he also earns $197,240 from an endorsement contract.
However, Faried also testified that his net earnings in 2012 were substantially
reduced by several "business expenses," including: NBA Escrow contributions
of $132,000, agent fees of $43,000, financial management fees of $25,000,
assistant's salary of $24,000, NBA Player Association fees of $10,000, NBA
fines of $12,000, 4 cell phone service of $4,440, and personal trainer costs of
$2,784. Faried's net income is further reduced by substantial income taxes,
retirement contributions, and insurance payments.
As for personal expenses, Faried rents a three-bedroom apartment in
Denver for $4,100 for himself and his brother and pays $4,517 per semester for
his brother to attend college. He also financially supports his separated
parents, paying: $2,300 per month for his mother to rent a four-bedroom
house in New Jersey; $1,300 per month for his father to rent a studio
apartment in Denver; utility costs for both households; and $1,000 monthly
allowance and cell phone service for each.
3 Faried signed a four-year contract in 2011, and he testified that he does not expect his NBA salary to substantially change over the next four years. 4 Faried testified that the NBA levied fines against him for committing technical fouls in games throughout the season.
5 Faried also testified that Kyra primarily lives with McCarty in Kentucky
but that Kyra lives with him in Denver for several months a year. When she
stays with him, he pays for her transportation and together they have gone
bowling and to the movies. Kyra also enjoys the use of an iPad in Denver, and
Faried took her to Disney World. Faried stated that he had no objection to
paying for Kyra's medical expenses and daycare and that he would pay for
preschool and gymnastics classes when Kyra is of age. Faried testified that he
believes $2,000 a month in child support plus $500 a month for an education
fund for Kyra is appropriate.
Finally, Melissa DeArk, a Certified Public Accountant, testified as an
expert witness for Faried. Ms. DeArk reviewed Faried's financial statements
and tax returns and calculated his net income, i.e. the money available for
discretionary spending, to be $638,183 per year or $53,182 per month. 5 Ms.
DeArk arrived at this figure by subtracting Faried's "business expenses"
totaling $253,224, his retirement contributions of $38,879, and his tax liability
of $701,919 from his total income of $1,632,205. Ms. DeArk also researched
census data and testified that the average Bath County resident pays $842 for .
a home mortgage, utility costs, and property taxes while the average Rowan
County resident pays $946.
Following the hearing, the trial court entered an order on October 31,
2013, establishing joint custody and directing Faried to pay $4,250 a month in
5 We note that net income is not the same as "gross income" as defined under Kentucky Revised Statute (KRS) 403.212(2)(6). Nevertheless, determining Faried's exact gross income is not necessary for the purposes of this appeal.
6 child support and to set up an "educational fund" for Kyra, in which he will
deposit $500 a month "to be used for summer camps and future educational
opportunities." In doing so, the court found that deviation from the statutory
child support guidelines was appropriate because of the substantial combined
income of the parties and relied on the child's reasonable needs. To that end,
the trial court found Kyra's reasonable needs were as follows:
a. Housing-$1200.00 per month b. Day care-$500.00 per month c. Dependable vehicle-$500.00 per month d. Vehicle maintenance-$150.00 per month e. Gas for car-$350.00 per month f. Proper insurance for car-$200.00 per month g. Nutritious food-$400.00 per month h. Utilities including internet-$350.00 per month i. Gifts (birthday parties/outings for/with other children)-$50.00 per month j. Activities-gymnastics and educational-$400.00 per month k. Clothing-$100.00 per month 1. Over the counter medical expenses-$50.00 Total: 4,250.00
The trial court further ordered Faried to maintain Kyra under his health
insurance coverage and to "arrange" for McCarty to be counseled in age
appropriate nutritional and exercise options for Kyra as well as financial
counseling. The order also made the monthly amount of $4,250 retroactive to
October 1, 2012 and calculated back child support to be $24,100.
Faried moved to alter, amend, or vacate the order, and the trial court
entered an amended order on January 10, 2014. The court ordered the same
amount in child support—$4,250—and maintained that Kyra's reasonable
7 needs were nearly identical to its original order. 6 However, the court vacated
the requirement for Faried to set aside $500 per month for future educational
needs and alternatively ordered the parties to divide all educational expenses in
accordance with their percentage of income: 1% to McCarty and 99% to Faried.
Furthermore, the court vacated Faried's duty to provide nutritional, exercise,
and financial counseling for McCarty but ordered McCarty to attend such
counseling on her own. Finally, in response to Faried's argument that a
portion of child support will be used to support McCarty herself, Malachi, and
Malachi's father, the court reasoned that Kyra's needs "are what they are,
regardless of the number of individuals in the household" or who else might
receive a benefit.
The Court of Appeals vacated and remanded the trial court's award of
child support. In doing so, the Court held that the trial court should not have
relied on McCarty's "speculative" testimony regarding housing, educational,
and extra-curricular costs. Furthermore, the Court noted that even if the trial
court could rely on that testimony, McCarty's expenses would fall well short of
$4,250 a month. The Court also raised issue with the retroactivity of the order,
finding it would create "an untenable result of reimbursing McCarty for
expenses she has never incurred." Thus, the Court held that the trial court
had abused its discretion because it had not based its award on Kyra's
reasonable needs as set out in the court's "specific supporting findings."
6 The court amended the "Activities" need in subsection (j) to read: "Activities- gymnastics, sports or other extra-curricular activities-$400.00 per month."
8 II. STANDARD OF REVIEW.
We review the establishment, modification, and enforcement of child
support obligations for abuse of discretion. Plattner v. Plattner, 228 S.W.3d
577; 579 (Ky. App. 2007). The test for abuse of discretion is whether the trial
court's decision was "arbitrary, unreasonable, unfair, or unsupported by sound
legal principles." Downing v. Downing, 45 S.W.3d 449, 454 (Ky. App. 2001)
(citing Goodyear Tire and Rubber Co. v. Thompson, 11 S.W.3d 575, 581 (Ky.
2000)). "[And] generally, as long as the trial court gives due consideration to
the parties' financial circumstances and the child's needs, and either conforms
to the statutory prescriptions or adequately justifies deviating therefrom, this
Court will not disturb its rulings." Van Meter v. Smith, 14 S.W.3d 569, 572 (Ky.
App. 2000) (citing Bradley v. Bradley, 473 S.W.2d 117 (Ky. 1971)).
III. ANALYSIS.
A trial court's first step when establishing child support is to attempt to
comply with Kentucky's statutory guidelines as codified in Kentucky Revised
Statute (KRS) 403.212. In a typical case, a court will calculate the parents'
combined monthly adjusted gross income and then determine the appropriate
child support obligation amount from the guidelines table. KRS 403.212(2)-(7).
However, because the table ends at $15,000 in combined monthly income, KRS
403.212(5) provides: "The court may use its judicial discretion in determining
child support in circumstances where combined adjusted parental gross
income exceeds the uppermost levels of the guideline table." Because we have
not had occasion to interpret the setting of child support above the guidelines, we turn to representative cases from the Court of Appeals: Downing v.
Downing, 45 S.W.3d 449 (Ky. App. 2001) and Bell v. Cartwright, 277 S.W.3d
631 (Ky. App. 2009). While we are not bound by their holdings, they are a
helpful staring point.
In Downing v. Downing, the Court of Appeals addressed how a trial court
should reasonably adjust child support when parental income exceeded the
guidelines. 45 S.W.3d at 454. The Court rejected the "share the wealth" model
where child support is determined by mathematically extrapolating over and
above the maximum guidelines without entering specific findings as to the
needs of the children. Id. at 455 (citations omitted). The Court reasoned that a
strict reliance on a mathematical extrapolation from the guidelines could result
in unreasonable increases in child support, which would only serve to provide
extravagance and not reflect the child's actual needs. Id. at 456.
Instead, the Court found that, "while to some degree children have a
right to share in each parent's standard of living, child support must be set in
an amount which is reasonably and rationally related to the realistic needs of
the children." Id. The Court referred to this analysis as the "Three Pony Rule,"
i.e. no child, no matter how wealthy his or her parents, needs more than three
ponies. Id. (citing Matter of Marriage of Patterson, 22 Kan.App.2d 522, 920
P.2d 450, 455 (1996)). Therefore, the Court concluded that "any decision to set
child support above the guidelines must be based primarily on the child's
needs, as set out in specific supporting findings." Id. To further aid courts in
determining the child's needs, the Court set forth non-exhaustive factors to be
10 considered, including: the standard of living which the children enjoyed during
and after the marriage; the parents' financial ability to meet that lifestyle; the
parents' financial circumstances, station in life, age, and physical condition.
Id. at 456-57. Applying that standard, the Downing Court concluded that the
trial court's increase of child support was arbitrary because the award was
based "almost entirely" on mathematical extrapolations from the guidelines
without any other supporting findings or evidence in the record. Id. at 456.
In Bell v. Cartwright, the Court of Appeals reviewed another case in
which a trial court failed to support its award of increased child support. 277
S.W.3d at 631-32. There, the Court vacated the order increasing support
because it did not contain specific supporting findings regarding the child's
reasonable needs. Id. at 633. In fact, the Court noted that the order "explicitly
acknowledged that there was no evidence offered regarding the cost of private
school, sports camps, or private daycare," and the Court found that the
mother's request for money to purchase a new home was "speculative." Id.
Here, the Court of Appeals concluded that the trial court's order of child
support suffered from the same defects as Downing and Bell. Although the
Court agreed with the trial court that deviation from the guidelines was
appropriate, the Court held that the order did not set out specific supportive
findings as to Kyra's needs. Additionally, the Court characterized some of
McCarty's requests for support as speculative, saying "if and when McCarty
rents or purchases a home [or enrolls Kyra in gymnastics], she may request a
modification of the child support award."
11 Because the Court of Appeals imposed an overly burdensome standard,
we reverse and reinstate the trial court's order.
In regard to the child support award as a whole, the trial court did not
abuse its discretion because it set out specific supportive findings and the
award was reasonable in light of those findings and the record. We hold that a
trial court's decision, when setting child support over and above the guidelines,
must be based on the best interest of the child. When making that
determination, a trial court may use its judicial discretion with regard to
weighing factors such as: the needs of the child, the financial circumstances of
the parents, and the reasonable lifestyle the child may have been accustomed
to before or after the parents separated.? On review, an order setting child
support above the guidelines will be affirmed so long as the trial court sets out
specific supportive findings and the award, as a whole, is reasonable in light of
those findings and the record.
With the preceding in mind, we hold that the trial court herein did not
abuse its discretion when setting child support for Kyra. Her parents'
combined monthly income far exceeds the guidelines; therefore, it is within the
trial court's discretion to set support. The trial court held a half-day
evidentiary hearing, at which both parents testified extensively about Kyra's
current and projected needs and lifestyle as well their own financial
circumstances and lifestyle expectations. That testimony included what
McCarty and Faried both believed were Kyra's reasonable needs, concluding
7 This is not an exclusive list.
12 between $2;575 and $5,000 was appropriate. Furthermore, McCarty testified
that she shares a bedroom with Kyra in her parents' house because she cannot
afford to move and that her monthly income of $1,050 is riot sufficient to cover
her necessary expenses, much less allow for discretionary spending on Kyra.
Faried testified that he could afford to fly Kyra to his three-bedroom apartment
in Denver, provide her with an iPad, and take her to Disney World.
The trial court heard this testimony and much more and ordered Faried,
as the non-custodial parent to pay $4,250 a month in child support. In its
original order, the trial court set forth specific supportive findings for the
award, including a categorical list of Kyra's needs, a detailed contrast of Kyra's
lifestyles with each parent, and an exhaustive compilation of each parent's
income and expenses. Furthermore, the court ordered amount was within the
range set forth by the parties—between $2,575 and $5,000. The court was
entitled in its discretion to find McCarty's opinion of Kyra's needs to be more
credible than Faried's opinion, or, as was more likely the case, the court found
a combination of the two was appropriate. Moreover, in its amended order, the
court considered each of Faried's objections and vacated several portions of its
original order where it was persuaded by Faried's positions.
The Court of Appeals undertook a detailed analysis of the testimony
offered at the hearing and rejected the trial court's determination of Kyra's
reasonable needs. While the Court merely remanded the child support order,
the Court improperly substituted its understanding of Kyra's needs for the trial
court's supported finding. Instead, the proper role of a reviewing court is to
13 judge whether the trial court abused its discretion by ordering a clearly
unreasonable amount of child support or failing to support its award with
specific findings. We detect no such error herein. As stated above, the trial
court set out specific and detailed findings in support of its award of $4,250.
As such, we have no trouble concluding that child support in the amount of
$4,250 is reasonable and in Kyra's best interest, taking into account her needs,
her parents' substantial combined income, and the disparate lifestyle between
the two households.
Additionally, we hold that McCarty's requests for child support for
housing and extracurricular activities were not speculative. First, the Court of
Appeals relied on Bell for its holding that McCarty had failed to support her
requests of housing and extracurricular activity support. Setting aside that
Bell is merely persuasive on this Court, the Court of Appeals's interpretation of
Bell was misplaced. The Bell Court deemed the petitioner's request for
increased child support to purchase a new home was speculative because "she
failed to inquire into the costs of homes" or supplement the record with
supporting documents. 277 S.W.3d at 633. Herein, McCarty testified that she
had personally inquired into renting a newly constructed house in Morehead
for $900 a month and that the homebuilder had assured her that he would
hold the house for her. Furthermore, McCarty introduced documentation
regarding five houses for sale in the area, which included the listed price and
monthly payment projections for each. We cannot say that this proof is
speculative or out of line with Bell's minimal requirements.
14 Second, while we agree Downing and Bell are helpful in some respects,
we are not bound by their holdings and find their reasoning is distinguishable.
Both cases concern modification of existing child support awards and thus
require "a showing of a material change in circumstances that is substantial
and continuing." KRS 403.213(1). An initial establishment of child support
requires no such showing. Therefore, McCarty was not required to show that
every dollar requested in child support was destined to cover a specific
expense. It is the petitioner's duty to make a request for child support that is
rationally related to the best interest of her child, and it is the trial court's
duty, in turn, to consider the request and any supporting proof at trial and to
award a reasonable amount of child support. McCarty requested child support
for both housing and extracurricular activities in her list of Kyra's needs; she
elaborated and specified those needs at trial; and the trial court, finding those
requests to be reasonable, allotted child support in an amount it found to be
sufficient.
Third, the Court of Appeals has cast petitioners similarly situated to
McCarty between a rock and a hard place. McCarty testified that her primary
desire was to move Kyra out of the bedroom they shared in her parents' house
but that she could not afford to do so with her current income. The Court of
Appeals concluded that, while moving was not unreasonable, McCarty had to
purchase or begin renting a new home before child support could be allocated
for that need. The flaw in this construction is obvious: without the means to
support the move, the move will not occur. In fact, without additional monthly
15 income McCarty would never qualify to purchase a home, and to expect her to
lease a home without the income to pay the rent would be foolhardy and
irresponsible. Similarly, without the funds to enroll Kyra in extracurricular
activities, those opportunities will not be practically available. It is for the trial
court to determine whether these requests are reasonably calculated to support
the child's needs, regardless of whether the petitioner provides an invoice for
the expense.
Finally, as to the retroactivity of the trial court's order, we find no error.
Faried argues that making the order retroactive was an abuse of discretion in
that McCarty had not incurred additional expenses for Kyra after the
temporary support order was set and therefore incurred no expenses for which
she should be reimbursed by an arrearage judgment. We find no merit to this
argument for two reasons. First, it is undisputed that the effective date of any
increase in child support is within the sound discretion of the trial court.
Giacalone v. Giacalone, 876 S.W.2d 616, 620 (Ky. App. 1994) (citing Ullman v.
Ullman, 302 S.W.2d 849, 851 (Ky. 1957)). Here, the court forewarned through
its temporary order that any increase in child support would be made
retroactive to the date of McCarty's motion for child support (a common
practice), and the court did just that in its final child support order.
Second, the order establishing child support was not meant to reimburse
specific expenses incurred after the trial court entered the temporary order.
Instead, the child support order represented McCarty's culmination of proof
and the trial court's judgment as to what amount is reasonable to support
16 Kyra. While that figure was determined months after McCarty's motion, the
trial court ordered that Kyra was entitled to that amount of support from
Faried during the interim and going forward. In other words, Kyra's reasonable
needs did not manifest the day the final child support order was entered; those
needs existed at least as of the date McCarty made a motion for support. Thus,
the trial court ordered that the child support award be applied retroactively to
the date of the motion. Absent a significant change in circumstances, that
order was not arbitrary, unreasonable, erroneous, or an abuse of discretion.
IV. CONCLUSION.
For the reasons stated above, we reverse the Court of Appeals and
reinstate the Bath Circuit Court's orders.
Minton, C.J., Hughes, Keller, Venters and Wright, JJ., concur. Noble, J.,
concurs in result only. Cunningham, J., not sitting.
COUNSEL FOR APPELLANT:
Eileen M. O'Brien Stoll Keenon Ogden, PLLC
COUNSEL FOR APPELLEE:
Mary Janice Lintner Lynch, Cox, Gilman 85 Goodman, PSC