Ketelsen v. Ketelsen

NEUMANN, Justice. [¶ 1] Gaye Ketelsen appealed from a Second Amended Judgment extending her spousal support payments at a reduced amount until February 1999 and then terminating them. We hold the trial court’s modification of spousal support is supported by changed circumstances and is not clearly erroneous. We affirm. I [¶ 2] Gaye and Dale Ketelsen were married in 1955. After the parties lived separately for 10 to 15 years, Gaye Ketelsen was granted a divorce on the grounds of irreconcilable differences, in an original judgment, dated June 25, 1997. At that time, Dale Ketelsen, age 64, was owner and operator of the Pingree Grain Elevator, and earned $20,000 per year. Gaye Ketelsen, age 60, was not working and had been unemployed since 1983. Dale Ketel-sen was ordered to pay Gaye Ketelsen spousal support of $1,200 per month “continuing until [Dale Ketelsen] retires or [Gaye Ketelsen] remarries.” The trial court valued the Pingree Elevator, including working capital, at $324,599. The court awarded the elevator to Dale Ketel-sen but ordered him to pay Gaye Ketelsen a one-half equity share, in the amount of $162,300, in 15 annual installments of $10,-820 per year, plus six percent interest, payable annually, on the unpaid balance. [¶ 3] Gaye Ketelsen moved for amendment of the judgment, requesting permanent spousal support. The court denied the motion, and explained its reasoning in a memorandum opinion, dated September 11,1997: At trial and now, Gaye wants permanent spousal support. The Court’s award of spousal support was to continue until Gaye remarried or Dale retired. The Court still does not believe that permanent spousal support is in order. However, Gaye points out that Dale could “retire” and continue to earn an income close to what he earned while working. The reason the Court used a benchmark such as retirement was that usually one’s income decreases at that time. If Dale were in a position to retire and not see much of a reduction in income, this would not be in keeping with the Court’s reasoning. [187] On October 7, 1997 the court entered an Amended Judgment, denying permanent spousal support but requiring Dale Ketel-sen to “notify [Gaye Ketelsen] ninety days prior to his retirement, in order to provide [Gaye Ketelsen] with an opportunity to have a hearing prior to the expiration of spousal support.” [¶ 4] On February 17, 1998, Dale Ketel-sen notified Gaye Ketelsen he would be retiring on June 1, 1998 and his spousal support payments would cease at that time. Gaye Ketelsen filed a motion requesting the court to order Dale Ketelsen to continue paying spousal support “until such time as the elevator ... is sold.” In an affidavit filed with her motion, Gaye Ketelsen described her situation following Dale Ketelsen’s retirement: [B]ecause I will not attain the age of 62 until December of this year, I will be unable to receive any benefits until January, 1999. Therefore, if my spousal support ceases, I will have no income until that time (payments will be $430.00 per month). I should receive my property settlement payments as ordered by the Court, but said payments will be insufficient for me to support myself and pay my bills. After an evidentiary hearing on the motion, the trial court entered a Second Amended Judgment, requiring Dale Ketel-sen to pay a reduced spousal support of $800 per month through February 1999, at which time his spousal support obligation would terminate. Gaye Ketelsen appealed. II [¶ 5] Gaye Ketelsen asserts the trial court’s termination of spousal support after February 1999 is clearly erroneous, because Dale Ketelsen still works part-time at the elevator and his income, including social security benefits, has actually increased after his retirement. [¶ 6] The Second Amended Judgment, which terminates Dale Ketelsen’s support payments after February 1999, even though his income has not decreased, appears inconsistent with the court’s earlier explanation Dale Ketelsen’s support obligation would cease when his income decreased upon retiring. A court cannot, however, consider issues of property division and spousal support separately in a vacuum, but must examine those issues together. Nelson v. Nelson, 1998 ND 176, ¶ 10, 584 N.W.2d 527. [¶ 7] After his retirement, Dale Ketelsen has continued to work part time at the elevator as a consultant to the new manager. He earns gross annual income from the elevator of $9,600 and receives $13,200 in social security benefits, for a total gross income of $22,800. He testified that when he retired on June 1, 1998 he told the elevator’s three employees if they can keep the elevator running with their “head above water” that would be “fine and dandy” but if it looks like the elevator will “sink” then we will be forced into “shutting the doors.” [¶ 8] The undisputed evidence shows Dale Ketelsen has attempted to sell the elevator without any success. The elevator had net earnings in the year prior to the hearing on the motion of only $14,000. Yet, under the divorce judgment Dale Ket-elsen was required to make a property distribution to Gaye Ketelsen of $19,908 ($10,820 per year plus interest). To make property distributions, Dale Ketelsen has had to use the dividend from elevator earnings and has also had to borrow money from the elevator. He testified that additional withdrawals from the elevator to make the property distribution payments could result in the elevator losing its bond, which would force him to terminate the elevator operation. [¶ 9] In its memorandum opinion, the trial court explained the difficulty of the situation: Dale’s position is that he has retired and is working parttime to supervise the new manager of the elevator. This helps protect the investment both Dale and Gaye have in the elevator.... Dale [188] had to borrow money from the elevator to pay the property distribution installment to Gaye. .... Gaye wants to be paid the $1200 until the elevator is sold or closes. She also wants attorney’s fees. This is a clash between the needs of two people. It is appropriate to order that spousal support end at the obligor’s retirement. Here Gaye would be given some spousal support to tide her over from the time of Dale going on social security until she does the same.... The Court also does not lose sight of the fact that Dale is in a difficult financial position because he cannot sell the elevator and must borrow from it to make the annual payment to Gaye. Considering the elevator’s financial condition and meager earnings, the court found, [Dale Ketelsen’s] earning capacity is reduced to the point he cannot make his annual property distribution payment to [Gaye Ketelsen] from his own funds. To make this payment, he must borrow money from the elevator. [¶ 10] The court recognized Gaye Ketel-sen has financial needs with very little resources to meet them. However, the court also recognized the elevator operation is in a precarious financial position, with no buyer in sight, and the court expressed concern about Dale Ketelsen being able to keep the elevator going as an operating entity for purposes of continuing to make property distribution payments to Gaye Ketelsen. The trial court implicitly found the current financial status of the elevator constitutes a significant change in circumstances warranting termination of Dale Ketelsen’s support obligation after February 1999, when Gaye Ketelsen would also begin receiving social security benefits, even though Dale Ketelsen’s total income did not decrease upon retirement. Balancing the parties’ needs and Dale Ket-elsen’s ability to pay, the court concluded the spousal support obligation should continue at a reduced amount until February 1999 and then terminate. [¶ 11] There must be a material change in circumstances to justify a modification of spousal support. Mahoney v. Mahoney, 1997 ND 149, ¶ 24, 567 N.W.2d 206. A trial court’s modification of spousal support based upon changed circumstances is a finding of fact, which will only be set aside on appeal if it is clearly erroneous. Schmitz v. Schmitz, 1998 ND 203, ¶ 5, 586 N.W.2d 490. Under N.D.R.Civ.P. 52(a) a finding of fact is clearly erroneous if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, although there is some evidence to support it, on the entire evidence this Court is left with a firm and definite conviction a mistake has been made. Id. In determining whether there has been a material change in circumstances to warrant modification of a spousal support obligation, the trial court must examine the extent the changes were contemplated at the time of the original decree. Schmitz v. Schmitz, 1998 ND 203, ¶ 12, 586 N.W.2d 490. [¶ 12] Dale Ketelsen’s retirement was contemplated and accommodated in the original support award, which provided his spousal support obligation would cease upon his retirement. On the other hand, Dale Ketelsen’s decision to continue working part time after his retirement, resulting in no reduction in total income, was not contemplated by the court, and is a factor weighing in favor of Dale Ketelsen having the ability to continue paying some spousal support. In addition to Dale Ketelsen’s retirement, however, other material changes have occurred since the parties’ divorce. [¶ 13] One change in circumstance, apparently not contemplated by the court when it initially awarded spousal support, is that Dale Ketelsen has been required to borrow money from the elevator to make the annual property distribution payments, which, in turn, has placed the elevator’s bond at risk and has jeopardized continued operation of the elevator. The annual equity payments to Gaye Ketelsen [189] have threatened the ongoing viability of the elevator, from which those payments are derived. The continued operation of the elevator directly affects Dale Ketel-sen’s ability to pay spousal support and to make the annual property distribution payments. If the elevator is forced to close its doors and if, as the record evidence indicates, there is no buyer, it could become financially impossible for Dale Ketelsen to continue paying either spousal support or property distribution payments. [¶ 14] Another changed circumstance is that as of February 1999, both parties started receiving social security benefits. Those benefits increase Dale Ketelsen’s ability to pay support, but lessen Gaye Ketelsen’s need for support. III [¶ 15] The trial court recognized both parties are financially burdened. In modifying the spousal support award the court attempted to balance Gaye Ketel-sen’s needs with Dale Ketelsen’s needs and ability to pay. The amended support order attempts to make it possible for Dale Ketelsen to continue the elevator as a viable and operating entity, capable of generating sufficient cash flow for him to continue making annual property distribution payments to Gaye Ketelsen. [¶ 16] We are not left with a definite and firm conviction the trial court made a mistake. The material changes in circumstances support the trial court’s decision to extend reduced support payments for Gaye Ketelsen until she began receiving social security and to then terminate spousal support, as contemplated in the original judgment. [¶ 17] We are concerned, however, that the same uncertainties the trial court found supported its modification of spousal maintenance might also leave Gaye Ket-elsen with neither property distribution nor spousal support. To guard against that unfortunate possibility, we believe prudence requires the trial court retain jurisdiction to reinstate spousal support payments, should a future change in circumstances require. We order the judgment modified to reflect that retained jurisdiction. See McAdoo v. McAdoo, 492 N.W.2d 66, 70 (N.D.1992). IV [¶ 18] The trial court denied Gaye Ketelsen’s request for an award of attorney fees under N.D.C.C. § 14-05-23. An award of attorney fees under this statute is within the sound discretion of the trial court and will not be set aside absent an abuse of discretion. Kautzman v. Kautzman, 1998 ND 192, ¶ 32, 585 N.W.2d 561. A court abuses its discretion when it acts in an arbitrary, unreasonable, or unconscionable manner or when its decision is not the product or rational mental process. Id. In deciding whether to award attorney fees in a divorce action the trial court must balance one party’s need against the other party’s ability to pay. Wilhelm v. Wilhelm, 1998 ND 140, ¶ 21, 582 N.W.2d 6. [¶ 19] In support of her request for attorney fees, Gaye Ketelsen asserts Dale Ketelsen’s “action in terminating his spousal support obligation” and the “disparity in the parties’ incomes” justify an award of attorney fees to her. Dale Ketel-sen’s notification to Gaye Ketelsen his support payments would terminate because he was retiring is in accord with the divorce judgment. In consideration of the disparity in the parties’ incomes, the trial court extended Dale Ketelsen’s support obligation until Gaye Ketelsen began receiving social security benefits. Under these circumstances, we are not convinced the trial court abused its discretion in denying Gaye Ketelsen’s request for attorney fees. [¶ 20] We affirm the judgment as modified. [¶ 21] GERALD W. VANDE WALLE, C.J., and DALE V. SANDSTROM and CAROL RONNING KAPSNER, JJ„ concur.