Schulte v. Kramer

• Decision Date: 16 August 2012
• Docket Number: No. 20110231.,20110231.
• Parties: Cheryl Rae SCHULTE, f/k/a, Cheryl Rae Kramer, Plaintiff and Appellant v. Kenneth Leroy KRAMER, Defendant and Appellee.
• Court: North Dakota Supreme Court

820 N.W.2d 318

2012 ND 163

Cheryl Rae SCHULTE, f/k/a, Cheryl Rae Kramer, Plaintiff and Appellant

v.Kenneth Leroy KRAMER, Defendant and Appellee.

No. 20110231.

Supreme Court of North Dakota.

Aug. 16, 2012.

Samuel S. Johnson, Wahpeton, N.D., for plaintiff and appellant.

Janel Brudvik Fredericksen, Wahpeton, N.D., for defendant and appellee.

MARING, Justice.

[¶ 1] Cheryl Rae Schulte appeals from an amended divorce judgment eliminating Kenneth Kramer's obligations to pay her spousal support, to provide health insurance, and to pay non-covered medical costs. We affirm the trial court's conclusion that the award of health insurance was spousal support and not property division; we reverse, concluding the trial court clearly erred in granting Kramer's motion to eliminate his spousal support obligations; we reverse for the trial court to consider whether to grant Schulte's request for attorney's fees; and we remand for further proceedings consistent with this opinion.

I

[¶ 2] Relevant facts are set forth in our prior decision in this case, Kramer v. Kramer, 2006 ND 64, 711 N.W.2d 164, and we will not repeat them here except as necessary to resolve the issues in this appeal.

[¶ 3] In 1973, Kramer and Schulte were married. In 2002, they entered into a legal separation agreement. Schulte subsequently sued for divorce, and the separation agreement was incorporated into a May 2005 divorce judgment. Kramer appealed from the judgment, and this Court affirmed. See Kramer, 2006 ND 64, ¶ 23, 711 N.W.2d 164. Regarding spousal support, the divorce judgment required Kramer to pay Schulte $500 per month until she either remarried or died. The judgment also required Kramer to provide Schulte with health insurance and pay her non-covered medical costs. The specific provisions of the divorce judgment's conclusions of law at issue stated:

9. That pursuant to paragraph seven of Exhibit III of the Property Settlement Agreement, the Defendant shall immediately pay the Plaintiff the sum of $3,500.00 representing back spousal support payments from October, 2004 though April, 2005 and continue to make future spousal support payments on the 15th of May, 2005, and on the 15th of each and every month thereafter in the amount of $500.00 per month until the Plaintiff shall remarry or die, whichever first occurs. Said spousal support shall be paid directly from the Defendant to the Plaintiff.

....

13. Pursuant to paragraph three of Exhibit III of the Property Settlement Agreement, the Defendant shall continue to provide health insurance on the Plaintiff and pay for all noncovered medical costs, including deductible and copayments, dental costs, optometric costs, orthodontic costs, chiropractic costs and psychological/psychiatric costs associated with the Plaintiff.

[¶ 4] At the time of the separation agreement and divorce judgment, Kramer was employed at Bobcat Company in Gwinner. In July 2010, while Kramer was employed in the maintenance department, his employment at Bobcat was terminated for violating company policy after he removed a discarded antenna from the Bobcat plant's scrap. On July 16, 2010, Kramer met with Bobcat representatives and viewed a videotape showing Kramer placing an item outside a fire exit door and returning after closing to pick up the item. Kramer subsequently acknowledged he was aware of Bobcat's policy that only allowed removal of cardboard and wood through the guard shack after following the proper procedure, a violation of which would “subject [an employee] to discipline up to and including termination.”

[¶ 5] On July 22, 2010, Kramer wrote a letter to Bobcat, stating he “made a mistake” and “removed an item from the trash dumpster and took it home without going through company policy.” Kramer apologized and requested Bobcat give him another chance to further his employment with them. On July 23, 2010, Donald Herbst, Bobcat's labor relations supervisor at the time, wrote a letter to Kramer concluding Kramer had violated plant rule number 29, theft or misappropriation of property, and stated his employment with Bobcat was terminated. On July 27, 2010, Kramer filed a grievance through his union, seeking to be reinstated to his position and alleging his punishment was too severe for the conduct.

[¶ 6] Kramer sought other employment after his termination from Bobcat, and he began working at Trail King in Fargo on August 9, 2010. On August 12, 2010, after the union grievance process, Bobcat sent a letter to Kramer allowing him to apply with the company for any open position at that time. If hired, Kramer would have been treated as a new hire, losing his seniority. Kramer was not offered his maintenance position back. Although testimony indicated there were open positions available at Bobcat in material handling, welding, and assembling departments, Kramer did not reapply for a position with Bobcat.

[¶ 7] In November 2010, Kramer moved the trial court to modify the divorce judgment to eliminate or, in the alternative, to reduce his obligation to pay Schulte spousal support under the 2005 divorce judgment. Kramer also moved the court to eliminate his obligations to provide Schulte's health insurance and pay all of her non-covered medical costs or, in the alternative, to order the parties to share the costs of Schulte's health insurance coverage and non-covered medical costs according to their respective incomes. Schulte opposed the motion. In April and May 2011, the trial court held a hearing, receiving evidence including testimony from Kramer, Schulte, and Herbst. At the time of his termination from Bobcat, Kramer was earning about $22.70 per hour. By the time of the hearing, Kramer was earning $14.50 per hour at Trail King and working about 40 hours per week. Kramer had also given up a second, part-time job at Swanson Apartments in Gwinner by moving to Fargo.

[¶ 8] In its July 2011 decision, the trial court granted Kramer's motion and terminated his obligations under paragraphs 9 and 13 of the divorce judgment to pay spousal support, to provide health insurance, and to pay non-covered medical costs. Schulte thereafter moved the court to amend the findings of fact and order for judgment and for a new hearing, which the court denied.

[¶ 9] Schulte appealed, arguing the trial court erred in finding a material change in circumstances existed; the trial court erred in finding the material change in circumstances warranted elimination of Kramer's obligations to pay spousal support, to provide health insurance, and to pay non-covered medical costs; and the trial court erred in not awarding her attorney's fees.

II

[¶ 10] Under N.D.C.C. § 14–05–24.1, the trial court retains jurisdiction to modify a spousal support order when awarded in the original divorce judgment. The standard governing our review of a trial court's decision on a motion to modify spousal support is well-established:

When the original divorce judgment includes an award of spousal support, the district court retains jurisdiction to modify the award. The party seeking modification of spousal support bears the burden of proving there has been a material change in the financial circumstances of the parties warranting a change in the amount of support. The district court's determination whether there has been a material change in circumstances warranting modification of spousal support is a finding of fact and will be set aside on appeal only if it is clearly erroneous.

A material change is a change that substantially affects the financial abilities or needs of the parties and that was not contemplated by the parties at the time of the original decree. In assessing whether a material change has occurred, the reasons for changes in the parties' income or needs must be examined, as well as the extent to which the changes were contemplated by the parties at the time of the initial decree. Not every change in the parties' financial circumstances justifies modification of spousal support, and no modification is warranted when the change is self-induced. This Court encourages agreements between divorcing parties, and stipulated spousal support awards should be changed only with great reluctance.

Rothberg v. Rothberg, 2007 ND 24, ¶ 6, 727 N.W.2d 771 (quotations and citations omitted).

[¶ 11] In the present case, the trial court found there had been a material change in circumstances, warranting elimination of Kramer's spousal support obligations to Schulte. We conclude the trial court's finding that there had been a material change in circumstances is not clearly erroneous. However, the trial court's finding that the material change in circumstances warrants an elimination of the original spousal support is based on an erroneous view of the law.

[¶ 12] The original divorce judgment in this case was based on an agreement of the parties, therefore, this Court reviews the issue of modification of spousal support with greater scrutiny. See Gibb v. Sepe, 2004 ND 227, ¶ 9, 690 N.W.2d 230.

[¶ 13] Schulte and Kramer divorced in May 2005. Their divorce judgment incorporated a 2002 legal separation agreement requiring Kramer to pay Schulte $500 per month in spousal support until she either remarried or died. Kramer appealed the divorce judgment arguing the legal separation agreement was unconscionable and should not be enforced. Kramer, 2006 ND 64, ¶ 1, 711 N.W.2d 164. Our Court concluded the agreement was not unconscionable; the agreement expressly contemplated divorce; and the trial court “did not err in deciding the parties freely and voluntarily entered into a settlement agreement that was fair and reasonable and the court did not err in enforcing the agreement and incorporating it into the divorce judgment.” Id. at ¶¶ 14, 15, and 18. As we have explained, “[t]he trial court should be more reluctant to modify an original decree which is based upon an agreement of the parties than one based upon the court's findings.” Huffman v. Huffman, 477 N.W.2d 594, 596 (N.D....