912 N.W.2d 315
N.D.2018Background
- Thompson and Johnson share one child (born 2013); Thompson was awarded primary residential responsibility in 2015.
- Johnson is a self-employed farmer; initial child support was $314/month. Thompson later moved to modify/support based on alleged inaccurate income reporting by Johnson.
- Discovery dispute: court granted Thompson’s motion to compel production of tax/banking records but denied a protective order and declined to award Thompson fees; later found Johnson not in contempt for discovery noncompliance.
- Johnson produced 2012–2016 tax returns showing average adjusted gross income of negative $50,972 and Schedule F average farming loss; the State argued he was underemployed and proposed imputing $49,302 annually.
- District court rejected tax returns as not reflecting true income (citing assets, equity, crops in storage, and personal budget), calculated Johnson’s net annual income at $113,916, and ordered $1,280/month child support; it denied Thompson attorney’s fees.
- Supreme Court held the district court erred as a matter of law by failing to calculate Johnson’s income according to the child support guidelines and remanded; it affirmed denial of attorney’s fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper method to calculate self-employment income for child support | Thompson: court should treat Johnson’s tax returns as unreliable and use other evidence to determine income or impute income; deviation may be appropriate given assets | Johnson/State: tax returns show low/negative income; but State also argued imputation under underemployment rules to $49,302 | Court: Reversed — district court erred by not following guideline hierarchy (use tax returns, then 5‑year average, then P&L if tax returns unreliable; or impute under underemployment rules) and by failing to explain how its budget-based figure complied with guidelines. |
| Whether court could impute income for underemployment | Thompson: impute income based on six-tenths of average statewide earnings for farmers ($49,302) | Johnson: contested income level but did not provide full records; argued tax returns reflect reality | Held: Under guidelines, imputation was available; court should have applied the guideline provisions (impute if underemployed) or used profit-and-loss statements before departing from tax returns. |
| Use of personal assets to deviate upward from guideline amount | Thompson: court may deviate upward because Johnson can access income from assets (crops, equity) | Johnson: assets alone do not replace guideline income finding without specific findings showing ability to secure income from assets | Held: Court may consider deviation after correctly calculating income under the guidelines, but must expressly label deviation and make explicit findings on child’s best interests and obligor’s ability to secure income from assets. |
| Award of attorney’s fees for discovery motion to compel | Thompson: Rule 37(a)(5)(A) requires fees when motion to compel is granted | Johnson: contesting discoverability was reasonable; other circumstances may make fees unjust | Held: Affirmed — trial court did not abuse discretion by declining fees because it found Johnson’s contest was substantially justified and award would be unjust under the rule. |
Key Cases Cited
- Raap v. Lenton, 885 N.W.2d 777 (N.D. 2016) (child support guidelines require correct net-income finding and adherence to guideline procedures)
- Halberg v. Halberg, 777 N.W.2d 872 (N.D. 2010) (standards of review and guideline compliance in child support determinations)
- Verhey v. McKenzie, 763 N.W.2d 113 (N.D. 2009) (necessity of accurate income documentation)
- Kobs v. Jacobson, 707 N.W.2d 803 (N.D. 2005) (court cannot ignore guidelines without ordering additional information and making specific findings)
- Entzie v. Entzie, 789 N.W.2d 550 (N.D. 2010) (requirements for upward deviation based on obligor’s assets and ability to secure income)
- Bertsch v. Bertsch, 740 N.W.2d 388 (N.D. 2007) (district court has broad discretion in discovery rulings)
- Zundel v. Zundel, 901 N.W.2d 731 (N.D. 2017) (abuse-of-discretion standard for discovery decisions)