Mahoney v. Mahoney, 950005

Citation538 N.W.2d 189
Decision Date22 September 1995
Docket NumberNo. 950005,950005
PartiesDebra Susan MAHONEY, Plaintiff and Appellant, v. Timothy James MAHONEY, Defendant and Appellee. Civ.
CourtUnited States State Supreme Court of North Dakota

Garaas Law Firm, Fargo, for plaintiff and appellant; argued by Jonathan T. Garaas, Fargo.

Stefanson, Plambeck & Foss, Moorhead, for defendant and appellee; argued by Todd W. Foss, Moorhead.

MESCHKE, Justice.

Debra Susan Mahoney appealed from an order decreasing child and spousal support payable by her ex-husband, Timothy James Mahoney. We reverse and remand for reconsideration.

Debra and Tim were married on January 1, 1977, and had three children. Ryan was born on May 28, 1980; Kaileen on January 29, 1982; and Colin on January 10, 1986. Debra filed for divorce in August 1991 and, after a seven-day trial in July 1992, they were divorced. Tim was then a surgeon at Dakota Clinic, Ltd. in Fargo earning $242,100 annually.

After the trial court announced its intended findings, Tim filed an affidavit that he would leave Dakota Clinic to open a practice with two other surgeons. He said his work at Dakota Clinic would end October 31, 1992 so that he would lose some year-end profit-sharing. Due to this "newly discovered evidence or a change of circumstance," Tim objected to Debra's proposed findings and decree. Soon after, though, Tim and Debra agreed that, if the proposed decree was entered, "Each party waives his or her right to appeal from the Judgment as entered." On September 9, 1992, the court entered the decree that ordered Tim to pay Debra $2,000 monthly spousal support for four years, and $4,080 monthly child support.

On May 13, 1993, Tim moved to reduce his support payments, claiming that his reduced income after leaving Dakota Clinic was "a significant change in his financial circumstances warranting a modification of support." The trial court denied Tim's motion, and Tim appealed. The Court of Appeals reversed and remanded for reconsideration, explaining that it was "unable to conclude that the trial court's erroneous view that Timothy was required to obtain prior court approval before changing employment did not color its judgment in denying the motion for modification." Mahoney v. Mahoney, 516 N.W.2d 656, 662 (N.D.App.1994). On remand, in December 1994, after a three-day trial, the court reduced Tim's monthly support payments to $1,000 for Debra and to $1,500 for the children, but extended her spousal support for an additional year. The court made the reductions effective from September 1, 1993. Debra appealed.

After her appeal, Debra moved the trial court for a stay of the "retroactive effect on child support" because Tim refused to make any more payments until he "has recovered the amount that he has paid in excess of $2,500.00 per month since September, 1993," and because Debra needed "current support monies [since] amounts that she ... received previously from [Tim] in excess of $2,500.00 after September 1, 1993, have been spent and are no longer available for the children" or her. The court stayed the effect of the accrued credits pending appeal, explaining:

[I]t was never pointed out to me, or did I realize when I modified the Judgment, that it would mean arrearages going the other way. I always intended that the $2500.00, at least initially, be continued. I am not going to leave these children with no income.

The court ordered Tim to continue paying the $1,000 spousal support and the $1,500 child support monthly, "during the pendency of the Appeal ... without regard to the existence of any claimed ... credit in favor of [Tim] supposedly created by the Amended Judgment," and directed that "these matters be reexamined by this Court after resolution of the pending appeal should the decision of the Supreme Court justify such reexamination so as to do justice to the parties."

Debra argues on appeal that no material change in circumstances authorized a reduction in support, the findings on the extent of the decrease in Tim's income are clearly erroneous, and the reduced support should not be retroactive. Because we agree the findings on the extent of the decrease in Tim's income are clearly erroneous, we reverse and remand for reconsideration.

A trial court's modifications of child support and spousal support are findings of fact that will not be reversed unless clearly erroneous. Gabriel v. Gabriel, 519 N.W.2d 293, 294 (N.D.1994); Gronland v. Gronland 527 N.W.2d 250, 253 (N.D.1995). A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if no evidence supports it or if, on the entire record, we are left with a definite and firm conviction that a mistake has been made. Krank v. Krank, 529 N.W.2d 844, 847 (N.D.1995). We conclude that the trial court properly found a material change of circumstances, but that its findings about Tim's decreased income were induced by an erroneous application of the guidelines and statutes on child support, and are therefore clearly erroneous. After reconsideration on remand, the trial court should establish a new equitable effective date for any changes in Tim's support payments.

1. Change of Circumstances

Debra argues: "There was no material change in circumstances because Tim's departure from Dakota Clinic was contemplated by the parties at the time of the stipulation which resulted in the non-appealable judgment of September 9, 1992"; the trial judge "is 'clearly erroneous' when he indicates that the resignation had 'no effect upon the Court's final Judgment' " because Tim's "resignation was known to all parties when the child support and spousal support obligations were imposed upon Tim--with his consent"; and Tim's "actions were unreasonable" because he acted in bad faith and "did not consider his actual circumstances of employment when he voluntarily resigned from Dakota Clinic." Therefore, Debra argues, "Tim failed to establish a prima facie case of material change in circumstances justifying any reduction in Tim's support obligations." We disagree.

Currently, only if a motion to modify child support is made within one year of a prior order is a material change of circumstances needed to conform the order to the guidelines. NDCC 14-09-08.4(3); Schmidt v. Reamann, 523 N.W.2d 70, 72 (N.D.1994); Eklund v. Eklund, 538 N.W.2d 182 (N.D.1995). Tim first moved to modify support on May 13, 1993, only eight months after the September 9, 1992 decree. For this reason, apparently, and because spousal support can only be modified for a material change of circumstances, Tim does not contest the need for changed circumstances. Furthermore, the Court of Appeals clarified that the trial court could modify these support orders for a material change in circumstances. Mahoney, 516 N.W.2d at 660. "Because a change in employment does not necessarily result in a change in financial circumstances, the proper time for a court to determine whether a change has occurred, whether the change is permanent or temporary, and whether it was made in good faith, is after the fact." Id. at 661.

The guidelines do not allow "an obligor with an established earnings history to drastically reduce his income, and thereby his ability to pay child support, upon a whim," or "voluntarily, without good reason." Olson v. Olson, 520 N.W.2d 572, 574 (N.D.1994). Still, we recognized in Olson that "there may be instances when medical, psychological, or other valid reasons will support [such] a change." Id. "We can also envision situations where the parent accepts new employment at a lower current salary or seeks further education, if the potential for advancement and long-term security are improved." Id. (citing Schatke v. Schatke, 520 N.W.2d 833 (N.D.1994)). In Olson, the parent voluntarily quit a "well-paying, permanent teaching position to take a substantially lower-paying job," but he gave no valid reasons for the change. 520 N.W.2d at 574. We adopted a "rule of reason" and affirmed the trial court's imputation of income compatible with his prior earnings to calculate child support under the guidelines. Id.

Here, Tim claimed "workload, visitation, psychological and economic" reasons for the change. The trial court found that Tim "voluntarily submitted his resignation to Dakota Clinic," but it accepted as valid his reasons for resigning, finding that "[Tim], perhaps unrealistically, felt his income would remain the same or increase." From evidence, the court also found that Tim's income "dropped substantially since the resignation," that the drop "was not known, anticipated, or considered by [Tim] at the time of the resignation or subsequent divorce," and that "[Tim] has experienced a significant change in circumstances justifying the modification of child support and reduction of spousal support/alimony."

Debra claims Tim acted unreasonably and in bad faith in resigning from Dakota Clinic, and that the evidence compels a finding of his bad faith. We disagree.

The trial court observes the demeanor and credibility of the witnesses, it is in a better position to choose between two permissible views of the evidence, and we do not retry the case to substitute findings we might have made for those the trial court makes when reasonable evidence in the record supports the findings made. Schmidkunz v. Schmidkunz, 529 N.W.2d 857, 859 (N.D.1995). The trial court found that Tim, "perhaps unrealistically," underestimated his future income when he left Dakota Clinic, but concluded that "[Tim] has made a substantial showing of good faith or cause for his voluntary resignation and subsequent decline in income." An unrealistic expectation, alone, does not conclusively prove misconduct or bad faith. We conclude that the trial court findings, that there was no misconduct or bad faith in Tim's changing employment, are not clearly erroneous.

2. Decreased Income

The trial court's findings about Tim's decreased income in 1993 and 1994 for application of the guidelines table are clearly erroneous....

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