FOR PUBLICATION
IN THE INTERMEDIATE COURT OF APPEALS
---o0o---
DAVID
MASATO YASUMURA, Appellant-Appellant, v.
CHILD SUPPORT ENFORCEMENT AGENCY, STATE OF HAWAI`I,
and LORI SHIZUKO YASUMURA, Appellees-Appellees
NO. 25395
APPEAL
FROM THE FAMILY COURT OF THE FIRST CIRCUIT
(FC-AP NO. 01-1-0015)
APRIL 20, 2005
BURNS, C.J., FOLEY AND FUJISE, JJ.
OPINION OF THE COURT BY BURNS, C.J.
Appellant David Masato Yasumura (Father) appeals from the family court's (1) September 18, 2002 Order Affirming in Part, Reversing in Part, and Remanding Administrative Findings and Order Filed on June 14, 2001. On June 14, 2001, the Office of Child Support Hearings (OCSH) issued its Administrative Findings and Order that decided Father's March 2, 2001 request for a decrease in his obligation to pay child support. We vacate in part, affirm in part, and remand for further proceedings consistent with this opinion.Father and Appellee Lori Shizuko Yasumura (Mother) are the parents of a male child (Son), born on August 19, 1978, and a female child (Daughter), born on March 8, 1982. The October 25, 1989 Divorce Decree awarded Father and Mother joint legal custody of Son and Daughter, awarded Father physical custody of Son, awarded Mother physical custody of Daughter, and ordered Father to pay Mother child support for Daughter in the amount of $320.00 per month, commencing November 1, 1989. If Daughter did not continue her education post-high school, Father's obligation would continue "until [Daughter] attains the age of 18 years or graduates from high school or discontinues high school, whichever occurs last." If Daughter continued her education post-high school, Father's obligation would continue "so long as [Daughter] continues her education post high school on a full-time basis at an accredited college or university, or in a vocational or trade school, or until [Daughter] attains the age of 23 years, whichever occurs first."
The Divorce Decree also stated, in relevant part, as follows:
As joint legal custodians, the parties shall confer on major decisions affecting the children, including, but not limited to, the children's elementary and secondary education, the children's higher education, major medical or dental care required by the children, the children's school and after school activities of note, military service requiring the consent of the parties, and marriage requiring the consent of the parties. Additionally, each party shall keep the other apprised of the children's general health, school progress (i.e.[,] report cards and the like), school activities, after school activities, and general whereabouts when the children are with him or her.
Father subsequently married Alice Yasumura (Alice). They have two sons. Father owns A C Systems, Inc., which is in the business of installing air conditioning systems.
On March 2, 2001, six days prior to Daughter's nineteenth birthday, Father asked the Child Support Enforcement Agency (CSEA) to reduce his monthly child support obligation. On April 24, 2001, the OCSH issued its Administrative Findings and Order that proposed a reduction of Father's child support obligation to $60.00 per month, commencing May 1, 2001. Mother objected to the proposed reduction and requested a hearing, alleging that "(1) [Father] is under-reporting [his] income; (2) [Father] should have income imputed; and/or (3) [Father's] property should be considered in determining support."
At the May 24, 2001 hearing, (2) CSEA stated, in relevant part, as follows:
[CSEA]: For the purposes of calculating child support using the Child Support Guidelines Work Sheet, [F]ather's income was determined based on 1999 Federal tax returns. And that's summarized in State's Exhibit C.
. . . .
Mother's income as reported by the Department of Labor averages out to two thousand three hundred and eighty-six dollars per month . . . .
In her capacity as Father's bookkeeper, Alice testified, in relevant part, as follows:
Q. . . . Can you explain this income from sales of S corporation, twenty thousand six seven four?
. . . .
Father and Alice testified, in relevant part, as follows:
[FATHER]: So, I am basically having a hard
time getting work and the work that I get I have a hard time turning a
profit.
. . . .
[FATHER]: Almost nothing. You know, basically almost nothing. I made only about fifteen hundred dollars this . . . year so far that . . . we could pay myself for, you know.
This year, 2001, we are trying to pay something just so that we can . . . pay the obligation to child support.
. . . .
. . . It's just a profit and loss statement, '97 to '99, S corp tax returns and our personal tax returns because the S corp flows into our personal so if there's a gain or a loss then we pick it up in our personal tax returns.
So, if a contract is not completed within the year then we have to back out that income and add it to the next year.
HEARINGS OFFICER: And so do you have any year 2000 tax returns?
. . . .
So, [Father], so I understand your position. According to all these documents what are you saying your current income is?
[FATHER]: I hope I can make twenty thousand dollars this year.
[BY CSEA]
[FATHER]: Contracts that I had going on and a job that I foresee in the future that I may acquire. It's depending on the general contractor.
HEARING[S] OFFICER: Okay.
And then on this Line 16A, fifty-one thousand five hundred seventeen dollars. What schedule or where does that number come from?
HEARING[S] OFFICER: The total pensions and annuity, Line 16A.
. . . .
[ALICE]: It was an annuity that was contributed to when we were at a different company. It was for retirement.
On June 14, 2001 the OCSH issued another Administrative Findings and Order which stated, in relevant part, as follows:ADDITIONAL FINDINGS OF FACT:
1. Father initiated the present administrative proceeding by requesting modification of child support.
2. The Divorce Decree between the parties ordered Father to pay child support in the amount of $320.00 per month commencing November 1, 1989. The child support order has not been amended.
3. Father wholly owns an S corporation, A C Systems, Inc. Father works full-time as the head of A C Systems, Inc. Father had a heart attack and triple bypass operation in 1997. Since then his current wife, Alice Yasumura, manages the financial aspects of A C Systems, Inc. Father is capable of earning $20,000.00 this year (based upon his testimony.) Father has $51,517.00 (and possibly more) in a retirement annuity account. Father's monthly income to be used on line 11(A) of the guidelines worksheet is $5,917.00.
Analysis: Father admitted having a current capacity to earn income of $20,000.00, so this amount may be included in the guidelines calculation. Father also has money available to pay child support in his retirement annuity, after payment of a ten per cent penalty ($51,517.00-$515.00=$51,002.00.) The fact that this annuity was "rolled over" in 1999 is of no consequence. This asset is available for child support after payment of the penalty whether or not a roll-over occurs. Father's current income capacity may thus be imputed at $51,002.00 plus $20,000.00 per year, or $5,917.00 per month.
ADDITIONAL CONCLUSIONS OF LAW:
1. Father, the party who requested modification, bears the burden of proving by a preponderance of the evidence that current child support should be lowered. Father failed to sustain his burden. Instead, the preponderance of the evidence and arguments adduced at the hearing support an increase in child support to $600.00 per month.
Analysis: Father's evidence in support of his position consisted primarily of his testimony, the testimony of Alice Yasumura, his pay record for 2001 and his personal and corporate financial statements and tax returns for 1997, 1998, and 1999. Father and Alice Yasumura testified that Father's current income is almost nothing. However, aside from the one pay statement dated April 2, 2001, no other records for the years 2000 and 2001 were produced. Year 2000 personal and corporate tax returns and financial statements were not submitted into evidence. Current financial statements for the year 2001 also were not submitted into evidence. Presumably, Father and Alice Yasumura have complete control over documentation showing, for example, gross income of A C Systems, Inc. Yet, no current records were produced. Alice Yasumura also testified that the documentation submitted by Father is incorrect in key aspects. Stated differently, the documentation produced for past years is suspect and important current documentation is lacking. The evidence produced by Father is insufficient to warrant a reduction in child support. Conversely, the preponderance of the evidence supports an increase in child support.
TOTAL MONTHLY PAYMENT: Total monthly payment is $600.00 commencing May 1, 2001.
On July 13, 2001, Father appealed from the OCSH's June 14, 2001 Administrative Findings and Order to the family court. In his appeal, Father argued that (1) his child support obligation for Daughter should have terminated because she was now over 18 years old, and no evidence was presented that she was a full-time student; (2) the administrative findings and order were wrong and constituted reversible error because Father's ability to pay had been drastically reduced, creating a change of circumstances necessitating a reduction, rather than an increase, in child support; and (3) the administrative findings and order increasing child support constituted reversible error because Father requested a downward modification and he did not receive notice that his child support obligation could increase.On May 2, 2002, Father filed a Motion for Leave to Present Additional Evidence. Specifically, he sought to present evidence of "[t]he 2000 U. S. corporate income tax return for A. C. Systems, Inc.; the 2000 federal and state income tax returns for [Father]; retirement account records and family budget." On June 27, 2002, the family court denied this motion.
On September 18, 2002, the family court entered its Order Affirming in Part, Reversing in Part, and Remanding Administrative Findings and Order filed on June 14, 2001 (the Family Court Order).
This court takes no position on the issue of whether Father's child support should have terminated upon the date of [Daughter's] eighteenth birthday, absent any evidence on record of [Daughter's] educational status.
The Court, nonetheless, instructs the [CSEA] in this case to immediately send written notice by mail, if not already done so, to Mother, Father, and [Daughter], of the requirement that proof of [Daughter's] full-time, post-high school student status must be presented to the [CSEA] for child support to continue. In the alternative, if the [CSEA] . . . has made a determination on whether child support continues, pursuant to HRS [Hawaii Revised Statutes] §576E-14(f), then the Court instructs the [CSEA] to immediately mail a notification of that determination to Mother, Father, and [Daughter].
The [CSEA's] determination of child support was based on the finding that Father's total income available to pay child support includes $20,000 per year (that Father admitted he is capable of earning) and his retirement annuity. The Court disagrees that the resulting increase was error, in light of evidence on the record.
Second, [Alice] testified that the $51,517 retirement annuity can be withdrawn, and has in fact been withdrawn from, to pay for expenses. . . . This is evidence that the retirement annuity is available for child support. The 1998 Amended Child Support Guidelines . . . states that "[i]f the parent owns assets, he/she may be required to convert all or some portion of said assets for cash for payment of support." . . . Hence, the administrative finding that the $51,517 retirement annuity is income available for child support, less 10% penalty for withdrawal, is supported by the record and is not clearly erroneous.
Regarding Father's claim that his due process rights had been violated, the family court stated, "The law requires [CSEA] to follow the [1998 Amended Child Support Guidelines (the 1998 Guidelines)] in the establishment or modification of child support, pursuant to HRS § 576E-15. (3) [CSEA] notified Father this much in the information with the notice of hearing mailed to Father." The family court decided that CSEA gave Father sufficient notice that his child support obligation might be "decreased or increased based on the application of the [1998] Guidelines and did not violate Father's due process rights when it determined and ordered an increase in child support pursuant to the [1998] Guidelines, notwithstanding Father's request for a reduction."The family court also decided that
[t]he Hearings Officer made a finding that the penalty for withdrawal from Father's retirement annuity is 10% of $51,517. Ten per cent of $51,517 correctly amounts to $5,152. On the Administrative Findings and Order, the Hearings Officer erroneously deducted $515 (which is only 1% of $51,517), instead of the correct penalty amount of $5,152, from the retirement annuity. Accordingly, the correct amount of Father's monthly gross income would be $5,530 (calculated as follows: $51,517 retirement annuity - $5,152 withdrawal penalty + $20,000 that Father testified he is capable of earning = $66,365; $66,365 ÷ 12 months = $5,530 per month gross income), not $5,917. The Hearings Officer's finding that Father's monthly gross income amounting to $5,917 is clearly erroneous.
Father filed a notice of appeal on October 10, 2002. The appeal was assigned to this court on June 13, 2003.
POINTS ON APPEAL
In his opening brief, Father contends that the family court erred:
1. In failing to rule that his child support obligation terminated when Daughter reached the age of eighteen;
2. In affirming the upward modification of his child support obligation imposed by the administrative findings and order;
3. In holding that his due process rights had not been violated; and
4. In denying his Motion for Leave to Present Additional Evidence.
STANDARD OF REVIEW
An appellate court's review of a circuit court's review of an administrative agency's decision is a secondary appeal. Korean Buddhist Dae Won Sa Temple of Hawaii v. Sullivan, 87 Hawai`i 217, 229, 953 P.2d 1315, 1327 (1998). In determining whether the circuit court's decision was right or wrong, the appellate court must apply the standards set forth in HRS § 91-14(g) (1993) to the agency's decision. Id. HRS § 91-14(g) provides:
Upon review of the record the court may affirm the decision of the agency or remand the case with instructions for further proceedings; or it may reverse or modify the decision and order if the substantial rights of the petitioners may have been prejudiced because the administrative findings, conclusions, decisions, or orders are:
(2) In excess of the statutory authority or jurisdiction of the agency; or
(3) Made upon unlawful procedure; or
(4) Affected by other error of law; or
(5) Clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record; or
(6) Arbitrary, or capricious, or characterized by abuse of discretion or clearly unwarranted exercise of discretion.
Pursuant to the above statutory provision, an agency's "conclusions of law are reviewable under subsections (1), (2), and (4); questions regarding procedural defects are reviewable under subsection (3); findings of fact are reviewable under subsection (5); and an agency's exercise of discretion is reviewable under subsection (6)." Korean Buddhist, 87 Hawai`i at 229, 953 P.2d at 1327 (internal quotation marks and citation omitted). Furthermore, an "agency's decision carries a presumption of validity and appellant has the heavy burden of making a convincing showing that the decision is invalid because it is unjust and unreasonable in its consequences." Id. (quoting Bragg v. State Farm Mut. Auto. Ins., 81 Hawai`i 302, 304, 916 P.2d 1203, 1205 (1996)).DISCUSSION
A.
Automatic Termination of Child Support Obligation
Daughter had
reached the age of 19 by the time of the May 24, 2001 administrative
hearing. (4) Father challenges the part
of
the Family Court Order that states, "The issue of whether Father owes
further child support to [Daughter] who has attained
age 18 is not reviewable on this appeal, given the lack of pertinent
evidence on the record." Father contends that the family
court erred by failing to decide that his child support obligation
terminated when Daughter reached the age of 18. We
disagree with Father. If Daughter does not continue her education
post-high school on a full-time basis, his child support
obligation terminates when Daughter "attains the age of 18 years or
graduates from high school or discontinues high school,
whichever occurs last." There being no evidence that Daughter had
graduated from high school or discontinued high
school, we agree with the family court's decision.
(5)
B.
Modification of Child Support Obligation
Father challenges the following part of the Family Court Order that states, "The [CSEA's] determination of child support was based on the finding that Father's total income available to pay child support includes $20,000 per year (that Father admitted he is capable of earning) and his retirement annuity. The Court disagrees that the resulting increase was error, in light of evidence on the record."
In its formula for calculating child support, the 1998 Guidelines start with "Monthly Gross Income." The 1998 Guidelines state, in relevant part:
D. GROSS INCOME, as used in these guidelines, worksheets and income tables, includes income from all sources that are regular and consistent, including but not limited to:
4. Investment and interest income (including dividends);
. . . .
8. Capital gains, unless nonrecurring;
15. Income from
self-employment, including rent, royalties, and other benefits
allocated to an individual for a business or
undertaking in the
form of
a proprietorship, partnership, joint venture, close corporation,
agency, or independent contractor[.]
Father also contends that the finding that his retirement annuity fund is "gross income" as defined in the 1998 Guidelines is clearly erroneous. In support of this contention, Father notes that he did not receive the retirement annuity fund directly in cash.
We conclude that Father's retirement annuity fund is not "income" under the 1998 Guidelines. Father's retirement annuity fund is the total of the income Father earned in prior years that Father saved for future retirement. When he earned the money, it was income. When he saved the money in the retirement annuity fund, it became principal. Expressly, the 1998 Guidelines include within "Gross Income" only such "Pension income" and "Annuities" that are "regular and consistent". Father's retirement fund is not a "regular and consistent" "Gross Income." He does not receive an annual income of $46,365.00 ($51,517.00 - $5,152.00) from his retirement annuity fund. Therefore, under the 1998 Guidelines, it was wrong to include the amount of Father's retirement annuity fund within his gross income.
Both CSEA and Mother argue that Father's assets should be considered in calculating his child support obligation. They cite the section of the 1998 Guidelines that states, "Assets for payment of support may be applied when a parent has inadequate income to meet his/her child support obligation. If the parent owns assets, he/she may be required to convert all or some of said assets to cash for payment of support."
We conclude that the 1998 Guidelines specify that: (1) absent proof of exceptional circumstances, it is regular and consistent income, rather than assets or principal, that is used to determine the amount of the child support obligation; and (2) a parent may be required to liquidate his or her assets to satisfy a child support obligation. Unless and until Mother satisfies her burden of proving the applicability of (1) above, the possibilities presented by (2) above are not relevant.
Due Process Rights
Father contends that the family court erred by not holding that CSEA violated his due process rights when it did not notify him prior to the May 24, 2001 administrative hearing that the issue "was to increase his child support[.]" This contention assumes that Father had a due process right to be so notified. We disagree with this assumption.
HRS § 576E-15 (Supp. 2004) states that "[w]hen an administrative order establishes or modifies the amount of child support required to be paid by a party, the guidelines established under section 576D-7 shall be applied, except when exceptional circumstances warrant departure. The most current guidelines shall be used to calculate the amount of the child support obligation." This statute informed Father that, absent exceptional circumstances, the hearings officer would be bound by the amount calculated in accordance with the 1998 Guidelines.
Even assuming Father had a due process right to be so notified, we conclude that his right was satisfied. The Family Court Order states in relevant part:
Father contends that the notice of hearing from [CSEA] did not indicate that the administrative hearing would involve anything other than his request for downward modification (i.e., reduction) of the child support order. On his reply brief, Father asserts that nothing in the record shows Father was informed by the Hearings Officer nor [CSEA] that the latter would have the power to increase child support when Father was asking for a decrease in the child support. . . .
The "information" referred to in the Family Court Order is a General Information Sheet that accompanied the Notice of Hearing mailed to Father. The General Information Sheet states in relevant part:
Child support is calculated using the most current version of the Hawai`i Child Support Guidelines Worksheet ("CSGW"). The CSGW provides a mathematical formula which uses the gross incomes from both parents to determine the amount of monthly child support. Unless a party is able to prove the existence of exceptional circumstances, the hearings officer must enter an order for child support in the amount calculated by the CSGW.
Given that Father was aware that the purpose of the administrative hearing was the modification of his child support obligation and that, absent exceptional circumstances, the hearings officer would be bound by the amount calculated by the CSGW, we agree with the family court's conclusion that "[t]his information is sufficient notice to Father that child support amount may be reduced, as he had requested, or it may be increased, as calculated using the [1998 Guidelines] worksheet."Motion for Leave to Present Additional Evidence
Father contends
that the family court erred by denying his Motion for Leave to Present
Additional Evidence. We disagree.
In Kilauea Neighborhood
Ass'n v. Land Use Comm'n, 7 Haw. App. 227, 751 P.2d 1031
(1988), this court held that it is
within the discretion of a trial court to reject additional evidence
presented to the court pursuant to HRS § 91-14(e).
(6) More specifically, this court held:
Under HRS § 91- 14(e), the court may order that "additional evidence be taken before the agency upon such conditions as the court deems proper;" however, the court is not obligated to do so. The decision is purely discretionary. We find no abuse of discretion in the lower court's refusal to grant Kilauea's motion.
7 Haw. App. at 236, 751 P.2d at 1037 (citation, brackets, and footnote omitted).In its Findings of Fact, Conclusions of Law, and Order Denying [Father's] Motion for Leave to Present Additional Evidence, the family court stated in relevant part:
CONCLUSIONS OF LAW
3. [Father] failed to carry his burden of showing good cause for failing to present the additional evidence before the agency.
5. While the court is conscious that [Father] represented himself before the agency, the court is also duty bound to be fair to both parties.
Clearly, it was not "shown to the satisfaction" of the family court "that there were good reasons for [Father's] failure to present . . . in the proceeding before the agency" the additional evidence Father sought to introduce.
CONCLUSION
The September 18, 2002 Order Affirming in Part, Reversing in Part, and Remanding Administrative Findings and Order Filed on June 14, 2001 is vacated in part, affirmed in part, and remanded as follows:
1. The findings, pursuant to the 1998 Amended Child Support Guidelines, of the amount of Father's gross income and his child support obligation are vacated because they are clearly erroneous.
2. Except as stated in 1 above, the September 18, 2002 Order Affirming in Part, Reversing in Part, and Remanding Administrative Findings and Order Filed on June 14, 2001 is affirmed.
3. We remand this matter for recalculation of Father's child support obligation under the 1998 Amended Child Support Guidelines and for further proceedings consistent with this opinion.
R. Steven Geshell
for David Masato Yasumura,
Appellant-Appellant.
Thomas D. Collins,
III
for Lori Shizuko Yasumura,
Appellee-Appellee.
1.
Judge Frances Q.F.
Wong, presiding.
2.
Hearings Officer Owen K. Tamamoto, presiding.
3.
Hawaii Revised Statutes (HRS) § 576E-15 (Supp. 2004) states, "When
an administrative order establishes or modifies the amount of child
support
required to be paid by a party, the guidelines established under
section 576D-7 shall be applied, except when exceptional circumstances
warrant
departure. The most current guidelines shall be used to calculate the
amount of the child support obligation."
4.
Pursuant to HRS § 577-1 (1993), "All persons residing in the
State, who have attained the age of eighteen years, shall be regarded
as of legal age and
their period of minority to have ceased."
5.
If it had been established that
Daughter had attained the age of eighteen and had graduated from high
school, HRS § 576E-14(f) (Supp. 2004)
and HRS § 580-47(a) (Supp. 2004) would have imposed the burden on
CSEA to prove that Daughter was continuing her education post-high
school
on a full-time basis at an accredited college or university, or in a
vocational or trade school and, therefore, that Father had a continued
obligation to
pay child support. In
those cases where child support payments are to continue due to the
adult child's pursuance of education, the [Child Support Enforcement]
agency, at least three months prior to the adult child's nineteenth
birthday, shall send notice by regular mail to the adult child and the
custodial parent
that prospective child support will be suspended unless proof is
provided by the custodial parent or adult child to the child support
enforcement
agency, prior to the child's nineteenth birthday, that the child is
presently enrolled as a full-time student in school or has been
accepted into and plans
to attend as a full-time student for the next semester a post-high
school university, college or vocational school. If
the custodial parent or adult child
fails to do so, prospective child support payments may be automatically
suspended by the child support enforcement agency upon the child
reaching
the age of nineteen years. In addition, if applicable, the agency or
hearings officer may issue an order terminating existing assignments
against the
responsible parent's income and income assignment orders. In those cases where
child support payments are to continue due to the adult child's
pursuance of education, the [Child Support Enforcement]
agency, three months prior to the adult child's nineteenth birthday,
shall send notice by regular mail to the adult child and the custodial
parent that
prospective child support will be suspended unless proof is provided by
the custodial parent or adult child to the child support enforcement
agency,
prior to the child's nineteenth birthday, that the child is presently
enrolled as a full-time student in school or has been accepted into and
plans to
attend as a full-time student for the next semester a post-high school
university, college, or vocational school. If the custodial parent or
adult child
fails to do so, prospective child support payments may be automatically
suspended by the child support enforcement agency, hearings officer, or
court upon the child reaching the age of nineteen years. In addition,
if applicable, the [Child Support Enforcement] agency, hearings
officer, or
court may issue an order terminating existing assignments against the
responsible parent's income and income assignment orders.
6. HRS § 91-14 (1993)
states in relevant part: