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Descher v. Descher

Court of Appeals of Mississippi

January 14, 2020

JEFFREY H. DESCHER APPELLANT
v.
APRIL PUCHEU DESCHER APPELLEE

          DATE OF JUDGMENT: 08/22/2018

          HARRISON COUNTY CHANCERY COURT, FIRST JUDICIAL DISTRICT, HON. JAMES B. PERSONS JUDGE.

          ATTORNEYS FOR APPELLANT: DAVID ALAN PUMFORD RICHARD ANTHONY FILCE ERIK M. LOWREY.

          ATTORNEYS FOR APPELLEE: JOE SAM OWEN ASHLEY W. GUNN.

         EN BANC.

          LAWRENCE, J.

         ¶1. On May 11, 2015, after seventeen years of marriage, April Descher filed a complaint for divorce against her husband, Jeffrey (Jeff) Descher. Two children were born of the marriage. Before a trial began in March 2017, April and Jeff consented to a divorce based on irreconcilable differences. The parties agreed to allow the chancellor to decide the distribution of the marital property, child custody and custodial child support, and the appropriateness of alimony, among other disputes submitted to the chancellor for resolution.

         ¶2. Jeff either owned by himself or co-owned with his brother thirteen McDonald's restaurants across the Mississippi Gulf Coast and southern Alabama, along with an apartment complex, a car wash, and a commercial building. This resulted in a profitable and sizable marital estate that was accumulated during the course of the marriage. The chancellor valued the marital estate and found that alimony was appropriate. As a result, the chancellor awarded April lump sum alimony in the amount of $856, 794.98 and permanent periodic alimony in the amount of $7, 500 per month. The chancellor further ordered Jeff to pay $7, 500 per month in child support and to pay the children's college expenses. In addition, the chancellor ordered Jeff to purchase a one million dollar life insurance policy with the two children listed as the sole beneficiaries. Jeff now appeals the award of child support, college expenses, and the life insurance requirement, along with the chancellor's decision to award April permanent periodic alimony. We find that the chancellor equitably distributed the vast marital estate and did not commit manifest error in awarding lump-sum alimony, requiring the payment of child support and college expenses, requiring life insurance for the children's benefit, and awarding permanent periodic alimony. For the reasons set forth below, we affirm the decision of the chancellor.

         FACTS

         ¶3. April Descher filed a complaint for divorce in 2015. The parties consented to an irreconcilable-differences divorce on February 15, 2017. The consent decree asked the chancellor to determine the issues raised in April's original complaint, absent the grounds for divorce. The issues determined by the chancellor that are relevant to this appeal were child support and any related expenses, college tuition, life insurance, and permanent periodic alimony.

         ¶4. Throughout their marriage, the Deschers built a sizeable marital estate. The marital estate came from Jeff's ownership interest in numerous businesses including thirteen McDonald's restaurants, an apartment complex, a car wash, and a commercial building. April was not listed as an owner on any of the businesses acquired during the marriage.[1] The record shows that at the time of trial Jeff's ownership interests, along with the estimated valuation of those interests by the court appointed expert, [2] were as follows:

1. The business BGJ, LLC owns an office complex building. Jeff owned a 33.33% interest along with his brothers Gregg Descher and Dr. Bill Descher. Jeff's interest was valued at $208, 000 at trial.
2. The business C2J, LLC owns a car wash. Jeff owned a 50% interest with Joshua Rimes. At the time of trial, the value of Jeff's interest was $0.[3]
3. Big D owns 100% of nine subsidiary companies and the apartment complex (Green Tree Apartments). Jeff and his brother Gregg each owned a 50% interest. Each of the nine subsidiary companies owned and operated eleven businesses: (1) Fourteen D owns two McDonald's stores; (2) Fifteen D owns one McDonald's store; (3) Sixteen D owns one McDonald's store; (4) Seventeen D owns one McDonald's store; (5) Eighteen D owns two McDonald's stores;[4] (6) Nineteen D owns one McDonald's store; (7) Twenty D owns one McDonald's store; (8) Twenty-One D owns one McDonald's store. The total of Jeff's interests in all of these businesses was valued at $68, 300 at trial.[5]
4. Four D is not a subsidiary of Big D and owns one McDonald's store. Jeff owns a 50% interest in Four D. At trial, Jeff's valued interest was $251, 000.
5. Five D is not a subsidiary of Big D and owns one McDonald's store. Jeff owns a 50% interest in Five D. Jeff's valued interest at trial was $710, 000.
6. Six D is not a subsidiary of Big D and owns one McDonald's store. Jeff owns a 50% interest in Six D. His valued interest at trial was $152, 000.
7. Twelve D is not a subsidiary of Big D. Jeff is the sole owner of Twelve D, which owns and operates one McDonald's store. His valued interest at the time of trial was $912, 000.

         The total sum of Jeff's interests in all of the businesses he acquired during the marriage was valued at $2, 301, 300.

         ¶5. April worked for the Descher business conglomerate. She was responsible for monogramming the uniforms of the corporation's employees, handling gift certificates, and addressing customer complaints at any of the thirteen restaurants.[6] April testified that she worked as an assistant at Benefield Eye Care before her marriage and as a sales clerk during high school. Otherwise, April has only worked for the Descher family. The chancellor found that April's yearly income was $36, 288, with an adjusted gross income of $2, 491.25 per month. Her Rule 8.05 financial statement listed $12, 784.82 in her personal monthly expenses and $3, 402.33 in expenses for the two children, for a total of $16, 168.33 in monthly expenses.[7] Because April would receive the home and her vehicle free and clear of any debt, this left her personal monthly expenses at $7, 199.50 per month.

         ¶6. Jeff's Rule 8.05 statement listed his monthly income before taxes as $65, 931.33. Further, his Rule 8.05 listed his after-tax monthly income at $40, 986.34. However, during his questioning by April's attorney, it was proved that these figures were not accurate. Jeff and his accountant reduced his actual before-tax income by claiming section 179 pass-through expenses, [8] which are tax deductions for business expenses in the type of corporations that Jeff had set up. While those expenses may be tax deductible, they are still income for the purpose of evaluating child support and alimony. For example, Jeff claimed $500, 000, which was actually income for Big D, in pass-through deductions as expenses for opening a new McDonald's restaurant after his separation from April. That $500, 000 deduction was used to reduce Big D's net-profit income by $500, 000. In other words, Big D's 2016 net-profit was $941, 198, but Jeff deducted $500, 000 from that $941, 198 as a business deduction for the new McDonald's. That $500, 000 was still income for Jeff and his brother and was used to open a new business. Just because it was classified as a deduction on his tax returns does not mean that it was not income for the purposes of child support and alimony. There were numerous other deductions as well. The chancellor added all of the deductions Jeff used to reduce his before-tax income on his Rule 8.05 statement and instead of arriving at the number suggested by Jeff ($65, 931.33), the chancellor found that the actual before-tax monthly income for Jeff was $96, 316.66. The chancellor then reduced that figure by the taxes owed and concluded that Jeff's after-tax monthly income was not $40, 986.34 (as stated in his Rule 8.05 statement), but, in fact, was $71, 377.67. This is the monthly income the chancellor used in evaluating child support and alimony.

         ¶7. The chancellor found that it was in the best interest of the minor children for April to retain physical custody. Jeff was ordered to pay $7, 500 in child support each month until the oldest child reached age twenty-one, married, or was otherwise emancipated. In addition, the chancellor determined that Jeff was responsible for the cost of the children's private or public college education and related expenses, along with any health and medical expenses. Jeff was also ordered to obtain a one million dollar life insurance policy that named the children as beneficiaries to ensure that the support would continue if Jeff prematurely died.

         ¶8. The chancellor then valued the entire marital estate in an effort to determine an equitable distribution. The judgment indicates that the chancellor was thorough in his distribution of the marital estate. As a result of the distribution, April received the marital home, valued at $625, 000, and a 2016 GMC Denali, both of which would be free and clear of any indebtedness once Jeff paid the loans in total, as ordered. Further, April received $45, 500 (from the sale of a Yellowfin boat) and her personal property. Jeff received his full interests in all the above-listed business entities, $45, 500 from the sale of the Yellowfin boat, a 1984 Toyota Land Cruiser, and his personal property. The chancellor found that the total marital estate was valued at $3, 584, 766.75. The initial distribution of the marital estate, which included the marital home valued at $620, 000, left April with a total value of $732, 113.47 and Jeff with a total value of $2, 445, 703.42. The chancellor found that after the distribution, April had a deficit of $856, 794.98 when compared with Jeff's portion of the estate. The chancellor therefore awarded lump-sum alimony in that amount. Finally, the chancellor ordered Jeff to pay April $7, 500 a month in permanent-periodic alimony. The chancellor concluded, "April's equitable distribution share of the marital estate is non-income producing[, ]" and April was entitled to live at the standard to which she had become accustomed. Jeff now claims the chancellor erred in the award of monthly child support in the amount of $7, 500 and college expenses. Finally, Jeff asserts that the one million dollar life insurance obligation was excessive and that April should not receive monthly permanent-periodic alimony in the amount of $7, 500 because her expenses do not exceed that income.

         STANDARD OF REVIEW

         ¶9. This Court's review of matters of divorce, child support, and alimony are limited. Ferguson v. Ferguson, 639 So.2d 921, 930 (Miss. 1994). In fact, we may only overturn the findings of a chancellor if "the chancellor was manifestly wrong, clearly erroneous[, ] or an erroneous legal standard was applied." Id. (quoting Bell v. Parker, 563 So.2d 594, 596-97 (Miss. 1990)). Any legal conclusions of the chancellor are reviewed de novo. See Armstrong v. Armstrong, 618 So.2d 1278, 1280 (Miss. 1993).

         ANALYSIS

         I. Child Support

         ¶10. Based on April's Rule 8.05 financial statement, the children have estimated monthly expenses of $3, 402.33. That sum includes $1, 208.33 in health and dental insurance and other out-of-pocket medical expense, which the chancellor ordered Jeff to pay. Following the chancellor's order, the children's total estimated monthly expense would be $2, 194 per month. The chancellor awarded a total of $7, 500 in monthly child support. Jeff claims that the award is excessive because the children's stated expenses are less than half of what the chancellor ordered. Additionally, Jeff claims that the chancellor erred because he did not make a "specific finding" to support the award as required by Mississippi Code Annotated section 43-19-101(4) (Rev. 2015).

         ¶11. The statute indicates that for two children the chancellor could award twenty percent of the parent's adjusted gross income (AGI) for support. Id. § 43-19-101(1). Where the parent makes more than $100, 000 annually, however, the chancellor may deviate from the statutory guidelines by making a "written finding in the record as to whether or not the application of the guidelines . . . is reasonable." Id. § 43-19-101(4). An upward deviation by the chancellor of a child-support obligation may be valid if the increase provides for the children in a manner in which they have become accustomed. Crittenden v. Crittenden, 129 So.3d 947, 959 (¶42) (Miss. Ct. App. 2013).

         ¶12. The chancellor found that Jeff's adjusted net income was $71, 377.67 per month or $856, 532.04 per year. That amount would have produced a monthly child-support obligation of $14, 274.33 if the chancellor had applied the statutory guidelines in subsection 43-19-101(1). The chancellor made a downward deviation of under twenty percent in Jeff's favor. Jeff, however, still complains to this Court that the amount is too much.

         ¶13. This Court has previously rejected "the argument that equates reasonable support with subsistence" and adopted the view that "the 'reasonable needs' of the child ought to be viewed at least as broadly as the reasonable needs of a wife seeking alimony." Ali v. Ali, 232 So.3d 770, 777 (¶21) (Miss. Ct App 2017) The monthly expenses provided for in a party's Rule 805 financial statement do not set a cap on an award of child support Even if a child's basic needs are met, "[i]t is not an abuse of discretion for the chancellor to consider the standard of living to which the child is accustomed in deciding what amount of support is reasonable" Ali, 232 So.3d at 777 (¶21) (citing Moulds v Bradley, 791 So.2d 220, 228-29 (¶24) (Miss 2001) (Diaz, J, concurring)) Even though April claimed less than $4, 000 in monthly expenses for the children, her Rule 805 declaration did not cap out the maximum amount of child support the chancellor could grant Jeff's monthly income and his earning potential far surpass April's As Justice Diaz said in his concurring opinion in Moulds, "[t]he trial court should not limit the amount in child support to the child's 'shown needs,' because a child is not expected to live at a minimal level of comfort while the non-custodial parent is living a life of luxury" Moulds, 791 So.2d at 229 (¶26) (Diaz, J, concurring) (citing People ex rel. Graham v. Adams, 608 N.E.2d 614, 616 (Ill.App.Ct. 1993)). The Rule 8.05 financial statement is not a locked-in-time child support determination. The children were accustomed to a standard of living where their father made $71, 377.67 per month. They are now living on $7, 500 per month.

         ¶14. This Court is not a finder of fact, nor do we apply our own discretion in place of the chancellor's. The chancellor issued a thirty-two page judgment that clearly articulated his findings of fact from the evidence presented and the correct legal standards. This Court only reverses the decision of a chancellor if his decision is not supported by the record, results in manifest error, or is an abuse of discretion. Here, the ...


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