PATRICK J. HOEGEN vs. CHRISTINE M. HOEGEN.
No. 14-P-1491.
Appellate Court of Massachusetts
January 22, 2016
Worcester. October 21, 2015. - January 22, 2016.
89 Mass. App. Ct. 6 (2016)
Present: GREEN, HANLON, & MASSING, JJ.
Divorce and Separation, Child support, Modification of judgment, Separation agreement, Findings, Attorney‘s fees. Parent and Child, Child support. Waiver.
A Probate and Family Court judge abused his discretion in entering a modification judgment that did not obligate the father to include income realized from vested restricted stock units (stock income) in the calculation of child support for the parties’ minor children, in that, given the consideration under the Child Support Guidelines (guidelines) of income derived from stock options as gross annual employment income in the calculation of child support, the judge erred in finding that the mother failed to prove that income from the stock should be included (an error compounded by the judge‘s failure to make written findings concerning his exclusion of the stock income) [8-10]; in that the judge‘s failure to consider the disparity in the standards of living between the parties’ households was inconsistent with the guidelines and would result in inequity [10]; and in that the waiver by the mother of her interest in the father‘s stock income at the time of the parties’ separation agreement, even if valid as to her own right to alimony or property division, could not operate to waive her children‘s right to appropriate child support pursuant to the guidelines [10-11]; moreover, the judge abused his discretion by not ordering the modification to be retroactive [11-12] and by denying without explanation the mother‘s request for attorney‘s fees [12].
COMPLAINT for divorce filed in the Worcester Division of the Probate and Family Court Department on March 17, 2010.
An amended complaint for modification, filed on May 23, 2013, was heard by Joseph Lian, Jr., J.
Warren M. Yanoff for Christine M. Hoegen.
Penelope A. Kathiwala (Barbara A. Cunningham also present) for Patrick J. Hoegen.
HANLON, J. The former wife, Christine M. Hoegen (mother), appeals from a modification judgment of the Probate and Family Court which held that her former husband, Patrick J. Hoegen (father), was not obligated to include income realized from vested restricted stock units (RSU) in the calculation of child support for
Background. The parties were divorced by a judgment of divorce nisi, incorporating by reference a separation agreement, which survived as an independent contract, except as to matters relating to the children.2 Under the agreement, the father‘s child support obligation was $1,020 biweekly,3 which the parties agreed was higher than the presumptive amount of support under the Massachusetts Child Support Guidelines (guidelines) at that time. The agreement also required that the parties “confer on April 1st of each year to evaluate whether the child support should be adjusted.”4 Exhibit D to the agreement (captioned “Pension/Retirement Funds, Etc.“) explicitly stated that the mother “acknowledges that she is aware that the [father] does participate in a stock plan through his employment; the [mother] waives all rights, title and interests in these accounts.”
On February 5, 2013, the father filed a complaint for modification, seeking to define more fully the shared parenting schedule, that is, to provide more specificity about weekday, holiday, and vacation schedules along with related transportation, and also to incorporate language regarding relocation of the children outside Massachusetts; he also sought to extend the review of his child support obligation from every year to every three years. The father amended his complaint on May 23, 2013, requesting not only the original relief, but also that he be granted the tax exemption for both children.
On June 27, 2013, the mother filed an answer to the amended complaint and a counterclaim, seeking, in addition to adjustments to the parenting schedule and responsibilities, to recalculate child support to include “all” of the father‘s income. On January 13, 2014, the parties resolved by stipulation the issues relating to the parenting schedule, and proceeded to trial only on the issues of child support and the tax exemptions.
On March 25, 2014, the judge ordered the entry of judgment on the father‘s modification complaint, incorporating the parties’ stipulation, and increasing the father‘s child support obligation to
Discussion. 1. RSU income. First, the mother challenges the judge‘s order that the RSU income should not be included in calculating the father‘s child support obligation, arguing that income for child support purposes, as defined in the guidelines, is “expansive and effectively constitutes income from any and all sources.” The father counters that, as part of the marital asset division at the time of divorce, he retained sole ownership of his “stock plan” and, under the provisions of that agreement, which independently survived the divorce judgment, the mother waived “all rights, title and interests” in it. He claims that, because the mother waived her right to this asset, using the RSU income derived from it for the purpose of calculating child support essentially would be “double dipping.”
“‘[C]hild support is controlled by
Section I-A of the guidelines explicitly instructs on the definition of “income,” and how that income should be calculated when determining a child support order. “[I]ncome is defined as gross income from whatever source regardless of whether that income is recognized by the Internal Revenue Code or reported to the Internal Revenue Service or state Department of Revenue or other taxing authority“; some twenty-seven sources of income are then listed. While income derived from stock or RSUs is not specifically included, the last item on the sample list is a catch-all phrase stating that “any other form of income or compensation not specifically itemized” may be included. Massachusetts Child Support Guidelines I-A(28).
“[A] judge‘s discretionary decision constitutes an abuse of discretion where we conclude the judge made ‘a clear error of judgment in weighing’ the factors relevant to the decision, such that the decision falls outside the range of reasonable alternatives.” L.L. v. Commonwealth, 470 Mass. 169, 185 n.27 (2014), quoting from Picciotto v. Continental Cas. Co., 512 F.3d 9, 15 (1st Cir. 2008). We acknowledge that the judge has a measure of discretion in how to value and how to characterize stock, bonuses, and contingencies because “a ‘one size fits all’ rule is both impractical and potentially unfair.” Brower v. Brower, 61 Mass. App. Ct. 216, 221 (2004). However, as this court has held, income derived from stock options is considered “gross annual employment income” for the purpose of calculating child support orders. Wooters v. Wooters, 74 Mass. App. Ct. 839, 843 (2009). “[C]ommon sense dictates that the income realized from the exercise of stock options should be treated as gross employment income: It is commonly defined as part of one‘s compensation package, and it
In this case, the father received as part of the compensation package in his offer of employment a certain number of RSUs. In addition, as indicated by the father‘s employee pay stubs, he regularly earned income from his employer-issued RSUs. As a result, contrary to the father‘s argument, these monies should have been included as gross income, along with his base salary and bonus compensation, in calculating his child support obligation. See ibid. In light of this, the judge‘s finding that the mother failed to “prove that the father‘s income from [RSUs] should be included in calculating child support” was error. The error was compounded by the fact that the judge failed to make written findings as to why he excluded the RSU income from the child support calculation, apart from noting that any claim to that income was waived. See Wasson, 81 Mass. App. Ct. at 579 (judge abused discretion in failing to make specific written findings in excluding capital gains income).
In addition, it does not appear from the modification judgment that the judge considered the disparity in the standards of living between the parties’ households, which is inconsistent with the principles underlying the guidelines. See Katzman v. Healy, 77 Mass. App. Ct. 589, 599 (2010), quoting from Brooks v. Piela, 61 Mass. App. Ct. 731, 734 (2004) (“Implicit in the judge‘s consideration of this disparity [in income] is consideration of the children‘s needs, defined in the light of [the father‘s] higher standard of living“). We are satisfied that failure to consider the income derived from the RSUs in determining an appropriate child support order in this case would result in an inequity. See Croak, 67 Mass. App. Ct. at 759.
As noted, the father counters that the mother waived all interest in his RSU income at the time of the agreement. That waiver, in his view, forecloses any consideration of RSU income in determining child support. The mother responds that the waiver was invalid because the father failed to disclose to her the nature of
We need not reach the issue whether the mother‘s waiver was valid as to her own right to alimony or the division of property because it is clear that her waiver cannot operate to waive her children‘s right to appropriate child support pursuant to the guidelines. “[I]t is axiomatic under Massachusetts law that ‘[p]arents may not bargain away the rights of their children to support from either one of them.‘” Okoli v. Okoli (No. 1), 81 Mass. App. Ct. 371, 377 n.10 (2012), quoting from Knox v. Remick, 371 Mass. 433, 437 (1976). See White v. Laingor, 434 Mass. 64, 66-67 (2001). See also Quinn v. Quinn, 49 Mass. App. Ct. 144, 146 n.4 (2000) (“General Laws c. 208, § 28, was amended to provide that after a complaint for divorce ‘[a] modification of child support may enter notwithstanding an agreement of the parents that has independent legal significance’ and to require that support obligations for minor children be consistent with the child support guidelines promulgated by the Chief Justice for Administration and Management. St. 1993, c. 460, § 61“).
As a result, even if the mother did waive her right to any interest in the income at issue, that waiver could not operate to waive her children‘s right to child support from that income. For all of these reasons, the judge abused his discretion, and the modification judgment cannot stand.
2. Retroactive award. The mother also argues that the judge abused his discretion in failing to modify retroactively the increased child support order, and in failing to make written findings explaining his rationale for not doing so. It has been established that, during a period in which a complaint for modification is pending, a party is entitled to retroactive modification of a child support order “where a judge finds that the parties’ circumstances have materially changed and that such modification is in the best interests of the children.” Whelan v. Whelan, 74 Mass. App. Ct. 616, 627 (2009). See
Although the father contends that a retroactive order is not warranted because he has been paying more than the guidelines amount, he fails to account for the fact that the child support he has been paying has never included the substantial income realized from his RSUs. It appears from this record that, when the father‘s RSU income is included in his gross weekly income (along with his base salary and bonus amount), it is not unlikely that the father has been underpaying significantly. “If the father has been paying less than would otherwise have been required under the Guidelines, this ‘necessarily implies that the child has been receiving insufficient support during the pendency of the complaint.‘” Whelan, supra, quoting from Boulter-Hedley, supra.
3. Attorney‘s fees. Finally, the mother asserts that she is entitled to an award of her attorney‘s fees, and the judge abused his discretion in denying her request without explanation. We recognize that a judge has discretion in awarding attorney‘s fees in appropriate circumstances. In addition, a “judge has discretion to award fees even in the absence of bad faith or frivolous claims or defenses.” Wasson, 81 Mass. App. Ct. at 582. See
Conclusion. The modification judgment of March 25, 2014, is vacated and the matter is remanded to the Probate and Family Court for the recalculation of an appropriate child support order based on the father‘s gross weekly income including his base salary, bonus income, and RSU income. The new modification judgment shall be retroactive to February 5, 2013. On remand, the judge shall determine, based on affidavits or hearing, whether to award attorney‘s fees to the mother and, if so, the appropriate amount of attorney‘s fees to be awarded. Until a new modification judgment enters, the modification judgment of March 25, 2014, shall remain in full force and effect.
So ordered.