Reed v. Reed , 2023 ND 15 ( 2023 )

FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
FEBRUARY 16, 2023
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2023 ND 15Ellen Crecelius Reed, Plaintiff and Appellee
v.
Paul Trevizo Reed, Defendant and Appellant
and
State of North Dakota, Department
of Human Services, Statutory Real Party in Interest and Appellee
No. 20220241
Appeal from the District Court of Grand Forks County, Northeast Central
Judicial District, the Honorable Lolita G. Hartl Romanick, Judge.
REVERSED AND REMANDED.
Opinion of the Court by Jensen, Chief Justice.
Ellen C. Reed, Minot AFB, ND, plaintiff and appellee; submitted on brief.
Shawn L. Autrey, Grand Forks, ND, for defendant and appellant; submitted on
brief.
Ethan Sonterre, Special Assistant Attorney General, Grand Forks, ND, for
statutory real party in interest and appellee; submitted on brief.
Reed v. Reed
No. 20220241
Jensen, Chief Justice.
[¶1] Paul Reed appeals a district court judgment modifying his child support
obligation, arguing the court erred in determining his gross income. We reverse
and remand for the district court to make findings consistent with this opinion.
I
[¶2] Paul Reed and Ellen Reed were previously married and share three
children together. Paul Reed and Ellen Reed were divorced on October 27,
2017. Ellen Reed was awarded primary residential responsibility of the three
minor children and Paul Reed was ordered to pay child support.
[¶3] On February 8, 2022, the State filed a motion to modify judgment,
requesting Paul Reed’s child support obligation be modified to be consistent
with the North Dakota Child Support Guidelines. Paul Reed has two separate
sources of income, a military disability benefit of $2,571.85 monthly and a
military pension of $2,491.00 monthly. Paul Reed’s first ex-wife receives a
monthly payment of $622.75 from his military pension and a monthly payment
of $189.72 for a Survivor Benefit Plan (SBP). Paul Reed’s second ex-wife, Ellen
Reed, receives a monthly payment of $327.00 from his military pension. Paul
Reed argued the payments made to his ex-wives should be deducted from his
total gross income when calculating his child support obligation. The district
court disagreed, did not deduct the payments made to his ex-wives, and
modified Paul Reed’s monthly child support obligation to $1,657.00 per month.
II
[¶4] When reviewing a district court’s calculation of child support, we utilize
a mixed standard of review:
Child support determinations involve questions of law, which are
fully reviewable, findings of fact subject to the clearly erroneous
standard, and in some areas, matters of discretion subject to the
abuse of discretion standard. Minyard v. Lindseth, 2019 ND 180,
1
¶ 6, 930 N.W.2d 626. “A court errs as a matter of law if it does not
comply with the requirements of the child support guidelines.”
Wolt v. Wolt, 2019 ND 155, ¶ 5, 930 N.W.2d 589. As a matter of
law, the court must clearly set forth how it arrived at the amount
of income and level of support. Minar v. Minar, 2001 ND 74, ¶ 10,
625 N.W.2d 518. “A finding of fact is clearly erroneous if it is
induced by an erroneous view of the law, if no evidence exists to
support it, or if, on the entire record, we are left with a definite and
firm conviction that a mistake has been made.” Id.Bickel v. Bickel, 2020 ND 212, ¶ 6, 949 N.W.2d 832.
[¶5] We must first consider whether the district court erred in concluding
Paul Reed’s military disability benefit and military pension should be
considered income. Section 14-09-09.10(9), N.D.C.C., defines income as “any
form of payment, regardless of source, owed to an obligor, including any earned,
unearned, taxable or nontaxable income, workforce safety and insurance
benefits, disability benefits, unemployment compensation benefits, annuity
and retirement benefits, but excluding public assistance benefits administered
under state law.” Section 75-02-04.1-01(4)(b), N.D. Admin. Code, provides
examples of gross income:
Examples of gross income include salaries, wages, overtime wages,
commissions, bonuses, employee benefits, currently deferred
income, dividends, severance pay, pensions, interest, trust income,
annuities income, gains, social security benefits, workers’
compensation benefits, unemployment insurance benefits,
distributions of retirement benefits, receipt of previously deferred
income to the extent not previously considered in determining a
child support obligation for the child whose support is under
consideration, veterans’ benefits (including gratuitous benefits),
gifts and prizes to the extent they annually exceed one thousand
dollars in value, spousal support payments received, refundable
tax credits, value of in-kind income received on a regular basis,
children’s benefits, income imputed based upon earning capacity,
military subsistence payments, and net income from self-
employment.
2
The definition of income is “very broad and is intended to include any form of
payment to an obligor, regardless of source, which is not specifically excluded
under the guidelines.” Wilson v. Wilson, 2014 ND 199, ¶ 24, 855 N.W.2d 105(quoting Berge v. Berge, 2006 ND 46, ¶ 12, 710 N.W.2d 417).
[¶6] The district court determined both Paul Reed’s military disability benefit
and his military pension are considered income because they both fall under
the definition of gross income in N.D. Admin. Code § 75-02-04.1-01(4)(b).
Although we agree military disability benefits and military pension payments
payable to Paul Reed fall within the definition and examples of income
provided, we conclude retirement benefits allocated within the property
division in the prior divorce proceedings is not income for child support
purposes.
[¶7] We conclude the allocation of $622.75 to Paul Reed’s first ex-wife should
not be included in his calculation of income for child support because the funds
are the property of his first ex-wife. The payment is specifically included in the
property division in Paul Reed and his first ex-wife’s divorce judgment.
Moreover, each month the $622.75 is removed from the payment Paul Reed
receives from his military pension. Although not determinative, we note that
Paul Reed is not taxed on the $622.75. See Otterson v. Otterson, 1997 ND 232,
¶ 19, 571 N.W.2d 648 (noting our statutory definition of income for child
support purposes includes both taxable and nontaxable amounts). The
payment of $622.75 to Paul Reed’s first ex-wife is her property and therefore
should not be included in calculating Paul Reed’s income.
[¶8] The monthly payment of $327.00 to Ellen Reed from Paul Reed’s military
pension is Ellen Reed’s property and should not be included in calculating Paul
Reed’s income. The monthly payment of $327.00 to Ellen Reed is included in
the divorce decree in the section dividing the property between the parties.
While Ellen Reed’s payment is not removed from Paul Reed’s monthly payment
from his military pension, Paul Reed testified that the only reason he pays the
money directly to Ellen Reed is because the Defense Finance and Accounting
Service (DFAS) will not allow more than fifty percent of his payment to be
garnished and directly allocating to Ellen Reed her share of the pension would
3
require the DFAS to garnish over fifty percent of his payment. The monthly
payment of $327.00 to Ellen Reed is property of Ellen Reed and therefore is not
Paul Reed’s income.
[¶9] The monthly SBP payment of $189.72 was correctly included in Paul
Reed’s income. The SBP payment is not included within the division of property
in the divorce judgment.
III
[¶10] Paul Reed’s monthly gross income includes $1,541.25 from his military
pension and $2,571.85 from his military disability benefit, totaling $4,113.10.
We remand for the district court to calculate Paul Reed’s child support
obligation consistent with this opinion.
[¶11] Jon J. Jensen, C.J.
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte
Douglas A. Bahr
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