Lead Opinion
[¶ 1] Diane Meyer appealed from an amended judgment modifying Timothy
I
[¶ 2] Timothy and Diane Meyer were divorced in February 1998. The original decree, based upon the parties’ stipulation, provided Timothy Meyer would pay $800 per month in spousal support to Diane Meyer for ten years. At the time of the decree, Timothy Meyer was earning $72,000 per year, and Diane Meyer was earning $22,000 per year.
[¶ 3] On January 1, 2003, Timothy Meyer’s employer, Krider Equipment, was sold to Titan Machinery, Inc. His income at the time of the sale was approximately $79,000. After the sale, Timothy Meyer’s salary was reduced to $50,000 per year. As a result, he moved for termination of his spousal support obligation or, in the alternative, a reduction in the amount of support. A hearing was held before a judicial referee, who determined there was a material change in circumstances and recommended the spousal support obligation be reduced to $300 per month for the remainder of the ten-year support obligation. Diane Meyer requested a review of the referee’s findings, and upon review, the district court affirmed the findings and recommendation of the referee and ordered entry of an amended judgment reducing Timothy Meyer’s support obligation to $300 per month.
II
[¶ 4] On appeal, Diane Meyer asserts the court’s modification of spousal support is clearly erroneous because Timothy Meyer’s reduction in income does not constitute a material change in circumstances; the district court did not adequately consider that the original decree was based upon a stipulation by the parties; and the reduction in Timothy Meyer’s income was contemplated by the parties in the original decree.
[¶ 5] When there has been an initial award of spousal support, the trial court retains jurisdiction and may modify the award at least as long as support continues. Bellefeuille v. Bellefeuille,
A.
[¶ 6] The record supports the trial court’s finding Timothy Meyer was earn
[¶ 7] Timothy Meyer’s current salary is 30.6% less than his annual income when the original decree was entered. This constitutes a significant decrease. Diane Meyer asserts the parties originally contemplated that Timothy Meyer might voluntarily change jobs with a resulting reduction of income, and therefore, his reduced salary should not be considered in finding a material change in circumstances. But, while the parties may have contemplated a reduction in Timothy Meyer’s income if he voluntarily changed jobs, they did not contemplate an involuntary reduction of his income resulting from the sale of his employer. Timothy Meyer had considered, but did not voluntarily make, a change of employment resulting in reduced income. More importantly, the parties did not contemplate the extent to which Timothy Meyer’s income has ultimately been reduced by the sale of his employer. The change was not voluntarily incurred by Timothy Meyer, nor was it contemplated by the parties or considered by the district court in fashioning the original decree. We conclude the trial court did not err in factoring Timothy Meyer’s reduction in income as relevant to its finding that a material change in circumstances existed.
B.
[¶ 8] Diane Meyer also asserts the trial court did not adequately consider that the original spousal support obligation was based upon a stipulation of the parties and should not be changed. This Court encourages spousal support awards based upon agreements between the divorcing parties and has recognized changing a stipulated support amount should only be done “with great reluctance by the trial court.” Toni v. Toni
[¶ 9] We reverse, however, because we are concerned with the lack of any explanation regarding the amount of the reduction in support compared to the reduction in Timothy Meyer’s income. See Wheeler v. Wheeler,
In this case, [Timothy Meyer] has experienced a material and substantial re*277 duction in income. [Diane Meyer] has increased her income and assets since the divorce, but opines she must continue to save for retirement and pay off the mortgage on her home in order to be rehabilitated by the end of the ten-year period of spousal support. The Referee’s decision to lower the monthly spousal support from $800 per month to $300 per month is a balance between the greater burden of [Timothy Meyer] and the lesser need of [Diane Meyer], and is not clearly erroneous.
Although Diane Meyer asserts the trial court erred in finding that she abandoned her rehabilitative goal or that she was rehabilitated, the trial court, in essence, concluded her rehabilitation was not complete and she continues to have a disadvantage as a result of the divorce, entitling her to continue receiving some spousal support. However, the trial court did not provide sufficient analysis regarding Diane Meyer’s current need for support or Timothy Meyer’s current ability to pay spousal support. Instead, it only concluded Diane Meyer’s needs had changed and so had Timothy Meyer’s ability to pay. Therefore, while we understand the trial court’s rationale for reducing the amount of spousal support, we cannot discern its rationale for reducing Timothy Meyer’s spousal support obligation from $800 per month to $300 per month. See Wheeler II at 30 (the Court will not remand for clarification if, through inference or deduction, we can discern the rationale for the result reached by the trial court). In Wheeler I, this Court stated:
If a supported spouse is not to be penalized “for her initiative and ... incentive for self betterment,” Lipp v. Lipp, [355 N.W.2d 817 , 819 (N.D.1984) ], her agreed support should not be reduced simply because she has improved her financial ability. Her standard of living and needs, as well as those of the paying spouse, must be weighed along with their relative financial abilities.
[¶ 10] We reverse and remand for reconsideration of the amount of support in accordance with this opinion.
Concurrence Opinion
dissenting in part
and concurring in part.
[¶ 12] I respectfully dissent from Part IIA and paragraph 8 of Part IIB and concur in the remainder of the majority opinion. I would reverse the order and amended judgment modifying Timothy Meyer’s spousal support obligation from $800 per month to $300 per month and remand for further proceedings. I believe the trial court- clearly erred in its application of the law.
[¶ 13] Timothy Meyer and Diane Meyer were divorced in February 1998 pursuant to a stipulated settlement. The stipulated settlement provided that Timothy Meyer would pay Diane Meyer $800 per month in spousal support for ten years after the sale of the marital home. After incurring a reduction in income, Timothy Meyer moved to terminate or reduce his spousal support obligation. The trial court
[¶ 14] A trial court’s determination concerning spousal support is treated as a finding of fact which we will not reverse on appeal unless clearly erroneous. Shields v. Shields,
I
[¶ 15] Timothy Meyer, the party who sought modification of his spousal support obligation, bore the burden of showing a material change of circumstances warranting or justifying a modification. Schmalle v. Schmalle,
To modify spousal support, circumstances must have changed materially. Slight, or even moderate, changes in the parties’ relative incomes are not necessarily material. “Material change” means something which substantially affects the financial abilities or needs of a party.
[¶ 16] We stated in Schmalle, “the reasons for changes in income must be examined as well as the extent the changes were contemplated by the parties at the time of the initial decree or a subsequent modification.”
[¶ 17] The trial court erred in applying the law applicable to modifications of spousal support obligations. The record establishes that Timothy Meyer stipulated to paying $800 per month in spousal support even though he was considering a reduction of his income and that he agreed to the stipulated divorce settlement to avoid a trial highlighting his marital infidelity. The majority emphasizes the fact that, after the divorce, Timothy Meyer did not voluntarily reduce his income. Regardless of whether the reduction in income was voluntary or involuntary, Timothy Meyer and Diane Meyer contemplated a reduction in Timothy Meyer’s income when agreeing to his spousal support obligation of $800 per month and to a division of their marital property.
[¶ 18] In Schmitz v. Schmitz, we said that a circumstance that was contemplated
[¶ 19] The trial court and the majority opinion do not acknowledge that Timothy Meyer has voluntarily taken the reduction in his income. He did testify he applied for a manager position with Titan, but it was given to one of the former owners of Krider. He has only applied for one $24,000 a year job and has not attempted to find another job at his previous income level. Our Court has said that “earned income is not the sole consideration in determining a party’s ability to pay support. Rather, the court must consider a party’s net worth, including the extent of his assets and his earning ability as demonstrated by past income.” Schmitz v. Schmitz,
[¶ 20] This Court has stated:
While it is true that the ‘change of circumstances’ necessary to warrant modification is one based primarily on a change in financial circumstances, ... it is also true that not every change in financial circumstances justifies a modification .... When the change is voluntary or self-induced, no modification is warranted because the obligor, by voluntarily placing herself or himself in a less financially secure position, is without clean hands and precluded from seeking equity. Even though the law never requires impossibilities, NDCC § 31 — 11— 05(22), one who voluntarily dissipates or reduces income is not protected either from the consequences of such conduct or by equitable maxims.
Wheeler v. Wheeler,
II
[¶ 21] Even if Timothy Meyer’s reduction in income is a change of circumstances, the trial court failed to make any findings that it “substantially affects the financial abilities or needs of a party.” Wheeler,
[¶ 22] When addressing whether Timothy Meyer’s change of circumstances warrants a modification, the trial court stated only that:
[i]n this case, Plaintiff has experienced a material and substantial reduction in income. Defendant has increased her income and assets since the divorce, but opines she must continue to save for retirement and pay off the mortgage on her home in order to be rehabilitated by the end of the ten-year period of spousal support. The Referee’s decision to lower the monthly spousal support from $800 per month to $800 per month is a balance between the greater burden of the Plaintiff and the lesser need of the Defendant, and is not clearly erroneous.
It is impossible to determine the basis for the trial court’s reduction of Timothy Meyer’s spousal support obligation because it did not provide any analysis of Diane Meyer’s needs or Timothy Meyer’s financial ability to continue paying $800 per month in spousal support.
[¶ 23] This Court has said, “[it] will not set aside the trial court’s determinations on property division or spousal support for failure to explicitly state the basis for its findings if that basis is reasonably discernible by deduction or inference.” Routledge v. Routledge,
III
[¶ 24] Finally, even if there was a material change of Timothy Meyer’s circumstances warranting a modification of his spousal support obligation, I would reverse and remand because the trial court provided no analysis explaining why $300 per month is an appropriate modification of Timothy Meyer’s spousal support obligation. The trial court arbitrarily chose $300 per month as Timothy Meyer’s monthly spousal support obligation.
[¶ 25] Timothy Meyer’s income has decreased from $72,000 per year
IV
[¶ 26] For these reasons, I respectfully dissent and concur. I would reverse the order and amended judgment reducing Timothy Meyer’s spousal support obligation from $800 per month to $300 per month and remand for further proceedings.
[¶ 27] MARY MUEHLEN MARING
Notes
. There is dispute as to whether Timothy Meyer's income at the time of divorce was $69,000 or $72,000. However, the trial court found his income to be $72,000.
Dissenting Opinion
dissenting.
[¶ 28] As the majority opinion recognizes, the trial court’s “determination re
[¶ 29] The majority concludes the trial court did not provide sufficient analysis regarding Diane Meyer’s current need for support or Timothy Meyer’s current ability to pay spousal support, and remands for the trial court to reconsider the amount of support awarded. By reviewing the record along with the trial court’s explanation for its decision to reduce the support obligation, we can readily discern the rationale for the result reached by the trial court. Consequently, a remand is not necessary.
[¶ 30] As the majority opinion recognizes, Timothy Meyer was earning $72,000 per year when the divorce decree was entered, and Diane Meyer was earning $22,000 per year, for a difference in incomes of $50,000. Now, Timothy Meyer is earning only $50,000 per year, and Diane Meyer is earning $32,000 per year, for a difference of $18,000. Consequently, the difference in income between these parties has narrowed by 64 percent since entry of the original decree. The trial court, recognizing the narrowed income gap constitutes a substantial change of circumstances, reduced Timothy Meyer’s support obligation by 62.5 percent. The math speaks for itself. The majority states that the trial court “must award support in an amount that is adequately proportional to the reduction in Timothy Meyer’s income.” That is precisely what the trial court has done. The evidentiary figures provide the basis and justification for the court’s reduction in support from $800 per month to $300 per month.
[¶ 31] The trial court has provided additional insight and explanation for its decision to reduce the support amount from $800 per month to $300 per month. The trial court reasoned that if the spousal support remained at the $800 per month level, Diane Meyer’s gross income would exceed Timothy Meyer’s gross income, and the court stated that the amended support obligation “is a balance between the greater burden of [Timothy Meyer] and the lesser need of [Diane Meyer].”
[¶ 32] Timothy Meyer’s reduction in income of 30.6 percent was an involuntary reduction caused by the sale of his business. Meanwhile, Diane Meyer has continued to improve her financial situation and has realized a 45 percent increase in her annual income. These substantial changes in the incomes of both parties support the trial court’s decision to reduce Timothy Meyer’s support obligation from $800 to $300 per month. The trial court has the authority to equitably balance the burden of an obligor against the needs of the obligee. Sommer v. Sommer,
[¶ 33] Here, the trial court’s findings are supported by the record and are not clearly erroneous. The evidence contains specific numbers showing the changes in income of both parties between entry of the original decree and the present. The court, using these numbers, recognized that the support obligation must balance the needs and abilities of both parties.
[¶ 34] DALE V. SANDSTROM