         IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI

                                NO. 2015-CA-00438-COA

EDWIN CLYDE NEELLY, IV                                                      APPELLANT

v.

LISA LEATHERMAN NEELLY                                                        APPELLEE

DATE OF JUDGMENT:                          01/30/2015
TRIAL JUDGE:                               HON. MILLS E. BARBEE
COURT FROM WHICH APPEALED:                 LEE COUNTY CHANCERY COURT
ATTORNEY FOR APPELLANT:                    JOE M. DAVIS
ATTORNEYS FOR APPELLEE:                    JASON D. HERRING
                                           MICHAEL SPENCER CHAPMAN
NATURE OF THE CASE:                        CIVIL - DOMESTIC RELATIONS
TRIAL COURT DISPOSITION:                   GRANTED CITATION FOR CONTEMPT;
                                           DENIED MOTION TO MODIFY DIVORCE
                                           DECREE
DISPOSITION:                               AFFIRMED - 10/11/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

       BEFORE LEE, C.J., WILSON AND GREENLEE, JJ.

       GREENLEE, J., FOR THE COURT:

¶1.    Edwin Neelly appeals the Lee County Chancery Court’s order finding him in contempt

of a divorce and separation agreement for failure to reimburse his ex-wife for certain

expenses related to their minor children and denying his request to modify the original decree

to allocate to him tax-exemption benefits. Finding no error, we affirm.

                        FACTS AND PROCEEDINGS BELOW

¶2.    Edwin and Lisa Neelly divorced in 2005. The divorce decree incorporated a

Separation and Property Settlement and Child Support and Custody Agreement
(“Agreement”) relating to their four minor children. The Agreement provided in part that

Edwin be responsible for one-half of all uncovered medical care (including dental and

optical), one-half of automobile expenses for the minor children, and all reasonable college

expenses.

¶3.    In May 2012, the court issued an order finding Edwin in contempt of certain

provisions of the Agreement. Edwin was ordered in part to reimburse Lisa for $3,500 in

medical and automobile expenses, to provide proof of life insurance, and to provide the

minor children a fuel card or a credit card for the exclusive use of fuel. By agreement of the

parties, the contempt order also directed that Lisa send the bills for quarterly reimbursement

to Edwin through his attorney at the time, rather than send them directly to Edwin. The

purpose of this arrangement was to minimize the need for Lisa and Edwin to communicate

with each other, given the strained nature of their relationship.

¶4.    Lisa filed a second motion for contempt in January 2013, asserting that Edwin had

accrued more than $17,000 in arrearage for failure to reimburse his share of qualified

expenses. Edwin counter-petitioned, requesting in part that the trial court modify the original

Agreement to allow him to claim certain tax benefits related to the dependent children.

¶5.    The court held a hearing.1 Edwin testified that he paid all bills that were forwarded

to his former attorney. The former attorney testified that she understood her role as


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         At the time of the 2013 motion for contempt, the original chancellor, Talmage
Littlejohn, was no longer sitting on the bench. The Mississippi Supreme Court appointed
senior status judge Mills Barbee to preside after multiple other local chancellors recused due
to professional or personal relationships with the parties.

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intermediary to include screening whether the expenses submitted by Lisa were reasonable

and in accordance with the Agreement. Lisa submitted as evidence a list of the unreimbursed

expenses along with receipts. Edwin had been personally sent a copy of these expenses and

acknowledged having access to the record of them. The submitted medical and automobile

expenses totaled $19,577.67, with $9,788.84 constituting the half Edwin would owe. The

college expenses included $953.08 for a computer and $6,700 for the couple’s freshman

daughter renting an apartment off of campus. Edwin expressed dissatisfaction that he was

not involved in the decision-making process of certain expenses, such as the purchase of a

$6,400 vehicle, the $935.08 laptop, and the cost of the freshman daughter renting an

apartment instead of living on campus or commuting from home. He also testified that

modification of the original order to permit him to claim some of the minor children as

dependents on his taxes would help him pay for his reasonable share of these expenses.

¶6.    The court found Edwin to be in contempt and established an instalment timeline for

him to pay the $14,073.92 arrearage. The court found him liable for only one-half of the off-

campus apartment expense, instead of for the whole amount. Edwin’s request for

modification to receive the tax benefits was denied. The court vacated the provision of the

previous contempt order directing that bills be sent to Edwin through his former attorney.

¶7.    Edwin appeals.

                                      DISCUSSION

¶8.    An appellate court will not disturb a chancellor’s findings related to domestic matters

unless they are manifestly wrong or clearly erroneous, or the chancellor applied an erroneous

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legal standard. Louk v. Louk, 761 So. 2d 878, 882 (¶8) (Miss. 2000).

       I.     The trial court did not abuse its discretion in denying Edwin’s
              request for modification relating to tax benefits.

¶9.    Edwin argues that the chancellor erred in refusing to modify the original agreement

to permit him to claim some of the children as dependents on his tax return. He cites largely

to the Mississippi Supreme Court’s decision in Nichols v. Tedder, 547 So. 2d 766 (Miss.

1989), in which the court held that a chancellor has the authority to order a custodial parent

to execute a tax-dependency waiver in favor of the noncustodial parent. The court held:

       The decision to allocate [the tax exemption to the noncustodial parent] is to be
       made on a case-by-case basis in the exercise of the chancellor’s wide
       discretion, and where the equities of the case require an allocation and order
       of waiver, the custodial parent’s obligation to execute the release is to always
       be contingent on the receipt of all due and owing payments related to the care
       and maintenance of the dependent children.

Id. at 780. The court referenced with approval examples from other jurisdictions of when

allocation to the noncustodial parent is appropriate, emphasizing that income-tax exemptions

are typically most valuable to the party in the higher tax bracket and can be worthless to a

party with little or no income. Id. at 776. Chancellors can construct an order for child support

that equitably takes into consideration which party received the benefit of the tax advantage,

while maximizing the overall income available to benefit the child. Id; see also Louk, 761

So. 2d at 884 (¶17) (enumerating various factors chancellors can consider when allocating

tax exemptions, including noneconomic contributions by the custodial parent, the value of

the exception at the marginal tax rate of each parent, the income of each parent, the age of

the child and how long the exemption will be available, the percentage of the cost of

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supporting the child borne by each parent, and the financial burden assumed by each parent

under the property settlement in the case).

¶10.   Here, Edwin is not challenging the allocation of tax exemptions with a direct appeal

from a chancellor’s original decree. When the request to transfer a tax exemption is pursuant

to a request to modify a prior decree, a material and adverse change in circumstances must

occur to transfer to one parent a tax exemption that was previously awarded to the other

parent. Peters v. Ridgely, 797 So. 2d 1020, 1024 (¶18) (Miss. Ct. App. 2001). For example,

in Peters, this Court affirmed the modification of an original decree transferring tax

deductions to the custodial parent following a significant and unexpected increase in medical

expenses for minor children coupled with the custodial parent’s need to purchase medical

insurance due to the noncustodial parent’s failure to maintain a policy. Id. at 1024-25 (¶20).

The noncustodial parent had also “abused the dependent deductions in a manner [which

violated] Internal Revenue Service regulations.” Id.; see also Laird v. Blackburn, 788 So. 2d

844, 852 (¶14) (Miss. Ct. App. 2001) (affirming tax-allocation modification where chancellor

took into consideration various considerations including party’s employment status).

¶11.   Outside of Edwin’s testimony that the tax benefit would help him pay some of his

arrearage, the record does not reflect that Edwin argued or presented evidence below that any

of the parties’ circumstances had materially changed so that “equity requires” allocation to

him of one or more of the tax exemptions under the principles of Nichols and Louk. While

Edwin states that evidence was never presented to the trial court of Lisa’s financial condition



                                              5
due to her failure to disclose her Uniform Chancery Court Rule 8.05 form, the record does

not reflect that Edwin ever requested an 8.05 form from her or that he called the matter to the

court’s attention. Edwin’s accrued arrearage stemming from the agreed terms and foreseeable

circumstances of the original decree does not constitute a material change in circumstances

warranting transfer of the tax exemption.2

       II.    The trial court did not err in finding Edwin in contempt for failure
              to reimburse his share of qualified expenses related to the minor
              children.

¶12.   Edwin argues that Lisa’s refusal to involve him in the decision-making process on

major expenses violates an implicit duty of sharing joint legal custody. In Laird, this Court

affirmed the chancellor’s refusal to order the noncustodial parent to reimburse the custodial

parent for various expenses incurred on behalf of the child, including clothing, school

supplies, and a bicycle. Laird, 788 So. 2d at 851 (¶14). In that case, the original decree

required consultation and mutual agreement between the parties prior to incurring expenses

for education and similarly important matters. Id. The parties did not communicate

concerning the expenses, and many of the expenses were duplicated between the two

households. Id.

¶13.   Here, the Agreement between Lisa and Edwin does not explicitly require consultation



       2
         And allocation of a tax exemption to Edwin would not immediately assist him in
paying the arrearage under the Nichols rule that the custodial parent has no legal obligation
to sign over the exemption waiver until the noncustodial parent has paid “all due and owing
payments related to the care and maintenance of the dependent children.” Nichols, 547 So.
2d at 780.

                                              6
and mutual agreement between the parties prior to incurring the expenses. With the exception

of reasonable college expenses, each expense is divided equally between the two parties. The

chancellor heard testimony concerning whether each expense was reasonable, and held in

Edwin’s favor that he did not have to pay the entirety of the expense of his freshman

daughter renting an apartment off-campus, even though the original decree provided that

Edwin would be solely responsible for all reasonable college expenses. We cannot find that

the chancellor abused his discretion in finding Edwin in contempt and ordering him to

reimburse the qualified expenses of $14,073.92.

¶14.   Finally, in the initial 2012 contempt order, the court specified that Edwin provide a

fuel card or a credit card designated exclusively for fuel expenses. The chancellor found

Edwin in contempt of this provision and ordered him to come into compliance. Edwin argues

that the provision of the contempt order requiring him to provide a fuel card up front is

impermissible because it is outside of the terms of the original Agreement requiring him

generally to pay for one-half of the automobile expenses. He argues that fuel is a

“transportation” expense rather than an “automobile” expense. We agree with Lisa that the

cost of fuel is within the concept of “automobile expenses” and that the trial court was within

its authority to specify that Edwin pay for his half of the fuel expenses by this method of

providing either a prepaid fuel card or a credit card designated exclusively for the purchase

of fuel.

                                      CONCLUSION

¶15.   The chancellor did not abuse his discretion in determining that Edwin was in contempt

                                              7
of the Agreement. Edwin failed to demonstrate a material change in circumstances that

would warrant modification of the original order to grant him tax-exemption benefits.

Finding no error, we affirm.

¶16. THE JUDGMENT OF THE CHANCERY COURT OF LEE COUNTY IS
AFFIRMED. ALL COSTS OF THIS APPEAL ARE ASSESSED TO THE
APPELLANT.

    LEE, C.J., GRIFFIS, P.J., BARNES, ISHEE, CARLTON, FAIR, JAMES AND
WILSON, JJ., CONCUR. IRVING, P.J. CONCURS IN PART AND IN THE RESULT
WITHOUT SEPARATE WRITTEN OPINION.




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