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COURT OF APPEALS DECISION DATED AND RELEASED AUGUST 6, 1996 |
NOTICE |
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A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 96-0518-FT
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT III
In re the Marriage of:
JULENE MARIE HOVILA
n/k/a JULENE
HOVILA-SCHMIDT,
Petitioner-Respondent
v.
MICHAEL JOHN HOVILA,
Respondent-Appellant.
APPEAL from an order of
the circuit court for Ashland County:
ROBERT E. EATON, Judge. Affirmed.
Before Cane, P.J.,
LaRocque and Myse, JJ.
PER
CURIAM. Michael Hovila appeals an order requiring him to pay
child support on a personal injury settlement.[1] He argues that the proceeds of a personal
injury settlement should not be included within the definition of gross income
for purposes of applying a 25% withholding order for child support and that
$5,500 of the settlement that he used to pay a loan to his personal injury
attorney should not be considered income for child support purposes. We reject these arguments and affirm the
order.
The parties were
divorced in 1990 and Michael was ordered to pay 25% of his gross income for
support of the parties' two minor children.
Michael was then injured on the job and, in May 1995, settled claims
with his employer for $275,000; $150,000 of this as a cash payment and $125,000
in the form of a structured annuity that paid $745 per month for life. Michael's personal injury attorney was paid
out of the $150,000 cash payment and a $5,500 loan the attorney made to Michael
was also paid from the cash award, leaving Michael with $72,353 plus the
annuity. Michael concedes that he must
pay 25% of the monthly annuity payments as child support when he receives them,
but argues that he should not have to pay child support on the $72,353 cash
payment or the $5,500 loan.
Michael's argument that
the cash payment was not intended to replace income was not properly preserved
because he did not present any evidence on that issue to the trial court. Wisconsin
Adm. Code § HSS
80.02(13) defines gross income to include personal injury awards intended to
replace income. The trial court cannot
be expected to differentiate between parts of an award designed to replace
income and parts attributable to other factors in the absence of any
evidence. The burden was on Michael to
present this evidence. Michael had sole
control of the information regarding a breakdown of the settlement. He succeeded in blocking Julene's efforts to
obtain this information prior to the hearing.
Michael cannot be heard to complain about the trial court's allocation
of the settlement proceedings when he has concealed the information necessary
to make any other decision.
Citing Krebs v.
Krebs, 48 Wis.2d 51, 419 N.W.2d 573 (Ct. App. 1988), Michael argues
that all of the award should be presumed to be compensation for losses other
than wages. The issue in Krebs
was whether the trial court properly applied the presumptive 50/50 division of
marital property to a personal injury award that included scarring and
disfigurement. The parties were still
married at the time of the structured settlement. The court concluded that payments to be received in the future
based on a structured settlement that did not identify what portion of the
future payment was to compensate for pain, suffering, bodily injury, future
earnings, past medical and other expenses or lost earnings during the marriage
are presumptively the sole property of the injured person. Krebs is distinguishable in
several ways. First, it involves
property division, not child support. A
structured settlement with future payments may not be accessible by a former spouse
as a form of property division but still constitute income for purposes of
child support. Second, the structured
settlement in Krebs occurred while the parties were still
married. The parties therefore had
equal access to any information relevant to the allocation of the
settlement. Finally, Krebs
involved damages for scarring and disfigurement. Michael's settlement is apparently based primarily on lost
wages. Michael has not worked as a
railroad engineer since the date of his injury. He did not work at any job from the date of the injury until
three weeks before the hearing when he acquired a part-time minimum wage
job. He was thirty-four years old at
the time of the settlement. The annuity
makes up for less than half of Michael's previous income. The entire personal injury award, less the
attorney's fees, could not have purchased an annuity that would equal Michael's
former annual salary. Even if we
applied a presumption that the cash payment was not meant to replace income,
that presumption is rebutted by the facts presented here. In the absence of any evidence establishing
that a portion of the settlement was designed to compensate Michael for damages
other than lost wages, the trial court properly required him to pay child
support on the entire cash settlement.
Michael also notes that
the trial court had authority to deviate from strict application of the
percentage guidelines. He submitted to
the trial court an accounting of how he spent the cash payment in an effort to
establish that he did not have the capacity to pay 25% of that amount. Those expenditures included a van, a
computer for recreational use, two boats, trips and a $10,000 beer can
collection. From January to October
1995, he paid only $180 child support for the two children. The trial court properly refused to deviate
from the percentage guidelines under these circumstances.
The $5,500 used to repay
a loan to Michael's personal injury attorney was properly included in the
settlement agreement and made subject to the 25% child support order. The attorney loaned Michael that money as an
advance on his settlement. Whether he
received the money in advance or after settlement does not change the character
of the money. It was properly combined
with the cash award and, in the absence of any evidence that it was paid to
Michael for a purpose other than wage compensation, it was properly subjected
to the child support formula.
By the Court.—Order
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.