849 N.W.2d 173
N.D.2014Background
- Jerry and Colette Shae divorced in 2011; Colette received primary custody of three minor children and various assets; Jerry was ordered to pay child support based on his engineer salary.
- Colette moved to modify child support after Jerry left engineering to run Northwest Water Transfer, LLC and realized large 2012 receipts and capital gains from selling a farm and machinery.
- The district court calculated Jerry’s 2012 net monthly income as $116,573, applied a 34% multiplier to set child support at $39,634.82/month, ordered retroactive support, required Jerry to pay children’s medical costs and awarded Colette $24,959.46 in attorney fees.
- The district court excluded Jerry’s capital gains (sale of farm and machinery) and did not include certain items (wages, taxable interest, other gains) while also excluding farming losses from its income calculation.
- Jerry appealed the modified child support order; the Supreme Court reviewed whether the district court misapplied the guidelines, miscalculated gross/net income, and improperly used a straight percentage multiplier for an upward deviation.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court may apply a straight 34% multiplier to a high-income obligor to calculate upward deviation | Jerry: Court erred by mechanically applying 34% multiplier (misreading Martiré) | Colette: Multiplier appropriate given very high income and children’s needs | Reversed — court may not apply an automatic percentage without specific findings tying increased support to children’s appropriate needs |
| Whether nonrecurring capital gains from sale of farm and machinery must be included in gross/net income | Jerry: District court properly excluded gains as one-time and partly reinvested | Colette: Gains should be included (even if nonrecurring) to reflect increased ability to pay | Reversed — gains must be considered in calculating gross/net income; district court erred in excluding them without adequate justification |
| Whether district court correctly calculated Jerry’s net income (wages, interest, other gains, and farming losses) | Jerry: Court miscalculated and improperly omitted wages, interest, other gains and omitted farming losses | Colette: District court calculation was reasonable given self-employment volatility | Reversed — court erred by failing to include wages, interest, other gains and by excluding 2012 farming losses from self-employment income calculation |
| Whether district court’s findings supported awarding attorney fees and medical-cost allocation | Jerry: Award based on flawed income determination and deviation | Colette: Fees and medical cost allocation appropriate given modification motion success and stipulation | Court did not disturb attorney-fee and medical-cost rulings on their own grounds here but remanded for recalculation of support (implicit that fee/medical issues may be revisited after accurate income determination) |
Key Cases Cited
- Martiré v. Martiré, 822 N.W.2d 450 (2012) (district court can deviate upward from guidelines but must make findings supporting deviation)
- Nuveen v. Nuveen, 825 N.W.2d 863 (2012) (upward deviation requires sufficient findings; cannot blindly apply percentage multipliers)
- Hoverson v. Hoverson, 828 N.W.2d 510 (2013) (affirmed limited upward deviation where evidence did not support large percentage-based increase)
- Lauer v. Lauer, 609 N.W.2d 450 (2000) (standards of review for child support fact/findings and legal error)
- Montgomery v. Montgomery, 481 N.W.2d 234 (N.D. 1992) (courts must inquire into appropriate amount when income exceeds guideline maximums)
- Berge v. Berge, 710 N.W.2d 417 (2006) (nonrecurrent payments/gains are included in gross income and may be used to increase support for a limited period)
- Schieffer v. Schieffer, 826 N.W.2d 627 (2013) (in extraordinarily high-income cases, linear extrapolation is unsuitable)