Opinion
No. C3-99-1754.
Filed July 3, 2000.
Appeal from the District Court, Hennepin County, File No. DW244120.
David M. Lawson, (for appellant)
Susan C. Rhode, Moss Barnett, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
In an appeal from judgment in a marital-dissolution action, Barbara Forestal challenges the district court's forgiveness of maintenance arrearages and its valuation of Ernst Forestal's garage business. Because the district court acted within its statutory authority to modify the maintenance retroactively and because the record provides an adequate factual basis for both the maintenance modification and the finding that the business had no value separate from the land and improvements, we affirm.
FACTS
Barbara and Ernst Forestal were married from December 1995 until August 1999. In January 1999, while a dissolution proceeding was pending, Barbara Forestal applied for an order for protection. A family-court referee issued the order and also ordered Ernst Forestal to pay temporary monthly maintenance of $1,000.
The referee based the maintenance amount on a determination that Barbara Forestal had monthly income of $800 and that Ernst Forestal had adequate income to pay her $1,000 a month, an amount equivalent to what she had been paid for working in Ernst Forestal's service-garage business. In late 1998, however, Ernst Forestal had apparently begun using drugs, and his service-garage business had rapidly declined. Testimony at the subsequent dissolution hearing indicated that the business was virtually worthless by the end of 1998, a decline from $220,000 gross income reported in a 1997 tax return.
Ernst Forestal failed to respond to the dissolution summons and complaint, and Barbara Forestal sought a default order in March 1999. In April 1999, before the default order was signed, Ernst Forestal obtained an attorney, who requested an extension of the response time because of Ernst Forestal's incapacity. The court granted the extension, permitted him to file a motion to modify the temporary maintenance, and provided that any modification would take effect on April 6, the date of the extension order.
Following a contested dissolution hearing, the district court issued findings of fact, conclusions of law, and order for judgment in August 1999. The court found that temporary maintenance should not have been awarded in a domestic-abuse proceeding when the dissolution was pending and that Barbara Forestal had not adequately demonstrated that she should receive spousal maintenance. The court specifically found that Barbara Forestal had produced no evidence that Ernst Forestal had the ability to pay maintenance, that she had not alleged that Ernst Forestal was voluntarily underemployed, and that she was capable of working part- or full-time.
The court found the service-garage business had no value independent of the property and improvements and awarded the business and property to Ernst Forestal. The court awarded Barbara Forestal the remaining real properties. These properties included two rental houses that had been foreclosed with no redemption value and one rental building valued at $70-80,000. The court found that the property division favored Barbara Forestal but that, under the circumstances, the distribution was fair and equitable. Barbara Forestal appeals, seeking (1) reversal of the maintenance-arrearage forgiveness and (2) a remand to determine a proper valuation and distribution of the garage business.
DECISION I
The family-court referee who presided in the domestic-abuse proceeding awarded Barbara Forestal $1,000 temporary monthly maintenance in its January 29, 1999, protection order. In its April 6 order granting Ernst Forestal an extension to respond to Barbara Forestal's petition for dissolution, the district court directed that any decision modifying maintenance be made retroactive to April 6. Ernst Forestal paid $1,500 between January and April. Consequently, the amount that Barbara Forestal challenges as an impermissible retroactive forgiveness is $500.
The referee issued the order for protection and established temporary maintenance under the domestic-abuse statute. Minn. Stat. § 518B.01, subds. 6(a)(1), (5) (1998). The statute permits the court to provide temporary spousal support "on the same basis as is provided in chapter 518." Id., subd. 6(a)(5).
The domestic-abuse statute specifically addresses the method and notice required to vacate or modify a restraining order, but is silent on whether a temporary support provision may be modified. Id., subd. 6(c) (1998). Because the domestic-abuse statute permits modification of orders issued in a domestic-abuse proceeding, we conclude that the temporary support award may be modified. Id., subd. 11 (1998); see also Swenson v. Swenson, 490 N.W.2d 668 (Minn.App. 1992) (referring to modification provisions of domestic-abuse statute).
We see nothing in the statute to support an argument that, because a dissolution was pending, the order entered in the domestic-abuse proceeding must be filed as a temporary order in the dissolution proceeding to be effective. To the contrary, the domestic-abuse statute anticipates the entry of effective orders in domestic-abuse proceedings when a dissolution proceeding is pending. See, e.g., Minn. Stat. § 518B.01, subd. 6(e) (1998) ("If a proceeding for dissolution of marriage * * * is pending between the parties, the court shall provide a copy of the order for protection to the court with jurisdiction over the dissolution * * * proceeding for inclusion in its file."); see also Rigwald v. Rigwald, 423 N.W.2d 701, 705 (Minn.App. 1988) (suggesting procedures for determining child custody in a domestic-abuse order when dissolution pending).
The parties' dispute centers on whether the court has authority to forgive arrears arising from a temporary-maintenance order. Neither the domestic-abuse statute nor the statute governing temporary orders in a dissolution proceeding specifically addresses forgiveness of arrears or retroactive modification. Both statutes, however, provide for modification of orders. See Minn. Stat. §§ 518B.01, subd. 11 (domestic abuse); 518.131, subd. 9(b) (1998) (dissolution); see also Laumann v. Laumann, 400 N.W.2d 355, 360 (Minn.App. 1987) (noting trial court has authority to modify a temporary order under section 518.131).
The dissolution statute limits retroactive modification of maintenance payments to specific circumstances. Minn. Stat. § 518.64, subd. 2(d) (1998). Forgiveness of arrears in a dissolution proceeding constitutes a retroactive modification of a maintenance obligation. Christenson v. Christenson, 490 N.W.2d 447, 449 (Minn.App. 1992) (applying statutory forerunner of Minn. Stat. § 518.64, subd. 2(d)). The modification provision of the dissolution statute states that it applies to both temporary and permanent dissolution orders. Minn. Stat. § 518.64, subd. 1 (1998). But it is not clear whether the limitation applies to a temporary order issued in a domestic-abuse proceeding. Although the parties have not provided us with a reason to make a distinction, we decline to specifically resolve an issue that was not directly raised in the district court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).
Furthermore, it is unnecessary to decide whether the retroactive-modification limitations in the marriage-dissolution statute apply to temporary orders because the court had the latitude to make the modification under either the dissolution or domestic-abuse statutes. First, there is no specific statutory prohibition against retroactive modifications of temporary orders in either the domestic-abuse or the marital-dissolution statutes. And, second, because the district court specifically found that Ernst Forestal was operating under an incapacity during the relevant time period, he falls within one of the specific provisions allowing retroactive modifications in dissolution proceedings. Minn. Stat. § 518.64, subd. 2(d)(1) (1998) (party seeking modification precluded from serving motion because of significant physical or mental disability).
Barbara Forestal alternatively argues that even if the court had statutory authority, the findings do not support its decision to modify the temporary spousal maintenance and the modification is thus an abuse of discretion. We disagree. The referee's award of $1,000 a month temporary maintenance was based on the finding that Barbara Forestal's rental income was $800 a month. The district court found that the temporary award was unfounded because Barbara Forestal's rental income was not $800. The district court found that Barbara Forestal's rental income was $1,200 a month gross. In her own testimony before the referee, Barbara Forestal stated her rental income was $1,000 a month net.
The record shows that the district court found Forestal's reasonable monthly expenses to be $1,370. This figure has not been disputed on appeal. It is also undisputed that Forestal told the referee she received $1,000 a month net rental income. Consequently, her established maintenance need amounted to $370, rather than $1,000. See Lyon v. Lyon, 439 N.W.2d 18, 22 (Minn. 1989) (stating maintenance based on need). The referee awarded $1,000 a month in maintenance. The district court did not clearly err when it found that the referee overstated Barbara Forestal's need for temporary maintenance.
Because Barbara Forestal's overall need for maintenance was significantly less than the original amount the referee awarded, the district court did not abuse its discretion in modifying the temporary maintenance amount. See Erlandson v. Erlandson, 318 N.W.2d 38, 38 (Minn. 1982) (describing district court's wide discretion in determining maintenance amount).
II
Barbara Forestal asserts the property division made by the district court was inequitable because the court clearly erred in determining that Ernst Forestal's garage-service business had no value. She challenges only the valuation of the business, not the land and improvements to the property where the business is located or the rest of the property division.
A district court's valuation of a business in a dissolution action is a finding of fact that will not be set aside on appeal unless clearly erroneous on the record as a whole. Hertz v. Hertz, 304 Minn. 144, 145, 229 N.W.2d 42, 44 (1975). An appellant has the burden of showing that the trial court abused its discretion in granting a property award in a dissolution case. Bury v. Bury, 416 N.W.2d 133, 136 (Minn.App. 1987).
The district court found that (1) no credible evidence was presented regarding the value of the garage business; (2) whatever value remains is nonmarital property; (3) the debt owed to the IRS exceeds the value of equipment owned by the business; (4) any "goodwill" value of the business is due to efforts of Ernst Forestal's daughter to rebuild it beginning in February 1999; and (5) any other value of the business is minimal.
Barbara Forestal asserts the court erred in ignoring evidence the business had gross receipts of $220,000 in 1997. Ernst Forestal responds that this evidence was not explained at trial and, more importantly, there was testimony that the value of the business had dropped sharply since 1997.
Barbara Forestal provided no evidence of her estimate of the value of the business either as of the date of separation or the prehearing conference. Her documentation setting 1997 gross income at $220,000 apparently consisted of a tax statement and bookkeeping ledger. Ernst Forestal indicated the business had little value by the end of 1998. In addition, his daughter testified that the business had debts of $24,000 in March 1999 besides owing $23,000 to the IRS and apparently offered into evidence a balance sheet documenting those claims. His daughter also testified that, by the time of trial, the debt had been reduced to $8,000 plus $23,000 to the IRS and $10,400 she had personally invested in the business. Ernst Forestal's daughter reopened the business in April, began paying herself a salary in May, and had five employees by the time of trial.
Judging witness credibility and the weight given witness testimony is within the province of the factfinder. General v. General, 409 N.W.2d 511, 513 (Minn.App. 1987). The district court found there was credible evidence that the business had minimal value. An appellate court will not reverse a trial court's valuation of an asset unless it is "clearly erroneous on the record as a whole." Hertz, 304 Minn. at 145, 229 N.W.2d at 44 (citations omitted). In this case, the court credited Ernst Forestal's testimony, his daughter's testimony, and the records that were presented. Barbara Forestal failed to provide any testimony or documentary evidence of the value of the business in 1998 or 1999. Therefore, she has failed to demonstrate any abuse of discretion in the district court's valuation of the property.