Nelson v. Nelson

• Court: North Dakota Supreme Court
• Writing for the Court: MESCHKE; NEUMANN; MUEHLEN MARING; VANDE WALLE; SANDSTROM
• Citation: Nelson v. Nelson, 547 N.W.2d 741 (N.D. 1996)
• Decision Date: 14 May 1996
• Docket Number: No. 950299,950299
• Parties: Keith Michael NELSON, Plaintiff and Appellee, v. Jody Lynn NELSON, n/k/a Jody Lynn Novak, Defendant and Appellant. Civil

Page 741

547 N.W.2d 741

Keith Michael NELSON, Plaintiff and Appellee, v. Jody Lynn NELSON, n/k/a Jody Lynn Novak, Defendant and Appellant.

Civil No. 950299.

Supreme Court of North Dakota.

May 14, 1996.

Richard A. Ohlsen, Ltd., Brainerd, MN, for plaintiff and appellee; argued by Richard A. Ohlsen. Appearance by Alan M. McDonaugh, Law Clerk.

Karen K. Braaten, Ltd., Grand Forks, ND, for defendant and appellant; argued by Karen K. Braaten. Appearance by Lynn Block, Law Clerk.

MESCHKE, Justice.

Jody Lynn Nelson appeals from a decree decreasing the child support payable by her ex-husband, Keith Michael Nelson. Although we disagree with much of the trial court's reasoning for refusing to impute more income to Keith, we agree with one valid reason and with the result. Therefore, we affirm.

Jody and Keith were married on May 30, 1981, and had two children. Erica Lynn was born on June 7, 1982, and Ashley Nicole was born on June 4, 1987. Keith and Jody were divorced on January 28, 1992. The divorce decree placed custody of the two children with Jody, and ordered Keith to pay $526 monthly child support. In December 1992, the divorce decree was amended when Keith agreed to increase his support payment to $568 monthly.

Before the divorce, Keith worked for the Overhead Door Company as an installer. His 1991 gross income had been $27,130. About June 1992, Keith left Overhead Door to work for the Red River Overhead Door Company. He earned $17,361 in 1992. In June 1993, Keith left Red River to start his own overhead door business. In June 1994, Keith filed bankruptcy. Keith earned $8,292 in 1993, and $10,005 in 1994.

In January 1995, Keith moved to reduce his child support obligation due to a "dramatic reduction of income." Jody resisted, asserting that Keith's income reduction was voluntary and only temporary. Comparing Keith's 1994 "hourly" income to his 1991 hourly wage of $10.50 at Overhead Door, Jody urged that Keith was "underemployed" for application of the North Dakota Child Support Guidelines, see NDAC 75-02-04.1-07, and asked the court to impute more income to Keith if it modified his obligation.

After an evidentiary hearing, the trial court concluded: (1) the underemployment guideline was inapplicable because Keith was "self-employed," not "underemployed"; (2) the underemployment guideline is unreasonable, unnecessary, and not required by federal law, and a court should not impute income unless an obligor's voluntary change of employment is not "reasonable under all of the circumstances"; and (3) even if the underemployment guideline applied, Jody had failed to present relevant and reliable evidence of the prevailing wage in the community for a person with Keith's work history and qualifications. The trial court concluded that Keith's monthly income was $900, and reduced his child support obligation to $252 monthly. Jody appeals.

A trial court's modification of a child support award is a finding of fact that will not be reversed unless it is clearly erroneous. Mahoney v. Mahoney, 538 N.W.2d 189, 191-92 (N.D.1995). As we explained in Mahoney, 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."

1. Voluntary & Temporary.

Jody argues that the "trial court erred in granting modification of Keith's child support obligation as Keith's reduction in income was voluntary and temporary." We disagree. A voluntary change of employment resulting in a reduction of income does not, by itself, foreclose an obligor from seeking modification of a child support obligation.

Formerly, an obligor had to demonstrate a material change in circumstances before a child support order would be reduced. See Sweeney v. Hoff, 478 N.W.2d 9, 10 (N.D.1991). A primary factor in determining whether such a change had occurred was whether there had been "a change in the financial circumstances of the parties." Id. Moreover, the voluntariness of the change was also considered when determining whether the change warranted modification of the support award. See id.; Huffman v. Huffman, 477 N.W.2d 594, 597 (N.D.1991); see also Gabel v. Gabel, 434 N.W.2d 722, 723 (N.D.1989) ("cause of change" was relevant factor, "including whether the change was permanent or temporary and whether it was due to a voluntary act or neglect on the part of the obligor"). Thus, under our prior opinions, the voluntary nature of Keith's change in financial circumstances would have been a relevant factor to consider.

Now, however, our legislature has authorized and directed periodic review of all child support orders. See Eklund v. Eklund, 538 N.W.2d 182, 185-86 (N.D.1995); see also Garbe v. Garbe, 467 N.W.2d 740, 742-43 (N.D.1991). Consequently, an obligor only has to demonstrate a material change in circumstances to seek modification of a child support order within one year after its entry. NDCC 14-09-08.4(3); see Mahoney, 538 N.W.2d at 192. If the obligor properly seeks to modify an order after one year, NDCC 14-09-08.4(3) requires the trial court to modify the obligation "to conform the amount of child support payment to that required under the child support guidelines."

Keith did not have to prove a material change in circumstances because his support order was over one year old. Since Keith is entitled to periodic review of his child support obligation, it necessarily follows that he is not absolutely precluded from seeking the modification when, due to a voluntary change of employment, application of the guidelines to his present income will reduce his support obligation.

Jody asserts that the "appropriate relief for Keith's temporary reduction in income would be for a delay in making a portion of the child support payments rather than a permanent reduction in the child support payment." See Schmidt v. Reamann, 523 N.W.2d 70, 73 (N.D.1994); Hartman v. Hartman, 466 N.W.2d 155, 157 (N.D.1991). We agree that it will frequently be better to defer payment of part of the support payments, without reducing the obligation, when the obligor is temporarily unable to meet the obligation. However, considering the duration and extent of the reduction in Keith's income during more than two years since the last order, we do not believe that the trial court was clearly erroneous in deciding that a modification of this support order was justified.

Like Keith, Jody is entitled to seek modification of the support order at least annually. NDCC 14-09-08.4(3). If and when Keith's business earns more, Jody can have the support increased accordingly.

2. Underemployment Guideline.

Jody argues that the trial court erred when it declared NDAC 75-02-04.1-07 unreasonable. We agree with Jody that this guideline remedy for underemployment was a reasonable exercise of the rule-making authority of the North Dakota Department of Human Services.

An obligor's ability to pay child support is not solely determinable from actual income, and an obligor's earning capacity also can be utilized, we have often recognized in our past decisions. See Gabel, 434 N.W.2d at 724; Cook v. Cook, 364 N.W.2d 74, 76 (N.D.1985); Burrell v. Burrell, 359 N.W.2d 381, 383 (N.D.1985); Skoglund v. Skoglund, 333 N.W.2d 795, 796 (N.D.1983). See also Perry v. Perry, 382 N.W.2d 628, 629 (N.D.1986) (obligor, who "could seek and maintain employment which would allow him to meet his obligation for child support," could be held in contempt for failure to pay). The first child support guidelines did not specifically authorize imputation of income to an unemployed or underemployed parent. See Heley v. Heley, 506 N.W.2d 715, 722 (N.D.1993); Spilovoy v. Spilovoy, 488 N.W.2d 873, 878 (N.D.1992). Yet, we explained in Olson v. Olson, 520 N.W.2d 572, 574 (N.D.1994), if "an obligor with an established earnings history voluntarily, without good reason, places himself in a position where he is unable to meet his child support obligations, income compatible with his prior earnings history may be imputed in calculating child support under the guidelines."

Olson 's "rule of reason," however, preceded the adoption of the specific child-support guideline allowing the imputation of income based on an obligor's earning capacity. See id. at 573 n. 1; see also Schatke v. Schatke, 520 N.W.2d 833 (N.D.1994). Effective January 1, 1995, the Department amended the guideline definition of "gross income" to include "income imputed based upon earning capacity," NDAC 75-02-04.1-01(5), and amended NDAC 75-02-04.1-07 to create methods for imputing income to an underemployed obligor.

For the guidelines, an "obligor is 'underemployed' if the obligor's gross income from earnings is significantly less than prevailing amounts earned in the community by persons with similar work history and occupational qualifications." NDAC 75-02-04.1-07(1)(b). An obligor is presumed to be "underemployed" if his or her gross earnings "is less than six-tenths of prevailing amounts earned in the community by persons with similar work history and occupational qualifications." NDAC 75-02-04.1-07(2). The guideline defines "community" as "any place within one hundred miles ... of the obligor's actual place of residence." NDAC 75-02-04.1-07(1)(a). If the obligor is "underemployed," income is imputed under NDAC 75-02-04.1-07(3), based on earning capacity, less actual gross earnings. ¹

Here, the trial court determined that NDAC 75-02-04.1-07 was "unreasonable and unnecessary and therefore in excess" of the Department's rule-making authority. Specifically, the court found "the huge size of the purported 'community' bears no rational relation to the availability of jobs within the area," and "no discretion is left to the Court to choose among available alternatives." Instead of using the underemployment guideline, the trial court used Olson 's pre-guideline "rule of reason." Finding Keith's decision to start his...