Opinion
No. C0-99-2134.
Filed September 5, 2000.
Appeal from the District Court, Hennepin County, File No. DC224905.
Daniel J. Goldberg, (for respondent)
Brian L. Sobol, (for appellant)
Considered and decided by Anderson, Presiding Judge, Schumacher, Judge, and Amundson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellant argues that the district court: (1) erred in determining her reasonable needs for the purpose of setting spousal maintenance; (2) abused its discretion in determining the value of respondent's business; (3) erred by characterizing certain property and debt as marital; and (4) abused its discretion by denying her attorney fees. We find no error or abuse of discretion in the district court's determinations and affirm.
FACTS
Appellant Denine Kittler Bergeland and respondent Nathan Daniel Bergeland were married in 1987 and have two children. Respondent, a financial planner, became a regional director for Financial Network Investment Corporation (FNIC). In 1994, appellant, also a financial planner, became an independent broker within respondent's FNIC region, working in his office. As an independent broker, appellant earned between $83,514 and $243,592 annually. In June 1996 the parties separated and appellant established her own office. Appellant earned a gross income of $118,332 in 1998; those earning are based on part-time work. Meanwhile, respondent's business expanded and merged with a larger corporation.
During dissolution proceedings, appellant submitted two budgets to show her financial needs. The district court found discrepancies between the two budgets submitted by appellant and the historical spending pattern of the parties. Based on expense exhibits and expert testimony, the district court rejected appellant's claimed needs of $23,000 per month, and found her reasonable needs to be $9,652 per month. The district court also found appellant would realize $100,000 per year in earned income and $65,000 in investment income. The district court ordered rehabilitative maintenance to be paid over five years: $5,000 per month the first year, $4,000 per month the second, $3,000 per month the third, $2,000 per month the fourth, and $1,000 per month the fifth year.
The district court divided the martial property and, in doing so, credited the testimony of appellant's expert, who determined respondent's financial planning business was worth $1,383,000 as of the December 31, 1997 valuation date. The district court characterized checking account and certain bond funds as marital property, even though appellant depleted those funds while dissolution proceedings were pending. The district court apparently treated capital gains taxes paid by appellant on martial stock sales during dissolution proceedings as marital debt. Finally, the district court denied attorney fees.
In response to post-trial motions, the district court amended several findings and conclusions of law but denied appellant's motion for new trial. Appellant challenges the district court determinations on maintenance, the value of respondent's business, the inclusion of depleted accounts in the marital property calculation, and attorney fees.
DECISION I.
Appellant claims that the district court erred in calculating appellant's reasonable needs for the purpose of setting maintenance and asserts that the district court miscalculated her income.
On appeal from an award of maintenance, we ask whether the district court abused its broad discretion. Erlandson v. Erlandson, 318 N.W.2d 36, 38 (Minn. 1982). Underlying factual findings will be set aside only if they are clearly erroneous. McCulloch v. McCulloch, 435 N.W.2d 564, 566 (Minn.App. 1989). In order to successfully challenge a district court's findings of fact, the party challenging the findings "must show that despite viewing that evidence in the light most favorable to the trial court's findings * * * the record still requires the definite and firm conviction that a mistake was made." Vangsness v. Vangsness, 607 N.W.2d 468, 474 (Minn.App. 2000).
A district court may award maintenance if it finds that the spouse seeking maintenance lacks sufficient property to provide for her reasonable needs, especially during a period of training or education, or is unable to provide adequate self-support through appropriate employment. Minn. Stat. § 518.552, subd. 1 (1998). The amount and duration of maintenance depends on the needs of the party seeking maintenance and the ability of the other party to pay, in light of the standard of living established during the marriage. Id., subd. 2 (1998); Erlandson, 318 N.W.2d at 39-40.
The district court compared appellant's temporary budget ($19,000 need per month) with her trial budget ($23,000 need per month), heard expert testimony about the parties' expenditures, and reviewed the relevant financial exhibits. The district court, comparing budget expenditures by category, found that appellant had artificially inflated her needs. The district court credited expert testimony that the parties could not sustain the $19,000 per month spending rate established during their last year together (1995-1996) without spending principal, and that the average spending from January 1994 to June 1996 was $12,000 per month. The district court found that the parties average monthly spending from 1992-1996 was $16,507 per month, and found that appellant's reasonable monthly needs were $9,652 per month.
The district court's findings are not clearly erroneous. The findings are based on the evidence in the record and not the district court's own subjective interpretation of reasonableness. A comparison of the two budgets submitted by appellant, together with the historical spending data compiled by respondent's expert, show that her "needs" became greater at the time of trial. The district court's budget more closely resembles the actual historical expenses of the parties as determined by the expert accountant and as shown in the 1995-96 budget data to which the parties stipulated. Some categories are reduced, and others increased, but all fall within the district court's discretion to determine what expenses are reasonable.
For example, the parties had no automobile payment in the one-year period of June 1995 to June 1996. After the June 1996 separation, appellant purchased a $50,000 Lexus requiring a $1,836 monthly payment for about two years. Although the family historically spent less than $250 per month on home furnishings, appellant proposes that her monthly needs in this category are now over $800. Appellant spent $157 per month on therapy in 1995-96, but claimed $800 per month in her temporary budget. In her trial budget, appellant claimed a need of $1,281.67 per month for therapy. Many other spending categories show similar dramatic increases: household (increase of $1,414/month); clothing (increase of $697/month); and membership dues (increase of $343 month).
E.g., 95-96 mortgage of $1,937.00/month vs. $3,458 awarded; 95-96 groceries of $473/month vs. award of $500; 95-96 clothing of $2,036/month vs. $750 awarded; 95-96 counseling of $ 157/month vs. $800 awarded.
We reject appellant's argument that the district court should have relied only on the 1995-96 spending and not on the averages calculated by the expert. We defer to district court credibility determinations, and the district court found the expert's review of the parties' historical spending credible. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988) (explaining that reviewing courts generally affirm a district court's credibility determinations, because the district court is in the best position to assess the witness). Moreover, when determining the amount and duration of maintenance, the district court is required to consider the standard of living that occurred "during the marriage,"not just at the time of separation or dissolution. Minn. Stat. § 518.552, subd. 2. Finally, there is little correlation between appellant's proposed "needs" and the expenses of the parties as shown in the stipulated 1995-1996 budget. The record supports the district court's findings on appellant's reasonable needs. See Vangsness, 607 N.W.2d at 474 ("That the record might support findings other than those made by the trial court does not show that the court's findings are defective.")
We also reject appellant's claim that the district court overstated her investment income by failing to consider that after the valuation date, but before the end of trial, she spent the money in a checking account and the proceeds from sale of municipal bonds to pay her expenses and taxes. District courts may impute the entire value of an asset to the party who disposed of it while proceedings were pending. Minn. Stat. § 518.58, subd. 1a (1998).
II.
Appellant next claims that the district court abused its discretion by failing to reserve jurisdiction to reevaluate the merger's effect on respondent's financial planning business. District courts have broad discretion in dividing property and setting reasonable valuation dates, and this court will not disturb those determinations absent an abuse of discretion. Desrosier v. Desrosier, 551 N.W.2d 507, 510 (Minn.App. 1996).
Minn. Stat § 518.58, subd. 1 (1998) mandates that district courts set the valuation date on the day of the initial prehearing conference, unless otherwise stipulated or unless the district court makes findings that another date is fair and equitable. The district court may also adjust the valuation date as to a single asset where "there is a substantial change in value of an asset between the date of valuation and the final distribution * * * ." Id. The pretrial hearing took place in September 1997, but, to accommodate the parties, the district court selected December 31, 1997 as the valuation date. At trial, the district court explained, several times, that the December date was fair and would not be changed.
Appellant's expert valued respondent's business, as of December 31, 1997, at $1,383,000, while respondent's expert valued the business at $800,000. Both experts addressed the merger risk, and explained that in a sale context a buyer may insist on a provision for future reassessment that would protect the buyer from a change in the value of the business purchased. Appellant's expert ventured that in a divorce setting, this risk could be countered by the court retaining jurisdiction and re-evaluating the business after two to four years. The district court disallowed discovery of business finances after the valuation date, declined to reserve jurisdiction, and accepted the higher valuation provided by appellant's expert.
District courts have broad, equitable discretion to assess the future value of an item of marital property. See, e.g., Balogh v. Balogh, 356 N.W.2d 307, 310-12 (Minn.App. 1984) (discussing the district court's discretion to value property in light of specific future events). The district court did not abuse its discretion here by accepting the opinion of appellant's expert and declining to retain jurisdiction for the purpose of reevaluating the value of the business at some future, unspecified, date. SeeThomas v. Thomas, 407 N.W.2d 124, 126 (Minn.App. 1987) (holding that the trier of fact must decide, when parties present conflicting opinions as to a business valuation, which expert is more convincing). It is neither fair nor reasonable to expect that complex business valuations be determined with pinpoint precision; the district court accepted appellant's expert witness valuation, at a figure much higher than that offered by respondent's expert, and then elected against retaining jurisdiction with all of the attendant uncertainty that would create for the parties. See Bury v. Bury, 416 N.W.2d 133, 136 (Minn.App. 1987) (stating district court is not required to be mathematically exact in its valuation of assets as long as value arrived at lies within a reasonable range of figures). Given the unique circumstances here, where the parties continue to have a business relationship, we cannot say the district court's decision as to the date of valuation and the value of respondent's business is unreasonable and it certainly is not an abuse of discretion.
We also note that appellant seems to assume, without presenting supporting evidence, that any post-marital business value increases would be marital property. See Minn. Stat. § 518.54, subd. 5 (1998) (providing that property acquired by a spouse after the valuation date is nonmarital).
III.
Appellant next claims that the district court abused its discretion by treating her marital property withdrawals, made during the dissolution proceedings, differently from those made by respondent. A district court has broad discretion in making a property division and will not be overturned absent a clearly erroneous resolution of the issue that is against the logic and the facts in the record. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984.) On the valuation date, appellant's checking account had a value of $44,704. At the time of trial, the balance was zero. After the valuation date, but before trial, appellant liquidated municipal bonds worth $46,000 in order to pay her income taxes. The district court treated the cash and bonds, as they existed on the valuation date, as marital property. Respondent used marital funds to pay capital gains taxes on marital stock sold as a result of the merger, and the district court evidently treated the tax liability as a marital debt.
District courts are required to assess the existing marital property, such as the cash and bonds, as of the valuation date and may impute the entire value of an asset to a party who disposed of it during pending dissolution proceedings. Minn. Stat. § 518.58, subds. 1, 1a. Moreover, debts, such as the tax liability, are apportioned as part of the property settlement and are divided in the same manner as assets. Filkins v. Filkins, 347 N.W.2d 526, 529 (Minn.App. 1984). The district court acted well within its discretion by dividing the marital property in a manner that requires appellant to bear her own income tax burden, incurred after the separation, and divides the tax liability on the marital stock proceeds between the parties.
IV.
Appellant claims that the district court erred by failing to award her attorneys fees because (1) her income is far less than respondent's and (2) respondent's failure to cooperate with discovery needlessly delayed proceedings. A refusal to award attorney fees will not be reversed absent a clear abuse of discretion. Bogen v. Bogen, 261 N.W.2d 606, 611 (Minn. 1977). Need-based fees require the recipient to lack the ability to pay the fees. Minn. Stat. § 518.14, subd. 1 (1998). A district court may also award attorney's fees when a party "unreasonably contributes to the length or expense of the proceeding." Id. The district court found that both parties' conduct contributed to the prolonged litigation, and that each has the ability to pay their own fees.
While appellant's income may be less than respondent's, each party's half of the marital property exceeds $ 1.25 million. It is not an abuse of discretion to refuse to award attorney fees where the reapportioned property and income is, for the most part, evenly balanced. Nardini v. Nardini, 414 N.W.2d 184, 199 (Minn. 1987). Additionally, we have affirmed the denial of conduct-based fees where both parties' conduct contributed to the expense of the case. Kitchar v. Kitchar, 553 N.W.2d 97, 104 (Minn.App. 1996), review denied (Minn. Oct. 29, 1996). The record shows that appellant improperly removed money from respondent's checking account and that respondent was not completely candid about his bonus earnings. The district court neither erred in making its findings nor abused its discretion by refusing to award appellant attorney fees.