A father whose annual income included varying bonuses and commissions is obligated to provide child support payments in line with evolving guidelines, despite a support agreement made a year earlier than the rules were revised, the Indiana Supreme Court ruled.
Justices on Thursday affirmed a ruling of Allen Superior Judge Pro Tem Thomas Boyer in Courtney L. Schwartz v. Jodi S. Heeter, 02S03-1301-DR-18, which overturned a divided opinion of the Court of Appeals.
Justice Loretta Rush wrote that the mother and father made a commendable agreement in 2009 laying out the father’s child support obligations in which he would pay a fixed amount based on regular income plus a lump-sum annual amount calculated from the varying income from bonuses and commissions governed by a distribution clause in the agreement. The guidelines changed in 2010.
“We therefore face a question of contract interpretation: Does the Agreement incorporate the version of the Guidelines in effect at the time the Agreement was made, or the one in effect for each particular year’s income? The trial court interpreted the Agreement as incorporating the version that applied to a particular year’s income, and we agree,” Rush wrote in a unanimous opinion.
“Since the Guidelines are regularly amended to fit changing economic conditions, we hold that this Agreement anticipates and incorporates those future changes, because it does not specify otherwise.”
The change in Child Support Guidelines in 2010 resulted in the trial court ordering the father to pay an arrearage of $38,376 for 2010 income based on a “true up” clause in the agreement, but the majority of a Court of Appeals panel reversed that determination of the trial court. Dissenting COA Judge Paul Mathias would have affirmed the trial court as the justices did.
“The Court of Appeals majority found the parties intended for Father to use the 2009 Guidelines in perpetuity. In coming to this defensible conclusion, the majority determined the 2009 Guidelines and formula were “factors” the Distribution Clause required to stay the same. But in interpreting a contract, we should not look at particular words in isolation,” Rush wrote.
“We read the Distribution Clause as requiring Father to calculate each year’s child-support obligation by applying the version of the Guidelines applicable to that year’s income. The language and structure of the Distribution Clause, the regularly changing nature of the Guidelines, and the basic purpose of those periodic changes and of child support generally, all lead us to that conclusion,” the court concluded.