What is the significance in a divorce settlement agreement of the parents’ decision to apply the child support formula to all of the parents’ income in excess of the statutory “cap?” How will such an agreement affect a subsequent modification proceeding?
Such was the issue addressed in last week’s decision of the Appellate Division, Second Department, in Matter of Monaco v. Monaco, 2023 NY Slip Op 01091, 2023 N.Y. App. Div. LEXIS 1093, 2023 WL 2290584 (2nd Dept. 2023).
The parties were married in 1996 and have three children. In 2013, the parties executed a stipulation of settlement that was incorporated but not merged into their judgment of divorce. The agreement fixed the father’s biweekly child support obligation at $1,618.02. In doing so, the parties had agreed to apply the 29% Child Support Standards Act (C.S.S.A.) statutory percentage to their total combined parental income of $185,980.
In September 2020, the father filed a petition seeking a downward modification and the mother filed a petition for an upward modification. By order dated December 3, 2021, Support Magistrate Darlene Jorif-Mangane granted the father’s petition. The Magistrate found that the parties’ combined parental income was $251,708.46 and exceeded the then statutory cap of $154,000.00. The father’s child support obligation on the combined parental income up to the statutory cap was the sum of $1,220.00 biweekly for 3 children, and $1,051.00 biweekly for 2 children [1 child having been emancipated prior to the hearing].
The Support Magistrate determined that it was appropriate to apply the statutory percentages to the combined parental income up to, but not above the statutory cap. The Support Magistrate directed the father to pay basic child support in the biweekly sum of $1,220 (29%, while there 3 children) and $1,051 (25%, when there was 2).
[Note: At the time of the 2013 agreement, the “cap” was $136,000.00. A that time, the father’s $1,618.02 biweekly support obligation grossed up to income of $145,064, some 78% of the combined total income of $185,980.00. In the modification proceedings, the father’s income was some 71% of combined income, grossing up to some $178,700.00 of the $251,708.46 combined income. The Mother’s income increased from some $40,900.00 in 2013 to $73,000.00 in 2021.]
The mother filed objections to the Support Magistrate’s order, contending that it was error not to calculate child support on the combined parental income over the statutory cap. Family Court Judge Paul M. Hensley granted the mother’s objections. The court determined that the Support Magistrate should have used the entire combined parental income when calculating the father’s child support obligation. The court directed the father to pay basic child support in the sum of $1,993.00 (29%) and $1,718.00 (25%) biweekly. The father appealed.
The Second Department reversed, reinstating the Magistrate’s order. The Court noted, that “the Family Court must articulate an explanation of the basis for its calculation of child support based on parental income in excess of the statutory cap. . . . This articulation should reflect a careful consideration of the stated basis for its exercise of discretion, the parties’ circumstances, and its reasoning why there [should or] should not be a departure from the prescribed percentage.” In addition to explaining why the record calls for deviating or not deviating from the statutory formula, the court must relate that record articulation to the statutory factors.
Here, the appellate court noted, the Family Court based its decision to calculate child support on combined parental income in excess of the statutory cap on the parties’ agreement in their stipulation of settlement to apply the statutory percentage to their total combined parental income. The Family Court had found that the parties intended for their children to enjoy the standard of living that the children would have enjoyed had the family remained intact.
However, the Second Department held that the parties’ agreement in their stipulation did not provide an appropriate rationale for the court’s calculation of child support on parental income over the statutory cap. Moreover, the record did not “demonstrate that the children are not living in accordance with the lifestyle they would have enjoyed had the household remained intact.”
The appellate court held that record supported the Support Magistrate’s determination that it was appropriate to apply the statutory percentages only up to the statutory cap considering “the children’s actual needs and the amount required for them to live an appropriate lifestyle.” Moreover, although the father’s gross income was higher than the mother’s gross income, the record did not establish that the difference between the parties’ gross incomes warranted applying the statutory percentages to the parties’ combined income in excess of the statutory cap.
Comment: Two questions come to mind. The first is what should be the significance of the parties’ agreement in 2013 to base the father’s 29% child support obligation on his entire income (the effect of basing it on the parties’ entire combined income)? Was it the parties’ intention that in any modification proceeding, the father’s obligation would continue to be based on his entire income.
If so, how should the agreement have reflected that intention? Perhaps, with hindsight, the parties should not have simply not opted out of the 3-year and 15%-income-change grounds for modification (please forgive the double negative). Perhaps the parties should have opted out and instead included their own rules for modification, specifying both what circumstances would justify a modification, and how the modified obligation is to be calculated.
However, even that does not seem enough for the Second Department. Together with setting forth the modification circumstances and calculation rules, the agreement must recite “an appropriate rationale for the court’s calculation of child support on parental income over the statutory cap.” Is it enough for the parties to provide that the parents want their children to enjoy the increasing lifestyle that an increasing income can provide?
Here, one would assume that in 2013, the lifestyle of the children was one that parents together making $186,000 can afford. Why would a court cap total parental income at anything less than $186,000 plus inflation?
Here, the appellate court held that exceeding the cap did not reflect “the standard of living the child would have enjoyed had the marriage or household not been dissolved” D.R.L. §240(1-b)(f)(3), F.C.A. §413(1)(f)(3). Does that mean the standard of living the children enjoyed only at the time of the dissolution?