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Shae v. Shae

Supreme Court of North Dakota

July 17, 2014

Jerry Shae, Plaintiff, Appellant, and Cross-Appellee
v.
Colette Shae, Defendant, Appellee, and Cross-Appellant

Page 174

Appeal from the District Court of Burleigh County, South Central Judicial District, the Honorable Donald L. Jorgensen, Judge.

Sherry Mills Moore (argued), Bismarck, ND, and David Michael Knoll (appeared), Bismarck, ND, for plaintiff, appellant and cross-appellee.

Rodney Ervin Pagel, Bismarck, ND, for defendant, appellee, and cross-appellant.

Daniel J. Crothers, Lisa Fair McEvers, Carol Ronning Kapsner, Dale V. Sandstrom, Gerald W. VandeWalle, C.J.

OPINION

Page 175

Crothers, Justice.

[¶1] Jerry Shae appeals a district court order for amended judgment on Colette Shae's motion to modify child support obligations, requiring Jerry Shae to pay $39,634.82 per month in child support, medical expenses for his children and Colette Shae's $24,959.46 in attorney fees. We conclude the district court's modified child support award was clearly erroneous and the district court incorrectly calculated Jerry Shae's 2012 net income. We reverse and remand.

I

[¶2] Jerry Shae and Colette Shae were divorced on February 2, 2011. They have three minor children and one adult child. Colette Shae was awarded primary residential responsibility of the children and assets including the parties' marital home in Bismarck, fifty acres of land in Burleigh County, mineral interests in Dunn and Stark Counties, her retirement account, $60,000 from Jerry Shae's retirement accounts and a $50,000 property equalization payment. Jerry Shae received substantial parenting time, a farm near Williston, real property in Williston and farm equipment. The parties agreed on the division of personal items. The settlement required Jerry Shae to pay $2,195 per month in child support for their four minor children. Jerry Shae was required to pay $1,978 per month support after their oldest child reached eighteen and graduated from high school or reached age nineteen, whichever came first. This child support award was based on Jerry Shae's salary of $95,108 as an engineer.

[¶3] Colette Shae moved to modify Jerry Shae's child support obligations.

Page 176

Colette Shae sought an increase in child support to include Jerry Shae's unexpected income since the divorce, a modification requiring Jerry Shae to pay the children's healthcare costs and her attorney fees from her motion. The district court found Jerry Shae terminated his employment as an engineer in 2012 to devote himself full-time to the western North Dakota water-hauling business he started known as Northwest Water Transfer, LLC. Testimony revealed Jerry Shae actually terminated his employment as an engineer in mid-2011 to devote himself full-time to Northwest Water Transfer. The district court found Jerry Shae realized nominal income for the first few months of operating Northwest Water Transfer in 2011. The district court found Jerry Shae earned $2,366,534 in 2012 for his work with Northwest Water Transfer, sold his farm, realizing capital gains of $2,935,460, and purchased a replacement farm for $1,900,000. According to Jerry Shae's 2012 Form 1040, he earned $50,000 in wages, $522 in taxable interest, $172,380 in other gains and incurred farming losses of $148,224. Colette Shae earned $125,293 in 2012, consisting of $51,974 as a registered nurse, $37,338 in capital gains, $16,123 in mineral royalties and $19,858 in gambling winnings.

[¶4] The district court made findings on the minor children's expenses and the lifestyle they lead with each parent. The three minor children participate in a variety of athletic and non-athletic activities, and Colette Shae provides for participation fees, equipment fees, travel expenses and related costs. Colette Shae also pays auto insurance costs and driving expenses for their two older minor children. The home Colette Shae and the children reside in needs significant repairs beyond Colette Shae's financial capacity. The district court found Jerry Shae is able to provide an elevated lifestyle to his children, including vacations and expensive gifts. The district court found Colette Shae is unable to give the same amenities to the children because she provides for their necessities.

[¶5] The district court found a preponderance of the evidence established a deviation from the child support guidelines was warranted. The district court based Jerry Shae's elevated child support obligation on its calculation of his 2012 net monthly income of $116,573. The district court stated it applied the child support projection methodology used in Martiré v. Martiré, 2012 ND 197, 822 N.W.2d 450, to determine that thirty-four percent of $116,573 is $39,634.82 per month. The district court ordered the child support to be retroactive to July 2012, with arrearages to be paid by Jerry Shae at ten percent per month for ten consecutive months beginning on August 5, 2013. The district court's net monthly income calculation did not include capital gains Jerry Shae realized through selling the farm and the machinery because a significant portion was reinvested in a new farm, because Colette Shae granted Jerry Shae the farm with express consent and presumable knowledge of its value and because it was a one-time occurrence. The district court did not include as income the allegedly excessive salary of $97,033.87 Jerry Shae paid their eldest son, who works for Northwest Water Transfer as a bookkeeper and payroll clerk. The district court required Jerry Shae to pay Colette Shae's attorney fees of $24,959.46 for her motion. Jerry Shae stipulated to assuming the obligation to pay for their children's non-elective, non-covered medical costs. Jerry Shae appealed cross-appealed.

II

[¶6] This Court has stated:

" Child support determinations involve questions of law which are ...

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