author: SANDSTROM, Justice.

text:
    2006 ND 65
    Patricia J. ROTHBERG, Plaintiff, Appellee and Cross-Appellant v. Charles S. ROTHBERG, Defendant, Appellant and Cross-Appellee.
    No. 20050198.
    Supreme Court of North Dakota.
    March 29, 2006.

      LaRoy Baird III (argued) and Bonnie L. Storbakken (on brief), LaRoy Baird, P.C., Bismarck, N.D., for plaintiff, appellee and cross-appellant.
    Scott K. Porsborg, Smith Bakke Pors-borg & Schweigert, Bismarck, N.D., for defendant, appellant and cross-appellee.
   SANDSTROM, Justice.

[¶ 1] Charles Rothberg has appealed from an order denying his motion to modify his spousal support obligation under a divorce judgment. Patricia Rothberg cross-appealed, alleging the district court erred in failing to award attorney fees to her. We reverse and remand, concluding the district court’s findings of fact lacked sufficient specificity to allow this Court to discern the factual basis for the court’s determinations, and the district court failed to consider the appropriate legal standards when it denied Patricia Roth-berg’s request for attorney fees.

I

[¶ 2] Charles Rothberg and Patricia Rothberg were married in 1979 in Canada and subsequently adopted three children. At the time of the parties’ divorce in 2001, he was employed as a neurosurgeon at St. Alexius Medical Center in Bismarck. His written employment contract with St. Alexius ran through June 2003, and he was paid $400,000 per year plus additional compensation for excess call coverage. The parties’ total income in 2001 was $483,822.

[¶ 3] Patricia Rothberg brought this action for divorce in May 2001. The parties entered into a settlement agreement awarding custody of the children to her with liberal visitation to him, and providing that he would pay child support. The agreement also divided the parties’ property and required him to pay spousal support to her for ten years following the divorce. Under the terms of the agreement, he was required to pay $3,600 per month in spousal support for the first three years and then $5,000 per month for the remainder of the ten-year term. The parties’ agreement was incorporated into the judgment of divorce entered on August 20, 2001.

[¶ 4] In 2002, St. Alexius made an offer to Charles Rothberg for further employment at a salary of $267,000 per year. He declined the offer, and his contract with St. Alexius was not renewed when it expired in June 2003. Since that time he has been working as a locum tenens, accepting short-term temporary assignments through a placement firm. He travels around the country to these temporary neurosurgery assignments approximately two to three weeks per month, and returns regularly to his home in Bismarck to exercise visitation with the two remaining minor children. In 2004, he earned $200,819 from his locum tenens work. In addition, he received a $50,000 payment in 2005 for work that had been performed in 2004.

[¶ 5] In March 2005, Charles Rothberg moved for a reduction in his spousal support obligation, claiming the nonrenewal of his St. Alexius employment contract and resulting reduction in income was a material change in circumstances warranting modification of spousal support. He claimed his income had been involuntarily reduced from over $400,000 to $200;000, and he was unable to find other employment in Bismarck that would approximate his prior salary. He claims that he accepted every locum tenens assignment offered to him in 2004, and that his spousal obligation should be based upon his 2004 income.

[¶ 6] In response to the motion, Patricia Rothberg alleged Charles Rothberg had turned down a position in Toledo, Ohio, that would have paid him $350,000 per year. She also alleged that, despite his claims of financial hardship, he had since the divorce spent inordinate amounts of money on luxury items, including an SUV, a car, two motorcycles, firearms, and model trains. He also purchased a house in Bismarck for $256,000 after the divorce.

[¶ 7] The district court found Charles Rothberg had failed to prove a material change in circumstances that substantially affected his ability to pay and that was not contemplated by the parties at the time of the initial decree. The court also denied Patricia Rothberg’s request for her attorney fees for responding to the motion. Charles Rothberg appealed from the order denying his motion to modify spousal support, and Patricia Rothberg cross-appealed.

II

[¶ 8] Although no subsequent judgment was entered in this case, an order denying a motion to modify child support or spousal support that is intended to constitute the final order of the court is appealable. See Wagner v. Wagner, 1998 ND 117, ¶¶ 3-4, 579 N.W.2d 207; Austin v. Towne, 1997 ND 59, ¶ 7, 560 N.W.2d 895; Mahoney v. Mahoney, 516 N.W.2d 656, 660 (N.D.Ct.App.1994). The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. § 27-05-06. This Court has jurisdiction under N.D. Const. art. VI, § 6, and N.D.C.C. §§ 28-27-02 and 14-05-25. The appeal was timely under N.D.R.App.P. 4(a).

III

[¶ 9] Charles Rothberg contends the district court erred in finding he had failed to prove a material change in the parties’ financial circumstances warranting a reduction in his spousal support obligation.

A

[¶ 10] When the original divorce judgment includes an award of spousal support, the district court retains jurisdiction to modify the award. N.D.C.C. § 14-05-24.1; Gibb v. Sepe, 2004 ND 227, ¶ 7, 690 N.W.2d 230; Staley v. Staley, 2004 ND 195, ¶ 17, 688 N.W.2d 182. The party seeking modification of spousal support bears the burden of proving there has been a material change in the financial circumstances of the parties warranting a change in the amount of support. Gibb, at ¶¶ 7-8; Schmalle v. Schmalle, 1998 ND 201, ¶ 12, 586 N.W.2d 677. The district court’s determination whether there has been a material change in circumstances warranting modification of spousal support is a finding of fact and will be set aside on appeal only if it is clearly erroneous. Gibb, at ¶ 7; Lohstreter v. Lohstreter, 2001 ND 45, ¶ 10, 623 N.W.2d 350.

[¶ 11] A material change is a change that substantially affects the financial abilities or needs of the parties and that was not contemplated by the parties at the time of the original decree. Gibb, 2004 ND 227, ¶ 7, 690 N.W.2d 230; Schmalle, 1998 ND 201, ¶ 12, 586 N.W.2d 677. In assessing whether a material change has occurred, the reasons for changes in the parties’ income or needs must be examined, as well as the extent to which the changes were contemplated by the parties at the time of the initial decree. Lohstreter, 2001 ND 45, ¶ 13, 623 N.W.2d 350; Schmalle, at ¶ 12. Not every change in the parties’ financial circumstances justifies modification of spousal support, and no modification is warranted when the change is self-induced. Lohstreter, at ¶ 13. This Court encourages agreements between divorcing parties, and stipulated spousal support awards should be changed only with great reluctance. Gibb, at ¶ 8; Toni v. Toni, 2001 ND 193, ¶ 11, 636 N.W.2d 396.

B

[¶ 12] Our review of this case is significantly hampered by the district court’s failure to make specific, detailed findings on the relevant issues, and failure to expressly delineate the basis for its decision. The conclusory findings included in the district court’s order denying the motion do little to explain the rationale for the court’s ultimate determination that Charles Rothberg had failed to demonstrate a material change in circumstances that warranted a reduction in spousal support.

[¶ 13] Rule 52(a), N.D.R.Civ. P., requires that “[i]n all actions tried upon the facts without a jury ... the court shall find the facts specially.” When a motion necessitates the resolution of conflicting evidence, the proceeding is “an action tried upon the facts” under N.D.R.Civ.P. 52(a). Skoglund v. Skoglund, 333 N.W.2d 795, 796 (N.D.1983); Clement v. Clement, 325 N.W.2d 262, 263 (N.D.1982); Voth v. Voth, 305 N.W.2d 656, 658 (N.D.1981). A motion to modify a prior divorce decree necessitates a fact-finding process before it can be determined whether a material change in circumstances has occurred, and N.D.R.Civ.P. 52(a) is therefore applicable. See Skoglund, at 796.

[¶ 14] Under N.D.R.Civ.P. 52(a), the trial court is required to make findings of fact and conclusions of law sufficient to enable the appellate court to understand the factual determinations made by the trial court and the basis for its conclusions of law and the judgment or order entered thereon. See, e.g., Johnson Farms v. McEnroe, 2002 ND 122, ¶ 8, 656 N.W.2d 1; Global Acquisitions, LLC v. Broadway Park Ltd. P’ship, 2001 ND 52, ¶ 18, 623 N.W.2d 442. The trial court’s findings of fact and conclusions of law should be stated with sufficient specificity to assist the appellate court’s review and to afford a clear understanding of the trial court’s decision. Johnson Farms, at ¶ 8. Conclusory, general findings do not comply with N.D.R.Civ.P. 52(a), and a finding of fact that merely states a party has failed in its burden of proof is inadequate under the rule. Federal Land Bank of St. Paul v. Lillehaugen, 404 N.W.2d 452, 459 (N.D.1987). Rather, the trial court must specifically state the subordinate facts upon which its ultimate factual conclusions rest. Global Acquisitions, at ¶ 18; Lillehaugen, at 459; Radspinner v. Charlesworth, 846 N.W.2d 727, 730 (N.D.1984). Although findings of fact should be stated to afford a clear understanding of the court’s decision, findings are adequate if this Court can discern from them the factual basis for the trial court’s determination. See, e.g., VND, LLC v. Leevers Foods, Inc., 2003 ND 198, ¶ 27, 672 N.W.2d 445; Minar v. Minar, 2001 ND 74, ¶ 10, 625 N.W.2d 518.

[¶ 15] In its order denying the motion to modify spousal support, the district court did not set out specific findings on the financial issues presented by the parties and failed to provide an organized explanation of its decision. The court found in a conclusory fashion that Charles Rothberg had failed to meet his burden of proving either a decrease in his ability to pay or a material change in the parties’ financial circumstances substantially affecting his financial abilities or needs. The court’s only consideration of the numerous underlying financial issues raised by the parties is a cryptic finding that there was no evidence that any change in Charles Rothberg’s income was permanent, and that he had a “significant income producing capacity.”

[¶ 16] The meager findings of fact in the district court’s order denying the motion provide little insight into the rationale for the court’s decision, and fail to specifically state the subordinate facts upon

which the court’s ultimate factual conclusions rest. See Global Acquisitions, 2001 ND 52, ¶ 18, 623 N.W.2d 442; Lillehaugen, 404 N.W.2d at 459. Based upon the evidence presented in this case, there are several potential explanations and theories for the court’s ultimate conclusion that Charles Rothberg had failed to prove a substantial change in financial circumstances warranting a reduction in spousal support. It is unclear whether the court’s suggestion that any reduction in income was not permanent was based upon a determination that Charles Rothberg could somehow earn an equivalent amount in Bismarck, that he could earn an equivalent amount if he moved out of state, or that he could earn an equivalent amount through additional locum tenens work. Furthermore, it is unclear whether the court’s suggestion that he has “significant income producing capacity” means the court believed that Charles Rothberg can actually again earn more than $400,000, or that his current income — producing capacity, even if less than $400,000 annually, is sufficient to support the spousal support award of $60,000 per year. The parties have raised numerous legal issues which turn upon the precise factual basis for the court’s decision. Without a clear understanding of the district court’s resolution of the subordinate facts, we are unable to properly perform our review function and address the issues raised on appeal. See Vigen Constr. Co. v. Millers Nat’l Ins. Co., 436 N.W.2d 254, 255 (N.D.1989); Radspinner, 346 N.W.2d at 730.

[¶ 17] The district court’s findings of fact are not stated with sufficient specificity to assist appellate review, do not afford a clear understanding of the court’s decision, and are not adequate to allow this Court to discern the factual basis for the court’s determination. Johnson Farms, 2002 ND 122, ¶ 8, 656 N.W.2d 1; Global Acquisitions, 2001 ND 52, ¶ 18, 623 N.W.2d 442. We reverse and remand to the district court for the entry of specific findings of fact on the financial issues raised by the evidence and for further explanation of the basis for the court’s determination.

IV

[¶ 18] Patricia Rothberg has cross-appealed, alleging the district court erred in denying her request for attorney fees expended to respond to the motion to modify spousal support.

[¶ 19] Under N.D.C.C. § 14-05-23, a district court has discretion to award attorney fees in divorce proceedings, including proceedings on motions to modify spousal support. Gibb v. Sepe, 2004 ND 227, ¶ 11, 690 N.W.2d 230. An award of attorney fees under N.D.C.C. § 14-05-23 lies within the sound discretion of the district court and will not be set aside on appeal absent an abuse of discretion. Gibb, at ¶ 11; Oldham v. Oldham, 2004 ND 62, ¶ 16, 677 N.W.2d 196. A district court abuses its discretion if it misinterprets or misapplies the law. Bertsch v. Bertsch, 2006 ND 31, ¶ 8, 710 N.W.2d 113.

[¶ 20] In deciding whether to award attorney fees under N.D.C.C. § 14-05-23, the court must balance the parties’ financial needs and ability to pay. Litoff v. Pinter, 2003 ND 172, ¶ 19, 670 N.W.2d 860. In assessing the parties’ needs and ability to pay, the court should consider the property owned by each party, their relative incomes, whether property is liquid or fixed assets, and whether the actions of either party unreasonably increased the time spent on the ease. Bertsch, 2006 ND 31, ¶ 8, 710 N.W.2d 113; Dvorak v. Dvorak, 2005 ND 66, ¶ 32, 693 N.W.2d 646; Litoff, at ¶ 19.

[¶21] The district court’s order contains a single sentence addressing Patricia Rothberg’s request for attorney fees. After finding Charles Rothberg had failed to prove a material change of circumstances warranting modification of spousal support, the court concluded: “The Court does find the issue was worthy of a hearing, hence both parties shall be responsible for their own attorney fees and costs.”

[¶ 22] Rather than considering the parties’ financial needs and ability to pay, the court apparently based its denial of attorney fees on a determination that the motion was not frivolous. There is no indication that the court considered the relevant legal standards for an award of attorney fees under N.D.C.C. § 14-05-23. The court’s failure to consider and balance the parties’ financial needs and ability to pay was a misapplication of the law, and accordingly its denial of Patricia Roth-berg’s request for attorney fees was an abuse of discretion. See Bertsch, 2006 ND 31, ¶ 11, 710 N.W.2d 113; Litoff, 2003 ND 172, ¶ 9, 670 N.W.2d 860. We direct the district court on remand to reconsider Patricia Rothberg’s request for attorney fees applying the correct legal standards.

V

[¶ 23] We reverse the order denying the motion to modify spousal support and remand for further proceedings in accordance with this opinion.

[¶ 24] GERALD W. VANDE WALLE, C.J., DALE V. SANDSTROM, DANIEL J. CROTHERS, MARY MUEHLEN MARING, and CAROL RONNING KAPSNER, JJ., concur.


source: Caselaw Access Project

author: MARING, Justice. SANDSTROM, Justice,

license: Public Domain

text:
    2006 ND 54
    Cory L. THOMPSON, Plaintiff and Appellant v. Nikki L. OLSON, Defendant and Appellee.
    No. 20050091.
    Supreme Court of North Dakota.
    March 29, 2006.

      Suzanne M. Schweigert, Smith Bakke Oppegard Porsborg Wolf, Bismarck, N.D., for plaintiff and appellant.
    Austin G. Engel Jr., Bismarck, N.D., for defendant and appellee.
   MARING, Justice.

[¶ 1] Cory L. Thompson appealed from an amended judgment granting Nikki L. Olson custody of the couple’s minor child and establishing a visitation schedule for Thompson. We conclude the trial court’s decision to grant Olson’s motion for change of custody is not clearly erroneous. We modify the visitation provisions of the amended judgment and affirm the amended judgment as modified.

I

[¶ 2] Thompson and Olson never married, but had a child (“Mary,” a pseudonym) born in October 1998. Thompson lives in Washburn and Olson lives in the Bismarck-Mandan area. Olson moved into Thompson’s home a few months before Mary was born. After the parties’ relationship ended, Thompson sued Olson in 1999 to establish his paternity, to obtain custody of Mary, and to set visitation and establish Olson’s child support obligation. In January 2000 Thompson and Olson stipulated to a split custody arrangement and agreed upon a visitation schedule, and the trial court entered a judgment incorporating the parties’ stipulation.

[¶ 3] In May 2004 Olson moved to amend the judgment to grant her full custody of Mary with continued visitation for Thompson, and to set Thompson’s child support obligation because “the beginning of [Mary’s] formal education will require adjustments in visitation from month to month to accommodate [Mary’s] school and other activities as she becomes older,” and Thompson “is an argumentative and combative person who will refuse to agree on anything he believes curtails or controls in any way what he wants.” At the hearing on the motion, the trial court limited each party to two hours and fifty minutes to present their cases. The evidence reflected that Mary was living one-half of the time in Washburn with her father and one-half of the time in the Bismarck-Mandan area with her mother. Thompson’s household included his girlfriend and a son from a previous marriage. Olson was engaged to be married but was not living with her boyfriend.

[II4] Following the hearing, the court found that a change of custody was required because Mary needed “to live with one parent in one community during the school week.” The court applied the best interest factors under N.D.C.C. § 14-09-06.2 and found most favored neither party in the custody determination. The court found the factor based on the length of time the child has lived in a stable satisfactory environment and the desirability of maintaining continuity “slightly” favored Thompson, but only because of his girlfriend’s efforts and because “Thompson has lived in the same house in Washburn.” However, the court found that Thompson had committed two acts of domestic violence against Olson in August 1998 and in March 1999, triggering a presumption that Thompson not be awarded custody of Mary. The court further ruled “Thompson failed to present clear and convincing evidence that [Mary’s] best interest require[s] him to have custody of [Mary].” The court awarded full custody to Olson, established a visitation schedule, and set Thompson’s child support obligation.

II

[¶ 5] Thompson argues the trial court erred in restricting each party to two hours and fifty minutes to present their cases.

[¶ 6] A trial court has broad discretion over the presentation of evidence and the conduct of trial, but it must exercise its discretion in a manner that best comports with substantial justice. Gullickson v. Kline, 2004 ND 76, ¶ 15, 678 N.W.2d 138. A court may impose reasonable restrictions on the length of a hearing and the number of witnesses allowed. Id. at ¶ 16. A court abuses its discretion only when the court employs a procedure which fails to afford a party a meaningful and reasonable opportunity to present evidence on the relevant issues. Id.

[¶ 7] The parties knew in advance that one day was scheduled for the hearing and Thompson did not seek to have more than one day allotted for the hearing. Thompson had an ample opportunity to plan his allocated time to accommodate his witnesses and presentation. Although Thompson claims he was unable to call three witnesses who were prepared to testify, he made no offer of proof of the specific testimony that he sought to introduce. Without a sufficient offer of proof, we are unable to review whether exclusion of the evidence was prejudicial. See Forster v. West Dakota Veterinary Clinic, 2004 ND 207, ¶ 43, 689 N.W.2d 366. Thompson also claims he was not given an opportunity to cross-examine Olson on rebuttal. However, the record shows Thompson did not object or request the court to allow him an opportunity to cross-examine Olson.

[¶ 8] Each party was given an equal amount of time to present their cases. Under the circumstances, we conclude Thompson was afforded a meaningful and reasonable opportunity to present evidence on the relevant issues.

Ill

[¶ 9] The parties do not dispute that the beginning of Mary’s education constituted a material change of circumstances requiring a change of custody. See Woods v. Ryan, 2005 ND 92, ¶ 9, 696 N.W.2d 508 (in deciding whether to change custody, the court must first consider whether there has been a material change of circumstances since the original custody decree, and if so, it must decide whether a change in custody is necessary to serve the best interests of the child); N.D.C.C. § 14-09-06.6(6). Rather, Thompson argues the trial court erred in finding he committed domestic violence sufficient to raise a presumption against awarding custody to him.

[¶ 10] In awarding custody in the best interests of the child, the court must consider the factors listed under N.D.C.C. § 14-09-06.2. Lawrence v. Delkamp, 2000 ND 214, ¶ 3, 620 N.W.2d 151. When there is credible evidence of domestic violence, it dominates the hierarchy of factors to be considered. Id. Section 14-09-06.2(l)(j), N.D.C.C., provides in relevant part:

In awarding custody or granting rights of visitation, the court shall consider evidence of domestic violence. If the court finds credible evidence that domestic violence has occurred, and there exists one incident of domestic violence which resulted in serious bodily injury or involved the use of a dangerous weapon or there exists a pattern of domestic violence within a reasonable time proximate to the proceeding, this combination creates a rebuttable presumption that a parent who has perpetrated domestic violence may not be awarded sole or joint custody of a child. This presumption may be overcome only by clear and convincing evidence that the best interests of the child require that parent’s participation as a custodial parent. The court shall cite specific findings of fact to show that the custody or visitation arrangement best protects the child and the parent or other family or household member who is the victim of domestic violence.... As used in this subdivision, “domestic violence” means domestic violence as defined in section 14-07.1-01.

“Domestic violence” is defined in N.D.C.C. § 14-07.1-01(2) as including:

physical harm, bodily injury, sexual activity compelled by physical force, assault, or the infliction of fear of imminent physical harm, bodily injury, sexual activity compelled by physical force, or assault, not committed in self-defense, on the complaining family or household members.

A trial court’s determination whether the domestic violence presumption is applicable is a finding of fact which will not be reversed unless it is clearly erroneous. Gonzalez v. Gonzalez, 2005 ND 131, ¶ 6, 700 N.W.2d 711. A finding of fact is clearly erroneous only if it is induced by an erroneous view of the law, if there is no evidence to support it, or if, after review of the entire record, we are left with a definite and firm conviction a mistake has been made. Simburger v. Simburger, 2005 ND 139, ¶ 12, 701 N.W.2d 880.

[¶ 11] The trial court found that the domestic violence presumption against granting custody to Thompson was triggered by two incidents:

The Court finds there has been domestic violence by Thompson against Olson. In her Application for a Domestic Violence Protection Order dated March 29, 1999, Olson related an earlier incident that occurred on or about August 9, 1998. Although she used the date July 9, 1998, Thompson put into evidence Plaintiffs Exhibit 7, which is a copy of a medical report from Turtle Lake Clinic dated August 10, 1998, for a perforated eardrum he received as a result of Olson slapping him in the ear during an altercation on August 9, 1998, thus establishing the date and that violence occurred. She reported that while she was pregnant with [Mary], Thompson assaulted her to get cigarettes away from her as he didn’t want her to smoke while she was pregnant. Encouraging her not to smoke while pregnant was a good idea, but holding her to the ground and sitting on her stomach while trying to choke her gave her a self defense right to force him off of her. Thompson denies Olson’s report of this incident, but the Court finds Olson’s description of the event is more credible than Thompson’s denial or his assertion that he was assaulted without provocation by Olson. The Court finds this incident of domestic violence did occur and did involve “the infliction of fear of imminent physical harm, bodily injury, sexual activity compelled by physical force, or assault, not committed in self-defense, on the complaining family or household members,” as defined in NDCC 14-07.1-01(2).
The Court also finds Thompson inflicted “serious bodily injury” on Olson on March 27, 1999, when he threw her out of their house because he found a copy of a letter she had written to an inmate while she was working as a correctional officer. Clearly, writing such a letter was inappropriate and keeping a copy of it for Thompson to find was incomprehensible. Nevertheless, Thompson’s subsequent actions were unlawful and resulted in bodily injury to Olson as shown by a copy of the McLean County Offense Report on the March 27, 1999, incident, which Thompson attached to his Affidavit of Cory Thompson dated June 18, 2004.... The report on page 2 lists photos taken of seven injuries, only one of which was to Thompson, that being a red scratch on his neck (the third photo listed). Attached to the Affidavit of Nikki L. Olson dated April 30, 1999, is a copy of an Emergency Room record from St. Alexius Medical Center of March 28, 1999, detailing bodily injuries she reported she received the previous day when she was assaulted by her boyfriend.
Both Olson and Thompson were charged with Disorderly Conduct, but the charge against Olson was dismissed and Thompson pled guilty to the charge against him. Also attached to the Affidavit of Nikki L. Olson dated April 30, 1999, was a copy of a Domestic Violence Protection Order granted to Olson against Thompson along with copies of the application and temporary order. She testified she dropped the order about a month later so she could work out an arrangement with Thompson about [Mary], but that she is still, as of the date of the hearing, afraid of him. The Court finds there is “credible evidence that domestic violence has occurred, and there exists one incident of domestic violence which resulted in serious bodily injury.” The Court finds Thompson committed Domestic Violence involving serious bodily injury against Olson. This factor favors Olson.

[¶ 12] In finding that Olson suffered “serious bodily injury” for purposes of applying the domestic violence presumption, the trial court reasoned Olson’s injuries “were not dissimilar” to those suffered by the victim in Schumacher v. Schumacher, 1999 ND 149, ¶ 18, 598 N.W.2d 131. In Schumacher, this Court affirmed a trial court’s finding that the husband committed domestic violence sufficient to invoke the rebuttable presumption based in part on an incident resulting in serious bodily injury to the wife. Id. at ¶ 18-19. We noted the trial court described “the serious bodily injury which occurred when Kurt attempted to take the wedding ring from Coreen’s finger, including, the bruised eye and arms and torn hair from Coreen’s head.” Id. at ¶ 18.

[¶ 13] Thompson argues the “bruises” and “red marks” Olson suffered as a result of the March 27, 1999, incident do not rise to the level of serious bodily injury within the meaning of the domestic violence presumption statute. To support his argument, Thompson relies on Morton County Soc. Serv. Bd. v. Schumacher, 2004 ND 31, 674 N.W.2d 505; Cox v. Cox, 2000 ND 144, 613 N.W.2d 516; and Dinius v. Dinius, 1997 ND 115, 564 N.W.2d 300. In Morton County, at ¶¶ 14, 17, we upheld the trial court’s finding that the father had not committed domestic violence based on the mother’s claim that the father “ ‘grabbed her, injured her neck and drug her down some stairs,’ ” but the trial court had noted the mother’s testimony was “ ‘discounted due to inconsistencies’ ” and “ ‘she did not seek immediate treatment for the alleged injuries.’ ” In Cox, at ¶¶ 19-20, we upheld the trial court’s finding that the mother had not presented credible evidence of domestic violence involving serious bodily injury where she testified she received “bruises” to her “neck, knee, and leg,” but presented no other evidence “addressing the seriousness of her injury.” We said “[t]he trial court did not view this incident as having caused Christi Cox serious bodily injury, and we cannot say the trial court incorrectly evaluated the evidence in the record.” Id. at ¶ 19. In Dinius, at ¶¶ 9, 19, “this Court reversed a trial court’s finding that a father had committed acts of domestic violence against his daughter to invoke the presumption against custody by hitting her in the face in a dispute over washing dishes and pulling her from a car by grabbing her by the arm and hair.” We noted the legislature granted “parents the right to use reasonable force to discipline their children,” the two incidents occurred seven years ago and were “quite remote in time,” and “there [wa]s no evidence suggesting either of these acts involved serious bodily injury or that the two suggest a pattern of domestic violence.” Id. at ¶¶ 15,19.

[¶ 14] In this case, the parties’ versions of the incidents were conflicting and the trial court found Thompson’s testimony was not credible. Olson presented the McLean County Sheriffs Department offense report from March 27, 1999, in which an investigating officer reported that Olson told him Thompson “pushed her against the washer and a wall,” that she “fell to the floor and Cory sat on top of her,” that Olson grabbed Thompson’s “shirt and told him to get off,” and after getting off of her, Thompson “kicked her 3 times — twice in the left ribs and once in the hip area — left side.” The officer noted Olson was “unsure how she got off the floor or when,” but that Thompson “grabbed her and attempted to throw her outside” and “she hit the cement steps with her left elbow.” The officer observed Olson “limped when walking around ... favoring her left side.” The report also noted Olson’s injuries:

Injuries Observed: (photographs taken of injuries)
• right hand — red marks on top.
• right elbow — yellow bruising — 2 red marks.
• above left elbow — swollen—black and blue — fresh scratch.
• left chest — slightly red marks.
• left side — slight red marks.
• back — slightly red marks.

At the sheriffs office, Olson “complained of her ribs hurting and requested medical attention.” She “agreed to get medical attention for her injuries” in Bismarck. The assessment of the emergency room physician was that Olson had “[cjontusion of left hip, left rib, left arm secondary to alleged domestic assault.” According to the offense report, Thompson “would not give a statement” because Thompson said, “it has not helped him [in] the past, and would be used against him in the future.”

[¶ 15] The fact situations in Schumacher, Morton County, Cox and Dinius do not provide the benchmarks for what can and what cannot be considered serious bodily injury under the domestic violence statutes. Those cases merely stand for the proposition that whether injuries rise to the level of serious bodily injuries for purposes of applying the domestic violence presumption is a finding of fact which will not be reversed on appeal unless it is clearly erroneous. Here, the trial court viewed the March 27, 1999, incident as having caused Olson serious bodily injury, and we cannot say that the court incorrectly evaluated the evidence in the record or that the trial court’s findings in this regard are clearly erroneous. See Cox, 2000 ND 144, ¶ 19, 613 N.W.2d 516.

[¶ 16] Thompson argues the trial court erred in failing to find that Olson committed domestic violence against him by perforating his eardrum in August 1998, in which case the domestic violence presumption might cease to exist. See Krank v. Krank, 529 N.W.2d 844, 850 (N.D.1995). However, the trial court found Olson, then pregnant, slapped Thompson in the ear in an act of self defense to force him off of her while Thompson sat on Olson’s stomach and tried to choke her. Acts committed in self defense are statutorily excluded from the definition of domestic violence. See N.D.C.C. § 14-07.1-01(2); Peters-Riemers v. Riemers, 2002 ND 72, 16, 644 N.W.2d 197; Huesers v. Huesers, 1997 ND 33, ¶ 11, 560 N.W.2d 219. The trial court’s finding that Olson was defending herself and her unborn child when she slapped Thompson is not clearly erroneous. Therefore, the court did not err in failing to find that Olson committed domestic violence in August 1998.

[¶ 17] Thompson argues the trial court erred in not finding that Olson committed domestic violence by spanking and slapping Mary across the face. Thompson presented testimony from Olson’s ex-boyfriend and Thompson’s ex-wife that Olson occasionally spanked and slapped Mary to discipline the child. The trial court ordered Burleigh County Social Services to prepare a Child Protection Service Assessment Report concerning Mary because of various allegations made by the parties. The report indicated neither Olson nor Thompson abused or engaged in any inappropriate behavior with Mary and no services were recommended. The Bismarck Police Department investigated and found no evidence of criminal activity. With respect to allegations of physical abuse by Olson, the assessment report said, “[Mary] stated sometimes she is spanked or tapped lightly on the face for discipline by her mom.” We conclude the trial court did not err in failing to find Olson committed domestic violence against Mary. See Dinius, 1997 ND 115, ¶ 15, 564 N.W.2d 300. (“Under N.D.C.C. § 12.1-05-05(1) the legislature grants parents the right to use reasonable force to discipline their children”).

[¶ 18] Having reviewed the entire record, we conclude the trial court’s finding that Thompson failed to present clear and convincing evidence that Mary’s best interest required him to have custody is not clearly erroneous and, therefore, Thompson has failed to rebut the presumption against custody. We further conclude the court’s finding that Mary’s best interest will be served by Olson having custody with reasonable visitation for Thompson is not clearly erroneous.

IV

[¶ 19] Thompson challenges parts of his visitation schedule. Thompson argues the trial court erred in inserting the following provision in the visitation schedule:

If Thompson fails to exercise any scheduled visitation without notifying Olson at least one hour in advance, or is more than one-half hour late to pick up [Mary], then his next scheduled visitation, whether it be weeknight, weekend, holiday or summer visitation, shall be automatically canceled, and shall not be replaced.

Olson agrees with Thompson that this provision should be deleted because it makes no allowances for unforeseen circumstances that may be beyond Thompson’s control. We therefore order that this provision be deleted from the amended judgment.

[¶ 20] Thompson also argues the court erred in changing the visitation times and dates for holidays and birthdays. A trial court’s decision to modify visitation is a finding of fact which will not be reversed unless clearly erroneous. Hanson v. Hanson, 2005 ND 82, ¶ 20, 695 N.W.2d 205. Thompson has not established that these changes to the visitation schedule made by the trial court are clearly erroneous.

V

[¶ 21] We modify the amended judgment to delete the visitation provision providing for automatic cancellation of Thompson’s next scheduled visitation upon certain conditions, and we affirm the amended judgment as modified.

[¶ 22] GERALD W. VANDE WALLE, C.J., DANIEL J. CROTHERS, and CAROL RONNING KAPSNER, JJ., concur.

SANDSTROM, Justice,

dissenting.

[¶ 23] Because it appears the district court failed to apply the correct legal standard for triggering the presumption against awarding custody to certain perpetrators of domestic violence, I dissent. I would reverse and remand for the district court to apply the correct law.

[¶ 24] Domestic violence is unacceptable, and it is a serious societal problem. See Bruner v. Hager, 534 N.W.2d 825, 829 (N.D.1995) (Sandstrom, J., concurring in the result); Schestler v. Schestler, 486 N.W.2d 509, 513 (N.D.1992) (Levine, J., dissenting). Children who grow up in a climate of domestic violence are adversely affected and are themselves more likely than others to grow up to be perpetrators of domestic violence. See Hearing on H.B. 1393 Before the House Human Servs. Comm., 53d N.D. Legis. Sess. (Jan. 27, 1993) (exhibit to testimony of Bonnie Paleeek, N.D. Council on Abused Women’s Services, titled “Domestic Violence Fact Sheets” by the Nat’l Woman Abuse Prevention Project); see also Schestler, 486 N.W.2d at 514 (Levine, J., dissenting) (“the trial court denuded the statute of its good intent to put to rest ... the failure of courts to recognize that the abuse of one parent by another, even in the absence of physical abuse to the children, has serious detrimental effects on the children nonetheless .... ”).

[¶ 25] In 1989, the North Dakota Legislative Assembly decided that domestic violence should be a factor in deciding child custody. 1989 N.D. Sess. Laws ch. 178, § 2. Subsequently, the legislature has struggled to determine when domestic violence should become the controlling factor when other factors would point the other way in the award of custody. See id.; 1993 N.D. Sess. Laws ch. 144, § 2; 1997 N.D. Sess. Laws ch. 147, § 2.

[¶ 26] Schestler, 486 N.W.2d 509, was a turning point. In Schestler, a majority of this Court upheld the award of custody of two children to a perpetrator of domestic violence and a child sexual abuser, reasoning that the presumption did not apply because he had not physically or sexually abused those children. Id. at 512; see also Hearing on H.B. 1893 Before the House Human Servs. Comm., 53d N.D. Legis. Sess. (Jan. 27, 1993) (testimony of Carol Larson, Attorney for Wanda Schestler). The legislature reacted to Schestler by amending the statutes to create a rebutta-ble presumption that custody could not be awarded to a perpetrator of domestic violence. 1993 N.D. Sess. Laws ch. 144, § 2. This Court took the legislature at its word, and if the letter of the law was not clear enough, this Court made clear that the presumption applied no matter how slight the “violence,” no matter how remote in time, and no matter how isolated the event may have been. See generally Huesers v. Huesers, 1997 ND 33, 560 N.W.2d 219; Anderson v. Hensrud, 548 N.W.2d 410 (N.D.1996); Engh v. Jensen, 547 N.W.2d 922 (N.D.1996); Heck v. Reed, 529 N.W.2d 155 (N.D.1995). This Court made clear that “pushing” someone’s “buttons” was no excuse or justification. Huesers, at ¶ 11 (citing Anderson, 548 N.W.2d at 413-14; Engh, 547 N.W.2d at 926; Heck, 529 N.W.2d at 164). A spouse who could provoke one shove in anticipation of divorce was usually guaranteed custody, no matter how much the best interests of the child would be otherwise served by custody going to the other parent. Hearing on S.B. 2235 Before the Senate Judiciary Comm., 55th N.D. Legis. Sess. (Jan. 29, 1997) (testimony of Bonnie Palecek, N.D. Council on Abused Women’s Services).

[¶ 27] Many of those who had promoted the earlier legislation went to the 1997 legislature for a mid-course correction. Hearing on S.B. 2235 Before the Senate Judiciary Comm., 55th N.D. Legis. Sess. (Jan. 29, 1997) (testimony of Sherry Mills Moore, State Bar Ass’n of N.D. Family Law Task Force). At their urging, the legislature changed the law so that domestic violence was always a factor to be considered in the award of custody, but only “serious” domestic violence would trigger the presumption. 1997 N.D. Sess. Laws ch. 147, § 2. To trigger the presumption the legislature said there had to be a pattern of domestic violence reasonably proximate in time, serious bodily injury, or the use of a dangerous weapon. Id.

[¶ 28] In this case, the “serious' bodily injury” was found by the district court. The legislature has told us how to interpret the term. The legislature tells us that when a term in the North Dakota'' Century Code is given a definition in the code that definition applies to other uses of that term. N.D.C.C. § 1-01-09. The legislature has told us that when it uses a term with an established definition, that is what it means. N.D.C.C. § 1-02-02.

[¶ 29] In N.D.C.C. § 12.1-01-04(29), the legislature had defined “serious bodily injury” to mean “bodily injury that creates a substantial risk of death or which causes serious permanent disfigurement, unconsciousness, extreme pain, permanent loss or impairment of the function of any bodily member or organ, or a bone fracture.” The term also has an established meaning. Black’s Law Dictionary defines “serious bodily injury” to mean “[s]erious physical impairment of the human body; esp., bodily injury that creates a substantial risk of death or that causes serious, permanent disfigurement or protracted loss or impairment of the function of any body part or organ.” Black’s Law Dictionary 802 (8th ed.2004).

[¶ 30] Even though we need not look to it, the legislative history reflects that these are the definitions it contemplated. When the Judiciary Committee inquired what “serious bodily injury” meant, the bill drafters responded that the definition of serious bodily injury found in the criminal code at N.D.C.C. § 12.1-01-04(29) was the definition they contemplated. Hearing on S.B. 2235 Before the Senate Judiciary Comm., 55th N.D. Legis. Sess. (Jan. 29, 1997) (testimony of Sherry Mills Moore, State Bar Ass’n of N.D. Family Law Task Force). The drafters considered including the definition in the bill but decided not to so the statute would not be exclusively limited to that definition and the court to look to other accepted definitions. Id. (testimony of Sherry Mills Moore, State Bar Ass’n of N.D. Family Law Task Force, and Lee A. Christofferson, District Judge). Therefore, the legislature intended the court to look to N.D.C.C. § 12.1-01-04(29) and other accepted definitions such as Black’s Law Dictionary.

[¶ 31] The evidence before the district court was that Olson had red marks, bruises, and scratches. She did not go to a doctor until the next day. The medical report reflects that Olson’s injuries were “Contusion of left hip, left rib, [and] left arm secondary to alleged domestic assault.” According to the medical report, Olson’s treatment plan included missing one day of work and icing her bruised hip.

[¶ 32] The district court applied the presumption even though the evidence makes application of the presumption questionable. Although Thompson’s conduct is inexcusable, the evidence reflects that Olson’s injuries were not serious. The evidence does not support a finding that the injuries created “a substantial risk of death” or caused “serious permanent disfigurement, unconsciousness, extreme pain, permanent loss or impairment of the function of any bodily member or organ,” or broken bones.

[¶ 33] As Justice Levine wrote in Schestler, “I would reverse this case and remand it to the trial judge with a simple instruction to do it over and do it right. I would request that he apply the statute in the way it was intended by the legislature.” 486 N.W.2d at 515 (Levine, J., dissenting).

[¶ 34] Dale V. Sandstrom


author: KONENKAMP, Justice.

text:
    2006 SD 18
    DOCTOR’S ASSOCIATES, INC., Plaintiff and Appellant, v. DEPARTMENT OF REVENUE AND REGULATION, Defendant and Appellee.
    No. 23744.
    Supreme Court of South Dakota.
    Considered On Briefs Jan. 9, 2006.
    Decided March 1, 2006.

      Todd C. Miller, Sioux Falls, South Dakota, Attorney for plaintiff and appellant.
    Harvey M. Crow, Jr., South Dakota Department of Revenue and Regulation, Rapid City, South Dakota, Attorney for defendant and appellee.
   KONENKAMP, Justice.

[¶ 1.] Doctor’s Associates, Inc., headquartered in Milford, Connecticut, owns the international Subway fast-food restaurant franchise. South Dakota has fifty-three restaurants in the Subway chain. Subway collects an 8% “royalty” fee from each franchisee’s weekly gross sales. After an audit, the Department of Revenue and Regulation determined that Subway’s royalty fees constitute taxable gross receipts. Since Subway failed to report these fees on its sales tax returns, the Department issued a certificate of assessment for sales tax and interest. Subway contested the assessment. Following an unsuccessful administrative appeal, Subway now seeks review before us, claiming that its royalty fees are non-taxable intangibles and that the Department failed in its burden of proving taxability. Because Subway’s franchise agreement provides that its royalty fees are collected in exchange for tangible personal property and services, these fees constitute taxable gross receipts under South Dakota law. Therefore, we uphold the assessment.

Background

[¶2.] On August 17, 2000, the senior auditor for the Department sent Subway a notice of intent to audit. As part of the notice, the Department requested that Subway submit certain corporate records. The Department further informed Subway in the notice of intent to audit that “(1) the audit period was July, 1997 through October, 2000; (2) the audit would commence on December 5, 2000; and (3) Subway had sixty days from December 5, 2000 to present to the auditor ‘all documents evidencing reduction, deduction or exemption from tax,’ and any such records not presented would not have to be considered by the auditor.”

[¶ 3.] To operate as a franchisee, each Subway restaurant owner was required to sign and accept, as is, Subway’s franchise agreement, pay a one-time, non-refundable franchise fee, and thereafter, pay an 8% “royalty” fee on the restaurant’s gross weekly sales. When Subway received the notice of intent to audit, it provided the Department with financial information about the South Dakota franchisees. Subway submitted “(1) a sales quarterly ledger detailing the royalty fees paid to Subway each week; (2) a copy of the April, 1997, ‘Limited Amnesty Program for the Franchise Industry,’ outlining the Department’s policy regarding taxation of royalty fees beginning July 1, 1997; and, (3) a copy of the Franchise Agreement.”

[¶ 4.] The audit took place in Milford and began on December 5, 2000. It lasted approximately six months. During the audit, the Department reviewed Subway’s records and concluded that the 8% royalty fee received by Subway from its franchisees constituted gross receipts and should have been reported in Subway’s sales tax returns. In reaching its conclusion, the Department relied on the language of the franchise agreement. Paragraph three states that Subway provides tangible personal property to franchisees. Paragraph four indicates that services are provided to franchisees. Because the franchise agreement stipulates that the royalty fees are consideration for allowing the franchisees access to Subway’s body of knowledge, among other things, the Department deemed the royalty fees collected by Subway to be taxable gross receipts under SDCL 10-45-2 and 10-45-4.

[¶ 5.] Subway had the opportunity to submit any evidence to show that the royalty fees should not be subject to sales tax. Beginning on December 5, 2000, Subway had sixty days to present materials to the Department that would reduce, deduct, or exempt the royalty fees from tax. When the sixty days ended on February 5, 2001, Subway had not submitted any evidence. Subway then requested an extension in order to present additional evidence. The extension was granted. On February 23, 2001, the Department sent Subway a “listing showing the [rjoyalty fees subject to sales tax to Subway for review.” When the extension expired on March 5, 2001, Subway still had not presented any evidence. Then, in May 2001, Subway requested another extension, this time “to review the South Dakota Code and Regulations.” Because the extension was not requested for the purpose of presenting additionál evidence, the Department denied Subway’s request.

[¶ 6.] In the end, the auditor received no evidence from Subway to reduce, deduct, or exempt any portion of the royalty fees from sales taxation. Consequently, the Department issued Subway a certifí-cate of assessment for $270,660.70 on June 21, 2001. Subway requested a hearing and argued that the royalty fees should not be taxed because they were not received as consideration for taxable services or property contained within the franchise agreement. At the hearing in June 2004, Subway attempted to offer new evidence that should have been submitted before the sixty days expired under SDCL 10-59-7 or during the thirty-day extension. The hearing examiner excluded the evidence and affirmed the Department’s certificate of assessment.

[¶ 7.] Subway appealed the decision to the circuit court. That court also excluded Subway’s evidence for not having been timely presented within the statutory time and affirmed the certificate of assessment. Subway now appeals to this Court, claiming that the circuit court erred when it affirmed the hearing examiner’s decision that (1) the royalty fees paid by the fifty-three South Dakota franchisees to Subway were taxable; (2) Subway failed to overcome the presumption of correctness of the certificate of assessment; and (3) certain testimony and documentary evidence were inadmissible.

Analysis and Decision

[¶ 8.] Our review of an administrative appeal is governed by SDCL 1-26-36. Watertown Coop. Elevator Ass’n v. S.D. Dept. of Rev., 2001 SD 56, ¶ 10, 627 N.W.2d 167, 171. “We give deference to the agency on factual matters, applying the clearly erroneous standard of review.” Id. (citing Sopko v. C & R Transfer Co., Inc., 1998 SD 8, ¶ 6, 575 N.W.2d 225, 228 (citations omitted)). However, the agency’s conclusions of law are reviewed de novo. W. Wireless Corp. v. Dept. of Rev., 2003 SD 68, ¶ 5, 665 N.W.2d 73, 75 (citing Sopko, 1998 SD 8, ¶ 6, 575 N.W.2d at 228).

[¶ 9.] Subway first contends that the circuit court erred when it concluded that the royalty fees, which Subway claims are intangibles, could be subject to sales tax under SDCL 10-45-2 and 10-45-4. The Department, on the other hand, asserts that the terms of the franchise agreement illustrate that Subway provided tangible personal property and services to South Dakota franchisees in return for the royalty fees. Thus, the Department deems the royalty fees in this case to be taxable under SDCL 10-45-2 and 10-45-4.

[¶ 10.] We begin by first examining the statutes in question. Whether SDCL 10-45-2 and 10-45-4 impose a sales tax under these circumstances is a question of law, reviewed de novo. See S.D. Dept. of Rev. v. Sanborn Tel. Coop., 455 N.W.2d 223, 225 (S.D.1990) (citations omitted). Under SDCL 10-45-2, “the gross receipts of all sales of tangible personal property consisting of goods, wares, or merchandise” are subject to sales tax, and, under SDCL 10-45-4, a tax is imposed on “the gross receipts of any person from the engaging in or continuing in the practice of any business in which a service is rendered.”

[¶ 11.] In examining SDCL 10-45-2 and 10-45-4 together, we see that the royalty fees will be subject to sales tax if they constitute gross receipts for the sale of tangible personal property or service. “Gross receipts” is defined in SDCL 10-45-1(6) as the “consideration, including cash, credit, property, and services, for which tangible personal property or services are sold, leased, or rented, valued in money, whether received in money or otherwise .... ” And “tangible personal property” is defined as “personal property that can be seen, weighed, measured, felt, or touched, or that is in any other manner perceptible to the senses.” SDCL 10-45-1(14). Finally, the definition of “service” is contained in SDCL 10-45-4.1, which includes “all activities engaged in for other persons for a fee, retainer, commission, or other monetary charge, which activities involve predominantly the performance of a service as distinguished from selling property.”

[¶ 12.] By applying these statutory definitions to the facts of this case, the royalty fees received by Subway were properly considered gross receipts from the sale of tangible personal property and services. This determination is based on the records Subway provided the Department for the audit, specifically the franchise agreement. First, in the section entitled Agreement, paragraph three states that Subway “grants” the franchisee access to, among other things, “the Company’s recipes, formulas, food preparation procedures, business methods, business forms, business policies and body of knowledge.... ” From this language it is clear that Subway is providing its franchisees with “tangible personal property” as defined in SDCL 10-45-1(14). Then in paragraph four, Subway agrees to “provide” franchisees a “Company Representative that the Franchisee may call upon during normal business hours for consultation concerning the operation of his business[.]” Based on the language of paragraph four, Subway is providing its franchisees with “services” as defined in SDCL 10-45-4.1. Finally, in the Recitals section of the agreement, we see that Subway receives consideration, i.e. “royalty,” constituting “gross receipts” under SDCL 10-45-1(6), for the tangible personal property it grants under paragraph three and the services it provides under paragraph four.

[¶ 13.] Accordingly, Subway provides tangible personal property and services in return for the royalty fee, and SDCL 10-45-2 and 10-45-4 apply to impose sales tax on these receipts. This finding, however, does not automatically obligate Subway to pay sales tax on the entire royalty fee collected from the fifty-three Subway franchisees across South Dakota. Subway was afforded an opportunity to present evidence to reduce, deduct, or exempt the royalty fees, or a portion thereof, from taxation, within sixty days of the commencement of the audit. See SDCL 10-59-3; SDCL 10-59-7; AT & T Corp. v. S.D. Dept. of Rev., 2002 SD 25, ¶ 18, 640 N.W.2d 752, 757 (citing In re Pam Oil, Inc., 459 N.W.2d 251, 257 (S.D.1990)). This Subway failed to do until more than two years later. Thus, the circuit court did not err when it concluded that the entire royalty fee was subject to sales tax under SDCL 10-45-2 and 10-45—4. See AT & T Corp., 2002 SD 25, ¶ 18, 640 N.W.2d at 757; Pam Oil, Inc., 459 N.W.2d at 257.

[¶ 14.] Subway’s next contention is similar to its first claim, that royalty fees, as a whole, are not taxable. Subway asserts that the certificate of assessment is per se incorrect because the Department “did not seek a reasonable value of services and tangible personal property that the Department deemed taxable.” For that reason, Subway insists that the circuit court erred when it held that Subway failed to overcome the presumption of correctness of the certificate of assessment. It is well settled that certificates of assessment are presumed correct and thus the burden was on Subway to overcome that presumption. See SDCL 10-59-8. Subway must present evidence that there was a mistake of fact or error of law in the conduct of the audit which resulted in the assessment. See SDCL 10-59-9.

[¶ 15.] Subway does not suggest that the certificate contains a mistake, or that the Department’s calculations or figures in the certificate of assessment were inaccurate. Rather, Subway argues that SDCL 10-46-18.2 imposes a burden on the Department to determine the “reasonable value” of the services and tangible personal property Subway sold in return for the royalty fees. Specifically, Subway alleges that SDCL 10-46-18.2 requires the Department to categorize the items listed in paragraphs three and four as either tangible personal property or services. Subway further claims that the Department was required to “verify whether Subway actually performed any services for the [fifty-three] franchisees in the State of South Dakota” in order to determine what, if any, tax should be assessed.

[¶ 16.] The problem with this argument is that SDCL 10-46-18.2 is a use tax statute. Here Subway was assessed a sales tax under SDCL 10-45-2 and 10-45-4. The Department reviewed Subway’s financial records and franchise agreement and determined the amount of tax applicable to the 8% royalty fees Subway received. Subway has not contested these calculations under the sales tax statutes. Nor has Subway presented competent evidence that the certificate of assessment contained a mistake of fact or error of law. As such, the circuit court did not err when it held that Subway failed to overcome the presumption of correctness for the certificate of assessment.

[¶ 17.] Subway’s final argument on appeal is that the circuit court erred when it disallowed testimonial and documentary evidence that would have established the value of services and personal property subject to taxation. The evidence Subway offered, Exhibit D, is a statistical summary prepared by Subway in 2003, containing values for 2002, 2001, 2000, 1999, and 1998. Subway also attempted to offer the testimony of Mike Dolishny, who was not employed by Subway during the time of the audit, but would have testified concerning Exhibit D. The circuit court affirmed the hearing examiner’s decision to exclude Exhibit D and Dolishny’s testimony because Subway failed to present the evidence during the audit. See SDCL 10-59-7.

[¶ 18.] Nonetheless, Subway insists that SDCL 10-59-7 is inapplicable under the circumstances. Subway argues that Exhibit D was not required to be kept by law and therefore should have been allowed at any time and that Dolishny should have been permitted to testify about Exhibit D. Subway also claims that Exhibit D and Dolishny’s testimony were not offered to prove a “reduction, deduction or exemption” from tax. Instead, Subway offered Exhibit D to show how royalty fees were intangibles and should not be taxed in the first place. Subway also claims that the Department arbitrarily denied its request for an extension of time, and as a result, the evidence should be allowed.

[¶ 19.] We start with Subway’s assertion that the Department arbitrarily denied its second request for an extension of time to submit further evidence. This argument is not supported by the evidence. A review of the record shows that Subway sent a letter to the Department requesting a second extension of time for the purpose of reviewing the “South Dakota Code and Regulations.” Because the extension was not for the purpose of submitting additional evidence, the Department denied Subway’s request. We fail to see how this decision was arbitrary, especially when the Department had earlier granted an extension.

[¶ 20.] We next address Subway’s argument that SDCL 10-59-7 does not apply because Exhibit D, a statistical summary, was not a document required to be kept by law and was not offered as evidence of a reduction, deduction or exemption from tax under SDCL 10-59-7. Subway was fully aware that the Department considered the fees taxable based on the language of the franchise agreement. Yet, Subway failed to present Exhibit D to the Department during the audit, or during the extension granted by the Department. Although Subway indicates that Exhibit D existed at the time of the audit, Subway did not present this material until more than two years later. Nevertheless, Subway claims Exhibit D was not required to be kept by law, and thus it should now be allowed.

[¶ 21.] Under SDCL 10-45-45, Subway is required to “keep records and books of all receipts and sales, together with invoices, bills of lading, copies of bills of sale, and other pertinent papers and documents.” (Emphasis added). Here Subway is offering Exhibit D as evidence that the royalty fees should not be subject to tax under SDCL 10-45-2 and 10-45-4. Exhibit D is therefore a pertinent document. Because Exhibit D is a pertinent document it was contemplated under the statutory time frame set out in SDCL 10-59-3 and 10-59-7. Also, because the purpose of Exhibit D was an attempt to remove the royalty fees from tax under SDCL 10-45-2 and 10-45-4, it is certainly evidence purporting to reduce, deduct or exempt the royalty fees from tax. Exhibit D should have been presented to the Department as required under SDCL 10-59-3 and 10-59-7.

[¶ 22.] Because Subway failed to submit the evidence during the sixty days required under SDCL 10-59-3 and 10-59-7, plus the thirty-day extension, Subway had no right to later offer this material. See AT & T Corp., 2002 SD 25, ¶ 18, 640 N.W.2d at 757; Pam Oil, Inc., 459 N.W.2d at 257. To allow late submittal of these materials long after the audit has ended would make the audit process interminable and unworkable. As a result, the circuit court did not err when it affirmed the hearing examiner’s decision to exclude Exhibit D and Dolishny’s testimony pertaining to Exhibit D.

[¶ 23.] Affirmed.

[¶ 24.] GILBERTSON, Chief Justice, and SABERS, ZINTER, and MEIERHENRY, Justices, concur.

      . The language of paragraph three provides: The Company hereby grants to the Franchisee:
      a. access to the Company's recipes, formulas, food preparation procedures, business methods, business forms, business policies and body of knowledge pertaining to the operation of a sandwich shop, including the loan of a copy of the Company’s Operations Manual;
      b. access to information pertaining to new developments and techniques in the Company’s sandwich business; and
      c. a limited license to use the Company’s rights in and to its service marks and trademarks in connection with the operation of one sandwich shop to be located at a site approved by the Company and the Franchisee.

      . Paragraph four provides:
      The Company agrees to:
      a.provide a training program for the operation of sandwich shops using the Company's recipes, formulas, food preparation procedures, business methods, business forms and business policies. The Franchisee shall pay all transportation, lodging and other expenses incurred in attending the training program.
      b. provide a Company Representative that the Franchisee may call upon during normal business hours for consultation concerning the operation of his business; and
      c. provide the Franchisee with a program of assistance which shall include periodic consultations with a Company Representative, publish a periodical advising of new developments and techniques in the Company's sandwich business, and grant access during normal business hours to specified office personnel for consultations concerning the operation of his business.

      ..Under the Recitals section of the franchise agreement, it is provided:
      The Franchise Fee, Royalty and promises by the Franchisee contained herein constitute the sole consideration to the Company for the use by the Franchisee of its body of knowledge, systems and trademark rights. (Emphasis added).

      . SDCL 10-59-7 provides, in relevant part: Any documents or record required to he kept by law to evidence reduction, deduction, or exemption from tax not prepared for presentation to the auditor within sixty days from the commencement date of the audit do not have to be considered by the auditor or secretary.
      (Emphasis added).

      . Some of the services Subway provides to its franchisees in exchange for the royalty fees may not be subject to sales tax. For example, the training for franchisee employees takes place in Connecticut. However, Subway failed to timely submit proof of valid deductions and therefore they could not be considered in this audit.


author: SABERS, Justice.

text:
    2006 SD 16
    Kami KUHLE, Claimant and Appellant, v. LECY CHIROPRACTIC, Employer and Appellee, and Acuity, Insurer and Appellee.
    No. 23736.
    Supreme Court of South Dakota.
    Considered on Briefs Jan. 9, 2006.
    Decided March 1, 2006.

      Michael J. Simpson of Julius & Simpson, LLP, Rapid City, South Dakota, Attorneys appellant.
    Michael S. McKnight, Lisa Hansen Mar-so of Boyce, Greenfield, Pashby & Welk, LLP, Sioux Falls, South Dakota, Attorneys for appellees.
   SABERS, Justice.

[¶ 1.] The South Dakota Department of Labor (Department) determined that Kami Kuhle (Kuhle) was not entitled to workers’ compensation benefits from Lecy Chiropractic Clinic (Clinic) because she failed to provide timely notice. We affirm.

FACTS

[¶ 2.] Kuhle was thirty-three years old at the time of this hearing. She attended high school, but only completed the tenth grade. Kuhle received her general equivalency diploma in 1987 or 1988. Later, she studied biology at Black Hills State University and phlebotomy at Western Dakota Technical Institute. Kuhle also obtained a degree as a medical secretary. She has worked in sales, at a veterinary clinic, and as a floral designer.

[¶ 3.] Kuhle began working at the Clinic as a chiropractic assistant in April, 2002. Her primary duties included gathering patient histories, data entry^ and using a massager and ultrasound on patients. The massager resembles a belt sander and weighs between three and five pounds. Kuhle used the massager for about two minutes on each patient. She was forced to lean over the patient during the procedure while the patient was lying on the examination table. After Kuhle finished with one patient, she would perform the procedure on another patient. She performed up to twenty of these procedures per day.

[¶ 4.] Kuhle began to experience a burning pain in the middle portion of her back, between her shoulder blades, as a result of performing these procedures. The pain would usually subside in the evening and would be gone by morning. Kuhle’s husband, Daryn, testified that she complained about the pain associated with the massaging procedure about once a week.

[¶ 5.] Doctors Dan and Robin Lecy periodically performed adjustments on Kuhle’s back. Both Doctors offered the adjustments free of charge for employees, a service that was usually performed during breaks or at the end of the business day. Kuhle testified that she received adjustments once or twice per month between April and November 2002. However, the medical records only document four treatments of Kuhle during that time period. Although the records contain information that Kuhle was experiencing upper back pain, there is no mention of the mas-sager or that the pain was related to her employment.

[¶ 6.] On October 25, 2002, Kuhle awoke stiff and sore. She scheduled an appointment with Dr. Dan Lecy that same afternoon. During the treatment, Kuhle felt a pop in her back that was like “nothing that [she][had] ever felt before.” The Clinic record from this date does not indicate that Kuhle informed Dr. Lecy that her pain and discomfort was the result of her employment. However, Dr. Lecy testified that Kuhle mentioned she had been doing landscaping work that month.

[¶ 7.] Sometime during the drive home, Kuhle’s pain became so intense that she was unable to move. Her husband took her to the hospital where she received an injection to relieve the pain. There is no mention of the massager or any work-related injury in the hospital records generated from this visit. Instead, it is noted that Kuhle’s pain started while she had been moving a large television earlier that month.

[¶ 8.] The following day, Kuhle received another adjustment from Dr. Dan Lecy. He believed Kuhle’s condition was deteriorating so he sent her to her family physician, Dr. Kevin Weiland. An MRI revealed that Kuhle suffered a herniated disc.

[¶ 9.] Kuhle underwent a diskectomy on November 25, 2002. She returned to work in January, 2003. However, she was only able to work on a limited basis, performing primarily office work.

[¶ 10.] By February, Kuhle started to consider taking legal action against the Clinic. She testified that Dr. Seljeskog, who had performed her surgery, implied that her injury may be related to the October 25th adjustment performed by Dr. Dan Lecy. She also had numerous conversations with her husband about possible claims she may have against the Clinic. Consequently, Kuhle decided to schedule a visit with Mike Abourezk, a Rapid City attorney. The meeting took place sometime in mid-February.

[¶ 11.] After discussing the potential for a medical malpractice claim, Abourezk advised Kuhle to file a workers’ compensation claim. Thereafter, Kuhle discussed the possibility of a workers’ compensation claim with Dr. Robin Lecy. Dr. Lecy informed her that he did not believe she had a workers’ compensation claim because her injury was not work related.

[¶ 12.] Kuhle completed her first report of injury on March 13, 2005. In the report, she listed October 1, 2002, as her date of injury. The Clinic denied her request for benefits, alleging that sufficient notice of injury had not been given in accordance with SDCL 62-7-10.

[¶ 13.] After a hearing, the Department issued a decision in favor of the Clinic. The administrative law judge (ALJ) found that:

Given Claimant’s age and intelligence, Claimant, as a reasonable person, should have recognized the nature, seriousness and probable compensable character of her injury by October 2002. At the very latest, Claimant should have provided written notice in mid February 2003 when she believed that her back problems were all related to her work activities of using the massager.

The ALJ also found Doctors Dan and Robin Lecy more credible than Kuhle.

[¶ 14.] Kuhle appealed the Department’s decision to the circuit court. After oral argument, the court affirmed the Department’s decision and adopted it in its entirety. Kuhle raises the following issue on appeal:

Whether the Department’s determination that Kuhle failed to give timely notice is clearly erroneous or affected by error of law.

Standard of Review

[¶ 15.] We review appeals from administrative decisions in the same manner as the circuit court. Clausen v. Northern Plains Recycling, 2003 SD 63, ¶ 7, 663 N.W.2d 685, 687 (citing Schuck v. John Morrell & Co., 529 N.W.2d 894, 896 (SD 1995)). “Our standard of review is controlled by SDCL 1-26-37.” Kassube v. Dakota Logging, 2005 SD 102, ¶ 25, 705 N.W.2d 461, 465. The Department’s factual findings and credibility determinations are reviewed under the clearly erroneous standard. Enger v. FMC, 1997 SD 70, ¶ 10, 565 N.W.2d 79, 83 (citing Tieszen v. John Morrell & Co., 528 N.W.2d 401, 403-04 (S.D.1995)). We will reverse those findings only if we are definitely and firmly convinced a mistake has been made. Gordon v. St. Mary’s Healthcare Center, 2000 SD 130, ¶ 16, 617 N.W.2d 151, 157.

[¶ 16.] Questions of law are reviewed de novo. Enger, 1997 SD 70, ¶ 10, 565 N.W.2d at 83 (additional citations omitted). Mixed questions of law and fact are also fully reviewable. Id. Ultimately, the claimant retains the burden of proving all facts essential to compensation. Clausen, 2003 SD 63, ¶ 7, 663 N.W.2d at 687 (citing Day v. John Morrell & Co., 490 N.W.2d 720, 724 (S.D.1992)).

Decision

[¶ 17.] SDCL 62-7-10 provides:

An employee who claims compensation for an injury shall immediately, or as soon thereafter as practical, notify the employer of the occurrence of the injury. Written notice of the injury shall be provided to the employer no later than three business days after its occurrence. The notice need not be in any particular form but must advise the employer of when, where, and how the injury occurred. Failure to give notice as required by this section prohibits a claim for compensation under this title unless the employee or the employee’s representative can show:
(1) The employer or the employer’s representative had actual knowledge of the injury; or
(2) The employer was given written notice after the date of the injury and the employee had good cause for failing to give written notice within the three business-day period, which determination shall be liberally construed in favor of the employee.

“The purpose of the written notice requirement is to give the employer the opportunity to investigate the injury while the facts are accessible.” Shykes v. Rapid City Hilton Inn, 2000 SD 123, ¶ 24, 616 N.W.2d 493, 499. SDCL 62-7-10 mandates that notice to the employer of an injury is a condition precedent to compensation. Id.

[¶ 18.]Claimant carries the burden of proving that he or she provided timely notice to the employer, or that either (1) the employer had actual notice, or (2) that

good cause exists for failing to give written notice within the three business-day period, which determination shall be liberally construed in favor of the employee. SDCL 62-7-10; Clausen, 2003 SD 63, ¶ 8, 663 N.W.2d at 687 (citing Miller v. Lake Area Hospital, 1996 SD 89, ¶ 11, 551 N.W.2d 817, 819). However, it is well settled that “the time period for notice or claim does not begin to run until the claimant, as a reasonable person, should recognize the nature, seriousness and probable compensable character of [the] injury or disease.” Clausen, 2003 SD 63, ¶ 13, 663 N.W.2d at 689 (quoting 2B Arthur Larson, Larson’s Workmen’s Compensation Law, 78.41(a) at 15-185-6 (1995)). Whether the conduct in question was reasonable is based on the claimant’s education and intelligence, not on the hypothetical reasonable person familiar to tort law. Shykes, 2000 SD 123, ¶ 42, 616 N.W.2d 493, 502. However, the standard creates an objective, not subjective test. Id. at ¶ 43 (“The standard is based on an objective reasonable person with the same education and intelligence as the claimant’s”).

[¶ 19.] In the present case, the Department found that Kuhle, given her education and intelligence, should have realized the compensable nature of her injury by October of 2002 or, at the very latest, February of 2003. Kuhle testified that she complained to her husband of work related pain and discussed possible legal claims for months. She underwent back surgery and missed a substantial amount of work. However, she did not notify the Clinic of her claim until late February or early March of 2003. During cross-examination, Kuhle admitted that she had known even before February of 2003 that her injury was related to the massager at work. Kuhle’s admission is dispositive of this issue. Therefore, she has failed to show where the Department erred.

[¶ 20.]Affirmed.

[¶ 21JGILBERTSON, Chief Justice, and KONENKAMP, ZINTER and MEIERHENRY, Justices, concur.

      . One record indicates the treatment was for pain that Kuhle had been experiencing after walking down the stairs at Mt. Rushmore.

      . On cross-examination, Kuhle testified that she had helped to install a sprinkler system for her property.

      . The record does not indicate that Kuhle mentioned anything about her injury being work related at this appointment.

      .The date on which Dr. Lecy was informed of Kuhle’s claim is disputed. According, to Kuhle, she contacted Dr. Lecy sometime in late February, only a day or two after speaking with Abourezk. Dr. Lecy recalls the conversation taking place in early March. The Department apparently found Dr. Lecy’s testimony more credible and adopted the early March time period.

      . Kuhle originally claimed that the Clinic had actual notice of her injury. However, it appears she abandoned that argument on appeal.

      . We have held that misdiagnosis or a misleading diagnosis can toll the date of an injury. See Vu v. John Morrell Co., 2000 SD 105, ¶ 29, 615 N.W.2d 171, 177; Bearshield v. City of Gregory, 278 N.W.2d 164, 166 (S.D.1979); Pirrung v. American News Company, 75 S.D. 444, 67 N.W.2d 748 (1954).

      . Kuhle argues she could not have known whether she had a malpractice or workers’ compensation claim. Even if we were to accept that argument, it misses the point because the test depends on the information available to her, not what she did or did not do with that information.