Opinion
No. C6-97-240.
Filed November 18, 1997.
Appeal from the District Court, Washington County, File No. FX943557.
Richard D. Goff, Law Offices of Richard D. Goff, (for Respondent).
Diane Marie Dube, Doris C. McKinnis, (for Appellant).
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
The dissolution of the marriage of appellant-husband Gregory L. Gallion and respondent-wife Nancy R. Gallion required the district court to identify and divide marital property. Under certain circumstances, husband is contractually entitled to a commission if a customer to whom he previously sold an insurance policy renews the policy. The court ruled the renewal commissions to be marital property, and the dissolution judgment divided the parties' property, awarding each party half the renewal commissions earned on policies husband sold during the marriage. The judgment also awarded wife attorney fees and costs. Husband appealed. Wife seeks fees and costs on appeal.
DECISION I.
Husband moves to strike portions of wife's brief, alleging they violate rule 128 by not being neutral, including irrelevant facts, and lacking cites to the record. See Minn.R.Civ.App.P. 128.02, subd. 1(c) (facts in appellant's brief must be stated fairly, as concisely as possible, and include cites to the record); Minn R. Civ. App. P. 128.02, subd. 2 (rule 128.02, subdivision 1, applies to respondent's brief). After reviewing the portions of wife's brief that are in question, we conclude they are not fatally defective.
II.
Husband claims the district court erred by ruling his right to renewal commissions to be marital property rather than income. Whether something is marital property or income is a legal question upon which we do not defer to the district court. Watson v. Watson , 379 N.W.2d 588, 590 (Minn.App. 1985). Here, the district court based its decision, partly, on an unpublished opinion of this court. To the extent the district court did so, it erred as a matter of law. See Minn. Stat. § 480A.08, subd. 3 (1996) (unpublished opinions "are not precedential"); Dynamic Air, Inc. v. Bloch , 502 N.W.2d 796, 800-01 (Minn.App. 1993) (stating that "[t]he legislature has unequivocally provided that unpublished opinions are not precedential[;]" it is "improper" for district courts or parties "to rely on unpublished opinions as finding precedent[;]" and the district court erred "in relying on an unpublished opinion").
The district court also based its holding, in part, on Niroo v. Niroo , 545 A.2d 35, 39 (Md. 1988), which held the right to insurance renewal commissions to be property. We are not bound by foreign decisions. State by Ulland v. International Ass'n of Entrepreneurs of Am. , 527 N.W.2d 133, 136 (Minn.App. 1995), review denied (Minn. Apr. 18, 1995). Niroo , however, is representative of decisions in several states. E.g. , Pangburn v. Pangburn , 731 P.2d 122, 125 (Az.Ct.App. 1986); Bigbie v. Bigbie , 898 P.2d 1271, 1273-74 (Okla. 1995); In re Marriage of Fisher , 939 P.2d 149, 152 (Or.Ct.App. 1997); Freeman v. Freeman , 457 S.E.2d 3, 5-6 (S.C.Ct.App. 1995). Of these states ruling the right to renewal commissions to be property, only Arizona is like Minnesota in that it has adopted the Uniform Marriage and Divorce Act (UMDA). See Ariz. Rev. Stat. Ann. §§ 25-311-25-330, 25-401-25-411 (West. Supp. 1997). Unlike Minnesota, however, Arizona is a community property state. See Cockrill v. Cockrill , 601 P.2d 1334, 1336 (Ariz. 1979) (finding an increase in separate property's value due to party's effort during marriage to be community property); Nelson v. Nelson , 149 Minn. 285, 287, 183 N.W. 354, 355 (1921) (noting that Minnesota is not a community property state); see also Nardini v. Nardini , 414 N.W.2d 184, 191-92 n. 5 (Minn. 1987) (commenting that UMDA uses different property division provisions for community property and non-community property states).
Husband's right to renewal commissions depends on his contract. See Fisher , 939 P.2d at 152 (stressing importance of contract terms). Under certain circumstances, when insurance policies are renewed, husband's contract entitles him to renewal commissions based on one of several formulas in his contract. Husband's status as an independent contractor combined with the periodic nature of insurance renewals, and hence the commissions therefrom, show that the commissions have indicia of income. See Minn. Stat. § 518.54, subd. 6 (1996) (income includes "any form of periodic payment to an individual including * * * payments to an independent contractor"). Indeed, husband's renewal commissions are reported as W-2 income on which income, Medicare, and Social Security taxes are paid and 401(k) contributions and pension benefits are based. Property, however, includes nonvested contract rights, like husband's right to renewal commissions. See Janssen v. Janssen , 331 N.W.2d 752, 754 (Minn. 1983) (a nonvested pension right is "more than a mere expectancy — it [is] a chose in action , a contractual right: a property interest"). Thus, the renewal commissions also bear indicia of property.
The way funds are treated for tax purposes is not dispositive of whether they are income. See County of Morrison on Behalf of Gutzman v. Watland , 448 N.W.2d 71, 74 (Minn.App. 1989) ("[T]ax returns may alone be insufficient to determine income."). Further, husband's claim that the right to renewal commissions cannot be property because they are not saleable, assignable, or transferable is of limited weight. His contract allows him to transfer, assign, or make his renewal commissions payable to a third party with the company's permission. Cf. Niroo , 545 A.2d at 39 (noting the commissions there were "assignable with the prior written consent of the company"). Also, unlike income, which is a periodic payment to an individual, husband's right to renewal commissions does not expire when he dies. Given the terms of husband's contract, we conclude the trial court did not err by ruling husband's right to renewal commissions to be property.
In Rogers v. Rogers , the supreme court stated:
The property acquired during marriage should be limited to that portion of the value of [the business] that is not dependent upon appellant's continued services. To capitalize the earnings of [the business] on the assumption that appellant will continue to contribute his talents and services is, essentially, to capitalize appellant. An award made on this basis would, in effect, give respondent a forced share of appellant's future work.
296 N.W.2d 849, 853 (Minn. 1980). Husband claims that because he must perform various postmarital services to receive renewal commissions, to divide those commissions as marital property would violate Rogers 's prohibition on capitalization of a person. We disagree. The purpose of Roger 's prohibition is to avoid awarding one party "a forced share of [the other party's] future work." Id. Here, because the policies for which the commissions are to be divided were sold during the marriage, the commissions are not solely (or even mostly) the result of husband's "future work," and treating them as property will not violate Rogers . The district court did not err in ruling the property rights in question (i.e., husband's right to renewal commissions) to be marital.
Husband also claims that because his contract includes a one-year noncompete clause, the first year of renewal commissions received after termination of his contract is consideration for the noncompete clause and that under Sweere v. Gilbert-Sweere , 534 N.W.2d 294 (Minn.App. 1995), consideration for the portion of a noncompete clause taking effect after a dissolution is his nonmarital property. Because husband is employed and is not currently restricted by the noncompete clause, we need not address the claim. Similarly, because a trustee collects and distributes the renewal commissions, husband's claim that the present value of the commissions is speculative need not be addressed.
III.
Minnesota law requires a just and equitable, but not necessarily equal, division of marital property. Minn. Stat. § 518.58, subd. 1 (1996); Reynolds v. Reynolds , 498 N.W.2d 266, 270 (Minn.App. 1993). A district court has broad discretion when dividing property, and its rulings will be reversed only when it has clearly abused that discretion. Id. Husband challenges the characterization and valuation of various assets.
A. Wife's Pension
The district court valued wife's pension at $20,155, with a marital interest of $14,900. Husband claims that because wife's pension did not vest until after the parties married, the entire pension is marital property under Minn. Stat. § 518.54, subd. 5 (1996). It is undisputed that (a) wife started working for her employer in 1978; (b) the parties married in 1989; (c) when wife's pension vested in 1990, she received credit for all of the time she had been employed; and (d) the parties separated in 1994. Husband does not explain how the treatment of only two-thirds of wife's pension as marital is inequitable in light of the fact wife accrued credit toward her pension for twice as long before the marriage as she did during the marriage. Cf. Janssen , 331 N.W.2d at 756 (finding marital interest in pension payments over which court retains jurisdiction to be proportional to amount of time pensioner accrued pension benefits during the marriage).
B. Husband's Pension and 401k Plan
The district court valued husband's pension and 401(k) plans based on the credibility of the parties' experts. We defer to these valuations. See Sefkow v. Sefkow , 427 N.W.2d 203, 210 (Minn. 1988) (appellate courts defer to district court credibility determinations). Any claim of arithmetical error should have been brought to the attention of the district court.
C. Princeton Account
The district court charged husband's share of the property distribution with funds from an account at the Princeton Bank that he allegedly dissipated during the marriage. Husband claims this is error because the district court erroneously put the burden of proof on him to show he did not dissipate the funds and because he can be assessed only for funds dissipated during or in contemplation of the dissolution. See Minn. Stat. § 518.58, subd. 1a (1996) (court "shall" compensate a party for another party's dissipation occurring during or in contemplation of dissolution and burden of proving dissipation is on party alleging dissipation). The statute assumes the party alleging dissipation will be provided with the information relevant to the alleged dissipation and have the opportunity to attempt to satisfy the statute. Here, the district court found (a) wife learned of the account in the discovery process; (b) husband failed to respond to "repeated" discovery requests regarding the account; and (c) husband's offer of proof failed to explain how the funds in question were used. Husband cannot complain about a refusal to rule in his favor when his own failure to provide documentation led to the district court's unfavorable ruling. Tuthill v. Tuthill , 399 N.W.2d 230, 232 (Minn.App. 1987); Taflin v. Taflin , 366 N.W.2d 315, 319 (Minn.App. 1985).
D. Ring
Husband claims wife failed to trace her nonmarital interest in a ring because she failed to document her claim. The district court found wife's testimony and exhibits sufficient to award wife a nonmarital interest in the ring and, implicitly, found husband's contrary evidence to be unpersuasive. Under Sefkow , we defer to the district court's resolution of the conflicting evidence. Husband also challenges the ring's valuation. While the ring was appraised at $5,770, the district court's adoption of wife's $2,000 valuation is consistent with case law. See Bury v. Bury , 416 N.W.2d 133, 136 (Minn.App. 1987) (stating that owners of property are "presumptively acquainted with its value" and may testify thereto without foundation).
E. Stock Options
Husband alleges wife concealed certain stock options. Wife denied the options exist but claims that even if they do exist, they are part of her pension and are worth no more than $2,958.50. Given the size of this marital estate, even if the options exist, have been awarded to wife in a de facto manner by not being accounted for in the property distribution, and have the full $5,000 value husband puts on them, the property division would still not be rendered inequitable. See Miller v. Hughes , 259 Minn. 53, 62, 105 N.W.2d 693, 699 (1960) (concluding that district court will not be reversed for error that does not cause substantial harm to complaining party).
IV.
The district court awarded wife $12,000 in conduct-based attorney fees because of husband's request for continuances and his failure to comply with discovery. See Minn. Stat. § 518.14, subd. 1 (1996) (allowing attorney fees awards against parties who "unreasonably" contribute to proceeding's length or expense). Attorney fee awards are discretionary with the district court and will not be disturbed absent an abuse of that discretion. Haasken v. Haasken , 396 N.W.2d 253, 261 (Minn.App. 1986). We cannot say this record compels the conclusion that the district court abused its broad discretion in awarding attorney fees. Wife's additional request for attorney fees on appeal is denied.