Shae v. Shae

849 N.W.2d 173

2014 ND 149

Jerry SHAE, Plaintiff, Appellant, and Cross–Appellee

v.Colette SHAE, Defendant, Appellee, and Cross–Appellant.

No. 20130282.

Supreme Court of North Dakota.

July 17, 2014.

Sherry Mills Moore (argued), and David Michael Knoll (appeared), Bismarck, ND, for plaintiff, appellant and cross-appellee.

Rodney Ervin Pagel, Bismarck, ND, for defendant, appellee, and cross-appellant.

CROTHERS, Justice.

[¶ 1] Jerry Shae appeals a district court order for amended judgment on Colette Shae's motion to modify child support obligations, requiring Jerry Shae to pay $39,634.82 per month in child support, medical expenses for his children and Colette Shae's $24,959.46 in attorney fees. We conclude the district court's modified child support award was clearly erroneous and the district court incorrectly calculated Jerry Shae's 2012 net income. We reverse and remand.

I

[¶ 2] Jerry Shae and Colette Shae were divorced on February 2, 2011. They have three minor children and one adult child. Colette Shae was awarded primary residential responsibility of the children and assets including the parties' marital home in Bismarck, fifty acres of land in Burleigh County, mineral interests in Dunn and Stark Counties, her retirement account, $60,000 from Jerry Shae's retirement accounts and a $50,000 property equalization payment. Jerry Shae received substantial parenting time, a farm near Williston, real property in Williston and farm equipment. The parties agreed on the division of personal items. The settlement required Jerry Shae to pay $2,195 per month in child support for their four minor children. Jerry Shae was required to pay $1,978 per month support after their oldest child reached eighteen and graduated from high school or reached age nineteen, whichever came first. This child support award was based on Jerry Shae's salary of $95,108 as an engineer.

[¶ 3] Colette Shae moved to modify Jerry Shae's child support obligations. Colette Shae sought an increase in child support to include Jerry Shae's unexpected income since the divorce, a modification requiring Jerry Shae to pay the children's healthcare costs and her attorney fees from her motion. The district court found Jerry Shae terminated his employment as an engineer in 2012 to devote himself full-time to the western North Dakota water-hauling business he started known as Northwest Water Transfer, LLC. Testimony revealed Jerry Shae actually terminated his employment as an engineer in mid–2011 to devote himself full-time to Northwest Water Transfer. The district court found Jerry Shae realized nominal income for the first few months of operating Northwest Water Transfer in 2011. The district court found Jerry Shae earned $2,366,534 in 2012 for his work with Northwest Water Transfer, sold his farm, realizing capital gains of $2,935,460, and purchased a replacement farm for $1,900,000. According to Jerry Shae's 2012 Form 1040, he earned $50,000 in wages, $522 in taxable interest, $172,380 in other gains and incurred farming losses of $148,224. Colette Shae earned $125,293 in 2012, consisting of $51,974 as a registered nurse, $37,338 in capital gains, $16,123 in mineral royalties and $19,858 in gambling winnings.

[¶ 4] The district court made findings on the minor children's expenses and the lifestyle they lead with each parent. The three minor children participate in a variety of athletic and non-athletic activities, and Colette Shae provides for participation fees, equipment fees, travel expenses and related costs. Colette Shae also pays auto insurance costs and driving expenses for their two older minor children. The home Colette Shae and the children reside in needs significant repairs beyond Colette Shae's financial capacity. The district court found Jerry Shae is able to provide an elevated lifestyle to his children, including vacations and expensive gifts. The district court found Colette Shae is unable to give the same amenities to the children because she provides for their necessities.

[¶ 5] The district court found a preponderance of the evidence established a deviation from the child support guidelines was warranted. The district court based Jerry Shae's elevated child support obligation on its calculation of his 2012 net monthly income of $116,573. The district court stated it applied the child support projection methodology used in Martiré v. Martiré, 2012 ND 197, 822 N.W.2d 450, to determine that thirty-four percent of $116,573 is $39,634.82 per month. The district court ordered the child support to be retroactive to July 2012, with arrearages to be paid by Jerry Shae at ten percent per month for ten consecutive months beginning on August 5, 2013. The district court's net monthly income calculation did not include capital gains Jerry Shae realized through selling the farm and the machinery because a significant portion was reinvested in a new farm, because Colette Shae granted Jerry Shae the farm with express consent and presumable knowledge of its value and because it was a one-time occurrence. The district court did not include as income the allegedly excessive salary of $97,033.87 Jerry Shae paid their eldest son, who works for Northwest Water Transfer as a bookkeeper and payroll clerk. The district court required Jerry Shae to pay Colette Shae's attorney fees of $24,959.46 for her motion. Jerry Shae stipulated to assuming the obligation to pay for their children's non-elective, non-covered medical costs. Jerry Shae appealed and Colette Shae cross-appealed.

II

[¶ 6] This Court has stated:

“Child support determinations involve questions of law which are subject to the de novo standard of review, findings of fact which are subject to the clearly erroneous standard of review, and may, in some limited areas, be matters of discretion subject to the abuse of discretion standard of review. A court errs as a matter of law when it fails to comply with the requirements of the child support guidelines in determining an obligor's child support obligation. As a matter of law, the district court must clearly set forth how it arrived at the amount of income and level of support. The trial court's findings of fact in making its child support determination are overturned on appeal only if they are clearly erroneous. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if no evidence exists to support it, or if, on the entire record, we are left with a definite and firm conviction that a mistake has been made.”

Lauer v. Lauer, 2000 ND 82, ¶ 3, 609 N.W.2d 450 (internal citations omitted). “In cases where the obligor's monthly net income exceeds [the maximums provided by the guidelines], the court must make a further inquiry to determine an amount appropriate to the needs of the children and the ability of the parent to pay.” Montgomery v. Montgomery, 481 N.W.2d 234, 235 (N.D.1992). “Pursuant to that inquiry, the trial court's determination of child support is a question of fact, and will not be set aside on appeal unless clearly erroneous.” Id.;see also Sherburne Cnty. Soc. Servs. on Behalf of Schafer v. Riedle, 481 N.W.2d 111, 113 (Minn.Ct.App.1992) (“The trial court may not deviate from the guidelines unless it makes express findings on the reasons for departure.... [A]n obligor's high income alone will not support an upward departure from the guidelines.”). For high income families, we find instructive language from the Kansas Court of Appeals, stating:

“In fixing the child support obligation of a high-income parent, the trial court must balance competing concerns. On the one hand ... a child is not expected to live at a minimal level of comfort while the noncustodial parent is living a life of luxury.... On the other hand, child support payments are not intended to be windfalls, but rather adequate support payments for the upbringing of the children.”

Matter of Marriage of Patterson, 22 Kan.App.2d 522, 920 P.2d 450, 456 (1996) (citation omitted).

[¶ 7] Jerry Shae argues the district court erred by mechanically extrapolating from the child support guidelines an upward deviation in the amount of thirty-four percent of his net monthly income. Jerry Shae asserts the district court incorrectly interpreted Martiré to require the thirty-four percent multiplier. 2012 ND 197, 822 N.W.2d 450. Martiré stated:

“The Child Support Guidelines allow a district court to deviate upward from the presumptively correct child support amount in cases that involve an obligor that earns more than $12,500 per month. Under N.D. Admin. Code § 75–02–04.1–09(2)(b), the presumptively correct amount of child support is rebutted ‘if a preponderance of the evidence establishes that a deviation from the guidelines is in the best interest of the supported children and ... [t]he increased ability of an obligor, with a monthly net income which exceeds twelve thousand five hundred dollars, to provide child support.’ ”

2012 ND 197, ¶ 22, 822 N.W.2d 450 (internal citation omitted). The district court in Martiré used the rebuttal criteria in N.D. Admin. Code § 75–02–04.1–09(2)(b) to determine the evidence merited an upward deviation, and it applied a thirty-four percentmultiplier to increase the total monthly support by $1,877 for a total of $6,127 per month. Martiré, at ¶ 23. We concluded the district court's decision in Martiré contained sufficient findings to support the upward deviation from the presumptive amount and the findings were not clearly erroneous. Id. at ¶ 24.

[¶ 8] Later, in Nuveen v. Nuveen, we clarified the rule to be applied. 2012 ND 260, 825 N.W.2d 863. This Court recognized that the thirty-four percent multiplier was used in Martiré by applying “the percentage of income an obligor was required to pay for three children at the highest income level in the [child support] guidelines ... to the obligor's income.” Nuveen, at ¶ 12. However, this Court does not simply affirm use of a multiplier without first determining that the...