Opinion
No. C0-02-332.
Filed December 17, 2002.
Appeal from the District Court, Dakota County, File No. FX0015733.
Kathryn A. Graves, (for respondent)
Elizabeth A. Cloutier, (for appellant)
Considered and decided by Shumaker, Presiding Judge, Schumacher, 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This opinion will be unpublished and may not be cited except as provided by Minn.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UNPUBLISHED OPINION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 the judgment dissolving the parties' marriage, appellant-wife argues that the district court abused its discretion by (a) making an inequitable division of property and debt based on appellant's alleged marital misconduct in not paying taxes, allowing the home to fall into foreclosure, and not cooperating with respondent-husband in having non-homestead real property sold; (b) awarding appellant the marital homestead on the condition that she pay off certain debts within 60 days of entry of the judgment; and (c) awarding respondent-husband attorney fees. Respondent has also brought a motion seeking attorney fees on appeal and damages arising out of preparing the homestead for sale. We affirm the district court's property distribution and award of attorney fees. We deny respondent's motion on appeal for attorney fees and damages.
FACTS
Appellant-wife and respondent-husband were married in August 1994 and separated on June 1, 1999. Appellant is currently 32 years old and respondent is 38 years old. There are no children born of this marriage, and the parties agree that respondent is not the biological father of appellant's child, born in February 2001.
Respondent was employed at the time of separation earning approximately $45,000 per year. Appellant was employed at the time of separation earning in excess of $100,000 per year as an independent computer consultant during 1997, 1998, and 1999. Appellant lost her primary contract and has been unemployed since January 2000. The district court found that she has a college degree, is in good health, and can financially support herself.
After the separation, appellant continued to reside in the marital homestead that the parties had purchased in December 1994. She agreed to continue to pay the mortgage and other costs associated with it. In July 1999, appellant paid respondent $5,000 for one-third of his equity in the homestead. Appellant stopped paying the mortgage in July 2000, but never informed respondent or the court. The balance on the mortgage when she stopped paying was approximately $125,000.
At the time of separation, the parties also had a VISA debt of over $7,000 and an IRS debt of over $28,000 for unpaid 1997 taxes, and appellant agreed to make payments on these debts. She did not, however, pay off these debts and the IRS debt had risen as a result of interest and penalties to over $30,500 by the time this appeal was filed.
Respondent filed his petition for dissolution in November 2000.
Appellant received two mortgage default notices in December 2000 and, in January 2001, a notice of foreclosure sale. She never informed respondent or the district court of these notices. In February 2001, the district court issued a temporary order and, on the basis that the sale was premature, denied respondent's motion to sell the homestead. The homestead was sold at a foreclosure sale in March 2001. The court and respondent did not learn of the foreclosure and sheriff's sale until the dissolution hearing in early July 2001.
As a result of the July 2001 hearing, the record reflects the parties' verbal agreement that (1) appellant would have until July 13, 2001, to attempt to arrange new financing for the mortgage or to confirm that she had sufficient inheritance funds (from the estate of her recently deceased grandmother) to pay the balance of the mortgage before the expiration on September 7, 2001, of the redemption period; (2) respondent "would give [appellant] a quitclaim deed for the property so that she can arrange for the new financing" and if she was unable to obtain financing or proof of financing, the homestead would be sold; (3) the fair market value of the home was $165,000; (4) respondent would sell his non-marital IBM stock and apply any proceeds to pay off a vehicle debt, and VISA debt if any funds remained; (5) they would sell non-homestead property located in Grant County (the "Herman" property, listed only in appellant's name) and any proceeds would be applied to the parties' IRS debt; and (6) appellant would change her surname. Based on this verbal agreement, the district court entered the initial judgment in July 2001, and reserved for trial the issues of distribution of real property, personal property, and debt.
Appellant, however, failed to provide proof of financing by July 13 and respondent again asked the court to order the marital homestead sold and to place some of appellant's inheritance funds into trust. The court thus ordered appellant to give respondent a written commitment by August 6, 2001, that she had secured a mortgage and that she had sufficient funds from her inheritance to close on the new mortgage. Additionally, the court ordered that not less than $15,000 of appellant's inheritance funds be placed in trust. Appellant again failed to provide written proof of financing and also failed to place $15,000 in trust. But appellant was able to close on September 5, 2001, after paying a mortgage broker to assist her in obtaining new financing. As a result, appellant redeemed the mortgage with loan for $110,000 and used approximately $42,000 of her inheritance funds to pay the balance owing on the original mortgage.
At trial, the parties testified as to the values of their marital debts and assets. In the amended judgment, the district court determined values for the parties' assets and debts and distributed the property accordingly. Notably, the district court awarded appellant the homestead on the condition that she would pay her portion of certain debts within 60 days of entry of the judgment. The court credited appellant with $15,000 representing her pay down of the first mortgage from $125,000 to $110,000, but found her solely responsible as a result of her own negligence for approximately $27,000 of costs associated with redeeming the mortgage. The court stated that it would have ordered the home sold in February 2001 had it known at that time of the mortgage default and foreclosure proceedings. The district court also awarded to each of the parties personal property, including vehicles, miscellaneous household items and furniture, bank accounts, retirement accounts, and other financial accounts. In the final property distribution, the difference between the net assets awarded to each party was less than $6,000.
DECISION I
The district court has broad discretion in dividing marital property. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). For this court to conclude that the district court abused its discretion, the district court's findings of fact must be "against logic and the facts on record." Id. (citation omitted). On review, this court must affirm the district court's property distribution "if it had an acceptable basis in fact and principle even though this court may have taken a different approach." Servin v. Servin, 345 N.W.2d 754, 758 (Minn. 1984). The record must be reviewed in the light most favorable to the district court's findings. Lossing v. Lossing, 403 N.W.2d 688, 690 (Minn.App. 1987).
In this case, appellant argues that the district court abused its discretion because the property distribution was improperly based on marital misconduct, lacked consideration of the required statutory factors, and was inequitable.
Under Minnesota law, the district court must make a "just and equitable division of marital property * * * without regard to marital misconduct." Minn. Stat. § 518.58, subd. 1 (2000). A property division need not be mathematically equal as long as it is just and equitable. Vinnes v. Vinnes, 384 N.W.2d 589, 592 (Minn.App. 1986). Additionally, the district court must make findings that are based on
all relevant factors including the length of the marriage, any prior marriage of a party, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, needs, opportunity for future acquisition of capital assets, and income of each party.
Id. Detailed findings are not required in property division cases. Id. The findings, however, must indicate the district court's rationale in reaching its property award. Dick v. Dick, 438 N.W.2d 435, 437 (Minn.App. 1989). Although no single statutory factor is dispositive, the court must consider the ability of one spouse to meet his or her financial needs balanced against the financial resources of the other. Erlandson v. Erlandson, 318 N.W.2d 36, 39-40 (Minn. 1982).
First, the district court did not base its decision on any marital misconduct by wife. Marital misconduct, as this court has applied the statute, refers to transgressions by one party during the course of the marriage. See, e.g., Stassen v. Stassen, 351 N.W.2d 20, 24 (Minn.App. 1984) (stating that a court may not base its property division upon a finding of fault, and "fault includes a finding that one spouse was a habitual consumer of alcoholic beverages").
Here, the district court considered appellant's failure to pay the mortgage that resulted in foreclosure proceedings, her repeated refusals to sell the homestead, and her concealment of the mortgage foreclosure proceedings from the court and respondent for over seven months and until the redemption period had almost expired. This conduct further encumbered the parties' homestead and depreciated the equity that the parties had in the marital homestead. Although appellant used approximately $42,000 of her own non-marital funds from her inheritance to redeem the mortgage, the record supports that approximately $27,000 of this amount can be attributed to her failure to maintain the mortgage payments after the parties separated.
Under Minnesota law, a court may consider a party's conduct during dissolution proceedings to the extent that the conduct results in the encumbrance of marital property:
During the pendency of a marriage dissolution, * * * each party owes a fiduciary duty to the other for any * * * loss derived by the party, without the consent of the other, from a transaction * * * by the party of the marital assets. If the court finds that a party to a marriage, without consent of the other party, has * * * encumbered * * * marital assets, * * * the court shall compensate the other party by placing both parties in the same position that they would have been in had the * * * encumbrance * * * not occurred.
Minn. Stat. § 518.58, subd. 1a (2000). The district court made clear findings on the marital value of the homestead, the mortgage amounts before and after redemption, and the costs associated with foreclosure and redemption. But for the appellant's failure to pay the mortgage, her concealment of the foreclosure, and repeated refusals to sell the home, the parties would not have incurred the expenses associated with redeeming the mortgage. Accordingly, the district court found appellant to be solely responsible for the costs associated with redemption. The amount she paid for the mortgage principal and interest was money she agreed to pay after the parties separated.
Second, in reviewing the property distribution as a whole, we conclude that it is just and equitable. Although the district court awarded much of the marital debt to appellant, of which the vast majority was the homestead debt, it also awarded her the homestead. Despite appellant's argument that the district court ignored her testimony regarding the homestead, Herman property, IRS debt, miscellaneous debt payments, and personal property distribution, we give due regard to the district court's opportunity to judge the credibility of the witnesses. See Minn.R.Civ.P. 52.01.
Appellant argues that the court inequitably apportioned fault to her because she failed to pay the parties' 1997 income tax debt and the property taxes on the Herman property. But the district court's findings do not indicate any type of fault assessment with regard to the IRS debt distribution and the allocation is equitable considering the parties' respective 1997 earnings. Appellant's failure to pay the Herman property taxes relates to her financial conduct during the course of the dissolution proceedings. In light of the discretion afforded the district court, we cannot say that the court abused its discretion with regard to the distribution of the IRS debt and Herman property.
Finally, although the district court did not specifically make each finding correspond to each relevant factor outlined in the statute on marital property division, Minn. Stat. § 518.58, subd. 1, the district court's findings overall indicate its rationale in determining the marital property award and the various factors are generally addressed in the findings. See Dick, 438 N.W.2d at 437 (findings must indicate district court's rational in reaching its property award). For example, the district court found that the marriage was of short duration, the parties were young and healthy, both parties were capable of supporting themselves in the future, and appellant anticipated receiving additional inheritance funds. Based on the record and the district court's findings, we find no abuse of discretion in the property award.
II
Appellant argues that the district court abused its discretion because, in the amended judgment (dated December 31, 2001), it awarded the homestead on the condition that she pay her portion of the IRS and VISA debts within 60 days of entry of the judgment. Appellant argues that, in the initial judgment (dated July 18, 2001), the district court awarded her the homestead without conditions and then erred when it subsequently imposed the debt-payment condition.
In July 2001, the district court entered an order dissolving the marriage and reserving all financial matters for trial. Although the parties had agreed and the district court ordered respondent to provide appellant with a quitclaim deed for the marital homestead, this transfer was to allow appellant to arrange financing for the mortgage redemption. In light of the district court's broad discretion in the property award, and the rationale provided, we conclude that the district court did not abuse its discretion by imposing the condition. Nor do we find any Minnesota caselaw restricting the district court from imposing such a conditional property award.
III
Appellant also argues that the district court abused its discretion in requiring her to pay for $3,000 of respondent's attorney fees and costs.
Minn. Stat. § 518.14, subd. 1 (2000), authorizes the district court to award attorney fees "against a party who unreasonably contributes to the length or expense of [a] proceeding." Conduct-based attorney fees must be based on behavior that occurred during the litigation process. Geske v. Marcolina, 624 N.W.2d 813, 819 (Minn.App. 2001). The party moving for conduct-based fees has the burden of showing that the other party's conduct contributed to the length of the proceeding. Id. at 818. A district court's attorney fee award will be reversed only for an abuse of discretion. Haefele v. Haefele, 621 N.W.2d 758, 767 (Minn.App. 2001), review denied (Minn. Feb. 21, 2001).
The district court found that appellant's actions unreasonably contributed to the length and expense of the proceeding. The court found that she refused to participate in good faith settlement discussions with respondent and to address the payment of the parties' marital debts; that she withheld her default on the homestead mortgage and the subsequent foreclosure proceedings and sheriff's sale; that she failed to honor the parties' agreements regarding the redemption and sale of the Herman property; that she failed to comply with the court's order to place $15,000 of her inheritance funds into a trust account; and that she did not promptly provide respondent with closing documents from the mortgage redemption as required by the court order. On these facts, supported by the record, we conclude that the district court did not abuse its discretion in awarding respondent a portion of his attorney fees.
IV
Respondent has moved for an award of appellate attorney fees and damages under Minn.R.Civ.App.P. 138, arguing that the appeal was brought in bad faith and solely for delay. Notwithstanding our affirmance of the district court's award of attorney fees, we are not convinced that this appeal was brought solely to delay proceedings. Respondent's motion for damages is related to his costs associated with cleaning up the house and readying it for sale and does not arise out of any delay caused by this appeal, within the meaning of rule 138. As the prevailing party on appeal, respondent may tax costs and disbursements in accordance with Minn.R.Civ.App.P. 139.01 — .03. Respondent's motion for attorney fees and damages is, otherwise, denied.