Opinion
No. C0-02-2016.
Filed May 20, 2003.
Appeal from the Olmsted County District Court, File No. F4992823.
Lawrence Downing, Lawrence Downing Associates, (for appellant)
Steven K. Murakami, Bagniefski Murakami, P.A., (for respondent)
Considered and decided by Stoneburner, Presiding Judge, Lansing, Judge, and Klaphake, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
On appeal from denial of a motion to reopen a dissolution judgment for fraud under Minn. Stat. § 518.145, subd. 2(3) (2002), appellant Kathleen Ryan argues that the district court abused its discretion by refusing to reopen the judgment or, in the alternative, that she was entitled to an evidentiary hearing on the issue of fraud. Because Ryan presented sufficient evidence to raise a material fact question regarding whether respondent Steven Clark committed fraud under Minn. Stat. § 518.145, subd. 2(3), we reverse and remand to the district court for a full evidentiary hearing.
FACTS
Immediately after appellant Kathleen Ryan entered into a stipulation on the record resolving this dissolution action, she told her attorney that she had concerns and reservations about the stipulation and she had felt that she could not protest the stipulation terms in court. Her attorney withdrew. The district court signed findings of fact, conclusions of law, and a judgment prepared by respondent Steven Clark's attorney over the objection of Ryan's newly hired attorney. Ryan's attorney then moved to reopen the judgment under Minn. Stat. § 518.145, subd. 2(3). Later, Ryan's attorney filed a supplemental motion with the court, supported by depositions and numerous affidavits attached to an affidavit by Ryan's attorney. The district court denied the initial motion on the merits and the supplemental motion because it was untimely. Ryan appealed. This court concluded that the district court had applied the wrong standard in considering the original motion and remanded for reconsideration under the appropriate standard. We also remanded an issue regarding need-based attorney fees, but affirmed the denial of the supplemental motion as untimely. Clark v. Clark, 642 N.W.2d 459 (Minn.App. 2002).
At the hearing on remand, Ryan resubmitted the depositions and her attorney's affidavit and attachments. Clark objected, asserting that, once again, the submission was untimely. The district court was unsure whether those documents could be considered on remand. Ryan's attorney argued that the documents could be properly considered. Clark's attorney acknowledged the district court's authority to consider the documents, but argued that they should be rejected as untimely. The district court declined to rule on the issue at the time of the hearing and did not directly address the issue in its subsequent order.
After hearing the argument of counsel, the court issued an order finding that appellant's "evidence, including affidavits, is not sufficient to raise the factual issue as to fraud," and that neither party has the ability to pay the other's attorney fees. The district court denied Ryan's motion for an evidentiary hearing on the issue of fraud, and denied each party's motion for need-based attorney fees. This appeal followed.
DECISION
Clark has moved to strike Ryan's attorney's affidavit and the depositions submitted to support the motion to reopen, and all references to those documents, contending that they were deemed untimely and are not part of the record. The district court's order after remand, however, implies that the district court considered affidavits submitted by Ryan. But the order is silent about the depositions. Because the district court did not grant Clark's motion to exclude this material, we conclude that the court implicitly denied the motion and that the material is part of the record. Clark's motion to strike is, therefore, denied.
Ryan has moved to strike references in Clark's brief and appendix to settlement discussions, mediation proceedings, and matters not within the personal knowledge of Clark's attorney. Because those references are not properly part of the record, we grant Ryan's motion to strike.
A court's decision whether to vacate a judgment will be upheld unless the court abused its discretion, and the findings as to whether the judgment was prompted by mistake or fraud will not be set aside unless clearly erroneous. Hestekin v. Hestekin, 587 N.W.2d 308, 310 (Minn.App. 1998).
For purposes of reopening a dissolution judgment for fraud under Minn. Stat. § 518.145, subd. 2(3), fraud includes a party's failure to make full disclosure. Doering v. Doering, 629 N.W.2d 124, 129-30 (Minn.App. 2001), review denied (Minn. Sept. 11, 2001). The appropriate legal standard in this case is ordinary fraud. Id. (stating that in stipulated marital dissolutions, when motion is brought within one year after judgment and contends that a party was defrauded by former spouse's failure to make full and complete disclosure of assets, the appropriate legal standard is ordinary fraud). Because parties to a dissolution have the duty to disclose all assets and liabilities completely and accurately, fraud in the dissolution context does not require an intentional concealment or an affirmative misrepresentation. Sanborn v. Sanborn, 503 N.W.2d 499, 503-04 (Minn.App. 1993), review denied (Minn. Sep. 21, 1993).
A district court may summarily dispose of a fraud claim (i.e., grant summary judgment) "only where there is no genuine issue of material fact in dispute and where a determination of the applicable law will resolve the controversy." Doering, 629 N.W.2d at 130 (Minn.App. 2001) (citing Gaspord v. Washington County Planning Comm'n, 312 Minn. 591, 252 N.W.2d 590 (1977)).
When presented with a motion for summary judgment, the district court may not weigh the evidence. * * * Instead, the district court must view the evidence in the light most favorable to the nonmoving party.
Id. (citations omitted).
The basis of Ryan's fraud claim is Clark's failure to fully and accurately disclose income from scheduling soccer referees and refereeing soccer games. In addition to the duty to disclose inherent in the proceeding, Ryan notes that information and documentation about income from soccer activities was requested in discovery, and that Clark was ordered to provide specific income and expense information.
Clark argues that although he technically failed to formally comply with discovery requests and the court's order compelling discovery, he has fully disclosed all documents in his possession and has, despite some minor discrepancies, been truthful about his income from providing soccer referee services. Clark has continuously asserted that much of the information about his soccer activities was on the computer that has always been in Ryan's possession.
On Schedule C of the parties' 1999 income tax returns, Clark reported gross income from his soccer business as $2,473, expenses of $4,524, and a net loss of $2,051. But Ryan has produced affidavit and deposition evidence that Clark was paid at least $30,698.40 for soccer-referee services provided in 1999. Although Clark asserts that most of this money was paid to others he scheduled to referee games, he has never produced any documentation or specific information that fully and accurately discloses income received for soccer-refereeing service, his expenses, or the amounts he paid out, to whom, for what, and when.
In answers to interrogatories dated April 7, 2000, Clark stated that he is paid between $65 and $90 per game that he referees. In an affidavit dated August 9, 2000, Clark stated "I currently earn $35 per game." Although Clark provided a list of 115 games that he personally refereed after the parties separated, listing mileage and telephone expenses for that period, he has never provided an accounting or documentation of the income he received for those games or any documentation of the rate at which he was paid for those games. Clark has asserted that he is paid $4 per game for scheduling referees. Ryan's evidence indicates that he is paid $10 per game for this service. Again, there is no documentation or full disclosure of income from scheduling referees.
We conclude that Ryan has made a prima facie showing of non-disclosure sufficient to warrant an evidentiary hearing and that the district court's finding to the contrary is clearly erroneous. Much of the dispute between these parties depends on a credibility determination that can only be made by the district court in an evidentiary hearing.
Ryan also alleges that Clark failed to fully and accurately disclose disposition of the funds he withdrew from the parties' tax-deferred account. The record reflects that Clark received a net of $56,164.70 from the liquidated tax-deferred savings plan. Ryan received $5,000, and $24,029.18 remained at the time of the judgment. In an affidavit, Clark states that he paid IBM Credit Union $2,545.73; MBNA America $3,836; SeaFirst Bank Card $1,566.69; Lourdes High School $3,561.50; and Ford Motor Credit $8,732.95 (all marital debts), leaving $6,792.65 unaccounted for. Because the record reflects that the parties received approximately the same amount of this fund and the remainder was accounted for as having been applied to marital debts, the district court did not abuse its discretion by determining that Ryan failed to raise a material fact issue of fraud with regard to this account.
We affirm the district court's determination that Ryan does not have the ability to pay Clark's need-based claim of attorney fees and therefore affirm denial of Clark's claim for attorney fees based on need. Because a determination of Clark's ability to pay need-based fees depends on his actual income, the amount of which is in dispute, we reverse the district court's denial of Ryan's claim for need-based fees and direct the district court to re-determine this claim based on the outcome of the evidentiary hearing. On remand, the court may also consider claims for attorney fees by either party based on conduct because such fees are not controlled by ability to pay. We address the parties' requests for attorney fees on appeal by separate order.