TN Dad Sells Business But Loses Argument to Lower Child Support
Tennessee child support modification case law summary from the Court of Appeals.
Gina Scarlett Ferrari Pace vs. Ward Redden Pace – Tennessee child support modification laws
Ward Redden Pace (“the Father”) and Gina Scarlett Ferrari Pace (“the Mother”) were the parents of one child (born 2002). Their divorce entered in 2003, incorporating a “Marital Dissolution Agreement” and a “Permanent Parenting Plan.” The Father’s original child support obligation was $1,000/month under the Tennessee Child Support Guidelines.
The Mother filed a petition for upward modification of child support in 2008. Following testimony in 2009, the trial court found that the Father earned $20,189/month and that the Mother had the ability to earn $2,305.34/month. Based upon these income figures, the trial court set the Father’s child support obligation at $1,904/month.
The Father lost two arguments with the trial court and with the appellate court. First, the Father argued that the trial court incorrectly calculated his income for child support purposes. Second, the Father claimed he was due a credit for the mortgage payments he was making on the Mother’s residence.
First, the Father argued that his income dropped to $32,750/year in 2008, compared to income of $201,036 in 2005, $241,360 in 2006, and $242,278 in 2007. The Father worked in 2005-2007 as an automobile broker and was a partial owner of Global Motor Sports. In 2006, the Father sold his ownership interest. He then dabbled in real estate investments until 2007, when he became partial owner of a different company, Dixie Motors.
The loss on appeal started at the trial when the Father failed to submit documentation of his claimed 2008 income, including any paystubs, year-end paystubs, or tax returns. The only proof before the trial court was the Father’s 2005, 2006, and 2007 tax returns. The trial court made a finding that it did not believe the Father’s testimony regarding his 2008 income, and the appellate court deferred to the credibility findings of the trial court.
By contrast, the Mother reported income on her tax returns of $26,150 in 2006 and $9,775 in 2007. The Mother had an associate’s degree, and worked part-time as a secretary for a small company. The trial court imputed an earnings capacity to the Mother of $14/hour for 38-hours/week, or, $2,305.34/month.
Second, the Father tried to win a reduction of child support by requesting a credit against his obligation for mortgage payments made on the Mother’s house. While the trial court gave a limited $100/month credit, the Court of Appeals reversed and gave no ($0) credit. The Court of Appeals looked to the divorce agreement of the Parties, which specifically included the mortgage payments in the equitable distribution trade-offs of the assets and liabilities.
The Court of Appeals explained that to now give the Father a credit against child support would amount to an unjust enrichment in favor of the Father. He would receive both the benefit of the Mother’s equity in the marital residence that he retained upon divorce and he would receive a reduction in child support – both as a result of his payment of the mortgage on the Mother’s residence. Considering that the mortgage paid by the Father was $95,000, the Court of Appeals cited prior rulings and took its stand in favor of the payment of child support to the Mother.
No. M2009-01037-COA-R3-CV (Tenn. Ct. App. Apr. 26, 2010).
See original opinion for exact language. Legal citations omitted.
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