Opinion
No. C5-00-287.
Filed August 22, 2000.
Appeal from the District Court, Ramsey County, File No. F8972289.
Robin Lee Dietz-Mayfield, (for appellant)
Tracey Ann Galowitz, (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This opinion will be unpublished and may not be cited except as provided by Minn.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UNPUBLISHED OPINION
Appellant Thomas David Hope challenges the district court's September 8, 1998 judgment and decree. Because the district court did not err in: (1) finding that the Susan Delores Hope (trust), Corner Kick escrow proceeds, and Connor House proceeds were nonmarital in nature; (2) its determination regarding the jewelry and the 1992 Volvo; (3) denying permanent spousal maintenance; (4) finding no undue hardship to appellant; and (5) admitting untimely evidence, we affirm in part. Because the district court abused its discretion in failing to issue findings in denying appellant's request for attorney fees, we reverse in part.
Respondent seeks review of the district court's failure to issue findings regarding her request for attorney fees for having to respond to appellant's motion to amend the judgment and decree. Because the district court erred in failing to issue findings as to respondent's request for attorney fees, we reverse in part and remand.
FACTS
On September 9, 1972, appellant and respondent were married. Sometime in the 1950s respondent's father created the Susan Delores Arend Trust (later named the Susan Delores Hope Trust), naming respondent as the beneficiary. Prior to 1984, the trustee of the trust was Norwest Bank and afterwards, First National Bank of Stillwater (now Firststar Bank) was named the new trustee. However, in 1984 there was a fire at Norwest Bank that destroyed all the trust's records prior to that date. Neither party made financial contributions to the trust during their marriage.
During 1984-85, the parties built the Corner Kick Soccer Building. Appellant, who was working at Sperry Univac at the time, left his job and began to work at Corner Kick. The original cost of the building was $1,104,929 and an addition to the building in 1995-96 cost $430,000. The parties sold Corner Kick on November 30, 1998, netting $952,728.97.
The parties also built a home, known as Connor House, for approximately $400,000. The home was sold on April 27, 1999 for $316,000 and the net proceeds to the parties were $285,651.37. Prior to building this home, the parties jointly owned a home on Matilde Circle in Roseville, which was sold for approximately $145,000.
The parties had a joint checking account and a joint savings account. According to respondent, the savings account was not used for daily expenses, but instead, was used to pay for the construction of Connor House and Corner Kick.
At trial, appellant admitted that his monthly expenses are $2,769 and that given his computer skills, he can earn at least $40,000 annually. He is currently self-employed at THC Consulting, Inc. Appellant states his monthly business expenses are $1,860.
In its September 8, 1999 judgment and decree, the district court: (1) found that respondent's trust, Connor House, and Corner Kick were nonmarital assets; (2) awarded respondent the 1998 Subaru and appellant the 1995 Suburban; (3) awarded appellant $57,000 in jewelry; (4) awarded appellant the life insurance policy valued at $15,000; (5) denied appellant's request for spousal maintenance and both parties' requests for attorney fees; (6) divided the remaining marital property equally between the parties, awarding appellant $47,306.50 to equalize the marital assets distribution; and (7) found there was no undue hardship to appellant in the distribution of nonmarital assets.
DECISION
I.
Appellant claims that the district court erred in concluding that the Susan Delores Hope Trust, Corner Kick, and Connor House were nonmarital in nature.
Our review of the [district] court's conclusions in dissolution cases is limited. Whether property is marital or nonmarital is a question of law, but a reviewing court must defer to the [district] court's underlying findings of fact. However, if we are "left with the definite and firm conviction that a mistake has been made," we may find the [district] court's decision to be clearly erroneous, notwithstanding the existence of evidence to support such findings.
Olsen v. Olsen, 562 N.W.2d 797, 799-800 (Minn. 1997) (citation and quotation omitted). An appellate court will not disturb a district court's determination that an interest was derived from nonmarital sources unless it is clearly erroneous. See Kottke v. Kottke, 353 N.W.2d 633, 636 (Minn.App. 1984), review denied (Minn. Dec. 20, 1984).
Trust
Appellant claims the trust is nonmarital in nature because the earliest evidence of the existence of the trust is from 1983, when the parties were already married. We disagree. A capital gains and losses report generated by Norwest Bank shows that it was the trustee of the trust account prior to 1984 and that on January 2, 1972, it acquired Faberge stock for the trust. Because the parties were not married until September 9, 1972, this report is evidence that the trust was in existence prior to the marriage and is, therefore, a nonmarital asset. Minn. Stat. § 518.54, subd. 5 (1998) ("`Nonmarital property' means property real or personal, acquired by either spouse before, during, or after the existence of their marriage, which * * * is acquired before the marriage.").
In the alternative, appellant argues that even if the trust existed prior to the marriage, it lost its nonmarital nature because he actively participated in the decision making regarding the trust. While the record demonstrates that the value of respondent's trust account increased throughout the years respondent was married to appellant, there is insufficient evidence in the record to support appellant's claim that his advice to respondent increased the value of the trust. In fact, there is no evidence in the record regarding what type of advice, if any, appellant gave to respondent or how much of that advice was in fact relied upon in managing trust assets.
Appellant also contends the parties commingled funds from the trust with funds in their joint accounts, thereby making the trust marital in nature. See Haaland v. Haaland, 392 N.W.2d 268, 272 (Minn.App. 1986) (stating that nonmarital nature of a trust is lost where the trust account funds are commingled with funds used for general living expenses). However, there is insufficient evidence in the record to support appellant's claim that trust funds were commingled with general funds.
Because the evidence in the record supports respondent's claim that the trust existed for respondent's benefit prior to her marriage to appellant, the district court's determination that the trust was nonmarital in nature was not clearly erroneous.
Corner Kick Connor House
Next, appellant claims that the district court erred in concluding that the proceeds from the sale of the Corner Kick and Connor House were nonmarital assets. Property acquired by either spouse during a marriage is presumed to be marital. Minn. Stat. § 518.54, subd. 5. This presumption may be overcome by showing that the property is nonmarital. Id. Nonmarital property includes property acquired by either spouse before their marriage which is acquired in exchange for property or used to increase the value of property acquired during the marriage. Id. A spouse claiming that property is nonmarital must prove the necessary facts by preponderance of the evidence. Kottke, 353 N.W.2d at 636.
Appellant claims the district court erred in finding that respondent had a nonmarital interest in Corner Kick. Specifically, appellant contends that because there is no evidence to verify that the land was purchased with trust funds, respondent has not met her burden of tracing the asset. We disagree. This court has consistently found that "strict tracing" is not necessary, but instead, the party only needs to show by a preponderance of the evidence that the asset was acquired in exchange for nonmarital property. Carrick v. Carrick, 569 N.W.2d 407, 413 (Minn.App. 1997), (citing Doering v. Doering, 385 N.W.2d 387, 390 (Minn.App. 1986)); Accord Kottke, 353 N.W.2d at 636.
Here, respondent testified that she used her trust fund to purchase and construct Corner Kick, as well as Connor House. According to respondent, payments were made directly from the trust's principal or from trust payments deposited into a savings account used exclusively for paying for the construction of Corner Kick and Connor House. In fact, respondent denied that any everyday expenses were paid from this account. Respondent also provided a copy of her savings account register, which shows that large amounts of money were transferred from her trust account into the savings account. Based on the record as a whole, there is sufficient evidence in the record to support the district court's finding that Corner Kick was a nonmarital asset.
Relying on Nardini v. Nardini, 414 N.W.2d 184, 192 (Minn. 1987) appellant claims that any nonmarital nature of the trust fund was lost because his expertise, education, and talent were used for the development and success of Corner Kick. In Nardini, this court held that where a spouse increases the value of nonmarital property during the marriage, the increase in value is considered marital property. Id. at 195. (noting that while husband invested $2,500 in the business in 1949, the record indicated that over the course of 31 years both parties reinvested money into the business that could have otherwise been used to acquire other marital property). However, unlike in Nardini, there is no evidence in the record, other than appellant's own testimony, indicating to what extent his services increased the value of Corner Kick. While there is no dispute that appellant did work at Corner Kick, there is insufficient evidence in the record indicating to what extent his services and expertise increased the value of Corner Kick, if at all.
Appellant also claims that the district court erred in finding that Connor House was a nonmarital asset. Appellant claims that prior to purchasing Connor House, the parties sold their home on Matilde Circle, which was a marital asset, for $145,000. According to appellant, they placed the proceeds from the sale into their joint account and used that money to build Connor House and, therefore, a portion of the proceeds from the sale of Connor House is marital property. We disagree. There is no evidence in the record indicating that the proceeds of the Matilde Circle house were used for the Connor House. Appellant is not sure whether the money was placed into the checking account, which was used for daily expenses, or the savings account, which according to respondent, was used for the construction of Corner Kick and Connor House.
II.
Appellant contends the district court erroneously awarded the jewelry and the 1992 Volvo to respondent. Because respondent concedes the jewelry belongs to appellant and is willing and able to transfer the jewelry to him, we need not address this issue.
Appellant also claims respondent dissipated a marital asset, the parties' 1992 Volvo, and even though appellant asked for the value of the car, the district court failed to address the issue. Respondent sold the 1992 Volvo for $14,000 and bought a 1998 Subaru for $20,000. Respondent testified that she used the $14,000, together with funds from her trust account, to purchase the Subaru, which she was later awarded by the district court. While the district court did not specifically refer to the Volvo in its findings, because the proceeds from the sale of the Volvo were used to purchase the Subaru and the district court made findings as to the allocation of the Subaru, it necessarily made findings regarding who would receive the value of the Volvo. Because the 1992 Volvo can be traced to the 1998 Subaru, it cannot be said that the district court did not address the allocation of the Volvo.
III.
Appellant contends the district court erred in denying his request for permanent spousal maintenance. "The standard of review on appeal from a [district] court's determination of a maintenance award is whether the [district] court abused the wide discretion accorded to it." Erlandson v. Erlandson, 318 N.W.2d 36, 38 (Minn. 1982). We examine the district court's discretion in light of the controlling statutory guidelines contained in Minn. Stat. § 518.552. Id. "There must be a clearly erroneous conclusion that is against logic and the facts on record before this court will find that the district court abused its discretion." Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984) (citation omitted).
Minn. Stat. § 518.552, subd. 1 (1998), provides in part:
[T]he court may grant a maintenance order for either spouse if it finds that the spouse seeking maintenance:
(a) lacks sufficient property, including martial property apportioned to the spouse, to provide for reasonable needs of the spouse considering the standard of living established during the marriage, especially, but not limited to, a period of training or education, or
(b) is unable to provide adequate self-support, after considering the standard of living established during the marriage and all relevant circumstances, through appropriate employment, or is the custodian of a child whose condition or circumstances make it appropriate that the custodian not be required to seek employment outside the home.
Appellant claims he is entitled to spousal maintenance because he lacks sufficient property to provide for his reasonable needs. Specifically, appellant contends the district court failed to consider: (1) that he currently does not have a $40,000 job and his sole income is from THC Consulting; (2) his business expenses of $1,860 per month; (3) the facts regarding his retirement; and (4) the previous lifestyle the parties enjoyed.
While appellant currently does not have a job paying $40,000, this court has held that future income of the parties can be considered when determining spousal maintenance. Fulmer v. Fulmer, 594 N.W.2d 210, 213 (Minn.App. 1999) (stating that district courts "may use earning capacity to measure income if its either impracticable to determine an obligor's actual income or the obligor's income is unjustifiably self-limited."); Warwick v. Warwick, 438 N.W.2d 673, 677 (Minn.App. 1989) (acknowledging that a party's earning capacity can be considered in determining spousal maintenance).
Appellant relies on Reif v. Reif, 426 N.W.2d 227, 231 (Minn.App. 1988), and Nardini v. Nardini, 414 N.W.2d 184, 197 (Minn. 1987), for the proposition that because future earnings are uncertain, they cannot be considered when determining spousal maintenance. However, Reif and Nardini are distinguishable because in those cases, the spouses had not worked in many years and had no immediate skills and, therefore, there was no evidence they could compete in the current market. See Nardini, 414 N.W.2d at 197 (finding that because wife had been out of the job market for 29 years, only had a high school diploma, and lacked marketable skills, future income was speculative); Reif, 426 N.W.2d at 231 (finding that wife had been out of the work force for 23 years and there was no evidence on the availability of nursing positions in the area or what she could earn if she obtained a position).
Here, in contrast, appellant has admitted to having marketable skills and has always been employed. He testified that he could find a job earning $40,000 and possibly more if he got further training. In addition, because he is currently self-employed, the record demonstrates that his actual income cannot be easily determined. See Fulmer, 594 N.W.2d at 213 (stating that future income is reliable where its difficult to determine actual income). Accordingly, the district court's finding that appellant could earn $40,000 annually was not clearly erroneous.
Appellant also claims that if his business expenses were considered, which the district court failed to do, his annual expenses amount to more than $55,000, exceeding even his potential income. We disagree. Because the $40,000 income attributed to appellant is not generated from his business, the business expenses cannot be considered for purposes of determining monthly expenses. See Bartl v. Bartl, 497 N.W.2d 295, 300 (Minn.App. 1993) (allowing consideration of business expenses where the business generated the income). Therefore, the district court's finding that appellant's expenses were only $2,769 was not clearly erroneous.
Next, appellant contends that the district court's finding regarding his retirement was not supported by the evidence in the record. Appellant claims that: (1) he cashed in his retirement account from Sperry Univac when the parties started operating Corner Kick; and (2) the parties planned on using respondent's trust income and the income from Corner Kick as their retirement income. Because there is insufficient evidence in the record to support appellant's claims, we conclude that the district court's findings regarding appellant's retirement were not clearly erroneous.
Finally, appellant claims that the district court did not adequately consider the parties' lifestyles. It is well-established law that the standard of living of the parties must be considered. Minn. Stat. § 518.552, subd. 1(b); Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn.App. 1998), review denied (Minn. Feb. 18, 1999). There was unrefuted testimony that the parties: (1) ate lunch out every day and dined out at least five times a week; (2) vacationed in New Zealand, Hawaii, Great Britain, on the QEII's transatlantic cruise, and on cruises to the Caribbean, Alaska, and on the Rhine River; (3) they flew first class; and (4) owned a lake home and boats.
However, the district court found that
while the parties enjoyed a standard of living which allowed them sporadic vacations and newer motor vehicles, the parties did not have a lavish lifestyle during the marriage. The parties were able to live debt-free due to the income from the [r]espondent's nonmarital trust; however, the parties were not members of private clubs, did not own extravagant motor vehicles or spend money on expensive clothing, jewelry and other such items.
There is evidence to support the district court's findings. Therefore, we cannot conclude those findings were clearly erroneous.
Not only did the district court not err in finding that appellant could earn $40,000 and had monthly expenses amounting to $2,769, but these findings, when considered with the other evidence in the record, support the district court's denial of permanent spousal maintenance. The district court awarded appellant the following marital assets: (1) the 1995 Suburban, valued at $20,000; (2) half the parties' personal property; (3) a life insurance policy with a cash value of $15,000; and (4) $57,000 in jewelry. In addition, the court awarded appellant $47,306.50 to equalize the distribution of marital assets between the parties. In light of the evidence in the record and the district court's broad discretion in awarding or denying spousal maintenance, we conclude the district court did not clearly err in denying appellant's request for permanent spousal maintenance.
IV.
Appellant contends the district court erred in concluding he suffered no undue hardship. Minn. Stat. § 518.58, subd. 2 (1998), allows a court to award up to one-half of a spouse's nonmarital property to the other spouse if necessary to prevent unfair hardship. Awards of nonmarital property are left to the discretion of the district court. Doering, 385 N.W.2d at 391. "A very severe disparity between the parties is required to sustain a finding of unfair hardship necessary to apportion nonmarital property." Ward v. Ward, 453 N.W.2d 729, 733 (Minn.App. 1990), review denied (Minn. June 6, 1990).
Appellant argues that he suffered undue hardship as a result of the district court's distribution of assets. A district court can apportion nonmarital property if it finds unfair hardship
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, and opportunity for future acquisition of capital assets and income of each party.
Minn. Stat. § 518.58, subd. 2.
Here, the evidence in the record shows: (1) appellant is 49 years old and capable of working; (2) there is no evidence that either party is less healthy than the other; (3) appellant, who has skills in the area of computers and has admitted that he can find a job that pays at least $40,000, is employable; (4) appellant's monthly expenses are $2,769; (5) there is no evidence either party has greater liabilities than the other; and (6) appellant was awarded other assets that he can use to support himself. See Minn. Stat. § 518.58, subd. 2 (listing factors considered when determining the existence of undue hardship).
While the parties were married for 27 years, the evidence, when considered in light of statutory factors, supports the district court's conclusion that appellant did not suffer undue hardship as a result of the distribution of assets.
V.
Appellant claims that the district court erred in admitting previously undisclosed evidence. Absent an erroneous interpretation of the law or an abuse of discretion, the question of whether to admit or exclude evidence is within the district court's discretion. Kroning v. State Farm Auto. Ins. Co., 567 N.W.2d 42, 45-46 (Minn. 1997). Appellant claims that because the district court set a discovery deadline in a pretrial order, it was clear error to act contrary to the order. We disagree.
Respondent sought to introduce recently discovered documents that further supported her claim that the trust was in existence prior to her marriage to appellant. Because appellant claimed that the trust was a marital asset, these documents were important because they provided further evidence in determining whether the trust existed prior to the marriage, making it a nonmarital asset. Given the district court's broad discretion in admitting evidence, we cannot conclude that the district court abused its discretion in denying appellant's motion in limine attempting to exclude the evidence.
VI.
Appellant claims the district court abused its discretion by denying both parties' requests for attorney fees in its September 8, 1999 judgment and decree without issuing specific findings. Similarly, respondent claims the district court abused its discretion in its January 13, 2000 order when it failed to issue any findings regarding her request for $960 in attorney fees for having to respond to appellant's motion to amend the judgment and decree. Respondent also requests attorney fees on appeal. "A refusal to award attorney fees will not be reversed absent a clear abuse of * * * discretion." Kitchar v. Kitchar, 533 N.W.2d 97, 104 (Minn.App. 1996), review denied (Minn. Oct. 29, 1996).
This court has held that a district court's decision regarding the grant or denial of attorney fees must include specific findings. See Richards v. Richards, 472 N.W.2d 162, 166 (Minn.App. 1991) (holding that while the district court's general findings regarding the incomes and expenses of the parties for purposes of determining maintenance could be sufficient to support its decision regarding attorney fees, Minn. Stat. § 518.14 mandates that a decision regarding attorney fees be accompanied by specific findings). Accordingly, the district court abused its discretion in failing to issue specific findings regarding both appellant's and respondent's requests for attorney fees, and we remand for the issuance of such findings.
Respondent also asks for attorney fees on appeal. "A party seeking attorneys' fees on appeal shall submit such a request by motion under Rule 127." Minn.R.Civ.App.P. 139.06. Because respondent failed to file a motion for attorney fees on appeal pursuant to Rule 127, she is not entitled to attorney fees on appeal at this time.