Texas = Judiciary Online

Opinion issued=20 December 13, 2007

In=20 The

Court of Appeals

For The

First District of Texas

NO. 01-06-01037-CV=20

____________

HENRY CLEBURNE MCMICHAEL,=20 IV,=20 Appellant

JACKIE MCMICHAEL,=20 Appellee

On Appeal from the 311th = District=20 Court

Harris County,=20 Texas

Trial Court Cause No.=20 2003-44907

MEMORANDUM OPINION

Appellant,=20 Henry McMichael, IV, challenges the trial court's August 25, 2006=20 "Modification Order in Suit Affecting the Parent-Child=20 Relationship," in=20 which the trial court increased child support in favor of = appellee, Jackie=20 McMichael.^{=20
(1)} In=20 two issues, Henry contends that the trial court abused its = discretion in=20 finding that a material and substantial change in circumstances = warranted=20 an increase in child support and in finding that Henry had net = monthly=20 resources of at least $4,300.

We=20 affirm.

Factual and Procedural=20 Background

Henry=20 testified that he and Jackie divorced on October 17, 2003. The = divorce=20 decree provided that Henry must pay Jackie $700 in child support = for their=20 two children. Henry works for Owan Mechanical, and his tax returns = show=20 that he made $50,197 in 2003. In 2004, he made $51,856, $41,518 in = wages=20 and $10,338 in rents and royalties. About $6,000 was withheld as = federal=20 income taxes. Henry did not produce any tax returns for the years = 2005 and=20 2006, but asserted that in 2005, he made "roughly" $57,000, and in = 2006,=20 he was making "[a]bout the same, maybe a little bit more." He did=20 acknowledge, however, that from March 10, 2004 through April 11, = 2005,=20 excluding two bank statements from September 11, 2004 through = November 9,=20 2004, which Henry failed to produce, his total cash deposits in = his Wells=20 Fargo checking account totaled $83,866.64. He explained that his = bank=20 deposits were above his salary because, in 2004, he received a = check for=20 royalties that was worth "between" $6,000 to $8,000. Also, in = 2005, he=20 borrowed "[a]round" $7,000 from his retirement account and = deposited it=20 into his checking account. When further asked to explain the = discrepancy=20 between his cash deposits and monthly income from his job, he = stated that=20 he took out personal loans from his family, which amounted to = "probably"=20 $20,000.

On=20 cross-examination, Henry contradicted himself, first stating that = he only=20 took two separate loans for $11,000 and $4,000 from his parents. = He did=20 not remember which month or year that he took out the $11,000 loan = or when=20 he deposited the money into his checking account. He did remember = taking=20 out the $4,000 loan in 2004. Henry further asserted that he = received a=20 loan in 2004 for $10,000 from Citi Financial, but he acknowledged = that=20 none of his bank statements showed a $10,000 deposit. He = subsequently=20 asserted that the Citi Financial loan was the only loan he took = out in=20 2004, but, for the first time, he testified that he received a = "gifted=20 inheritance" of "at least $10,000 or more." When asked why he did = not=20 produce any information "regarding gifts or loans" in a November = 24, 2004=20 request for production, Henry did not offer any explanation. Also, = he did=20 not produce any information verifying that he had taken out loans = in 2004=20 and 2005. Henry explained that these loans were given to him via = checks.=20 He would cash the checks "at the banks to where I received the = checks=20 from" and only then would he deposit the money into his checking = account.=20

Henry=20 further testified that the deposits above his salary were from = receiving=20 oil royalties of about $2,500 a year. He also stated that he sold = "[a]fter=20 2004" real property worth "somewhere in between" $6,000 to $7,500, = later=20 stating that he "believe[d]" $7,500 was right. Henry acknowledged = that=20 none of his bank statements showed a $7,500 deposit. When asked = why he=20 testified in a deposition in 2005 that he actually sold the real = property=20 in 2003, he stated, "I did state that some of it was at that time. = I said=20 around a year ago maybe. I couldn't remember the exact dates = because not=20 all the property was sold at the same time, and one of the = properties was=20 sold while I was overseas." When asked if he was making any money = on the=20 side from John Lofton, a friend who works in the same line of = business,=20 Henry stated that although he has "helped" Lofton "a couple of = times," he=20 never received any money from Lofton. He did concede that he had=20 "probably" made about $1,500 from side jobs since the divorce.=20

Jackie=20 testified that she believed that Henry had a side job with Lofton = because=20 Henry had side jobs in the past and his deposits in his checking = account=20 have increased, even though his reported income has decreased. She = is=20 aware that Henry has borrowed money from his parents, although she = does=20 not know the amount. Jackie explained that she needed an increase = in child=20 support because the children's expenses have increased since the = divorce.=20 Specifically, "the kids are in school now. They have child care. = They have=20 supplies they need and the fact that he's just making more money = and it=20 shows in his bank statements." The boys also play baseball and = football,=20 and based on their monthly activities in these sports, it costs = her $100 a=20 month. Since the divorce decree, she traded in her 1995 Toyota = Tercel for=20 a 2004 truck, and her gasoline bill has doubled. Her food bill for = the=20 boys has also increased. At the time of the divorce, she was in = school,=20 not making any money. She currently makes only $400 a month, and = takes out=20 loans to attend Kingwood College. She believes that = Henry has=20 net resources of over $6,000 a month and asked for $1,500 a month = in child=20 support.

On=20 August 25, 2006, the trial court ordered Henry to pay increased=20 child-support payments of $1,075 per month to Jackie. The trial = court also=20 signed findings of fact and conclusions of law.^{=20
(2)} Among its findings of fact, the trial court = found=20 that the "circumstances of the child or a person" had "materially = and=20 substantially changed" and that Henry has net resources totaling = "not less=20 than $4,300 per month." Among its conclusions of law, the trial = court=20 determined that it had good cause to increase Henry's child = support to=20 $1,075 per month.

Modification

In=20 his first issue, Henry argues that the trial court abused its = discretion=20 in finding a material and substantial change in circumstances = because=20 Jackie did not present "evidence of the parties' financial = condition both=20 at the time of the order to be modified and at the time of the = hearing."=20 In his second issue, Henry also argues that the trial court abused = its=20 discretion in finding that he had net monthly resources of at = least $4,300=20 because "[t]he only evidence of [his] income during 2006 is his = testimony=20 that he earns $26.01 per hour and usually works 40 hours a week." = He=20 asserts that "[a]t that rate, [he] would earn a little over = $54,140 per=20 year" and "monthly wages of $4,508 would represent his = 'resources,' not=20 his 'net resources,'" after subtracting expenses for taxes and = health=20 insurance.

Generally,=20 a complaining party must show that a trial court's support order=20 constitutes a clear abuse of discretion in order for it to be = disturbed on=20 appeal. Worford=20 v. Stamper,=20 801 S.W.2d 108, 109 (Tex. 1990). A trial court = abuses its=20 discretion when it acts without reference to any guiding rules and = principles. McGuire=20 v. McGuire, 4=20 S.W.3d 382, 384 (Tex. App.--Houston [1st Dist.] 1999, no pet.);=20 Holley=20 v. Holley,=20 864 S.W.2d 703, 706 (Tex. App.--Houston [1st Dist.] 1993, writ = denied). In=20 the child-support context, sufficiency challenges are not = independent=20 points of error, but are "incorporated into an abuse of discretion = determination." McGuire, 4=20 S.W.3d at 387 n.2; see=20 Burney v. Burney,=20 225 S.W.3d 208, 214 (Tex. App.--El Paso 2006, no pet.). Our = analysis=20 employs a two-pronged inquiry: (1) Did the trial court have = sufficient=20 information upon which to exercise its discretion; and (2) did the = trial=20 court err in its application of discretion? McGuire, 4=20 S.W.3d at 387 n.2.

A=20 court may modify a child-support order if "the circumstances of = the child=20 or a person affected by the order have materially and = substantially=20 changed since . . . the date of the order's rendition." Tex. Fam. Code Ann. =A7 156.401(a)(1)(A) = (Vernon = Supp. 2007).=20 When determining the necessity of modifying child support, the = trial court=20 should compare and examine the circumstances of any minor children = and the=20 parents at the time of the original order with the circumstances = existing=20 at the time the movant seeks to modify the order. Hardin=20 v. Hardin,=20 161 S.W.3d 14, 21 (Tex. App.--Houston [14th Dist.] 2004, no pet.), = vacated,=20 No. 14-03-00342-CV, 2005 WL 310076 (Tex. App.--Houston [14th = Dist.] Feb.=20 10, 2005, no pet.) (mem. op.). The trial court has broad = discretion in=20 determining child-support payments and in modifying those = payments.=20 Id.=20 When=20 ruling on a child-support modification, a court must consider, = among other=20 factors: (1) the needs of the child, (2) the ability of the = parents to=20 contribute to the child's support, (3) any financial resources = available=20 for support, and (4) the amount of possession and access to the = child.=20 Tex.=20 Fam. Code Ann. =A7 154.123 (Vernon 2002).

If=20 the requisite material and substantial change in circumstances = appears,=20 the trial court may alter a party's child-support obligation.=20 See=20 In re Hamer,=20 906 S.W.2d 263, 265 (Tex. App.--Amarillo 1995, no writ). In regard = to a=20 child-support award, section 154.062 provides that a court "shall=20 calculate net resources for the purpose of determining child = support=20 liability as provided by this section." Tex. Fam. Code Ann. =A7 154.062(a) = (Vernon = Supp. 2007).=20 "Net resources" includes all wage and salary income, = self-employment=20 income, and all other income actually being received. = Id.=20 =A7=20 154.062(b) (Vernon Supp. 2007). Section = 154.063 also=20 provides that "[t]he court shall require a party to . . . furnish=20 information sufficient to accurately identify that party's net = resources=20 and ability to pay child support." Id. =A7=20 154.063 (Vernon 2002); Garner=20 v. Garner,=20 200 S.W.3d 303, 306 (Tex. App.--Dallas 2006, no = pet.).=20 Section 154.125 provides the appropriate guidelines for when an = obligor's=20 net resources are $7,500 or less. Tex.=20 Fam. Code Ann. =A7 154.125 (Vernon Supp. 2007). Henry first = asserts=20 that the trial court abused its discretion in finding that a = material and=20 substantial change occurred in the circumstances of a child or a = person=20 since the court's prior child-support order. In Giangrosso=20 v. Crosley,=20 this Court held that a "parent's testimony showing a substantial = increase=20 in the designated expenses for a child can be legally sufficient = evidence=20 to support a trial court's finding of a material and substantial = change in=20 the situation of the child." 840 S.W.2d 765, 769 (Tex. = App.--Houston [1st=20 Dist.] 1992, no writ). Testimony on "increased costs [for] = clothing and=20 sporting activities . . . . alone could serve as evidence that the = child's=20 situation has so substantially changed as to warrant an increase = in child=20 support obligations." Id.;=20 see=20 also Hamer,=20 906 S.W.2d at 267 (noting that three children, instead of one as = in=20 Giangrosso,=20 made obligee's testimony even more "probative"). Here, Jackie = testified=20 that the expenses of her two children had increased because (1) = they are=20 now in school and need supplies, (2) they need child care, (3) = they=20 participate in recreational activities, resulting in a higher gas = bill=20 from driving her children around, and (4) they have higher food = costs. In=20 Giangrasso,=20 based on similar facts, this Court found sufficient evidence to = support=20 the trial court's finding of a material and substantial change in = a=20 child's circumstances. 840 S.W.2d at 769; see=20 also Bagot v. Bagot,=20 602 S.W.2d 334, 336 (Tex. Civ. App.--Texarkana 1980, no writ) = (holding=20 that because record revealed at time of modification hearing that = "there=20 had been a substantial increase in the child's expenses, = [obligor's]=20 income had increased, and [obligee's] income had not changed = materially,"=20 increase of child support was justified). Jackie provided some = evidence of=20 a substantive and probative character which supported the trial = court's=20 decision.=20 See Farish v. Farish,=20 921 S.W.2d 538, 541 (Tex. App.--Beaumont 1996, no = writ).=20 Accordingly, we hold that the trial court did not abuse its = discretion in=20 finding that there was a material and substantial change in=20 circumstances.

Henry=20 next asserts that the trial court abused its discretion in finding = that he=20 had monthly net resources of at least $4,300, instead of $3,500 or = less.=20 He does not dispute the trial court's application of the = child-support=20 guidelines, stating in his appellate brief, "Based on its finding = that=20 [he] had net monthly resources of $4,300 or more, the trial court = applied=20 the guidelines of section 154.125 and ordered him to pay 25% of = $4,300, or=20 $1,075 per month in child support."

In=20 Burney,=20 the trial court properly determined that the obligor had higher = net=20 resources than his tax returns showed, based on the obligee's = testimony=20 and the obligor's inability to account for deposits in his banking = account=20 above his monthly salary. 225 S.W.3d at 214. Here, bank statements = showed,=20 and Henry admitted, that from March 10, 2004, through April 11, = 2005, he=20 had made deposits totaling $83,866.64 into his Wells Fargo = checking=20 account. The only documentation that Henry presented to the trial = court of=20 his income in 2004 through 2006 showed that in 2004, he had = take-home pay=20 of approximately $35,500 and approximately $10,000 in rents and = royalties.=20 On direct-examination, he stated that in 2004, he had received = $20,000 in=20 loans from his parents. However, on cross-examination, his = testimony was=20 inconsistent. He admitted at one point to having, in 2004, only = one loan=20 from Citi Financial for $10,000, but at another point, he = explained that=20 he received $15,000 or less in loans from his parents in 2004. He = noted=20 that he received a $11,000 loan and a $4,000 loan, but he could = not=20 remember the year in which he had deposited the proceeds from the = $11,000=20 loan. He did, however, admit to receiving the $4,000 loan in 2004. = On=20 recross-examination, for the first time, Henry then asserted that = he had=20 received an inheritance gift of "at least $10,000 or more." When = asked in=20 a request for production to produce information "regarding gifts = or=20 loans," he did not inform Jackie of any gifts or loans. Moreover, = Henry=20 did not produce any documentation at trial to verify these loans.=20

Henry=20 testified that in 2005, he made roughly $57,000 and, after 2004, = he=20 received $7,500 in proceeds from a land transaction. However, on=20 cross-examination, he conceded that he had previously testified in = a=20 deposition that he had received the proceeds in 2003. He also = stated that=20 he took out a $7,000 loan from his retirement account. Again, = Henry did=20 not produce any documentation to verify the land transaction or = loan.=20 Jackie testified that Henry customarily performed side jobs.=20

The=20 trial court, as the fact-finder, was free to disbelieve Henry's = testimony=20 that the money deposits above his salary in his checking account = were from=20 unverifiable loans, and it was free not to accept his testimony = about his=20 income and net resources. See=20 Garner,=20 200 S.W.3d at 308 (reasoning that trial court "was not required to = accept=20 [obligor's] evidence of his income and net resources"); = Hardin,=20 161 S.W.3d at 23 (noting that trial court need not accept = obligor's=20 evidence of his income and net resources "as true"). Although the = Family=20 Code required Henry to produce financial information supporting = his claims=20 about his income, he failed to do so. See=20 Garner,=20 200 S.W.3d at 308 ("Although required to do so by the [F]amily=20 [C]ode . . ., [obligor] produced no financial = information=20 to support his claims regarding his income."). Also, the trial = court was=20 free to deem Henry's deposits as more probative of his net = resources than=20 his reported income. See=20 Burney,=20 225=20 S.W.3d at 214. Accordingly, we hold that the trial court did not = abuse its=20 discretion in finding that Henry's net resources were "not less = than=20 $4,300 per month."

We=20 overrule Henry's first and second issues.

Conclusion

We affirm = the judgment=20 of the trial court.

Terry=20 Jennings

Justice

Panel=20 consists of Justices Nuchia, Jennings, and Keyes.=20

1. = See=20 Tex. Fam. Code = Ann. =A7=20 156.401(a)(1)(A) (Vernon Supp. 2007).=20

2. = The trial = court signed=20 two sets of findings of fact and conclusions of law, one on = October 30,=20 2006 and the other on November 1, 2006.=20