IN THE COURT OF APPEALS OF NORTH CAROLINA
2022-NCCOA-487
No. COA21-595
Filed 19 July 2022
Wake County, No. 15 CVD 2297
JOAN BRITT, Plaintiff,
and
WAKE CO. HUMAN SERVICES, CHILD SUPPORT ENF., Intervenor Plaintiff,
v.
ERVIN BRITT, Defendant.
Appeal by defendant from order entered 30 April 2021 by Judge David Baker
in Wake County District Court. Heard in the Court of Appeals 27 April 2022.
Wake Family Law Group, by Nancy L. Grace and Melanie C. Phillips, for plaintiff-appellee.
No brief filed on behalf of intervenor-plaintiff.
Gailor Hunt Davis Taylor & Gibbs, PLLC, by Jonathan S. Melton, for defendant-appellant.
ZACHARY, Judge. ¶1 Defendant Ervin Britt appeals from an order requiring him to pay child
support to Plaintiff Joan Britt for the support of their two minor children, E.B. and
R.B.1 After careful review, we affirm.
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2022-NCCOA-487
Opinion of the Court
Background ¶2 Plaintiff and Defendant married in 1999 and separated in 2014. There were
two children born of the parties’ marriage: E.B., born in 2004, and R.B., born in 2009.
On 19 February 2015, Plaintiff filed a complaint seeking, inter alia, child support and
equitable distribution of the parties’ marital assets. On 18 August 2016, Wake County
Human Services, Child Support Enforcement filed a motion to intervene on Plaintiff’s
behalf seeking to sever the child support claim from the collateral claims, which the
trial court granted. On 18 August 2017, the trial court entered a temporary child
support order, obligating Defendant to pay $375.00 per month in child support,
together with $25.00 per month toward Defendant’s child support arrears of
$7,500.00. ¶3 On 1 May 2018, the trial court entered a consent order executed by the parties
resolving the equitable distribution claim. The parties agreed that Plaintiff would,
inter alia, receive a distributive award of $110,000.00, which Defendant would pay to
her at the rate of $4,000.00 per month. ¶4 The child support claim came on for hearing on 30 April 2021 in Wake County
District Court. At trial, Defendant testified regarding his income. Defendant
explained that he owned two businesses: Five-O Servicing, LLC, an HVAC company,
and D Britt Enterprises, a real estate holding company. He also owned ten rental
properties, all of which were encumbered by mortgages at various financial
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Opinion of the Court
institutions. Defendant estimated that he made “[l]ess than a hundred bucks” per
month from Five-O Servicing; he only worked there one to two hours per week
because the company was “in the process of being closed down.” He also stated that
“D Britt [Enterprises wa]s closed.” Defendant testified that he received
approximately $7,000.00 per month in rent from his properties, and he “guess[ed]”
that after expenses, he had a net rental income of approximately $1,050.00 per month
from the properties. He further testified that he did not know from which bank
accounts he paid the mortgages on the various properties. ¶5 Several financial documents that were admitted at trial related to a third
company, DER Enterprises, Inc. Defendant testified that DER belonged to his
mother, who owned three rental properties, and that he did not control the company.
However, he confirmed that he was a signatory on the two DER bank accounts in
order to help his elderly mother. When asked why money was repeatedly transferred
from the DER bank accounts to Defendant’s accounts, Defendant replied, “I’m sure it
was to keep one of the properties from going out of foreclosure.” In contrast, Plaintiff
testified that she and Defendant originally owned DER, but placed it in Defendant’s
mother’s name to avoid creditors during the 2008 housing market crash. She
elaborated: “[T]here was just no way for us to keep up with the bills and the debt we
were creating, so -- I mean, we had creditors all the time, so we changed it over to her
name so they, you know, couldn’t get at us directly . . . .”
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Opinion of the Court ¶6 Defendant testified that in addition to running his own businesses, he also
worked as a “contractor” for Raleigh Air, an HVAC business owned and operated by
his live-in girlfriend. At the time of trial, Defendant had worked at Raleigh Air for
approximately one year for about “eight hours a day every other day, maybe.”
Although he was merely a “contractor” with Raleigh Air, Defendant transferred his
HVAC license from his company, Five-O Servicing, to Raleigh Air to expand Raleigh
Air’s offered services. Moreover, Defendant contributed to Raleigh Air’s advertising
campaigns and interviewed candidates for employment with the company. Defendant
maintained that he was not paid for this work; rather, his employment with Raleigh
Air “started as a loan type of situation,” and he worked for the company in an effort
“to pay [it] back and make goodwill[.]” While Defendant conceded that money was
deposited monthly into his personal bank account from the Raleigh Air bank account,
he testified that this was not income to him. Instead, the money was intended to
reimburse him for his girlfriend’s portion of the mortgage payment on their shared
residence. Defendant also stated that he has used a Raleigh Air credit card to cover
his personal expenses, such as lunches, without advance authorization from the
company. On one occasion, he also used the card to purchase airline tickets to
Washington for himself and his children. ¶7 At trial, Plaintiff’s counsel questioned Defendant regarding the itemized lists
that Defendant created purporting to track his business expenses. Defendant
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conceded that a list of Five-O Servicing’s expenses for the year 2020 was inaccurate,
in that it listed the salaries for employees who were actually contractors for Raleigh
Air; he confirmed that the list contained the salaries “in order to claim th[ose]
expenses for Five-O[.]” Regarding another itemized list of his expenses from 1
January through 2 April 2021, Defendant initially asserted that the list solely
comprised expenses “for the apartments.” However, the list also contained an expense
explicitly related to DER. When he was asked about this expense, Defendant
responded that “[i]t could be anything[,]” and suggested that perhaps he had
performed HVAC services for DER. ¶8 Other items on Defendant’s list of business expenses from 1 January through
2 April 2021 included $962.91 from 2020, which Defendant confirmed were personal
expenses; the nearly $4,000.00 mortgage payment on Defendant’s personal residence,
which he contended was a business expense; and over $13,000.00 in “separation”
expenses, which Defendant conceded should not have been included as a business
expense. Defendant acknowledged that this list contained “some errors” and
confirmed that a qualified accounting professional had not reviewed it. ¶9 Plaintiff also introduced bank statements for the two DER accounts. These
statements evidenced several mortgage payments for various properties, but did not
indicate the amount of each payment that was attributable to principal versus the
amount attributable to interest. Additionally, despite Defendant’s assertion that he
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was a signatory on the DER accounts simply “to help [his mother] with her bills[,]”
Defendant could not describe how he paid the mortgages on his mother’s properties,
stating only that the mortgage payment process was “automatic.” Regarding his
ability to pay the mortgages on his own properties, Defendant explained: “The
apartments bring me money; the mortgages get paid.” Furthermore, Defendant could
not articulate which expenses were satisfied with the transfers to the DER accounts.
Concerning the January 2020 deposits from the Raleigh Air bank account into a DER
account, Defendant testified that he “assum[ed] there’s something that went on that
[his mother] needed money for the apartments or something.” ¶ 10 Before entering its order, the trial court orally rendered its ruling. Addressing
Defendant with regard to his testimony concerning his income and expenses, the trial
court stated:
[T]he Court has wrestled with how to calculate your income. . . . [T]he deposits into the accounts, that’s the one thing that this Court can be certain of. However, there’s no evidence of what the expenses are associated with any of your business enterprises. And I’ll just be honest with you, I don’t think I’ve found myself in a situation where I declare a witness just completely not credible, but it appears to the Court that you’ve gone to great lengths to portray your income at an artificial low and that your testimony was largely evasive with the purpose of misleading the Court about your stake, your role and interest particularly in the business of Raleigh Air.
But this Court will find that the bank account . . . for DER Enterprises . . . is an account that [Defendant] has access
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to, that he utilizes for -- that he has access to and that he utilizes for his personal and business expenses. And although he’s testified that it’s his mother’s account, that in light of the deposits and withdrawals that indicate that [Defendant] is largely in control of this account and that it’s appropriate, fair and just for this to be included in the calculation of his income.
I don’t really even know where to start with the contentions about your role in Raleigh Air. You’re all over the place. And when I sit here in this capacity, representing the Court of Justice, it’s really appalling when someone goes to the lengths that you’ve gone . . . to mislead the Court. I want to be clear about that. You haven’t fooled anyone.
In light of Defendant’s “evasive” testimony and Plaintiff’s testimony that the parties
“shifted and diverted their holdings with DER” to “avoid[ ] debt collection and debt
collectors,” the trial court further found that Defendant “ha[d] done likewise” with
his assets in Raleigh Air in an attempt to avoid his child support obligation. ¶ 11 In its order entered 30 April 2021, the trial court found that Defendant was
self-employed in “HVAC + Real Estate Rentals[,]” and that he owned multiple
businesses. The court determined that Defendant had a monthly income of
$24,085.00 based on evidence presented at trial of the monthly deposits into his
various bank accounts, and the court imputed income of $3,333.00 per month to
Plaintiff. The trial court accordingly ordered, inter alia, that Defendant (1) contribute
$2,040.23 per month to the support of the parties’ minor children beginning 1 May
2021, in accordance with the North Carolina Child Support Guidelines; and (2) pay
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his child support arrears of $6,059.00 to Plaintiff in full by 30 May 2021. Defendant
timely filed notice of appeal.
Discussion ¶ 12 On appeal, Defendant argues that the trial court erred by failing to (1) deduct
the “ordinary and necessary expenses” from Defendant’s self-employment business
receipts in its calculation of his monthly gross income; (2) provide a rationale as to
why the court did not deduct the expenses; and (3) deduct Defendant’s temporary
child support and equitable distribution payments from his monthly gross income in
its calculation of his monthly adjusted gross income.
I. Standard of Review
¶ 13 “Child support orders entered by a trial court are accorded substantial
deference by appellate courts and our review is limited to a determination of whether
there was a clear abuse of discretion.” Jonna v. Yaramada, 273 N.C. App. 93, 100,
848 S.E.2d 33, 41 (2020) (citation omitted). “A judge is subject to reversal for abuse
of discretion only upon a showing by a litigant that the challenged actions are
manifestly unsupported by reason.” Plott v. Plott, 313 N.C. 63, 69, 326 S.E.2d 863,
868 (1985) (citation omitted). Because the North Carolina Child Support Guidelines
vest a trial court “with the discretion to disallow the deduction of any business
expenses which are inappropriate for the purposes of calculating child support, the
trial court’s decision to disallow the claimed expenses must be upheld unless it is
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Opinion of the Court
‘manifestly unsupported by reason’ and therefore an abuse of discretion.” Cauble v.
Cauble, 133 N.C. App. 390, 395, 515 S.E.2d 708, 712 (1999) (citation omitted). ¶ 14 “[U]nchallenged findings of fact are binding on appeal.” Kleoudis v. Kleoudis,
271 N.C. App. 35, 39, 843 S.E.2d 277, 281 (2020) (citation omitted). “Furthermore,
evidentiary issues concerning credibility, contradictions, and discrepancies are for
the trial court—as the fact-finder—to resolve and, therefore, the trial court’s findings
of fact are conclusive on appeal if there is competent evidence to support them despite
the existence of evidence that might support a contrary finding.” Sergeef v. Sergeef,
250 N.C. App. 404, 406–07, 792 S.E.2d 192, 194 (2016) (citation and internal
quotation marks omitted).
II. Analysis
¶ 15 Defendant first argues that the trial court erred by declining to deduct the
“ordinary and necessary expenses” from Defendant’s business receipts when
calculating his monthly gross income for child support purposes. Specifically, he
asserts that the court erroneously failed to deduct the recurring “withdrawals for at
least 5 mortgages and a pest and termite service[.]” We disagree. ¶ 16 “The calculation of child support is governed by North Carolina Child Support
Guidelines established by the Conference of Chief District Court Judges.” Craven Cty.
v. Hageb, 277 N.C. App. 586, 2021-NCCOA-231, ¶ 12 (citation omitted). The
Guidelines define “gross income” as “a parent’s actual gross income from any source,
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including but not limited to income from employment or self-employment . . . ,
ownership or operation of a business, partnership, or corporation, [or] rental of
property[.]” N.C. Child Support Guidelines, at 3 (2019). ¶ 17 The actual gross income derived from self-employment is calculated by
subtracting the “ordinary and necessary expenses required for self-employment or
business operation” from the gross receipts. Id. “ ‘Ordinary and necessary expenses,’
although not specifically defined in the Guidelines, include expenses for repairs,
property management and leasing fees, real estate taxes, insurance, and mortgage
interest. Mortgage principal payments, however, are not an ‘ordinary and necessary
expense’ within the meaning of the Guidelines.” Lawrence v. Tise, 107 N.C. App. 140,
149, 419 S.E.2d 176, 182 (1992). ¶ 18 Here, given the proffered evidence of Defendant’s business expenses—or lack
thereof—the trial court did not err by declining to deduct any expenses from
Defendant’s business receipts in its calculation of Defendant’s gross income for child
support purposes. The transcript supports the trial court’s finding that there was “no
evidence of [which] expenses [were] associated with any of [Defendant’s] business
enterprises.” Defendant did not introduce any documentation of his income and could
only provide a rough estimate of the amount that he derived from his apartment
rentals and other businesses; he did not provide any recent tax returns, because he
had not filed an income tax return since 2017; he testified that he was unsure how
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the apartment mortgages were paid; and his itemized list of business expenses
included some which were clearly illegitimate, such as Defendant’s home mortgage
payment and Defendant’s “separation” expenses, which he conceded were not
business expenses. ¶ 19 Moreover, although two exhibits listed the pest control expense, Defendant
failed to provide sufficient credible information concerning the expense to permit its
consideration by the trial court. The itemized list of expenses from 1 January through
2 April 2021 contained a $140.00 expense for “pest” under “office” expenses, but the
trial court, as fact-finder, was not required to accept this bare assertion at face value,
in light of its determination regarding Defendant’s lack of credibility. See Sergeef, 250
N.C. App. at 406–07, 792 S.E.2d at 194. ¶ 20 Indeed, the court found that Defendant was not credible, as he “was largely
evasive [in his testimony] with the purpose of misleading” the court. Defendant does
not challenge this finding, and thus, it is binding on appeal. Kleoudis, 271 N.C. App.
at 39, 843 S.E.2d at 281. Further, Defendant conceded at trial that the list of expenses
contained errors, and that a qualified accounting professional had not reviewed it.
And while the bank statements for one of the DER accounts also listed a monthly pest
control expense of $70.00, Defendant failed to indicate whether that expense was
incurred for his or his mother’s rental properties, or for one of their personal
residences. Therefore, because the trial court found that Defendant offered no reliable
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evidence as to the pest control expense—a determination supported by the court’s
binding finding concerning the incredibility of Defendant’s testimony—the trial court
appropriately exercised its discretion by declining to consider pest control expense as
an ordinary and necessary business expense. See Cauble, 133 N.C. App. at 395, 515
S.E.2d at 712. ¶ 21 Regarding the interest portion of the mortgage payments on Defendant’s rental
properties, Defendant presented insufficient evidence to warrant its inclusion as a
business expense. Although Defendant testified that the monthly mortgage payments
on some of his rental properties, his mother’s residence, and her rental properties
were paid from the DER accounts, he could not identify the specific properties
associated with those mortgage payments. With this incomplete picture of
Defendant’s expenses, the trial court could not adequately distinguish whether the
proffered expenses were Defendant’s personal expenses or expenses associated with
Defendant’s business or his mother’s business. Furthermore, even if Defendant had
identified the mortgage payments which were attributable to his rental properties,
full mortgage payments do not constitute “ordinary and necessary expenses” for the
purpose of calculating child support. Lawrence, 107 N.C. App. at 149, 419 S.E.2d at
182 (“Mortgage principal payments . . . are not an ‘ordinary and necessary expense’
within the meaning of the Guidelines.”). Additionally, Defendant did not provide any
evidence regarding the “expenses for repairs, property management and leasing fees,
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real estate taxes, insurance, and mortgage interest[,]” id., or any other “ordinary and
necessary expenses required for self-employment or business operation[,]” N.C. Child
Support Guidelines, at 3. ¶ 22 Accordingly, the trial court did not abuse its discretion in finding that there
was no competent evidence of Defendant’s “ordinary and necessary expenses[,]” id.,
and appropriately declined to deduct the pest control expense and the mortgage
payments from Defendant’s business receipts in its calculation of Defendant’s gross
income for child support purposes, see Cauble, 133 N.C. App. at 395, 515 S.E.2d at
712. ¶ 23 Defendant next asserts that the trial court was “required to make findings why
the expenses [Defendant] testified about and that were admitted into evidence were
not considered in the calculation of his income.” In support of this contention,
Defendant cites Thomas v. Burgett, 265 N.C. App. 364, 852 S.E.2d 353 (2019).
However, as explained below, Defendant’s reliance on Thomas is misplaced. ¶ 24 In Thomas, this Court vacated in part and remanded a child support order in
which the trial court failed to articulate its reason for excluding particular expenses
related to the defendant’s rental property. 265 N.C. App. at 368, 852 S.E.2d at 357.
The Court explained that “even if the trial court chose not to find [the defendant]’s
evidence credible at all and therefore did not factor it into its computation, its findings
d[id] not provide its rationale for doing so.” Id. (citation and internal quotation marks
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omitted). The Court determined that vacatur and remand were necessary because
“[w]ithout any evidence indicating the trial court’s contemplation of those expenses,
we do not have enough findings to conduct adequate review.” Id. ¶ 25 In the case at bar, the trial court sufficiently provided a rationale for not
factoring Defendant’s proffered evidence of pest control expense into its calculation
of his gross income: it did not find the evidence to be credible. And, unlike the trial
court in Thomas, the court here articulated at trial why it did not find Defendant’s
evidence to be credible: namely, that Defendant’s testimony “was largely evasive with
the purpose of misleading” the court, a sentiment reiterated in the court’s written
finding that Defendant’s “testimony was largely evasive with the purpose of
misleading the court as to his income[.]” This finding, unchallenged by Defendant, is
binding on appeal. Kleoudis, 271 N.C. App. at 39, 843 S.E.2d at 281. Moreover,
because Defendant did not offer any evidence of the interest portion of the mortgage
payments on his rental properties, the court did not need to provide a rationale for
not considering the interest as a business expense, as there was no evidence for the
court to consider. ¶ 26 Thus, given that the trial court provided a rationale for not accepting
Defendant’s evidence of any pest control expense—that Defendant’s evasive and
misleading testimony undermined the credibility of his proffered evidence—and that
the court required no rationale for declining to consider evidence of the mortgage-
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interest expense where Defendant offered none, we conclude that the court provided
sufficient findings of fact in its order to enable appellate review. See Thomas, 265
N.C. App. at 368, 852 S.E.2d at 357. Defendant’s argument accordingly fails. ¶ 27 Finally, citing no authority, Defendant contends that the trial court erred in
calculating his monthly adjusted gross income by failing to deduct Defendant’s
temporary child support and equitable distribution payments from his monthly gross
income. This argument is manifestly without merit. ¶ 28 The Guidelines prescribe particular instances in which a parent is entitled to
receive a deduction from his or her monthly gross income for the purpose of
calculating child support: (1) where a parent is responsible for child support payments
on behalf of a child other than the child for whom support is sought in the present
action; and (2) where a parent is responsible for the financial care of “his or her
natural or adopted children who currently reside with the parent (other than children
for whom child support is being determined in the pending action).” N.C. Child
Support Guidelines, at 4. ¶ 29 In the instant case, the trial court did not abuse its discretion by declining to
deduct Defendant’s temporary child support and equitable distribution payments
from his monthly gross income for child support purposes, in that the Guidelines do
not permit deductions from a party’s gross income for such payments. See id.; see also
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Cauble, 133 N.C. App. at 395, 515 S.E.2d at 712. Defendant’s argument to the
contrary is overruled.
Conclusion ¶ 30 For the foregoing reasons, we conclude that the trial court did not abuse its
discretion in calculating Defendant’s monthly gross income and monthly adjusted
gross income, and that the trial court provided sufficient findings to support its
determinations. Accordingly, we affirm the child support order.
AFFIRMED.
Judges DILLON and CARPENTER concur.
Footnotes
[1] We use initials to protect the identities of the juveniles.