
                        IN THE SUPREME COURT OF IOWA

                              No. 132 / 05-0106

                           Filed February 3, 2006


IN RE THE MARRIAGE OF TIMOTHY R.
MCKENZIE AND DOLORES M. MCKENZIE

Upon the Petition of
TIMOTHY R. MCKENZIE,

      Appellant,

And Concerning
DOLORES M. MCKENZIE n/k/a
DOLORES M. GUEST,

      Appellee.



      On review from the Iowa Court of Appeals.


      Appeal from the Iowa District  Court  for  Woodbury  County,  Mary  J.
Sokolovske, Judge.


      Wife seeks further review of a court of appeals decision reducing  the
amount of her former husband’s child support obligation.  DECISION OF  COURT
OF APPEALS VACATED IN PART AND AFFIRMED IN  PART;  DISTRICT  COURT  JUDGMENT
AFFIRMED IN PART, REVERSED IN PART, AND CASE REMANDED.

      Lori A. Ubbinga, Sioux City, for appellant.

      Edward J. Keane of Gildemeister  &  Keane,  L.L.P.,  Sioux  City,  for
appellee.



WIGGINS, Justice.
      In this appeal, we must decide if our court  of  appeals  was  correct
when it used  a  parent’s  actual  earnings  to  reduce  his  child  support
obligation when he voluntarily terminated his  prior  employment,  moved  to
another state, and took a job with less  compensation.   Because  using  the
parent’s actual earnings to determine his  child  support  obligation  under
our child support guidelines would not provide for the needs  of  his  child
and result in a substantial  injustice  between  the  parties,  his  earning
capacity should be used instead of his  actual  earnings  to  determine  his
child support obligation.
      I.  Prior Proceedings.
      Timothy  McKenzie  and  Dolores  McKenzie  n/k/a  Dolores  Guest  were
married on June 16, 1979.  Timothy and  Dolores  have  three  children.   On
August 24, 1998, the district court dissolved their  marriage.   The  decree
adopted  the  provisions  of  a  written  stipulation  between  Timothy  and
Dolores.  Relevant to this appeal,  the  stipulation  provided  Timothy  and
Dolores were to keep the other advised of their telephone  numbers,  Timothy
was to pay $495 per month in child support for one  child,  Timothy  was  to
maintain health insurance on the children through his employment,  and  each
party would pay one-half of the necessary health  expenses  not  covered  by
insurance.
       In  2002,  the  district  court   modified   the   original   decree,
establishing Timothy’s obligation to  pay  a  one-third  share  of  a  post-
secondary education subsidy for the middle  child,  Montana.   In  September
2003, Dolores filed an application  for  rule  to  show  cause  why  Timothy
should not be punished for contempt,  stating  he  knowingly  and  willfully
failed to pay his one-third  share  of  Montana’s  post-secondary  education
subsidy, failed to pay his one-half share  of  certain  medical  and  dental
expenses, and refused to provide her with a health insurance  card  for  the
children after changing carriers.  She also requested  Timothy  be  required
to pay her attorney fees.
      Timothy resisted the application for rule to show  cause  and  alleged
he was unable to pay the medical bills and he was no longer able  to  obtain
health insurance at a reasonable cost.  He also filed a petition  to  modify
the decree asking the court:  (1) to decrease his child  support  obligation
for Kilie, the youngest child, stating “there has  been  a  substantial  and
material  change  of  circumstances”  because  his  income   decreased   and
Dolores’s income increased resulting  in  a  ten-percent  deviation  in  the
child support he owed  under  the  child  support  guidelines;  and  (2)  to
relieve him of the obligation to pay a post-secondary education subsidy  for
Montana alleging Montana failed to provide Timothy with  grade  reports  and
repudiated Timothy.  He also requested Dolores pay his attorney fees.
      At the conclusion of  the  evidentiary  hearing,  the  district  court
found Timothy in contempt for failing to pay child support and his share  of
a medical bill for Kilie.  Timothy purged  himself  of  contempt  by  making
payment on those  obligations.   After  giving  the  parties  time  to  file
briefs, the district court did not find Timothy in contempt for his  failure
to pay Montana’s post-secondary education subsidy on the  basis  Montana  no
longer qualified for a post-secondary education subsidy due to  his  failure
to maintain a cumulative grade point average in the median  range  or  above
during his first year of college.  The court found Timothy in  contempt  for
failing to pay his share of an orthodontia  bill  for  Montana,  failing  to
maintain health insurance on Kilie through his employment,  and  failing  to
provide his new telephone number to Dolores.
      On Timothy’s modification petition, the  court  determined  there  had
been a substantial and material change of circumstances because Montana  did
not maintain  the  requisite  cumulative  grade  point  average;  therefore,
Montana no longer qualified for a  post-secondary  education  subsidy.   The
court modified the decree by relieving  Timothy  of  that  obligation.   The
court denied Timothy’s application to modify his  child  support  obligation
for Kilie because Timothy “voluntarily quit his employment and as such  this
voluntary reduction of income cannot be a basis for a  modification  of  his
child support.”  Finally, in regards to attorney fees, the court found  even
though Dolores was in a better financial position than  Timothy,  he  should
be responsible for a portion of Dolores’s attorney fees in view of her  need
to pursue the contempt actions and awarded her attorney fees of $1000.
      In response to  a  post-trial  motion  filed  by  Dolores,  the  court
entered a second ruling and order requiring Timothy to reimburse Dolores  in
the amount of $1144.02 for  insurance  costs  paid  by  her  and  increasing
Dolores’s attorney fee award to $5000.  Timothy appealed.
      We transferred the case  to  our  court  of  appeals.   The  court  of
appeals found Timothy had the ability to pay and affirmed on  the  issue  of
his contempt for failure to pay child  support  and  his  share  of  medical
expenses, as well as his failure to give Dolores his new  telephone  number.
The court of appeals  reversed  on  the  issue  of  Timothy’s  contempt  for
failure to maintain health  insurance  because  the  order  to  do  so  “was
neither definite nor certain with reference to Timothy’s  responsibility  to
maintain  insurance  when  it  was  not  available  to   him   through   his
employment,” but affirmed the judgment against him for the  insurance  costs
paid by Dolores.
      In regards to the modification, the  court  of  appeals  reversed  the
district court’s ruling on the issue of  reducing  Timothy’s  child  support
obligation because it found he did not voluntarily quit  his  job  with  the
intent “to deprive his [child] of support or had a  reckless  disregard  for
[her]  well-being.”   The  court  of  appeals  applied  the  child   support
guidelines to the parties’  actual  earnings  and  reduced  Timothy’s  child
support obligation to $200.17 per month.  The court of appeals  affirmed  on
the issue of attorney fees and awarded no attorney fees on appeal.
      Dolores  seeks  further  review  of  the  court  of  appeals  decision
reversing the district court’s denial of  Timothy’s  application  to  modify
the decree by reducing his child support obligation.   Even  though  Dolores
seeks further review of only that part of the  court  of  appeals  decision,
“we have the discretion to review any issue raised on appeal  regardless  of
whether such issue is expressly  asserted  in  an  application  for  further
review.”  In re Marriage of Olson, 705 N.W.2d  312,  315  (Iowa  2005).   In
exercising our discretion, we  will  only  review  the  modification  action
relating to the amount of Timothy’s child support obligation.
      II.  Scope of Review.
      “Our scope of review of a child  support  modification  action  is  de
novo.”  In re  Marriage  of  Walters,  575  N.W.2d  739,  740  (Iowa  1998).
Although we give weight to the findings of fact made by the district  court,
especially as to the credibility of witnesses, we are  not  bound  by  those
findings.   Id.  at  741.   “We  recognize  that  the  district  court  ‘has
reasonable discretion in determining whether modification is  warranted  and
that discretion will not be disturbed on appeal unless there  is  a  failure
to do equity.’ ”  Id. (citation omitted).
      III.  Statutory Framework.
      At the time of this modification action, the  Iowa  Code  provided  in
part:

           Subject to 28 U.S.C. § 1738B, the court may subsequently  modify
      orders made under this section when there is a substantial  change  in
      circumstances.  In determining whether there is a  substantial  change
      in circumstances, the court shall consider the following:

           a.    Changes in the employment,  earning  capacity,  income  or
                 resources of a party.

           b.    Receipt by a party of an  inheritance,  pension  or  other
                 gift.

           c.    Changes in the medical expenses of a party.

           d.    Changes in the number or needs of dependents of a party.

           e.    Changes in the physical, mental, or emotional health of  a
                 party.

           f.    Changes in the residence of a party.

           g.    Remarriage of a party.

           h.    Possible support of a party by another person.

           i.    Changes in the physical, emotional or educational needs of
                 a child whose support is governed by the order.

           j.    Contempt by a party of existing orders of court.

           k.    Other factors the court determines to be  relevant  in  an
                 individual case.
Iowa Code § 598.21(8) (2003).[1]  The  Code  also  contained  an  additional
ground for modification of child support.  It reads in part:

           Subject to 28 U.S.C. § 1738B, but notwithstanding subsection  8,
      a substantial change of circumstances exists when the court order  for
      child support varies by ten percent or  more  from  the  amount  which
      would be due pursuant to the most  current  child  support  guidelines
      established pursuant to subsection 4 . . . .
Id. § 598.21(9).[2]
      Timothy bases his modification of  child  support  action  on  section
598.21(9).  Accordingly, we must look to “the  most  current  child  support
guidelines established pursuant to subsection 4”  to  determine  if  a  ten-
percent variation exists.  Id.  Subsection 4 requires the supreme  court  to
“maintain uniform  child  support  guidelines.”   Id.  §  598.21(4).[3]   In
applying the guidelines to establish a parent’s child support obligation

      consideration shall be given to the responsibility of both parents  to
      support and provide for the welfare  of  the  minor  child  and  of  a
      child’s need, whenever practicable, for a close relationship with both
      parents.  There shall be a rebuttable presumption that the  amount  of
      child  support  which  would  result  from  the  application  of   the
      guidelines prescribed by the supreme court is the  correct  amount  of
      child support to be awarded.  A variation from  the  guidelines  shall
      not be considered by a court without  a  record  or  written  finding,
      based on stated reasons,  that  the  guidelines  would  be  unjust  or
      inappropriate as determined  under  the  criteria  prescribed  by  the
      supreme court.
Id. § 598.21(4)(a).[4]
      Our  guidelines   incorporate   these   legislative   mandates.    Our
guidelines state:

           The purpose of  the  guidelines  is  to  provide  for  the  best
      interests of the children by recognizing the duty of both  parents  to
      provide adequate support for their children  in  proportion  to  their
      respective incomes.  While the guidelines cannot take into account the
      specific  facts  of  individual  cases,  they  will  normally  provide
      reasonable support.

Iowa Ct. R. 9.3.  The guidelines further provide:

      In ordering child support, the court should determine  the  amount  of
      support specified by the guidelines.   There  shall  be  a  rebuttable
      presumption that the amount of child support which would  result  from
      the application of the guidelines prescribed by the supreme  court  is
      the correct amount of child support to be awarded.  That amount may be
      adjusted  upward  or  downward,  however,  if  the  court  finds  such
      adjustment necessary to provide for the needs of the children  and  to
      do justice between the parties under the special circumstances of  the
      case.

Id. r. 9.4.
      IV.  Factual Findings.
      On our de novo review of the record, we determine the  facts  relevant
to this appeal to be as follows.  At the time of the  original  dissolution,
Timothy’s gross annual income was $32,240 and Dolores’s gross annual  income
was $40,300.  At the time of this modification action, Dolores’s income  had
increased to $88,900, and Timothy’s income had decreased to $21,199  because
he left the state of Iowa and moved to South Carolina.
      Prior to his move to South Carolina, Gelita USA employed  Timothy  for
twenty-two years.  His income on  his  2003  tax  return  was  $32,634.   He
worked at Gelita until the first week of September in 2003.   He  worked  in
South Carolina  for  one  month  in  2003.   By  subtracting  one  month  of
Timothy’s South Carolina income from the income on his 2003 tax  return  and
then annualizing his income at Gelita, Timothy’s annual  income  would  have
been $45,260 if he had continued to  work  at  Gelita.   In  February  2003,
Timothy’s then girlfriend Teresa moved to South Carolina.  Prior to  moving,
she had been earning around $24,000 annually in Iowa.  Therefore,  in  Iowa,
Timothy and Teresa’s combined annual income would be $69,260.
      Teresa  found  a  job  in  South  Carolina  paying  $44,500  annually.
Although Timothy did not have another job lined up,  in  September  2003  he
moved to South Carolina because he wanted to be with  Teresa.   Timothy  and
Teresa were formally married in  September.   From  September  to  November,
Timothy looked for employment at an income level comparable to what  he  was
earning in Iowa.  Having no success, he took a job with the State  of  South
Carolina at the Department of Health and Environmental Control  on  December
1, 2003.  Timothy and Teresa’s combined annual income in South  Carolina  is
$65,699.
      V.  Analysis.
      Using Timothy’s gross annual income of $21,199, his net monthly income
under our child support guidelines is $1108.  Using Dolores’s  gross  annual
income  of  $88,900,  her  net  monthly  income  under  our  child   support
guidelines is $5297.  These net  monthly  incomes  require  Timothy  to  pay
18.5% of his net monthly income or $205  per  month  in  child  support  for
Kilie.  $205 is more than ten percent less than the $495 he was required  to
pay under the original decree.  Thus, if we use Timothy’s actual  income,  a
substantial change of circumstances exists  under  section  598.21(9).   Our
analysis, however, does not end here because Dolores claims  we  should  not
use Timothy’s actual earnings to  determine  his  child  support  obligation
under the guidelines.
      Although our courts are required to use the child  support  guidelines
to  determine  a  parent’s  child  support  obligation,  the  child  support
indicated by a strict application of the guidelines  to  a  parent’s  income
only creates a rebuttable presumption that the child support resulting  from
the application of the guidelines is a just and  appropriate  amount.   Iowa
Code § 598.21(4)(a); Iowa Ct. R.  9.4.   If  a  strict  application  of  the
guidelines would  be  unjust  or  inappropriate,  a  court  may  adjust  the
guideline  support  amount  upward  or  downward  if  such   adjustment   is
“necessary to provide for the needs  of  the  children  and  to  do  justice
between the parties under the special  circumstances  of  the  case.”   Iowa
Code § 598.21(4)(a); Iowa Ct. R. 9.4.  One of the  factors  we  consider  in
determining if we will use  a  parent’s  earning  capacity,  rather  than  a
parent’s actual earnings, in order to meet the needs of the children and  do
justice between the parties is whether the  parent’s  inability  to  earn  a
greater income is self-inflicted  or  voluntary.   See  In  re  Marriage  of
Duggan,  659  N.W.2d  556,  562  (Iowa  2003)  (citation  omitted)  (stating
“[u]nder our case law, ‘a  party  may  not  claim  inability  to  pay  child
support when that inability is  self-inflicted  or  voluntary’ ”).   We  may
also consider Timothy and Teresa’s combined income to  determine  whether  a
strict  application  of  the  guidelines  would  result  in  a   substantial
injustice.  See State ex rel. Reaves v. Kappmeyer, 514  N.W.2d  101,  104-05
(Iowa 1994) (determining parents’ incomes for purposes of the child  support
guidelines  without  regard  to  the  incomes  of  others,  and  then   only
considering such  additional  funds  in  evaluating  “whether  awarding  the
guideline  amount  would  result  in  a  substantial  injustice”  warranting
departure from the guidelines).
      Timothy claims the reason he voluntarily left his employment at Gelita
was to join Teresa in South Carolina, and not to  avoid  his  child  support
obligation to Kilie.  We have no reason to believe otherwise  and  recognize
Timothy’s desire to move and continue his relationship with Teresa  is  only
natural.  However, our first consideration under these circumstances is  not
what is in the best interest of Timothy, but what is in  the  best  interest
of his child.  If we consider Timothy’s reason for  moving  as  the  primary
consideration in deciding this case, we  would  place  his  selfish  desires
over the welfare of his child and the custodial parent, not provide for  the
needs of his child, and create a substantial injustice between the parties.
      Timothy was not  free  to  plan  his  future  without  regard  to  his
obligation to his former wife and child.  At the time Timothy left Iowa,  he
knew he had a pre-existing duty to provide monthly child support in the  sum
of $495 for his daughter and that he  could  earn  $45,260  annually  if  he
stayed in Iowa.  Even though he thought he could earn  a  comparable  salary
in South Carolina at the time he quit his job in Iowa, he had no  idea  what
his  earning  capacity  in   South   Carolina   would   be.    Under   these
circumstances, Timothy’s desire for self-fulfillment is  outweighed  by  the
pre-existing duty he had to his former spouse to  provide  adequate  support
for his minor child.
      Timothy also claims his new job and expenses would not  allow  him  to
pay child support based on an income other than his actual  earnings.   Even
if true, under the special circumstances of this case we should  still  base
Timothy’s child  support  obligation  on  his  earning  capacity.   Although
Timothy’s income dramatically declined, he was able  to  make  the  move  to
another state without a change in his and Teresa’s lifestyle  because  their
combined income in South Carolina is substantially the same  as  what  their
combined income would have been if they stayed in Iowa.
      Finally, if we were to allow a reduction in  Timothy’s  child  support
obligation based on his actual earnings, we would be  requiring  Dolores  to
increase her contribution for the support of Kilie.  Dolores should  not  be
forced to make up Timothy’s reduced child support so  Timothy  can  start  a
new life with his new wife in  South  Carolina,  when  his  combined  family
income in South Carolina is substantially similar  to  the  combined  family
income he had available to him in Iowa.
      Consequently, a strict application of  the  child  support  guidelines
using Timothy’s actual earnings under the circumstances of this  case  would
not provide for the needs of his child and would  result  in  a  substantial
injustice between the parties.  Therefore, it is necessary to use  Timothy’s
earning capacity  to  determine  his  child  support  obligation  under  our
guidelines.
      Having concluded we must use Timothy’s earning capacity  to  establish
his child support  obligation,  we  must  now  determine  Timothy’s  earning
capacity.  In re Marriage of Nelson, 570 N.W.2d 103, 106 (Iowa  1997).   The
best indication of Timothy’s earning capacity  is  the  salary  he  made  at
Gelita before he quit to move to South Carolina because he worked there  for
twenty-two years and we find at the time he quit  there  was  no  indication
that he could not have continued in this position  for  the  period  he  was
obligated to provide child support for Kilie.   Thus,  we  fix  his  earning
capacity at $45,260.
      Using $45,260 as Timothy’s gross annual  income  for  the  purpose  of
determining child support  under  the  child  support  guidelines,  his  net
monthly income is $2819.  Dolores’s  net  monthly  income  under  the  child
support guidelines remains at $5297.   These  net  monthly  incomes  require
Timothy to pay 17.2% of his net monthly income or $485 per  month  in  child
support for Kilie.  $485 does not  vary  more  than  ten  percent  from  the
amount of Timothy’s child support obligation set  by  the  original  decree.
Accordingly, a substantial change of  circumstances  does  not  exist  under
section 598.21(9) and Timothy is not entitled to a reduction  in  his  child
support obligation.
      VI.  Disposition.
      Because  it  is  necessary  to  use  Timothy’s  earning  capacity   in
determining his child support obligation under our child support  guidelines
to provide for the needs of Kilie and do justice between the  parties  under
the special circumstances of this case, we vacate the decision of the  court
of appeals and affirm the judgment of the district court  as  to  the  child
support issue raised by Timothy in his modification petition.  We  otherwise
affirm the decision of the court of appeals.  Accordingly,  we  remand  this
case to the district court to enter judgment consistent with  this  opinion.

      DECISION OF COURT OF APPEALS VACATED IN PART  AND  AFFIRMED  IN  PART;
DISTRICT COURT JUDGMENT  AFFIRMED  IN  PART,  REVERSED  IN  PART,  AND  CASE
REMANDED.
-----------------------
      [1] The legislature has reorganized section 598.21 by  separating  its
various subsections into separate sections  of  the  Code.   See  Iowa  Code
§§ 598.21-598.21G (Supp. 2005).   Section  598.21(8)  is  now  contained  in
section 598.21C,  entitled  “Modification  of  child,  spousal,  or  medical
support orders.”  Id. § 598.21C.  The quoted portion  of  section  598.21(8)
is  now  contained   in   section   598.21C(1),   entitled   “Criteria   for
modification.”  Id. § 598.21C(1).
      [2] Section 598.21(9) is now contained in section 598.21C(2), entitled
“Additional criteria for modification of child support orders.”  Iowa Code
§ 598.21C(2) (Supp. 2005).
      [3] Section 598.21(4) is now contained in section 598.21B.  Iowa Code
§ 598.21B (Supp. 2005).
      [4] Section 598.21(4)(a) is now contained in section 598.21B(2)(a),
(b)(1), (c)-(d) and 598.21B(3).  Iowa Code § 598.21B(2)-(3) (Supp. 2005).

