In re Marriage of Crainshaw

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NOT DESIGNATED FOR PUBLICATION

No. 114,470

IN THE COURT OF APPEALS OF THE STATE OF KANSAS

In the Matter of the Marriage of

U. ELIZABETH CRAINSHAW,
Appellee,

v.

RODNEY G. CRAINSHAW,
Appellant.

MEMORANDUM OPINION


Appeal from Johnson District Court; KEVEN M.P. O'GRADY, judge. Opinion filed March 3, 2017.
Affirmed in part and remanded with directions.

James M. Smart, Jr., of Kansas City, Missouri, and Shannon A. Sorenson, of Waits, Brownlee,
Berger, et al. of Kansas City, Missouri, for appellant.

Michael W. Lucansky, of Law Office of Michael W. Lucansky, P.A., of Overland Park, for
appellee.

Before ARNOLD-BURGER, C.J., PIERRON and MALONE, JJ.

Per Curiam: Rodney Crainshaw appeals his divorce from Elizabeth Crainshaw.
He argues the district court abused its discretion when it calculated his child support
income because it did not include a deduction for transportation, mobile phone service,
internet, bookkeeping and accounting, and depreciation. He also argues the court abused
its discretion when it did not reduce spousal maintenance to a nominal amount and did
not make the modification retroactive to April 4, 2014. The district court did not abuse its
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discretion in calculating Rodney's child support income because it had substantial
competent evidence to deny the deductions. Further, the district court did not abuse its
discretion when it did not reduce spousal maintenance to a nominal amount. The court
may reduce maintenance and may make the modification retroactive. Because it is in the
district court's discretion to make it retroactive, it is not necessarily an abuse to refuse
that request. Therefore, we affirm, but also, remand the case on the narrow issue for the
district court to make specific findings as to why it did not make the modification of the
maintenance award retroactive as requested.

Rodney and Elizabeth were married on April 11, 1998. They had 3 children during
their marriage, Joy (born 2002), Angel (born 2005), and Abigail (born 2011). Elizabeth
filed an amended petition for divorce with the district court on January 9, 2013.

This matter came to trial on April 17, 2013. The district court issued its decision,
Decree of Divorce and Order, on April 26, 2013. The court, in its decision, granted joint
custody and control to both the parents. The children primarily live with Elizabeth.

In support, the district court made several findings. It found that Rodney was self-
employed and operated a business called Rod's Home Repair, LLC. Elizabeth was
unemployed and homeschooled the children. The court stated it had considered K.S.A.
2015 Supp. 23-2902 and the factors set out in Williams v. Williams, 219 Kan. 303, 306,
548 P.2d 794 (1976), to determine spousal maintenance. The court also noted that the
marriage had lasted for 14 years, Rodney was 52 and Elizabeth was 45, and that Rodney
had a profound visual impairment but had still been successful in running his business.
The court found it was reasonable that Elizabeth could earn income in the future but
would need updated training to return to her previous vocation. The court imputed no
income to Elizabeth.

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The district court noted that Rodney's income was debated by the parties and
counsel. Rodney claimed to earn less than $18,000 a year after business expenses.
Elizabeth claimed that Rodney's income was approximately $45,500 a year. The court
noted that domestic gross income for someone who is self-employed is self-employment
gross income less reasonable business expenses. Reasonable business expenditures "are
those actual expenditures reasonably necessary for the production of income." Further,
depreciation would only be included if it was shown that it was reasonably necessary for
the production of income. From the tax returns and Rodney's testimony, the court
considered the reasonable business expenses to be the "costs for labor, insurance,
supplies, taxes, and licenses." The court found Rodney's income for purposes of the
calculation of support was $48,510 per year.

The district court found it to be fair, just, and equitable that Rodney pay Elizabeth
$700 per month in spousal maintenance for 36 months beginning May 1, 2013. It also
found that Rodney should pay Elizabeth $1,042 plus 1/2 the enforcement fee per month
in child support beginning May 1, 2013.

On March 3, 2014, Rodney filed a motion to modify child support and
maintenance. He argued that modifying child support and spousal maintenance was
appropriate because there had been a material change in his income, his living situation,
and his business expenses. He also stated he had worked with an accountant and believed
he had a better picture of his finances than he had in the past.

Rodney's motion came up for hearing before a hearing officer on August 25, 2014.
The hearing officer issued its ruling in a judgment form on August 28, 2014. In its order,
the hearing officer found the district court had been presented with substantial evidence
regarding Rodney's business income and expenses. It also found the court had considered
Rodney's visual impairment in arriving at its decision regarding spousal maintenance and
child support obligations. After reviewing the evidence, the hearing officer found that
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Rodney had "failed to establish by a preponderance of the evidence that a material
change of circumstances had occurred in the thirteen months following the trial in this
matter," and denied his motion.

Rodney filed a motion to appeal the hearing officer's decision, and a trial was held
on April 22, 2015, and May 5, 2015. The court heard the matter de novo after the hearing
officer's decision. The district court issued its memorandum decision on May 13, 2015.
The court stated the threshold question was whether a material change in circumstances
had occurred since the entry of the decree.

At trial, Rodney testified about his visual impairment. He stated his visual acuity
was 20/200 and his corrected vision was 20/200. He also did not see color and had no
light filtering ability. He set his computer at 200% and could adjust it anywhere up to
400%. He was not able to drive a vehicle and whoever he had working with him on a job
or his pastor drove him places. In total, he had 8 to 10 people who helped him with
personal driving. Before the divorce, Elizabeth had driven him.

Rodney testified that since the divorce, he had someone take care of his
bookkeeping and tax preparation. He stated he did not understand his tax return and was
not able to prepare the return with the level of accuracy his accountant achieved. He also
said that with the current child support and maintenance he was not able to afford an
apartment or utilities. He did not own a television, electronic tablets, or golf clubs.
Rodney did not have health insurance, life insurance, disability insurance, workers
compensation, or long term care insurance. He testified that other than insurance for the
truck he used for his business, he did not have any other insurance.

Rodney stated his business did better through 2014 with the help of having a
driver every day. However, when he saw his funds were running low, he cashed out his
IRAs and paid child support and maintenance with that money. With his current income,
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he was unable to continue to pay the child support and maintenance. He was also unable
to cut any expenses more than he had. He was unable to make any more money than he
currently did.

On cross-examination, Rodney testified he has had professional fees for an
accountant in the past and at the time of the previous trial. The change since trial was that
he now used a bookkeeper. He also had paid attorneys fees in the amount of $8,321 to
modify the support. He liquidated his retirement in order to pay for the attorney. He
testified that in the past 6 years, 2014 was the second highest gross revenue year he ever
had.

Elizabeth testified she was currently employed in the school system as a para
educator. She worked 32 1/2 hours a week for 36 weeks of the year. She was paid $12.63
an hour. She got the job as a para because it was required to complete her masters degree
in special education. At trial, she said she paid $130 a week for daycare for their youngest
child. She received a child care subsidy of $240.50 per month for a 9-month period. The
children received Medicaid and reduced school lunches. Elizabeth testified that she had
approximately $15,000 in savings. She stated that when she was married to Rodney, he
did the bookkeeping before she started doing it. She stated he did it with paper and pencil
and took a full day and night to figure out what he needed to present it to the tax preparer.

In the district court's decision, it noted that Rodney claimed eight different
circumstantial changes occurred between the date of the decree and the date of filing the
motion. First, his income had decreased. Second, he had been forced to liquidate assets to
pay for living expenses and attorney fees. Third, his business expenses had increased and
he now paid a bookkeeper and an accountant. Fourth, living with his mother was no
longer a temporary living arrangement but a permanent one. Fifth, he had to hire
individuals to drive him to and from worksites and other places for business and personal
needs. Sixth, Elizabeth was employed. Seventh, his oldest daughter was old enough to
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watch the younger daughter and therefore daycare costs were decreased or unnecessary.
Eighth, he had presented the evidence about his financial situation in a better manner this
time than at the original trial.

As to the issue of drivers and Elizabeth's income, the district court said it
"specifically considered Rodney's need to hire drivers and Elizabeth's then current and
likely short term future earnings in its original decision." Testimony was offered
regarding those two issues at the original trial, and nothing had changed with regards to
either. For the liquidation of assets, the court stated that it was Rodney's legitimate
decision to pursue a motion to reduce his support which was not a change in financial
circumstances that was "involuntary or outside of his direct control." Regarding daycare
costs, the original orders were entered with no work related daycare credit. The change
that had occurred since the divorce decree was that work related daycare had increased,
not decreased, which did not support Rodney's motion.

As to the accountants and bookkeeping, the district court stated that "[t]he fact
Rodney hired accountants and bookkeepers who substantially improved his
recordkeeping and were able to analyze his business expenditures in a professional
manner did not constitute a change in circumstances." The court said Rodney could have
presented similar evidence at trial but did not; therefore, the court was not inclined to
revisit the original orders simply because one party wanted to present a better case on the
second try. Regarding his now permanent residence with his mother, the court was not
persuaded that Rodney's "'temporary' residency had become something different ten
months (or 20 months) after the trial."

The district court noted that Rodney could not allege that his gross income had
substantially changed. At trial, Rodney estimated his 2012 income was approximately
$88,000. Exhibit 121 demonstrated it was actually $89,699. Exhibit 116 indicated his
2013 gross income was $60,905. Then, in 2014, it was $82,053. The relevant timeframe
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was 2014, where the gross income was $82,053. The court noted that Rodney now did his
taxes differently, so his subcontractor expenses were not called contract labor but now
were included in costs of sale. The biggest difference in how Rodney presented his case
here, as opposed to before, was that he had showed the cost of materials under the costs
of sale in 2014. Those costs totaled $19,741, and the court found those costs should be
included. It was also reasonable to include costs of repairs and tool replacement.

However, the district court said phone expenses were not allowed because there
was no evidence Rodney would not have a cell phone anyway or that he was paying for a
special service. The court stated it was not persuaded that a mileage tax deduction for a
vehicle was appropriate because it was not an accurate reflection of actual expenditures.
The court noted that depreciation was argued but under the circumstances was not
allowed. Finally, the accounting and bookkeeping charges could be permissible, but the
amounts that were claimed seem high for a small business. While the charges were fair
and reasonable, they were also increased as a result of this litigation. Because the court
had no real way of knowing what the charges would have been but for the litigation, they
were not allowed.

Ultimately, the district court reduced spousal maintenance to $400 per month
effective May 1, 2015. The court also reduced child support to $836 a month plus one
half of the enforcement fee effective May 1, 2015.

Rodney filed a motion for new trial or, in the alternative, to alter or amend
judgment. The district court denied his motion and found that nothing he had raised in his
motion was sufficient to grant either a new trial or an alteration or amendment of the
decision. Rodney timely appeals.

On appeal, Rodney argues: (1) the district court abused its discretion and
committed reversible error when it calculated his child support income and refused to
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allow any deduction from self-employment gross income for business transportation,
mobile phone service, internet, bookkeeping and accounting, and depreciation; and (2)
the court abused its discretion and committed reversible error when it refused to reduce
maintenance to a nominal amount and did not make the reduction retroactive to April 4,
2014, 1 month from the date of the filing of the petition.

Parental child support obligations in a divorce action are governed by statute and
guidelines established by our Supreme Court. See generally K.S.A. 2015 Supp. 23-3001
et seq. (governing court's obligation and authority to make provisions for child support);
K.S.A. 2015 Supp. 20-165 (mandating Supreme Court to adopt rules establishing child
support guidelines); Kansas Child Support Guidelines (KCSG), Administrative Order No.
261 (2015 Kan. Ct. R. Annot. 111-133). The applicable standard of review depends on
the question presented. A district court's child support award is generally reviewed for
abuse of discretion. In re Marriage of Skoczek, 51 Kan. App. 2d 606, 607, 351 P.3d 1287
(2015).

Use of the KCSG is mandatory in a divorce action, so failure to follow the
guidelines is reversible error. In re Marriage of Thurmond, 265 Kan. 715, 716, 962 P.2d
1064 (1998); Skoczek, 51 Kan. App. 2d at 608. A court can deviate from the amount of
child support determined through use of the KCSG but must justify any such deviation
through specific written findings in the journal entry about how it is in the child's best
interests. 51 Kan. App. 2d at 608. Such findings are generally reviewed for substantial
competent evidence and to ensure they are sufficient to support the district court's
conclusions of law. In re Marriage of Atchison, 38 Kan. App. 2d 1081, 1085, 176 P.3d
965 (2008). Failure to make such written findings, however, is considered reversible
error. Thurmond, 265 Kan. at 716.

Under the KCSG, domestic gross income for a self-employed person is "self-
employment gross income less Reasonable Business Expenses." Kansas Child Support
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Guidelines, Administrative Order No. 261. (2015 Kan. Ct. R. Annot. 113). "In cases of
self-employed persons, Reasonable Business Expenses are those actual expenditures
reasonably necessary for the production of income. Depreciation shall be included only if
it is shown that it is reasonably necessary for the production of income." Kansas Child
Support Guidelines, Administrative Order No. 261 II, E.2. (2015 Kan. Ct. R. Annot.
113).

The trial court has the discretion to determine whether depreciation is reasonably
necessary for the production of income. In re Marriage of Jones, No. 97,714, 2008 WL
2251177, at *10 (Kan. App. 2008) (unpublished opinion). The ruling will only be
reversed if it is shown the district court abused its discretion. Stayton v. Stayton, 211 Kan.
560, 561-62, 506 P.2d 1172 (1973). Under the KCSG, the trial court has discretion to
determine whether depreciation should be deducted as a reasonable business expense, and
this court has previously upheld a district court's determination that depreciation expenses
were not reasonably necessary for the production of income. See In re Marriage of
Lewallen, 21 Kan. App. 2d 73, 75, 895 P.2d 1265 (1995); In re Marriage of Cox, 36 Kan.
App. 2d 550, 554, 143 P.3d 677 (2006).

Rodney argues that costs for transportation, phone and internet, bookkeeping and
accounting, and equipment depreciation should have been deducted from his child
support income. He states that the failure of the district court to allow deductions from
gross business income for expenses that are reasonably necessary for his production of
income demonstrate that the district court departed from the Guidelines and did not make
any written or oral findings to justify the departure. Each of these categories will be
looked at in turn.

For transportation, Rodney argued at trial through his accountant that the district
court could consider deducting actual expenses for fuel and maintenance or the federal
mileage deduction of 56 cents per mile. However, the court denied the deduction as a
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reasonable business expense and stated: "This [c]ourt is not typically persuaded that the
mileage tax deduction for a vehicle is appropriate. Often this amount, again a legitimate
tax write off, is not an accurate reflection of actual expenditures." The court did include
vehicle and trailer insurance as well as registration and personal property taxes into
Rodney's child support income. At trial, Rodney's accountant testified that the 56 cents
mileage deduction did not equate to Rodney's out of pocket expenses. In fact, they were
less than 56 cents per mile. The court gave a written justification as to why it did not
include a deduction for transportation as a reasonable business expense and had
substantial competent evidence for its justification. Therefore, the district court did not
abuse its discretion when it did not deduct transportation costs from the child support
income.

Rodney argues phone and internet services should be deducted from his child
support income. When the district court denied the phone and internet deduction, it stated
"[p]hone expenses are not allowed as there is no evidence that he would not have a cell
phone anyway or that he is paying anything extra for special service." Rodney argues that
because he is not a person who would spend money on these resources if he did not need
it, then it should be deducted. However, the court justified its reason for not allowing the
deduction and did not abuse its discretion in determining it was not a reasonable business
expense.

For bookkeeping and accounting, Rodney argues the district court should have
reduced the cost that was spent, not deny it all together. The evidence presented showed
that in 2011 and 2012 there was no expense claimed for bookkeeping and accounting.
Then, starting in 2013, there were expenses claimed for his accountant. In regards to
deducting these charges, the court stated:

"Accounting and bookkeeping charges could be permissible, but the amounts claimed
seem high for such a small business. Undoubtedly the charges were fair and reasonable,
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but were also increased as a result of this litigation. Having no way of really knowing
what the charges would have been but for litigation, they are not allowed."

Because there was substantial competent evidence that the cost of accounting and
bookkeeping increased at the time of trial, the court did not abuse its discretion in
determining accounting and bookkeeping was not a reasonable business expense.

Finally, Rodney argues depreciation should have been deducted as a reasonable
business expense. The trial court has discretion to determine whether depreciation should
be deducted as a reasonable business expense. Lewallen, 21 Kan. App. 2d at 75. In this
case, the trial court considered depreciation and said, "[d]epreciation was argued, but
under the circumstances is not allowed." Because the court has discretion to determine
whether depreciation should be included, there was no abuse of discretion when it denied
depreciation as a reasonable business expense when it was shown that depreciation was
not a legitimate business expense.

As was noted by Elizabeth in her brief:

"Rodney failed to present any evidence to support a contention that he
historically had to replace expensive fixed assets on some type of a regular schedule. In
fact, the evidence presented at trial showed that Rodney was savvy in his purchases and
regularly bought work equipment or tools, used them and then sold them for more that he
bought them. . . . As stated earlier, based on Rodney's mileage deduction utilizing [56
cents] per mile, he was putting on less than 5,000 miles per year on his company truck,
that was also used by him personally. This is [nowhere] akin to someone who has
extensive travel associated with this business, such as a traveling sales person that due to
the extensive miles racked up every year that his or her vehicle had to be replaced on a
regular basis.
"In denying Rodney's request for a depreciation deduction, the district court
stated 'depreciation was argued, but under the circumstances it [is not] allowed.'"

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The district court considered transportation, phone and internet, bookkeeping and
accounting, and depreciation, but denied them all as reasonable business expenses. The
court explained in its memorandum decision why those categories were not included as a
deduction. Because the court justified its denial of these deductions based on substantial
competent evidence, it did not abuse its discretion and the court is affirmed.

Rodney next argues the district court abused its discretion when it did not reduce
spousal maintenance to a nominal amount and did not make the reduction in spousal
maintenance retroactive.

An award of spousal maintenance is governed by K.S.A. 2015 Supp. 23-2901. The
district court has wide discretion regarding spousal maintenance. In re Marriage of Hair,
40 Kan. App. 2d 475, 483, 193 P.3d 504 (2008). An appellate court generally reviews a
district court's maintenance award for abuse of discretion. In re Marriage of Vandenberg,
43 Kan. App. 2d 697, 706-07, 229 P.3d 1187 (2010). Judicial discretion is abused when
the judicial action is arbitrary, fanciful, or unreasonable. Hair, 40 Kan. App. 2d at 483. If
reasonable persons could differ as to the propriety of the action taken by the district court,
then it cannot be said that the district court abused its discretion. 40 Kan. App. 2d at 483-
84. Further, the trial court abuses its discretion when it goes outside the applicable legal
standards or statutory limitations when making its decision. Dragon v. Vanguard
Industries, Inc., 277 Kan. 776, 779, 89 P.3d 908 (2004). Rodney bears the burden of
showing such an abuse. Hair, 40 Kan. App. 2d at 484

Modification of maintenance is generally governed by K.S.A. 2015 Supp. 23-2903
and K.S.A. 2015 Supp. 23-2904. An appellate court reviews a district court's decision to
grant or deny modification of a maintenance award by reviewing the record to determine
whether there is substantial competent evidence to support the court's factual findings and
whether the court abused its discretion. In re Marriage of Strieby, 45 Kan. App. 2d 953,
961, 255 P.3d 34 (2011).
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A maintenance award must be fair, just, and equitable under all circumstances.
K.S.A. 2015 Supp. 23-2902(a). "The purpose of spousal maintenance is to provide for the
future support of the divorced spouse, and the amount of maintenance is based on the
needs of one of the parties and the ability of the other party to pay." Hair, 40 Kan. App.
2d at 484. In Williams v. Williams, 219 Kan. 303, 306, 548 P.2d 794 (1976), the court
stated the following elements may be considered by a district court in determining
whether to award spousal maintenance: (1) the age of the parties; (2) the parties' present
and prospective earning capabilities; (3) the length of the marriage; (4) the property
owned by the parties; (5) the parties' needs; (6) the time, source, and manner of
acquisition of property; (7) family ties and obligations; and (8) the parties' overall
financial situation.

In order to modify maintenance, a hearing must be held with reasonable notice to
the party affected. K.S.A. 2015 Supp. 23-2903. Maintenance may be modified downward
upon a showing of a material change in circumstances. In re Marriage of Ehinger, 34
Kan. App. 2d 583, 587, 121 P.3d 567 (2005). The term "material change in
circumstances" does not have a precise definition, "but it requires consideration of a
variety of facts and circumstances." In re Marriage of Nelson, 34 Kan. App. 2d 879, 887,
125 P.3d 1081 (2006). "A material change in circumstances must be of such a substantial
and continuing nature as to make the terms of the initial decree unreasonable." 34 Kan.
App. 2d at 887 (citing Johnson v. Stephenson, 28 Kan. App. 2d 275, 280, 15 P.3d 359
[2000]).

At the hearing, "the court may modify the amounts or other conditions for the
payment of any portion of the maintenance originally awarded that has not already
become due." K.S.A. 2015 Supp. 23-2903. However, no modification shall be made
without the consent of the party that is liable for the maintenance if the modification
increases or accelerates the liability for unpaid maintenance. K.S.A. 2015 Supp. 23-2903.
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K.S.A. 2015 Supp. 23-2904 governs whether the modification of spousal maintenance
can be made retroactive. Under the statute, "the court may make a modification of
maintenance retroactive to a date at least one month after the date the motion to modify
was filed with the court." K.S.A. 2015 Supp. 23-2904.

Here, the court originally ordered $700 per month in spousal maintenance for 36
months and $1,042 in child support, plus one half of the enforcement fee per month.
After the trial on the motion to modify child support and maintenance, the district court
reduced spousal maintenance to $400 a month and child support to $836 a month plus 1/2
the enforcement fee, effective May 1, 2015. In reducing both the maintenance and child
support, the court found that the cost of materials should have been included as well as
the cost of repairs and tool replacement.

At the trial on the motion to modify, Rodney testified he had to buy tools and
small equipment for his business. He also stated he misplaced tools occasionally and had
trouble finding things due to his visual handicap. There was also testimony presented that
he had to repair his truck and equipment.

Given there was evidence presented regarding the cost of materials, repairs, and
tool replacement, there was substantial competent evidence to support the factual finding
that maintenance should be reduced based on those added costs. However, Rodney argues
the district court should have reduced maintenance and child support more than it did. He
argues that based on Elizabeth's new job, the savings that she has, and his mundane
lifestyle compared to her "recklessly ambitious" lifestyle, the amount of the reduction
was not reasonable under the circumstances.

Maintenance may be modified downward after a showing of a material change in
circumstances. Ehinger, 34 Kan. App. 2d at 587. However, there is no requirement that
the district court modify the maintenance. Here, the court heard testimony on the motion
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to modify and found there were two areas where there was a material change in
circumstances and modified the maintenance accordingly. There was substantial
competent evidence to support the district court's reduction, and the court did not abuse
its discretion.

Although the district court methodically examined all the other issues in the case,
it gave no reasons for denying the retroactivity of its decision to modify the maintenance
award. We cannot determine whether the court's refusal to make the award retroactive
was arbitrary, fanciful, or unreasonable, or based on an error of fact or law because it
gave no reasons. Accordingly, we remand the case on this narrow issue for the district
court to make specific findings as to why it did not make the modification of the
maintenance award retroactive as requested.

Affirmed in part and remanded with directions.