IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2024 ND 196
Signe Ann Edison, Plaintiff and Appellee
v.
Jeffrey Bryce Edison, Defendant and Appellant
No. 20240119
Appeal from the District Court of Cass County, East Central Judicial District, the
Honorable Tristan J. Van de Streek, Judge.
AFFIRMED.
Opinion of the Court by Tufte, Justice, in which Justice Crothers, Justice Bahr,
and District Judge Daniel S. El-Dweek joined. Justice McEvers filed an opinion
concurring specially.
Michael L. Gjesdahl, Fargo, N.D., for plaintiff and appellee.
Benjamin B. Freedman, Fargo, N.D., for defendant and appellant.
Edison v. Edison
No. 20240119
Tufte, Justice.
[¶1] Jeffrey Edison appeals from an amended divorce judgment entered
following remand from this Court. On appeal, he argues the district court’s
award of primary residential responsibility to Signe Edison was clearly
erroneous because the court was biased. Jeffrey Edison also argues the district
court erred in calculating his income and finding him to be underemployed for
purposes of child support. We affirm the judgment.
I
[¶2] Jeffrey Edison previously appealed from a divorce judgment and an
amended judgment “awarding primary residential responsibility for two
children to Signe Edison, arguing error in the form of gender bias and in the
court’s finding that Jeffrey Edison was underemployed for purposes of child
support.” Edison v. Edison (“Edison I”), 2023 ND 141, ¶ 1,
994 N.W.2d 151. We
concluded the district court’s findings regarding E.E.’s best interests were clearly
erroneous because they misapplied N.D.C.C. § 14-09-29(1), explaining the
“court’s reasoning for awarding Signe Edison primary residential responsibility
over E.E. depended significantly on Signe’s breastfeeding E.E.” Id. at ¶ 19. We
held the “district court’s findings in support of its award of primary residential
responsibility to Signe Edison were heavily influenced by improper sex-based
generalizations” and remanded “for the district court to make findings under a
correct application of the law.” Id. at ¶ 23.
[¶3] In Edison I, Jeffrey Edison also argued “the district court erred in finding
that he was underemployed for purposes of child support and for imputing
income to him,” and this Court agreed.
2023 ND 141, ¶ 36. We held “[t]he court’s
finding that Jeffrey Edison was underemployed is clearly erroneous because it
lacked evidence to support the ‘statewide average earnings for persons with
similar work history and occupational qualifications.’” Id. at ¶ 41. This Court
further concluded, “the court erred because it failed to calculate Jeffrey Edison’s
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gross income and made a determination solely on the basis of his adjusted gross
income from his tax returns.” Id. at ¶ 44.
[¶4] After remand, the district court held a status conference. The parties
stipulated that E.E. was no longer breastfeeding and that the district court could
receive and rely on relevant pages of the U.S. Bureau of Labor Statistics wage
employment survey as evidence. The court also heard argument on the issues on
remand. Thereafter, the district court entered orders for amended judgment in
two parts. The first part addressed the best interest factors under N.D.C.C. § 14-
09-06.2(1)(a)-(m) and awarded primary residential responsibility to Signe
Edison. The second order addressed the issue of child support calculations and
found Jeffrey Edison was underemployed. Both orders were incorporated into
the second amended judgment. Jeffrey Edison appeals from the second amended
judgment.
II
[¶5] Jeffrey Edison argues he was denied due process on remand because the
district court failed to follow instruction on remand to reconsider the award of
residential responsibility without improper sex-based generalizations. He
argues the district court maintained its bias and prejudged the matter. He asks
this Court to award equal residential responsibility or to reassign the case to a
different judge.
[¶6] “At a minimum, [due process] requires the proceedings be overseen by an
impartial fact-finder.” Koon v. State, 2023 ND 247, ¶ 15,
1 N.W.3d 593 (citation
omitted). “A fact-finder is not impartial if the fact-finder prejudges the case, if
the fact-finder harbors an actual bias towards a participant or if a high
probability exists the fact-finder harbors bias towards a participant.”
Id.
[¶7] Jeffrey Edison argues the district court’s bias is shown through the court’s
commentary on how to proceed after remand and its categorization of genderbias as the “breastfeeding issue.” At the status conference, the district court
asked if it needed to receive further evidence or if it may review the record and
simply remove any reference to breastfeeding in its findings. After review of the
record, we conclude the district court’s comments do not rise to the level of
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judicial bias or impartiality. See Schadler v. Job Serv. N.D., 361 N.W.2d 254, 258
(N.D. 1985) (holding inartful comments are an insufficient basis to establish bias).
[¶8] Jeffrey Edison next argues the district court’s findings are not supported
by the record. He argues the district court must be biased because the only
difference between the court’s final order and the interim order, which awarded
equal residential responsibility, was the court’s findings on breastfeeding.
[¶9] Adverse rulings alone are not evidence of judicial bias or partiality.
Wisnewski v. Wisnewski,
2020 ND 148, ¶ 65,
945 N.W.2d 331. “In a bench trial, it
is presumed the district court only considered competent evidence because a
judge, when deliberating the ultimate decision, is capable of distinguishing
between admissible and inadmissible evidence.” Koon,
2023 ND 247, ¶ 17.
[¶10] In Edison I, we explained the district court’s analysis of the best interest
factors, namely factors (a), (c), and (m), relied significantly on breastfeeding.
2023
ND 141, ¶¶ 16-19. The district court eliminated those findings in its amended
order. The district court followed our directive to make findings under the
correct application of law. The district court’s award is not gender-biased.
[¶11] Jeffrey Edison has not shown bias. Nor has Jeffrey Edison shown the
district court prejudged the issue. We affirm the district court’s award of primary
residential responsibility to Signe Edison.
III
[¶12] Jeffrey Edison argues the district court erred in calculating his income and
finding him underemployed. “Determination of whether an individual is
underemployed is within the discretion of the trial court.” Schrodt v. Schrodt, 2022
ND 64, ¶ 22,
971 N.W.2d 861. “If the district court fails to comply with the child
support guidelines in determining an obligor’s child support obligation, the
court errs as a matter of law.” Edison I,
2023 ND 141, ¶ 37 (citations omitted).
[¶13] Jeffrey Edison argues the district court improperly determined his income
from past years, which were not reliable indicators of his current and future
earnings. He also argues the court failed to adequately compare his earnings to
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the state’s statewide average earnings for persons with similar work history and
occupational qualifications and improperly subtracted his self-employment
losses from his gross income.
A
[¶14] Jeffrey Edison is self-employed. Our case law regarding self-employment
explains:
Determination of a self-employed individual’s income for the
purpose of calculating a child support obligation is governed, at
least initially, by N.D. Admin. Code § 75-02-04.1-05. “Net income
from self-employment means total income, for internal revenue
service purposes, of the obligor.” N.D. Admin. Code § 75-02-04.1-
05(1). The guidelines recognize that “[s]elf-employment activities
may experience significant changes in production and income over
time.” N.D. Admin. Code § 75-02-04.1-05(4). “To the extent that
information is reasonably available, the average of the most recent
five years of each self-employment activity, if undertaken on a
substantially similar scale, must be used to determine self-employment income.” Id. “If the tax returns are not available or do
not reasonably reflect the income from self-employment, profit and
loss statements which more accurately reflect the current status
must be used.” N.D. Admin. Code § 75-02-04.1-05(3). A district court
cannot arbitrarily ignore the guidelines simply because it feels the
obligor’s tax returns do not reasonably reflect the obligor’s income
without ordering the parties to present more information and
making specific findings of fact.
Thompson v. Johnson, 2019 ND 111, ¶ 9,
926 N.W.2d 120.
[¶15] Jeffrey Edison argues the district court erred by using his 2021 tax return
because it was not a reliable indication of his future circumstances. The district
court explained, “Jeffrey’s tax returns are adequate to reflect his income as the
Court found his testimony provided an incomplete representation of his income
for 2022, since his self-employment income and losses were not yet known and
his predictions are based off a short period of time.” The court further found,
“Jeffrey did not argue his tax returns were inaccurate and they were further
corroborated by his father, a Certified Public Accountant, who prepared them.”
4
[¶16] Jeffrey Edison argues his testimony is a more reliable indicator of future
circumstances. Regarding Jeffrey Edison’s testimony, the district court found:
Jeffrey testified at trial that he can withdraw approximately
$2,500.00 per month from Edison Squared Investments LLC, and
that he has an income from JBE Construction, but that is not as
predictable. Jeffrey’s 2021 tax return shows a gross annual income
of negative $13,659.00. Docket # 461. Page 12 of his tax return breaks
down his income. Id. Specifically, JBE Construction had a business
income of $12,577.00 and Edison Squared Investments LLC, had a
loss of $26,237.00, resulting in a total income for Jeffrey of negative
$13,659.00. Id. Additionally, Schedule C on page 24 of Jeffrey’s tax
return also shows JBE Construction’s small profit of $12,577.00;
Schedule E on page 29 also shows Edison Squared Investments,
LLC’s loss of $26,237.00. Id. Edison Squared Investments LLC
Balance Sheet has retrained [sic] earnings of negative $54,374.00.
Docket # 313. Retained earnings are the profit a company has left
after paying all its costs, taxes, and dividends to shareholders. The
negative retained earnings support the accuracy of the loss on
Jeffrey’s tax return. Jeffrey’s 2021 tax return and Edison Squared
Investments LLC’s Balance Sheet contradict his testimony that he
can draw $2,500.00 per month or $30,000.00 per year from Edison
Squared Investments LLC.
[¶17] “Income must be sufficiently documented through the use of tax returns,
current wage statements, and other information to fully apprise the court of all
gross income.” N.D. Admin. Code § 75-02-04.1-02(7). “If tax returns are
unavailable or the court finds the returns unreliable, the guidelines require the
court to use profit and loss statements which more accurately reflect the obligor’s
current self-employment income, in order to properly calculate income.” Entzie
v. Entzie, 2010 ND 194, ¶ 6,
789 N.W.2d 550; see also N.D. Admin. Code § 75-02-
04.1-05(3). “When self-employment activity has not been operated on a
substantially similar scale for five years, a shorter period may be used.” N.D.
Admin. Code § 75-02-04.1-05(4). In this case, the district court found the 2021 tax
return more reliable than Jeffrey Edison’s testimony. The district court followed
the guidelines and did not err by using Jeffrey Edison’s 2021 tax return to
compute his income.
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B
[¶18] Jeffrey Edison argues the district court failed to compare his earnings to
the statewide average earnings for persons with similar work history and
occupational qualifications. “Both N.D. Admin. Code §§ 75-02-04.1-07(1)(b) and
75-02-04.1-07(2) require the use of this state’s statewide average earnings.”
Edison I, 2023 ND 141, ¶ 40 (cleaned up). “District courts must refer to a source
demonstrating the average earnings for the entire state of North Dakota;
evidence of average earnings for a different geographic area is insufficient. The
statewide average earning reports published by Job Service of North Dakota are
sufficient.”
Id.
[¶19] The district court relied on the stipulated exhibits, the U.S. Bureau of Labor
Statistics May 2021 State Occupational Employment and Wage Estimates for
North Dakota, and compared Jeffrey Edison’s earnings to the statewide average:
Next, under subsection (b), regardless of whether the Court agrees
with Jeffrey or Signe’s argument whether he should be considered
either a construction laborer or a construction manager for
subsection (b) purposes, a negative income of $13,659.00 is still less
than both $26,952.00 or $63,660.00 (as Jeffrey argues he is a
construction laborer, and $44,920.00 is the statewide average for
Construction Laborers, and six-tenths of that equals $26,952.00; or as
Signe argues that he is considered a construction manager, and
$106,100.00 is the statewide average for construction managers, and
six-tenths of that equals $63,660.00). N.D.A.C. § 75-02-04.1-07(3)(b).
The district court compared Jeffrey Edison’s earnings to the statewide average
earnings.
C
[¶20] Jeffrey Edison argues the district court erred by subtracting his self-employment losses from his gross income, and by failing to include his
refundable tax credits. We agree the district court misapplied the law. However,
the errors are harmless because they do not change the result.
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[¶21] The district court explained, “Jeffrey’s total gross income includes his self-employment earnings from JBE Construction and his losses from Edison Squared
Investments LLC, which equaled a total gross income from his 2021 federal and
state tax return as negative $13,659.00,” and found Jeffrey is considered to be
underemployed under N.D.A.C. § 75-02-04.1-07(2). Jeffrey Edison argues the loss
from Edison Squared cannot be deducted from his other income because each
self-employment activity must be considered independently if they maintain
separate finances, and a loss of one self-employment activity cannot be used to
reduce other income unless the resulting amount equals or exceeds the greatest
of the subdivisions of N.D. Admin. Code § 75-02-04.1-05(6).
[¶22] That guideline provides:
When less than three years were averaged under subsection 4, a loss
resulting from the averaging may be used to reduce other income that
is not related to the self-employment activity that produced the loss only if
the loss is not related to a hobby activity and monthly gross income,
reduced by one-twelfth of the average annual self-employment loss,
equals or exceeds the greatest of:
a. A monthly amount equal to one hundred sixty-seven times
the hourly federal minimum wage;
b. An amount equal to six-tenths of this state’s statewide average
earnings for persons with similar work history and
occupational qualifications; or
c. An amount equal to eighty percent of the obligor’s greatest
average gross monthly earnings, calculated without using
self-employment losses, in any twelve consecutive months
included in the current calendar year and the two previous
calendar years before commencement of the proceeding
before the court.
N.D. Admin. Code § 75-02-04.1-05(6) (emphasis added).
[¶23] Signe Edison relies on our decision in Shae v. Shae, which stated, “N.D.
Admin. Code § 75-02-04.1-05(6) and (7) restrict when loss may be applied to
reduce income unrelated to self-employment.” 2014 ND 149, ¶ 16,
849 N.W.2d
173 (explaining “the income used in the district court’s calculations was solely
self-employment income” and “Shae’s farming losses should have been included
7
in determining his net income from self-employment for the purposes of
determining his gross income”). However, after Shae, the Administrative Code
was amended, providing clarification. Effective September 1, 2015, the Code
clarified: “When less than three years were averaged under subsection 4, a loss
resulting from the average may be used to reduce other income that is not related
to the self-employment activity that produced the loss only if the loss is not related
to a hobby activity . . . .” N.D. Admin. Code § 75-02-04.1-05(6) (2015) (emphasis
added to show additions); see also N.D. Admin. Code § 75-02-04.1-05(7) (2015)
(adding the same clarifying language). Under the plain language of the
Administrative Code, a loss, including a loss from an unrelated self-employment
activity, may be used to reduce other income that is not related to the self-employment activity that produced the loss. See also Gerving v. Gerving, 2022
ND 2, ¶ 19,
969 N.W.2d 184 (“The plain language of the child support guidelines
does not preclude using the loss to reduce income that is related to the self-employment activity that produced the loss.”).
[¶24] The district court did not make a finding whether or not Jeffrey Edison’s
two self-employment businesses are related. If, as in Gerving,
2022 ND 2, ¶ 19,
the income was related to the self-employment activity that produced the loss,
then the guidelines allow the income to be reduced by the loss. If the two self-employment activities are related, then the district court’s application of the loss
to reduce the income was correct. On the other hand, if the two self-employment
activities are unrelated, the income from JBE Construction may be reduced by
the loss resulting from Edison Squared Investments only if the monthly gross
income, reduced by one-twelfth of the self-employment loss, equals or exceeds
the greatest of subsections (a), (b) or (c). N.D. Admin. Code § 75-02-04.1-05(6).
Because the district court did not make those findings or calculations, it did not
comply with N.D. Admin. Code § 75-02-04.1-05(6).
[¶25] If the two self-employment activities are unrelated, then under N.D.
Admin. Code § 75-02-04.1-05(6), the district court erred by subtracting the loss
from Jeffrey Edison’s income because the monthly gross income, reduced by one-twelfth of the self-employment loss, does not equal or exceed the greatest of
subsections (a), (b) or (c). The court determined that Jeffrey Edison’s annual gross
income, other than the Edison Squared loss, was $12,577, which is a monthly
8
gross income of $1,048. The loss was $26,237 annually, or $2,186 per month,
which is $2,004 when reduced by 1/12th. If the loss is subtracted from the gross
income, it results in a negative number, which cannot exceed or equal any of the
three subdivisions of N.D. Admin. Code § 75-02-04.1-05(6).1
[¶26] Jeffrey Edison also argues the district court failed to include his earned
income credit of $3,618 and his child tax credit of $1,800 in his gross income for
2021. Under N.D. Admin. Code § 75-02-04.1-01(4)(b), “gross income” includes
“refundable tax credits” such as the earned income tax credit and the child tax
credit. The district court misapplied the guidelines by failing to include the
earned income tax credit and child tax credit in calculating Jeffrey Edison’s gross
income.
[¶27] Because the district court erred in its application of the child support
guidelines, we must examine whether the error was harmless. “[A]n error is
harmless if it does not affect the outcome of the case or a party’s substantial
rights.” Senger v. Senger, 2022 ND 229, ¶ 12,
983 N.W.2d 160; N.D.R.Civ.P. 61 (“At
every stage of the proceeding, the court must disregard all errors and defects
that do not affect any party’s substantial rights.”). “Unless justice requires
otherwise, no error in admitting or excluding evidence, or any other error by the
court or a party, is ground for granting a new trial, for setting aside a verdict, or
for vacating, modifying, or otherwise disturbing a judgment or order.”
N.D.R.Civ.P. 61.
[¶28] The district court found Jeffrey Edison’s annual gross income, other than
the Edison Squared loss, was $12,577. It failed to include his earned income tax
credit of $3,618 and his child tax credit of $1,800, which increases the annual
gross income to $17,995. If the two self-employment activities are unrelated, then
the loss cannot be deducted under N.D. Admin. Code § 75-02-04.1-05(6), and we
1 Inclusion of the tax credits in the gross annual income does not change the
outcome of the calculations under N.D. Admin. Code § 75-02-04.1-05 because the
result still does not exceed or equal any of the three subdivisions of subsection
six.
9
compare $17,995 to the statewide average earnings. If they are related, the
income is reduced by the loss, resulting in a negative income. As a construction
laborer, Jeffrey Edison is presumed underemployed if he earns less than 6/10 of
$44,920 or $26,952. As a construction manager, he is presumed underemployed
if he earns less than 6/10 of $106,100, or $63,660. Whether or not his self-employment activities are related, under either category, Jeffrey Edison is
underemployed. Therefore, the district court’s errors in application of the child
support guidelines are harmless because they do not change the result.
IV
[¶29] We affirm the judgment.
[¶30] Jerod E. Tufte, Acting C.J.
Daniel J. Crothers
Douglas A. Bahr
Daniel S. El-Dweek, D.J.
McEvers, Justice, concurring specially.
[¶31] I concur with the majority that the district court’s amended judgment
should be affirmed. I respectfully continue to disagree that remand was
necessary on the issue of primary residential responsibility because I do not
believe the court was heavily influenced by improper sex-based generalizations
in its original findings. Majority, at ¶ 2.
[¶32] Lisa Fair McEvers
[¶33] The Honorable Daniel S. El-Dweek, District Judge, sitting in place of
Jensen, C.J., disqualified.
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