The case involves an appeal regarding the modification of child support obligations following the divorce of Frank Hooper Lacey and Karla Suzanne Lacey. The father was awarded primary custody of their two children, and the mother was initially ordered to pay $744.67 monthly in child support based on her previous employment as a park recreation director. After losing her job shortly after the divorce, the mother enrolled in a doctoral program at the University of Mississippi, where her tuition was waived, and she planned to work as a teaching assistant earning $853 monthly.
The mother filed a petition to modify her child support due to her changed financial circumstances, claiming that she was not willfully underemployed. The father opposed the modification, arguing that she voluntarily chose to leave her job and that her situation was foreseeable at the time of the divorce. The trial court initially ruled that the mother had not demonstrated an unforeseeable change in circumstances but allowed her to present further evidence.
During the subsequent hearing, testimony revealed that the mother was pressured to resign due to unsatisfactory job performance rather than voluntarily leaving her position. The court ultimately reduced her child support obligation, which the father appealed. The appellate court affirmed the trial court's decision, concluding that the mother was not willfully underemployed and that the waived tuition should not be counted as income.
Mother's salary is set at $853 per month for nine months, with a $20,000 tuition waiver described as “an investment in my future.” The trial court granted Mother’s petition to reduce child support to $240 per month based on her salary. Following this, Father appealed the court's written order issued on October 28, 2002.
On appeal, the trial court's findings of fact are reviewed with a presumption of correctness unless the evidence suggests otherwise, while conclusions of law are reviewed without such presumption. Father raises several issues: he claims the trial court wrongly found a change in circumstances justifying a reduction in child support and that it was incorrect in determining Mother was not voluntarily underemployed. He also argues that the tuition waiver should be considered part of Mother’s income for child support calculations.
To modify child support, the "significant variance test" under Tennessee law requires a notable difference between the guideline amount and the current support order, specifically defined as at least 15% when support is $100 or more, and $15 when under $100. Father contends the change in Mother’s circumstances was foreseeable at the time of the divorce decree, as she had applied for her graduate position two years earlier. However, evidence presented at the hearing indicated that Mother was unexpectedly forced to resign her previous job and took the graduate position only after becoming unemployed.
Father also asserts that Mother is voluntarily underemployed given her master’s degree and potential earnings exceeding $35,000 per year, arguing that her decision to pursue education over higher-paying employment should not excuse her from prioritizing child support obligations based on her prior salary.
Determining whether a party is willfully and voluntarily underemployed is a factual question subject to the trial court's discretion. The custodial parent bears the burden of proving the obligor parent's underemployment. Evidence must support any findings of underemployment, which requires evaluating the obligor's past and present employment and the good faith behind their job choices. Courts typically view a voluntary decision to leave a job for lower pay as willful underemployment, particularly if the party admits to having the ability to earn more. The reasons behind the obligor's job choice are critical for analysis.
In this case, the Mother, after losing her job involuntarily, chose to pursue her doctorate full-time while taking a temporary teaching position, aiming to enhance her future earning potential. The trial court concluded she was not willfully underemployed, a decision that is supported by the evidence presented.
Additionally, the Father contends that the trial court erred by not imputing a $20,000 annual tuition waiver as income for the Mother, arguing it constitutes 'in kind' remuneration linked to her teaching role. He references child support guidelines that classify various forms of income broadly, including benefits and waivers. If included, this tuition waiver would raise Mother's imputed income above the threshold needed to justify modifying child support payments. Conversely, the Mother argues the tuition waiver is akin to an academic scholarship rather than compensation for work, lacking independent financial value for her support obligations.
The argument centers on whether a tuition waiver received by the Mother can be classified as 'in kind' remuneration for calculating her gross income in child support determinations. 'In kind' remuneration generally includes fringe benefits like company cars or lodging, but simply receiving a benefit does not automatically qualify it as such. Evidence must show that the benefit represents payment for services rendered. In this instance, the tuition waiver was deemed more like a scholarship for her studies rather than a stipend for teaching assistance. Consequently, it was ruled that the waiver does not count as 'in kind' remuneration and should not be included in her income for child support calculations. The trial court's determination of Mother’s income at $853 per month and a child support obligation of $240 per month was upheld. The Father’s argument for imputing the tuition waiver as income was rejected, as it would not meet the threshold for adjusting the child support amount based on the regulations. The trial court’s decision is affirmed, with costs on appeal assigned to the Appellant, Frank Hooper Lacey.
