                IN THE SUPREME COURT, STATE OF WYOMING

                                         2016 WY 78

                                                              APRIL TERM, A.D. 2016

                                                                     August 9, 2016

JOHN M. ZUPAN, JR.,

Appellant
(Plaintiff),

v.                                                   S-15-0259

HEATHER M. ZUPAN,

Appellee
(Defendant).

                  Appeal from the District Court of Hot Springs County
                       The Honorable Norman E. Young, Judge

Representing Appellant:
      Amanda K. Roberts of Lonabaugh and Riggs, LLOP, Sheridan, WY; and Bobbi D.
      Overfield of Messenger & Overfield, P.C., Thermopolis, WY.

Representing Appellee:
      Wendy Press Sweeney, Worland, WY.

Before BURKE, C.J., and HILL, DAVIS, FOX, and KAUTZ, JJ.




NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third.
Readers are requested to notify the Clerk of the Supreme Court, Supreme Court Building,
Cheyenne, Wyoming 82002, of any typographical or other formal errors so that correction may be
made before final publication in the permanent volume.
HILL, Justice.

[¶1] Father challenges an order modifying his child support obligation and argues that
Mother did not show a material change in circumstances to justify that modification.
Father also contends that even if a modification was appropriate, the district court
miscalculated the amount. We will affirm.

                                        ISSUES

[¶2]   Father presents two issues for our review:

             1. Modification of Child Support was improper pursuant to
                the Smith Rule.
             2. Even if Modification of Child Support was appropriate,
                the district court erred in its determination of Father’s
                child support obligation.

                                         FACTS

[¶3] Father and Mother married in 1996 and had two children, a girl born in 1997 and a
boy born in 2000. The parties divorced in 2004 and agreed to share custody. Their
agreement provided that they would alternate residential custody on an annual basis, with
the custody exchange taking place on July 15 of every year. The parties also agreed that
Mother would not pay child support, while Father would pay $500 monthly while the
children lived with Mother. The agreement was to expire on July 15, 2008 and per the
agreement, the parties were to seek mediation if they could not agree on a custody
arrangement moving forward. As it turns out, in 2008 Mother sought to hold Father in
contempt for failing to mediate. That was denied in district court, where the court also
held that the former custody and child support arrangement should continue. Mother
appealed, and this Court affirmed in Zupan v. Zupan, 2010 WY 59, 230 P.3d 329 (Wyo.
2010).

[¶4] In June of 2011, the parties stipulated to a modification of custody. The
modification provided that daughter would live with Mother permanently, while son
would continue with shared custody. Father would pay $250 per month in child support
for daughter, and an additional $250 while both children lived with Mother. This matter
began in 2012 when Father filed a Motion for Order to Show Cause, seeking to hold
Mother in contempt for failing to pay unreimbursed medical expenses for the children.
On May 4, 2012, Mother counterclaimed to modify child support and requested that the
modification be retroactive to the date Father was served with the counterclaim. After a
hearing, the district court entered its “Order Granting in Part and Denying in Part
Plaintiff’s Motion for Order to Show Cause and Order Modifying Judgment and Decree
of Divorce.” The district court determined that Father owed $18,813.81 in retroactive


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child support from May of 2012 to January of 2015. The court offset that amount by
unreimbursed medical expenses Mother owed to Father in the amount of $2,069.16. The
court ruled no accrual of interest would occur if Father paid Mother within 60 days of
entry of the order. The court further ruled that beginning on June 1, 2015, Father would
pay monthly child support in the amount of $466.55 for the parties’ son. Father’s appeal
followed this ruling.

                               STANDARD OF REVIEW

[¶5]   Our standard of review in child support cases is well established:

                     In general, determinations concerning child support are
              left to the district court’s sound discretion. Verheydt v.
              Verheydt, 2013 WY 25, ¶ 19, 295 P.3d 1245, 1250 (Wyo.
              2013); Witowski v. Roosevelt, 2009 WY 5, ¶ 13, 199 P.3d
              1072, 1076 (Wyo. 2009). Consequently, we will not disturb
              the district court’s decision unless it abused its discretion. “In
              determining whether an abuse of discretion occurred, our core
              inquiry is the reasonableness of the district court’s decision.”
              Verheydt, ¶ 19, 295 P.3d at 1250; Hanson v. Belveal, 2012
              WY 98, ¶ 14, 280 P.3d 1186, 1192 (Wyo. 2012).

Bagley v. Bagley, 2013 WY 126, ¶ 6, 311 P.3d 141, 143 (Wyo. 2013).

[¶6] “ ‘Judicial discretion is a composite of many things, among which are conclusions
drawn from objective criteria; it means a sound judgment exercised with regard to what is
right under the circumstances and without doing so arbitrarily or capriciously.’ ”
Rodenbough v. Miller, 2006 WY 19, ¶ 8, 127 P.3d 800, 802 (Wyo. 2006); Vaughn v.
State, 962 P.2d 149, 151 (Wyo. 1998) (quoting Martin v. State, 720 P.2d 894, 897 (Wyo.
1986)); Watson v. Watson, 2002 WY 180, P4, 60 P.3d 124, 125 (Wyo. 2002); Groenstein
v. Groenstein, 2005 WY 6, ¶ 10, 104 P.3d 765, 768-69 (Wyo. 2005).

                                      DISCUSSION

Child Support Modification

[¶7] Father argues that the modification of child support was improper pursuant to the
‘Smith’ rule. In Smith v. Smith, 895 P.2d 37 (Wyo. 1995) and its progeny, we concluded
that when parties agree to a child support amount, even when that amount deviates 20%
from the presumptive support amount, the petitioner for modification must show both (1)
a 20% change in the amount of support and (2) a material change in circumstances. We
extensively explained Smith in Wright v. Wright, 5 P.3d 61, 63 (Wyo. 2000):



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In Smith, Mr. Smith initially entered into an agreement with
Mrs. Smith to pay $5,000 per month in child support, even
though that was an amount many times greater than the
presumptive level of support. Later, the Smiths reached a
second agreement which reduced Mr. Smith's child support
obligation to $3,000 per month, an amount which was still
many times greater than the presumptive support level. Mr.
Smith then sought an adjustment of his child support
obligations to bring them into line with the statutory level of
presumptive child support. Based on those facts, we held that
Wyo. Stat. Ann. § 20-6-302:

     invokes the discretion of the trial judge, in the
     modification hearing, to weigh the enumerated thirteen
     factors and also the presence or absence of an agreement
     in the light of the policy favoring finality. In instances in
     which the parties have arrived at an agreement as to
     child support previously, even when the support agreed
     to deviates by more than twenty percent from the
     presumptive guidelines, the petitioner must introduce
     other evidence of a material change in circumstances in
     order to justify a modification. Smith, 895 P.2d at 42.

     This Court then attempted to clarify the rule set forth
above in Smith to apply “only to cases in which the parties
entered into a stipulation to child support amounts before the
current guidelines were enacted but which deviated from the
guidelines in existence at that time, and to stipulated child
support amounts under the current guidelines which deviate
from the current guidelines by twenty percent or more at the
time the judgment was entered.” Sharpe, 902 P.2d at 213.
Thus, as clarified by Sharpe, the rule in Smith became: In
instances in which the parties have arrived at an agreement as
to child support previously, and when the support agreed to
deviates by more than 20% from the presumptive guidelines,
the petitioner must introduce other evidence of a material
change in circumstances, in addition to a present 20%
deviation, in order to justify a modification.

      This rule attempts to eliminate the possible evil of a non-
custodial parent agreeing to pay child support which exceeds
20% deviation to secure a custodial parent’s signature on a
stipulation, only to come back to court within six months and


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             ask for modification based upon a 20% deviation. Or, in the
             alternative, to prevent a custodial parent from agreeing to a
             child support amount which exceeds a 20% deviation below
             the guidelines to secure a non-custodial parent’s signature on
             a stipulation, only to come back within six months asking for
             modification based only upon a 20% deviation. This rule does
             not apply to situations in which the child support amount
             agreed to by the parties did not exceed a 20% deviation one
             way or another from the guidelines in existence at the time
             the stipulation was executed. Where the agreement reached
             by the parties with respect to child support is predicated upon
             the operation of the presumptive child support statute, Smith
             and Sharpe play no role in the process of review and
             adjustment of child support as provided for in § 20-6-306(a).

With regard to modifying child support, Wyo. Stat. § 20-2-311(a) (LexisNexis 2015)
provides three methods under which a support modification may be proven: (1) support
order in place for six months and a 20% change in the presumptive support amount; (2) at
any time, based on a substantial change in circumstances; and (3) either parent may
request review of a child support order “[e]very three (3) years.”

[¶8] Here, we agree with Father’s suggestion that Mother was required under Smith to
prove a material/substantial change in circumstances. While Mother did not allege that a
material change in circumstances had occurred, nor did the district court make such a
finding in its order, we believe that a material change did in fact occur. When Mother
filed her petition “when the parties’ custodial arrangement changed,” she in effect made
the argument that a change had taken place. The custody change she alleged is more than
enough to establish a change in circumstances, even without a specific finding from the
district court in that regard. Nonetheless, the district court explicitly found a 20%
increase in the presumptive support amount when it calculated Father’s new child support
obligation at $466.55 per month. Accordingly, both requirements of Smith are satisfied.
Having concluded that the modification was proper, we turn to the actual determination
of the child support obligation.

Calculation of Income for Determination of Child Support

[¶9] Presumptive child support amount is calculated using the parents’ net income.
Bagley, ¶ 15, 311 P.3d at 145:

                  “Net income” means income as defined in paragraph (ii)
                  of this subsection less personal income taxes, social
                  security deductions, cost of dependent health care
                  coverage for all dependent children, actual payments


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                  being made under preexisting support orders for current
                  support of other children, other court-ordered support
                  obligations currently being paid and mandatory pension
                  deductions. Payments towards child support arrearage
                  shall not be deducted to arrive at net income[.]

             Wyo. Stat. Ann. § 20-2-303(a)(iii) (LexisNexis 2013).

[¶10] Under that same statute, “income” means:

             [A]ny form of payment or return in money or in kind to an
             individual, regardless of source. Income includes, but is not
             limited to wages, earnings, salary, commission, compensation
             as an independent contractor, temporary total disability,
             permanent partial disability and permanent total disability
             worker’s      compensation       payments,    unemployment
             compensation, disability, annuity and retirement benefits, and
             any other payments made by any payor, but shall not include
             any earnings derived from overtime work unless the court,
             after considering all overtime earnings derived in the
             preceding twenty-four (24) month period, determines the
             overtime earnings can reasonably be expected to continue on
             a consistent basis. In determining income, all reasonable
             unreimbursed legitimate business expenses shall be deducted.
             Means tested sources of income such as Pell grants, aid under
             the personal opportunities with employment responsibilities
             (POWER) program, supplemental nutrition assistance
             program and supplemental security income (SSI) shall not be
             considered as income. Gross income also means potential
             income of parents who are voluntarily unemployed or
             underemployed[.]

Wyo. Stat. Ann. § 20-2-303(a)(ii) (LexisNexis 2015).

[¶11] Regarding his income, Father complains that the district court should have
determined his net income separately for 2012, 2013, and 2014 because those years
experienced different highs and lows based on the respective economies from year to
year. He also argues that the court improperly imputed income to him from his rental
properties, health insurance premiums paid by his company, and life insurance policy
payments. Regarding Mother’s income, Father argues that the court erred in allowing
Mother improper deductions for home office space, utilities, home internet, and her cell
phone. Father contends that while those deductions are appropriate for federal tax
purposes, only “legitimate business expenses” may be deducted for purposes of


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calculating income for child support, and that regardless of her employment, Mother
would nevertheless incur those expenses. To conclude, Father submits that his
retroactive support should total $1,404.06 and that his monthly support obligation going
forward should be $30.66 per month

[¶12] During a bench trial, much of the evidence presented concerned the parties’
income. Ultimately, after the trial and after considering each parties’ proposed Findings
of Fact and Conclusion of Law, the district court found Father’s net monthly income to
be $8,403.00 and Mother’s to be $3,622.00. Also in its order, the court made findings
regarding the parties’ financial sources. The court noted that Father is “a self-employed
electrical plumbing contractor and the sole owner of Zupan Electric, Inc. Father controls
his rate of pay, benefits, provision of health insurance and the like.”

[¶13] First, regarding Father’s argument about Mother’s financials – and specifically,
the deductions she takes to arrive at her net income − we cannot say the district court’s
decision was an abuse of discretion. This Court has reiterated several times that there is
no “per se prohibition … on the use of federal tax information as evidence in determining
‘income’ and ‘net income’ under the Wyoming child support statutes.” Ackerman v. Ott,
2014 WY 93, ¶ 12, 330 P.3d 271, 274 (Wyo. 2014) (quoting Ready v. Ready, 2003 WY
121, ¶ 16, 76 P.3d 836, 840 (Wyo. 2003)).

                   In fact, in all child support proceedings, the parties are
                   required to submit to the court financial affidavits with
                   supporting documentation that includes copies of their
                   most recent tax returns. Thus, it is clear from case law
                   that the focus should be upon the reasonable and
                   legitimate nature of the expense and its impact on the
                   party's actual cash flow in the year in question rather
                   than the treatment of the expense by federal law in the
                   context of income taxes.

Ackerman, ¶ 12, 330 P.3d 271, 274. Furthermore, “when determining which business
deductions to allow for the purposes of determining child support, a court is not bound by
the tax laws.” 2 Jeff Atkinson, Modern Child Custody Practice, Second Edition, Ch. No.
11, § 11-27 (2014). Although deductions for things such as a “home office” should be
subject to scrutiny, they should not be categorically disallowed. Accordingly, to de facto
prohibit all deductions for rent, utilities, and repairs, when the record clearly indicates
that such expenses occurred and were necessary, also would be error.

[¶14] As to Father’s argument about his income being improperly computed, we also
cannot find an abuse of discretion by the district court. As Father points out, the district
court had ample information and heard sufficient testimony regarding Father’s income.
Father also contends that his incomes over several years should have been averaged in


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order to compute his child support obligation. It is true that we have approved income
averaging for the purpose of calculating child support “where circumstances require it.”
Madison v. Madison, 859 P.2d 1276, 1280 (Wyo. 1993); Triggs v. Triggs, 920 P.2d 653,
662 (Wyo. 1996); Bollig v. Bollig, 919 P.2d 136, 138 (Wyo. 1996); Wood v. Wood, 964
P.2d 1259, 1264 (Wyo. 1998). However, this is not to say income averaging is mandated
in all circumstances showing income fluctuation. Accordingly, the district court did not
abuse its discretion in deciding to use only one year of income figures. Our careful
review of the record demonstrates that the district court took into account all relevant and
available information in reaching its determination of Father’s income level.

Unreimbursed Medical Expenses

[¶15] Mother argues in her brief that she should have been credited for unreimbursed
medical expenses. However, she cannot seek a change in the district court’s ruling on
this issue at this time, inasmuch as she did not cross-appeal. As we explain in GOB, LLC
v. Rainbow Canyon, Inc., 2008 WY 157, ¶ 10, 197 P.3d 1269, 1271-72 (Wyo. 2008):

                      “The distinction between arguing in brief and cross-
              appealing generally is that a cross-appeal is required to win a
              change in the judgment, while arguments to support the
              judgment can be made without a cross-appeal.” Wright,
              Miller & Cooper, Federal Practice and Procedure:
              Jurisdiction 2d § 4478.6, at 831 (2002). A survey of cases
              before this Court involving cross-appeals bears out this
              distinction. For example, in Garrison v. CC Builders, Inc., the
              appellees prevailed below, but cross-appealed contending that
              the damage award was incorrect. 2008 WY 34, ¶ 26, 179 P.3d
              867, 875 (Wyo. 2008). In Diamond B Svcs., Inc. v. Rohde,
              the Department of Employment granted a worker’s request
              for unpaid wages but denied an award for interest on the
              unpaid wages, costs, and attorney fees. 2005 WY 130, ¶¶ 1-2,
              120 P.3d 1031, 1035 (Wyo. 2005). The employer appealed
              the award of unpaid wages, and the worker cross-appealed the
              denial of interest on the unpaid wages, costs, and attorney
              fees. Id. Our history includes many similar examples. E.g.,
              Wells Fargo Bank v. Hodder, 2006 WY 128, 144 P.3d 401
              (Wyo. 2006) (Trust beneficiaries sued Trustee alleging breach
              of fiduciary duty. Beneficiaries prevailed and Trustee
              appealed. Beneficiaries cross-appealed seeking attorney fees
              and prejudgment interest.); Wallop v. Wallop, 2004 WY 46,
              88 P.3d 1022 (Wyo. 2004) (Wife appealed property division
              in a divorce. Husband cross-appealed contending that the
              district court made a mathematical error when it calculated


                                              7
              the wife’s share of an annuity benefit.); Warnick v. Warnick,
              2003 WY 113, 76 P.3d 316 (Wyo. 2003) (Partner sued
              partnership and remaining partners.         Plaintiff partner
              prevailed on summary judgment and was awarded value of
              the partnership. Defendants appealed the summary judgment,
              and the plaintiff appealed the court’s calculation of the
              partnership share value.).

Sanctions

[¶16] Finally, Mother suggests that it would be appropriate to award her costs and
attorney fees under Wyoming Rule of Appellate Procedure 10.05. That rule provides:
“[i]f the court certifies … there was no reasonable cause for the appeal, a reasonable
amount for attorneys’ fees and damages to the appellee shall be fixed by the appellate
court and taxed as part of the costs in the case.” W.R.A.P. 10.05(b).

[¶17] Sanctions under Rule 10.05 are generally not available for challenges to
discretionary rulings, unless “an appeal lacks cogent argument, there is an absence of
pertinent legal authority to support the issues, or there is a failure to adequately cite to the
record.” Welch v. Welch, 2003 WY 168, ¶ 13, 81 P.3d 937, 940 (Wyo. 2003) (citations
omitted). Although unsuccessful on appeal, Father’s efforts were reasonable. Mother’s
request for Rule 10.05 sanctions is denied.

                                      CONCLUSION

[¶18] We affirm the district court. Our review of the record shows that the district court
was within its discretion in calculating both Father’s and Mother’s net income for child
support purposes.




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