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03/17/2017 08:09 AM CDT




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                                  Nebraska Supreme Court A dvance Sheets
                                          296 Nebraska R eports
                                               DONALD v. DONALD
                                                Cite as 296 Neb. 123




                                        Lacy J. Donald, appellee, v.
                                        A lex S. Donald, appellant.
                                                  ___ N.W.2d ___

                                        Filed March 17, 2017.    No. S-16-547.

                1.	 Divorce: Child Custody: Child Support: Property Division: Alimony:
                     Attorney Fees: Appeal and Error. In an action for the dissolution of
                     marriage, an appellate court reviews de novo on the record the trial
                     court’s determinations of custody, child support, property division,
                     alimony, and attorney fees; these determinations, however, are initially
                     entrusted to the trial court’s discretion and will normally be affirmed
                     absent an abuse of that discretion.
                2.	 Evidence: Appeal and Error. When evidence is in conflict, an appel-
                     late court considers, and may give weight to, the fact that the trial judge
                     heard and observed the witnesses and accepted one version of the facts
                     rather than another.
                3.	 Child Custody. Joint physical custody must be reserved for those cases
                     where, in the judgment of the trial court, the parents are of such maturity
                     that the arrangement will not operate to allow the child to manipulate
                     the parents or confuse the child’s sense of direction, and will provide a
                     stable atmosphere for the child to adjust, rather than perpetuating tur-
                     moil or custodial wars.
                4.	____. Numerous parenting times do not constitute joint physical
                     custody.
                 5.	 ____. The paramount consideration in determining child custody is the
                     best interests of the children.
                6.	 Child Support: Rules of the Supreme Court: Presumptions. The
                     Nebraska Child Support Guidelines are to be applied as a rebuttable
                     presumption and offer flexibility and guidance rather than a stringent
                     formula.
                7.	 Divorce: Jurisdiction: Armed Forces. Federal law precludes a state
                     court, in a dissolution proceeding, from exercising subject matter juris-
                     diction over Department of Veterans Affairs disability benefits.
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             Nebraska Supreme Court A dvance Sheets
                     296 Nebraska R eports
                            DONALD v. DONALD
                             Cite as 296 Neb. 123

 8.	 Divorce: Property Division: Armed Forces: Pensions: Waiver.
     Pursuant to federal law, a state court cannot include the amount of mili-
     tary retirement pay that a veteran waives in order to receive disability
     benefits as divisible marital property.

  Appeal from the District Court for Lancaster County: Steven
D. Burns, Judge. Affirmed as modified.
  Sean M. Reagan and A. Bree Robbins, of Reagan, Melton &
Delaney, L.L.P., for appellant.
  Tara L. Gardner and Joel Bacon, of Keating, O’Gara, Nedved
& Peter, P.C., L.L.O., for appellee.
   Heavican, C.J., Wright, Miller-Lerman, Cassel, Stacy,
K elch, and Funke, JJ.
   Cassel, J.
                      I. INTRODUCTION
   Alex S. Donald appeals from a decree dissolving his mar-
riage to Lacy J. Donald. He presents two issues regarding
child custody and support, urging that his additional daytime
parenting time during Lacy’s working hours required a joint
physical custody classification and use of the joint custody
child support worksheet. As we will explain, the relevant stat-
utes and guidelines dictate otherwise. He presents a third issue
regarding classification of his lump-sum disability payment
from military service as marital property. Because federal law
prevents a state court from doing so, we modify the decree to
exclude the payment’s proceeds. As so modified, we affirm
the decree.
                    II. BACKGROUND
                         1. Overview
  Approximately 2 years 1 month after Alex and Lacy were
married, Lacy filed a complaint for dissolution. There were
two minor children born to the parties. At the time of trial, both
children were under 4 years of age.
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           Nebraska Supreme Court A dvance Sheets
                   296 Nebraska R eports
                       DONALD v. DONALD
                        Cite as 296 Neb. 123

   After a 2-day trial, the court awarded legal and physical cus-
tody of the children to Lacy, subject to Alex’s parenting time,
ordered Alex to pay child support, and divided the marital
estate. During the marriage, Alex received a lump-sum disabil-
ity benefit payment from the Department of Veterans Affairs
(VA). In dividing the property, the court classified this payment
as part of the marital estate and ordered that its proceeds be
divided equally.
   Because Alex’s appeal contests only the award of custody,
the child support order, and the classification of the lump-sum
disability benefit payment as marital property, we summarize
only the facts that are relevant to those issues.

                        2. Child Custody
                 (a) Parties’ Contentions Below
   Both parties testified that prior to their separation, Lacy
worked outside of the home while Alex cared for the children
during the workday. Alex was injured serving in the military
and throughout the marriage was unable to work. By the time
of trial, the parties had not reached an agreement regarding
the custody arrangement and instead both offered different
parenting plans.
   Lacy proposed that she receive joint legal custody and pri-
mary physical custody of the minor children. Alex proposed
joint legal and physical custody.

               (b) District Court’s Parenting Plan
   The district court did not adopt either party’s proposed par-
enting plan; instead, it incorporated one of its own creation into
the decree. The court’s plan provided that Alex would have par-
enting time on alternating weekends—beginning Friday at 5:15
p.m. and ending Sunday at 8:15 a.m.—and 5 weeks of summer
parenting time. After the children began attending school, the
alternating weekend parenting time would be adjusted to begin
on Thursday at the conclusion of school and end on Monday
morning at the commencement of school.
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           Nebraska Supreme Court A dvance Sheets
                   296 Nebraska R eports
                       DONALD v. DONALD
                        Cite as 296 Neb. 123

   The court also found that “[t]here [was] no reason why the
daytime parenting time arrangement that occurred before the
separation should not continue.” Thus, before the children
began school, and later during summertime school vacations,
Alex would have parenting time every weekday from 7:45 a.m.
until 5:15 p.m. Throughout each school year after the children
began to attend, Alex’s weekday parenting time would begin at
the conclusion of school instead of 7:45 a.m.
   The parenting plan allocated Alex’s parenting time. Alex
will have approximately 80 parenting-time overnights a year
before the children begin attending school. After that, Alex will
have approximately 120 parenting-time overnights a year.
                       3. Child Support
   Child support was largely calculated based upon the amount
of parenting time allocated between the parties. Because the
children would both be in school within 3 years of entry of
the decree, the court found that Alex’s parenting time would
soon “reduce significantly” with the loss of the weekday par-
enting hours. Therefore, the district court elected to calculate
child support based on the parenting-time allocation after the
children were in school. The court recognized Alex’s addi-
tional daytime parenting time prior to the time the children
were in school by implementing a downward deviation from
the guidelines.
   The court calculated child support using a sole custody
worksheet and determined Alex’s share of child support to be
$855 per month. But the court also attached a child support
deviation worksheet showing a downward deviation of $200
per month for the time period beginning May 1, 2016, through
August 31, 2019. The court did not specifically explain how it
calculated the downward deviation but did note that the eldest
child would be starting school within 1 year.
             4. VA Disability Benefit Payment
  The parties disputed whether a lump-sum disability benefit
payment was marital property subject to division. The lump-sum
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           Nebraska Supreme Court A dvance Sheets
                   296 Nebraska R eports
                       DONALD v. DONALD
                        Cite as 296 Neb. 123

payment was for past-due disability benefits after Alex retro-
actively received an increase in monthly compensation.
                     (a) Monthly Disability
                        Benefit Payments
   Alex received a service-connected injury while deployed
and serving in the U.S. Marine Corps in 2008. The VA initially
assessed his injury and associated major depressive disorder at
70 percent disability. This assessment entitled him to receive
monthly disability benefit payments at a scheduled rate set by
the VA.
                      (b) VA Reevaluation
   In November 2015, after the parties had separated, the VA
reevaluated Alex’s disability. The VA determined that Alex was
entitled to “individual unemployability” status because he was
“unable to secure or follow a substantially gainful occupation
as a result of service-connected disabilities.” This meant that
although his disability was assessed as a 70-percent disability,
the VA would compensate him at the 100-percent disability rate
due to his individual unemployability.
   The VA made the determination of individual unemploy-
ability retroactive to April 2013 and issued a lump-sum
payment, totaling $41,906.47, for the disability benefits he
should have received at this increased rate. After receiving
the lump-sum payment, Alex deposited $30,000 of the pay-
ment into a health savings account and the remainder into a
checking account.
                 (c) District Court’s Disposition
  No evidence or testimony was offered to establish whether
Alex was also entitled to retirement benefits or whether the dis-
ability benefit payments included or otherwise waived retire-
ment benefits. Nonetheless, the court concluded that the entire
lump-sum payment was marital property. After including the
lump sum in the marital estate, the court ordered Alex to pay
an equalization payment to Lacy, totaling $37,000.
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                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                             DONALD v. DONALD
                              Cite as 296 Neb. 123

                III. ASSIGNMENTS OF ERROR
   Alex assigns that the district court erred in (1) not awarding
the parties joint physical and legal custody of the parties’ minor
children, “taking into consideration the significant amount of
parenting time awarded”; (2) not deviating further in the child
support calculation; and (3) including Alex’s lump-sum dis-
ability benefit payment from the VA in the marital estate and
dividing the payment equally between the parties.
                 IV. STANDARD OF REVIEW
   [1] In an action for the dissolution of marriage, an appellate
court reviews de novo on the record the trial court’s determi-
nations of custody, child support, property division, alimony,
and attorney fees; these determinations, however, are initially
entrusted to the trial court’s discretion and will normally be
affirmed absent an abuse of that discretion.1
   [2] When evidence is in conflict, an appellate court consid-
ers, and may give weight to, the fact that the trial judge heard
and observed the witnesses and accepted one version of the
facts rather than another.2
                         V. ANALYSIS
                       1. Child Custody
                          (a) Generally
   Alex assigns that the district court erred by not awarding
the parties joint physical and legal custody of their minor
children, “taking into consideration the significant amount of
parenting time awarded to [him].” Although he submits that
his parenting plan should have been adopted, he focuses most
of his argument on the proper characterization of the cus-
tody awarded.
   Before turning to his primary arguments, we recall that a
statute requires a court, in determining custody and parenting

 1	
      Mamot v. Mamot, 283 Neb. 659, 813 N.W.2d 440 (2012).
 2	
      Millatmal v. Millatmal, 272 Neb. 452, 723 N.W.2d 79 (2006).
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                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                              DONALD v. DONALD
                               Cite as 296 Neb. 123

arrangements, to consider certain factors relevant to the best
interests of the minor child.3 And we have summarized addi-
tional factors that a court may consider in making a child
custody determination.4 We see nothing in the district court’s
decree to suggest that the court disregarded any appropri-
ate factor.
   [3] To the extent that Alex argues for an alternating-week
joint physical custody arrangement, we find no abuse of dis-
cretion by the district court. Joint physical custody must be
reserved for those cases where, in the judgment of the trial
court, the parents are of such maturity that the arrangement
will not operate to allow the child to manipulate the parents or
confuse the child’s sense of direction, and will provide a stable
atmosphere for the child to adjust, rather than perpetuating
turmoil or custodial wars.5 In this regard, the district court’s
implicit assessment of witness credibility is particularly impor-
tant. We now address Alex’s primary arguments.

                     (b) Physical Custody
   Alex’s assignment of error and argument as it relates to joint
physical custody is primarily one of definition. He contends
that the significant amount of parenting time awarded war-
ranted a characterization of joint physical custody.
   [4] Nebraska’s Parenting Act6 defines joint physical cus-
tody as “mutual authority and responsibility of the parents
regarding the child’s place of residence and the exertion of
continuous blocks of parenting time by both parents over
the child for significant periods of time.”7 While Alex does
have liberal parenting time under the decree with all the

 3	
      See, Neb. Rev. Stat. § 43-2923 (Reissue 2016); Schrag v. Spear, 290 Neb.
      98, 858 N.W.2d 865 (2015).
 4	
      See Schrag v. Spear, supra note 3.
 5	
      Zahl v. Zahl, 273 Neb. 1043, 736 N.W.2d 365 (2007).
 6	
      Neb. Rev. Stat. §§ 43-2920 to 43-2943 (Reissue 2016).
 7	
      § 43-2922(12).
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               Nebraska Supreme Court A dvance Sheets
                       296 Nebraska R eports
                             DONALD v. DONALD
                              Cite as 296 Neb. 123

weekday parenting hours, he does not exercise “continuous
blocks of parenting time” for “significant periods of time.”
And numerous parenting times do not constitute “joint physi-
cal custody.”8
   Furthermore, Alex does not challenge the fact that Lacy has
the sole authority on the children’s place of residence, since
they primarily reside with her. Because the parenting plan as
ordered does not fit the statutory definition of joint physical
custody, the district court did not err in its characterization of
the physical custody award. We therefore affirm the physical
custody award.

                         (c) Legal Custody
    Alex’s argument does not meaningfully distinguish between
joint physical and joint legal custody. However, joint legal cus-
tody is separate and distinct from joint physical custody; it is
“mutual authority and responsibility of the parents for making
mutual fundamental decisions regarding the child’s welfare,
including choices regarding education and health.”9 Therefore,
we address it separately.
    [5] The paramount consideration in determining child cus-
tody is the best interests of the children.10 At trial, Lacy tes-
tified that she has been chiefly responsible for finding and
hiring babysitters, enrolling and registering the eldest child in
preschool, and arranging for and taking the children to their
medical appointments.
    Lacy also testified that since the parties’ separation, she has
had problems working with Alex on dividing and sharing the
children’s expenses—including the eldest child’s preschool
registration. On the other hand, Alex testified that he believed

 8	
      See Heesacker v. Heesacker, 262 Neb. 179, 629 N.W.2d 558 (2001).
 9	
      § 43-2922(11).
10	
      See, generally, Neb. Rev. Stat. § 42-364(3) (Reissue 2016); Kamal v.
      Imroz, 277 Neb. 116, 759 N.W.2d 914 (2009); Maska v. Maska, 274 Neb.
      629, 742 N.W.2d 492 (2007).
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                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                              DONALD v. DONALD
                               Cite as 296 Neb. 123

he and Lacy could set aside personal differences to communi-
cate and put the children’s best interests first.
   Upon our de novo review, we find no abuse of discre-
tion in the district court’s determination that it was in the
best interests of the children for Lacy to have legal custody.
Lacy was primarily responsible for making the big decisions
concerning the children prior to the parties’ separation. And,
during the proceeding’s pendency, she was the primary deci-
sionmaker regarding the eldest child’s education. We give
weight to the fact that the district court heard and observed
the witnesses and accepted Lacy’s account of the parenting
disagreements over Alex’s. We affirm the award of legal cus-
tody to Lacy.
                         2. Child Support
   Alex’s argument concerning child support is closely related
to his argument concerning child custody. He argues that he
was awarded de facto joint custody. And, he contends that
the district court should have calculated child support using a
joint custody worksheet based on the number of parenting-time
hours he was awarded.
   The child support guidelines provide a rebuttable presump-
tion that support shall be calculated using a joint custody work-
sheet when “a specific provision for joint physical custody
is ordered and each party’s parenting time exceeds 142 days
per year.”11 But, no specific provision of joint custody was
ordered. Nonetheless, Alex argues that the district court should
have deviated from the guidelines and used the joint custody
worksheet because his parenting-time hours exceed 142 days
per year.
   Notably, Alex calculates his days of parenting time by con-
verting the number of parenting-time hours he has with the
children into equivalent days. After adding his 35 days of sum-
mer parenting time, Alex estimates that he has approximately

11	
      Neb. Ct. R. § 4-212 (rev. 2011).
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                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                              DONALD v. DONALD
                               Cite as 296 Neb. 123

180 total days of parenting time per year before the children
attend school.
   [6] While the Nebraska Child Support Guidelines are to be
applied as a rebuttable presumption and offer flexibility and
guidance rather than a stringent formula,12 we do not believe
that the guidelines can be construed so as to allow for Alex’s
requested deviation. Our guidelines specifically provide that
“a ‘day’ shall be generally defined as including an overnight
period.”13 Alex does not dispute that under this definition, his
parenting time falls far short of the threshold for a joint physi-
cal custody calculation.
   In effect, the district court treated Alex’s extra daytime
parenting time as an alternative to third-party childcare. This
was economically beneficial to both parties. In recognition of
Alex’s contribution to this economic benefit, the court pro-
vided a downward deviation from the child support guidelines.
And the court sufficiently explained its deviation. Because we
find no abuse of discretion in the deviation ordered, we affirm
that part of the decree as well.

               3. VA Disability Benefit Payment
   Finally, Alex assigns that the district court erred by includ-
ing a lump-sum VA disability benefit payment in the marital
estate. We agree.
   [7,8] The evidence presented at trial clearly established that
the lump-sum payment was for retroactive service-connected
disability benefits. And federal law precludes a state court, in
a dissolution proceeding, from exercising subject matter juris-
diction over VA disability benefits.14 In the same way, a state
court cannot include the amount of military retirement pay

12	
      See, Neb. Rev. Stat. § 42-364.16 (Reissue 2016); Gress v. Gress, 271 Neb.
      122, 710 N.W.2d 318 (2006).
13	
      § 4-212.
14	
      See, Ryan v. Ryan, 257 Neb. 682, 600 N.W.2d 739 (1999); Kramer v.
      Kramer, 252 Neb. 526, 567 N.W.2d 100 (1997).
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                Nebraska Supreme Court A dvance Sheets
                        296 Nebraska R eports
                               DONALD v. DONALD
                                Cite as 296 Neb. 123

that a veteran waives in order to receive such benefits as divis-
ible marital property.15 It is therefore an abuse of discretion to
divide service-connected disability benefits, or any amount of
waived military retirement pay, as part of the marital estate in
a dissolution proceeding.
   Lacy argues that it is possible the lump-sum payment
included nondisability retirement benefits that were not waived.
She further argues that Alex did not produce evidence estab-
lishing that the lump-sum payment was solely disability com-
pensation. We disagree.
   Alex presented evidence at trial and established that the
lump-sum payment received from the VA was purely disabil-
ity compensation. The lump-sum payment simply included
the difference between the disability rate of compensation
Alex had previously received and the new retroactive rate.
Therefore, the evidence persuades us that the payment should
not have been included in the marital estate.
   After excluding the health savings account and the balance
of the bank account representing the remainder of the lump-
sum payment from the marital estate, we find that a recalcula-
tion of the equalization payment is also in order. Accordingly,
we modify the decree to exclude the lump-sum payment and
reduce the equalization payment ordered to $15,968.77.

                      VI. CONCLUSION
   The parenting plan as ordered did not fit the statutory defi-
nition of joint physical custody. Therefore, the district court
did not err in its characterization of the physical custody
award. We also conclude that the child support guidelines do
not allow for a “day” to be construed as including any noncon-
secutive 24 hours when determining whether to use the joint
custody worksheet in support calculations. The district court
was correct to use the sole custody worksheet in calculating

15	
      See id. See, also, 10 U.S.C. § 1408(a)(4)(B) and (c)(1) (2012); Mansell v.
      Mansell, 490 U.S. 581, 109 S. Ct. 2023, 104 L. Ed. 2d 675 (1989).
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          Nebraska Supreme Court A dvance Sheets
                  296 Nebraska R eports
                      DONALD v. DONALD
                       Cite as 296 Neb. 123

child support and did not abuse its discretion in ordering a
deviation for the first 3 years.
   Evidence presented at trial established that the lump-sum
payment Alex received was purely for service-connected dis-
ability compensation. Because federal law precludes state
courts, in proceedings to dissolve a marriage, from exercising
jurisdiction over such disability compensation, we modify the
divorce decree to exclude the lump-sum payment from the
marital estate. We also reduce the ordered equalization pay-
ment to $15,968.77. As so modified, the decree of the district
court is affirmed.
                                       A ffirmed as modified.
