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Domestic Relations – Alimony – Imputed Income – Equitable Distribution – Separate Debts – Attorney’s Fees

By: S.C. Lawyers Weekly staff//April 27, 2011

Domestic Relations – Alimony – Imputed Income – Equitable Distribution – Separate Debts – Attorney’s Fees

By: S.C. Lawyers Weekly staff//April 27, 2011

Grumbos v. Grumbos. (Lawyers Weekly No. 011-068-11, 8 pp.) (H. Bruce Williams, J.) Appealed from Greenville County Family Court. (R. Kinard Johnson Jr., J.) S.C. App. Click here for the full text of the opinion.

Holding: The husband’s representations about his income were inconsistent, so the trial court did not err in relying on the wife’s evidence to impute income to the husband.

We affirm the alimony and equitable distribution awards. We reverse the attorney’s fee award and remand for further consideration.

Temporary Alimony

In awarding the wife $2,500 in temporary alimony, the family court found the husband earned $7,000 per month and the wife earned $550 per month. This finding was based on the financial declarations of the parties, their affidavits, and their respective tax returns.

While the family court may only have been privy to limited evidence based on the timing and nature of the temporary hearing, we discern no abuse in the family court’s award of $2,500 per month in temporary alimony.

The husband claimed he earned only $825 per month at the temporary hearing, yet the financial declaration he submitted before the final hearing reflected a gross monthly income of $1,733. The family court was in the best position to question the accuracy of the husband’s initial claim and thus was within its discretion to weigh the husband’s testimony in its decision to impute additional income to him.

The husband admits he received over $243,000 in revenue from his family’s LLCs between 2004 and 2006. Even if we accept the husband’s argument that this revenue was nonrecurring, he earned $80,856 alone in 2006 (or $6,738 per month) from his restaurant employment and LLCs, which provides ample basis for the family court’s decision to impute $7,000 per month to him as income.

Additionally, the husband never contested the wife’s calculation of $4,100 per month in household expenses. Because the wife only earned $550 per month at the time of the temporary hearing, we discern no error in the family court’s efforts to maintain the status quo by requiring the husband to pay her $2,500 per month in temporary alimony.

Permanent Alimony

An award of alimony should be based on the payor spouse’s earning potential rather than merely his current, reported earnings.

The family court found, “Husband’s testimony lacks credibility. The only credible evidence before the court as to the earning potential of Husband is that of Wife and Dr. Alford [Wife’s expert witness] that the funds paid by Husband to Wife for the payment of household expenses for the 12 months prior to the filing of this action was … $53,990.63 … which computes to a monthly average of … $4,499.24. … The Court imputes to Husband gross monthly income of … $4,500 … per month.”

The husband’s reported earnings in his W-2 form reflected a 20-hour work week, despite his unwavering testimony that he worked 40 hours per week. Moreover, conflicting evidence was presented regarding the amount of distributions the husband received from the LLCs as additional income. The distribution statements prepared by the husband’s accountant for 2001, 2002, 2003 and 2006 varied by as much as $17,000 from the LLCs’ tax returns.

Without a meaningful representation of the husband’s current income, the family court was required to resort to other credible evidence, namely the parties’ expenses, in assessing the husband’s income. Because both parties agreed their household expenses were approximately $4,100 per month, it was not unreasonable for the family court to conclude the husband earned at least that amount when determining his income. Thus, the family court did not err in imputing additional income to the husband when it calculated the wife’s permanent alimony award.

The objective of alimony is to insure that the parties separate on as equal a basis as possible.

In granting the wife alimony, the family court considered the relevant statutory factors from S.C. Code Ann. § 20-3-130(C), including: the length of the marriage, the parties’ education, their health, both parties’ past and current incomes, the parties’ standard of living during the marriage, marital fault, and the marital and nonmarital properties of the parties.

The husband’s primary contention is the family court failed to give proper weight to the wife’s college degree and prior earnings. Yet the court said, “The Court is of the opinion that Wife has the educational background to enable her to obtain employment which provides her with an income and with benefits comparable to that which she had at her last full-time job.”

Further, despite the wife’s stated income of $975 in her financial declaration, the family court imputed $2,000 to her as income based on her past employment and education. We find the family court’s decision to award the wife only $630 in alimony in light of her current income and expenses to be reasonable under the circumstances.

Pre-Separation Debts

The husband enumerates three debts he claims were incurred during the parties’ marriage. These debts include (1) a $23,000 debt to his brother-in-law; (2) a $6,000 debt to his parents; and (3) a $95,000 debt to two of the LLCs in which the husband holds an interest.

In excluding these debts from the marital estate, the family court considered the intra-family nature of the debts and noted the lack of credible documentation and testimony to substantiate these debts.

The family court believed the wife’s testimony that the execution of the notes occurred shortly after an incident that ultimately led to the demise of the marriage. The wife’s testimony that she was unaware of any of these debts and only discovered their existence after she filed for divorce is additional evidence these debts were not incurred for the joint benefit of husband and wife.

The family court did not err in excluding these debts from the marital estate.

Attorney’s Fees

The family court erred in finding the husband’s overpayment of temporary alimony negated his obligation to pay the wife attorney’s fees and costs.

In light of our holding that the family court properly awarded the wife temporary alimony, we necessarily reverse the family court’s finding that this excess alimony adequately reimbursed the wife for her attorney’s fees.

In the family court’s final order, it held the husband was required to pay “most” of the fees incurred by the wife. However, the family court then essentially held the husband responsible for all of the wife’s attorney’s fees by crediting him the entire remainder of the wife’s fees.

Because of this discrepancy in the family court’s order in addition to the lack of specific findings to support its decision, we remand the issue of attorney’s fees to the family court.

Affirmed in part, reversed in part and remanded.

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