Appeal from the District Court of Burleigh County, South Central Judicial District, the Honorable Sonna M. Anderson, Judge.
The opinion of the court was delivered by: Opinion of the Court by Crothers, Justice.
N.D. Supreme Court Becker v. Becker,
This opinion is subject to petition for rehearing. [Go to Documents][Download as WordPerfect] Concurring and dissenting opinion filed.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
[¶1] Ricky Becker appeals from a divorce judgment awarding Jill Becker spousal support and establishing her child support obligation. We affirm the spousal support award, reverse the child support decision and remand for recalculation of Jill Becker's child support obligation.
[¶2] Ricky and Jill Becker married in 1989 and have four children together. Ricky Becker is a plastic surgeon in Bismarck and has his own medical practice. Jill Becker has a master's degree in speech pathology. Jill Becker worked part-time as a speech pathologist during the marriage, but there were times when she did not work outside the home and she has not worked outside the home since 2003. The parties own Spa D'Athena, a spa and hair salon in Bismarck.
[¶3] In 2008, Ricky Becker filed for divorce. The parties agreed Ricky Becker would have primary residential responsibility for the children and later agreed on property and debt distribution. The parties agreed Jill Becker would receive ownership of Spa D'Athena. Ricky and Jill Becker also own various business entities, including HST, LLC; Athena Properties, LLP; Gulch Executive, LLC; RC Becker Family Corporation; and Ricky C. Becker MD PC, which was later changed to Becker Plastic Surgery, LLC. The parties agreed Ricky Becker would receive the parties' interests in these entities. The district court entered partial judgments incorporating the parties' agreements, but the parties reserved the issues of spousal support and child support for trial.
[¶4] After a September 2009 hearing on the spousal support and child support, the court awarded Jill Becker spousal support of $7,000 per month for June 2010 through December 2012 and $6,000 per month thereafter until her death or remarriage. The court found Ricky Becker's net income was more than three times that of Jill Becker's income and granted Jill Becker a downward deviation from the presumptively correct amount of child support under the child support guidelines. The court ordered Jill Becker to pay Ricky Becker $500 per month in child support for each child, for a total of $2,000 per month. A judgment was entered, and an amended judgment was later entered to amend provisions providing for separate income withholding orders for spousal and child support.
[¶5] Ricky Becker argues the district court erred in calculating his income for purposes of deciding whether to award spousal support and calculating Jill Becker's child support obligation. He contends the court incorrectly interpreted the financial information and erred finding his income higher than it actually is.
[¶6] A district court's findings of fact in calculating a child support obligation and deciding whether to award spousal support will not be reversed on appeal unless they are clearly erroneous. Duff v. Kearns-Duff, 2010 ND 247, ¶ 13, 792 N.W.2d 916 (spousal support findings); Lauer v. Lauer, 2000 ND 82, ¶ 3, 609 N.W.2d 450 (child support findings). Income is a finding of fact. See Montgomery v. Montgomery, 2003 ND 135, ¶ 14, 667 N.W.2d 611. A finding of fact is clearly erroneous if it is induced by an erroneous view of the law, no evidence exists to support the finding, or this Court is convinced, based on the entire record, a mistake has been made. Lauer, at ¶ 3.
[¶7] The parties provided the district court with copies of their 2004-2008 individual income tax returns and tax returns for some of the business entities. The court reviewed the tax returns to determine which properties may be income producing and how much income they might produce. The court averaged Ricky Becker's income over a five-year period and found his average income from his surgical practice is $457,222 per year. The court also found Ricky Becker has an average annual income from consultation and surgical fees of $192,000. The court found these consultation and surgical fees were additional income, stating, "[Ricky Becker] also acknowledged at trial, that he, personally, would have been the recipient of any surgical or consultation fees, which were expensed out of the gross business receipts before arriving at the net taxable business income." The court could not determine from the parties' tax returns how the fees were treated for tax purposes.
[¶8] Ricky Becker contends the court erred in finding he had additional income from consultation and surgical fees. He contends the surgical and consulting fees were expenses his surgical practice pays to local hospitals to provide facilities and services related to surgeries. However, no evidence in this record establishes these consulting and surgical fees were payments to local hospitals related to surgical services. Ricky Becker testified the consulting fees listed on the Becker Plastic Surgery ("BPS") profit and loss statements were payments to the RC Becker Family Corporation for health insurance and other money for himself and the children, including paying the children wages for work they did for the business entities and paying for the children's activities, but later he testified the family corporation does not pay for health insurance. He testified contract labor payments from BPS could be payments made to him, but he was not sure, and expenses listed as draws on the profit and loss statements are money paid to him. Ricky Becker's accountant testified he did not know the purpose of the consulting and contract labor expenses. Evidence in this record supports the district court's findings about Ricky Becker's income.
[¶9] Furthermore, it is not clear from the court's decision that it included the consulting and surgical fees as income in deciding child support and spousal support. The court made findings about Ricky Becker's income for each year from 2004 until 2008. The court could not determine how the consulting or surgical fees were treated for tax purposes. The court found, "Dr. Becker's earning ability remains relatively constant at about $455,000 per year. It is likely significantly higher than that if the consultation and surgical fees or draws were added." When the court considered the parties' circumstances and necessities for purposes of spousal support, the court said, "Dr. Becker has an average monthly income from his medical practice of $38,000. (This does not include any consulting or surgical fees earned from the business but not treated as ordinary income, profit, or wages.)" The court did not make a specific finding about Ricky Becker's net income for child support. We address that shortcoming below. As to spousal support only, the court's decision was not based on the additional income Ricky Becker claims the court erred in calculating. The award of spousal support is based on evidence presented to the district court. We therefore conclude the court's findings about Ricky Becker's income and spousal support obligation are not clearly erroneous.
[¶10] Ricky Becker argues the district court erred in reducing Jill Becker's child support obligation after finding she was entitled to a downward deviation from the guidelines because her income was less than one-third of his income. He contends the court erred in calculating Jill Becker's income and the court failed to deduct his spousal support payments from his income.
[¶11] "'Child support determinations involve questions of law which are subject to the de novo standard of review, findings of fact which are subject to the clearly erroneous standard of review, and may, in some limited areas, be matters of discretion subject to the abuse of discretion standard of review.'" Halberg v. Halberg, 2010 ND 20, ¶ 8, 777 N.W.2d 872 (quoting Verhey v. McKenzie, 2009 ND 35, ¶ 5, 763 N.W.2d 113).
[¶12] The child support guidelines provide a schedule of child support amounts based on the obligor's net income. See N.D. Admin. Code § 75-02-04.1-10. The scheduled amount is presumed to be the correct amount of support. N.D. Admin. Code § 75-02-04.1-09. The district court must comply with the child support guidelines to determine an obligor's child support obligation, and a court errs as a matter of law if it fails to comply with the guidelines. Heinle v. Heinle, 2010 ND 5, ¶ 36, 777 N.W.2d 590. "'The interpretation and proper application of a provision of the child support guidelines is a question of law, fully reviewable on appeal.'" Id. (quoting State ex rel. K.B. v. Bauer, 2009 ND 45, ¶ 8, 763 N.W.2d 462). "'The failure to properly apply the child support guidelines to the facts involves an error of law.'" Heinle, at ¶ 36 (quoting Bauer, at ¶ 8).
[¶13] The child support guidelines require the support order "include a statement of the net income of the obligor used to determine the child support obligation, and how that net income was determined." N.D. Admin. Code § 75-02-04.1-02(10). A court must properly find net income when applying the child support guidelines to calculate the correct amount of child support. Halberg, 2010 ND 20, ¶ 10, 777 N.W.2d 872. "'Because a proper finding of net income is essential to determine the correct amount of child support under the child support guidelines, we have said that, as a matter of law, a [district] court must clearly set forth how it arrived at the amount of income and the level of support.'" Gunia v. Gunia, 2009 ND 32, ¶ 13, 763 N.W.2d 455 (quoting Berge v. Berge, 2006 ND 46, ¶ 8, 710 N.W.2d 417). A district court's decision will be reversed and remanded if the court fails to clearly state how it arrived at the amount of income and the level of support. Gunia, at ¶ 13.
[¶14] Here, the district court made findings about each party's income and earning ability in deciding whether to award spousal support. But the court did not make specific findings about each party's net income under the child support guidelines. Based on the parties' income tax returns, the court found Ricky Becker's average income from his medical practice is $457,222 per year. The court also found Ricky Becker has an average of $192,000 per year in additional income from consultation and surgical fees. The court found the income from Spa D'Athena in 2009 would be approximately $100,000 based on Ricky Becker's testimony about the business. The court also made findings about the parties' earning abilities. The court considered Ricky Becker's argument that Jill Becker could earn approximately $50,000 per year if she worked full-time as a speech pathologist. But the court found Jill Becker only made $15,000 to $17,000 per year when she worked as a speech pathologist and Jill Becker testified she did not believe she could return to that type of work. The court found, "Jill Becker should earn $100,000 per year from the Spa, and could reasonably earn approximately $15,000 per year from any other employment." The court made these findings as part of its analysis of the Ruff-Fischer factors for purposes of deciding whether to award spousal support. See Ruff v. Ruff, 78 N.D. 775, 52 N.W.2d 107 (1952); Fischer v. Fischer, 139 N.W.2d 845 (N.D. 1966). However, the court did not make separate findings about each party's net income under the child support guidelines to calculate Jill Becker's child support obligation. The court addressed the parties' arguments about child support and found:
"If Jill Becker were required to pay child support until the children were 19, she would be required to pay for 4 children for 1 year, then 3 children for 2 years, then 2 children for an ...