Summary
The Supreme Court of North Dakota reviewed a divorce judgment involving marital-property distribution, allocation of business debts, child support, and the effective date of support. The court affirmed the effective date of child support but held that the trial court improperly excluded Allan Brandner's business debts from the marital estate and improperly calculated his imputed income for child support. The case was remanded for reconsideration of the property distribution and recalculation of child support.
Topics
Practice areas
Questions Presented
- Whether the district court properly classified and distributed Allan's business debts in dividing the marital estate.
- Whether the district court properly calculated Allan's imputed income and child support obligation.
- Whether the district court abused its discretion by making Allan's child support obligation effective in June 2004 rather than retroactive to April 2003.
Holdings
- Business debts accumulated during the marriage remain part of the marital estate even when the court ultimately allocates responsibility for repayment to one spouse. The district court erred as a matter of law by treating Allan's $659,771 in business debts as nonmarital debts and must reconsider the property distribution under the correct legal framework.
- When imputing income to an unemployed or underemployed child-support obligor, the court must comply with the applicable child-support guidelines and use the prescribed method that produces the greatest imputed income, subject to applicable exceptions. The district court erred as a matter of law by calculating Allan's imputed income using a method not authorized by the guidelines.
- The district court did not abuse its discretion in finding that Allan was underemployed.
- The district court did not abuse its discretion by making Allan's child support obligation effective in June 2004 rather than retroactive to April 2003.
Key quotations
“A trial court may consider which of the parties has incurred particular debts, and the purposes for which those debts were incurred, in determining an equitable allocation of the responsibility for repayment, but those debts nevertheless remain a part of the marital estate.” (¶ 10)
“Nevertheless, a court errs as a matter of law if it fails to comply with the child support guidelines in determining an obligor's child support obligation.” (¶ 18)
Factual background
Cheryl and Allan Brandner were married in 1985 and had two children. During the marriage, Allan changed employment and became involved in East River Livestock, a business that failed and generated potential debts exceeding $600,000. Cheryl commenced the divorce action in April 2003 after learning that Allan had not filed the family's tax returns for several years and had provided no financial support after the action began. The district court treated most of Allan's business debts as nonmarital, awarded Cheryl custody, and calculated Allan's support obligation using an earning capacity of $38,000 per year.
Procedural history
The district court granted the divorce, divided the marital property and debts, awarded Cheryl custody, ordered Allan to pay $723 per month in child support, and made the support obligation effective in June 2004 rather than retroactive to the filing of the divorce action. The Supreme Court of North Dakota affirmed the effective date, reversed the property distribution and child support award, and remanded for reconsideration and recalculation.
Remand instructions
Reconsider the property distribution after including Allan's business debts in the marital estate and applying the correct equitable-distribution law. Recalculate Allan's child support obligation in compliance with the child-support guidelines. The district court may also reconsider the effective date of support payments if it wishes.