Opinion
No. A03-613.
Filed March 23, 2004.
Appeal from Dakota County District Court, File No. FX-91-13052.
Vicki Fagre-Stroetz, (for respondent).
Richard A. Emerick, (for appellant).
Considered and decided by Klaphake, Presiding Judge, Randall, Judge, and Harten, 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This opinion will be unpublished and may not be cited except as provided by Minn.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UNPUBLISHED OPINION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 in this maintenance-modification dispute, appellant-husband argues that the district court (1) abused its discretion when it denied his motion to reduce or eliminate his permanent spousal-maintenance obligation; (2) understated respondent-wife's income; (3) overstated appellant's maintenance arrears; (4) should have granted appellant an evidentiary hearing; and (5) abused its discretion by awarding respondent more than the discovery-related fees respondent sought under Minn. R. Civ. P. 37 and did not otherwise support the award with the required findings. Respondent did not file a brief, so this court ordered that the appeal proceed under Minn. R. Civ. App. P. 142.03. We affirm in part as modified, reverse in part, and remand.
FACTS
Appellant Robert G. Carter and respondent Debra A. Carter separated after nearly 21 years of marriage. The parties had three children together. On March 26, 1991, the parties entered into a marital separation agreement that addressed child-support, spousal-maintenance, and attorney fees among other things. Respondent's attorney prepared the agreement, and appellant chose not to have legal representation. In the separation agreement, the parties agreed that physical and legal custody of their one remaining minor child would be awarded to respondent, appellant would pay $196 per week for child-support, and $437 per week in permanent spousal-maintenance. After the minor child's emancipation, appellant's permanent spousal-maintenance obligation would increase to $600 per week. The separation agreement stated that appellant's gross annual income was approximately $48,000. The separation agreement also stated that respondent made $180 (net) per week and that her job would be eliminated in 1991. The parties' separation agreement was silent on appellant's net income and the parties' monthly living expenses. The district court adopted the parties' separation agreement as its judgment of separation.
On August 31, 1994, appellant moved to reduce or eliminate his permanent spousal-maintenance obligation. Appellant acknowledged that he owed $20,000 for past spousal-maintenance, but claimed that he was "tricked" into signing the separation agreement. After extended negotiations, the parties entered into a stipulation to amend the judgment of separation. Both parties were represented by counsel at this time, and appellant entered into the stipulation against his attorney's advice. In exchange for the stipulation, the parties agreed that respondent would forgive any past arrears for child-support and spousal-maintenance. The stipulation to amend the judgment of separation provided that appellant would pay $950 per month in child-support, $1,050 per month in permanent spousal-maintenance, and the spousal-maintenance would increase to $1,600 per month when the parties' child was emancipated. The stipulation stated that respondent's estimated annual gross income was $18,000 and appellant's estimated annual gross income was $52,000. The stipulation was silent on the parties' net incomes and monthly living expenses. The district court adopted the stipulation as its amended judgment of separation.
Approximately six years later, the parties appeared for a hearing to dissolve the marriage and an appellant's motion for modification of his permanent spousal-maintenance obligation. The district court dissolved the parties' marriage, and reduced appellant's permanent spousal-maintenance obligation to $1,200 per month. The court reasoned that the $1,600 permanent spousal-maintenance obligation was unreasonable and unfair because appellant's expenses had increased and respondent's income had increased.
Appellant again brought a motion seeking to reduce or eliminate his permanent spousal-maintenance obligation because his employment terminated. This was followed by a series of motions including respondent's motion to compel discovery and request for attorney fees. Following several re-scheduled hearings, the parties appeared for a hearing regarding all the then pending motions before the district court.
The district court filed an order directing appellant to pay $13,200 in permanent spousal-maintenance arrears for the months of May 2002 through March 2003. The court also ordered appellant to pay respondent $5,000 in attorney fees and costs for his failure to abide by its prior orders and for unreasonably delaying the proceedings. The district court denied all other motions.
In its memorandum accompanying the order, the district court noted that appellant failed to produce loan documents to support his contention that he borrowed money to start his own business. The court also stated that appellant's claim that his previous employer terminated him was without merit. The district court noted appellant's claim that he only had a net monthly income of $935.25 after paying his claimed $4,263.61 in monthly living expenses. Appellant refused to disclose his new wife's income and her contribution, if any, to his monthly living expenses. The court found that respondent's annual gross income was $27,000, and her monthly living expenses totaled $3,693. Based on an appellant's aggregate wages for the year 1996 through 1999, and the year 2001, the district court found appellant's current net monthly income to be $3,167. The court denied appellant's motion to reduce or eliminate his permanent spousal-maintenance obligation. This appeal follows.
DECISION
1. Maintenance
Appellant argues that the district court erred by denying his motion to reduce or eliminate his permanent spousal-maintenance obligation. Modification of a spousal maintenance award is left to the sound discretion of the district court. Rapacke v. Rapacke, 442 N.W.2d 340, 343 (Minn. App. 1989). A district court abuses its discretion if it resolves the matter in a manner that is against logic and the facts on record. See Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). When modifying a maintenance award, the district court must determine that there has been a significant change in the parties' circumstances and that the change renders the terms of the current maintenance order unfair and unreasonable. Videen v. Peters, 438 N.W.2d 721, 724 (Minn. App. 1989), review denied (Minn. Jun. 21, 1989).
a. Respondent's Income
Appellant argues that the district court erred in calculating respondent's gross income, and thus, this court should remand for an evidentiary addressing his maintenance related issues, among other things. "Findings of fact concerning spousal maintenance must be upheld unless they are clearly erroneous." Gessner v. Gessner, 487 N.W.2d 921, 923 (Minn. App. 1992). In determining spousal maintenance, the district court must consider "the financial resources of the party seeking maintenance . . . and the party's ability to meet needs independently" and "the ability of the spouse from whom maintenance is sought to meet needs while meeting those of the spouse seeking maintenance." Minn. Stat. § 518.552, subd. 2(a), (g). An appellate court will not reverse a district court's determination of net income if it has a reasonable basis in fact. Strauch v. Strauch, 401 N.W.2d 444, 448 (Minn. App. 1987). Minn. Stat. § 518.551, subd. 5b, controlling child support, provides the method in which the district court may determine income of the parties. Although maintenance does not have a specific statute to itself, Minn. Stat. § 518.551, subd. 5b, provides a logical starting point by comparison.
The parties shall timely serve and file documentation of earnings and income. . . . Documentation of earnings and income also includes, but is not limited to, pay stubs for the most recent three months, employer statements, or statement of receipts and expenses if self-employed. Documentation of earnings and income also includes copies of each parent's most recent federal tax returns, including W-2 forms, 1099 forms, unemployment benefits statements, workers' compensation statements, and all other documents evidencing income as received that provide verification of income over a longer period.
Appellant argues that the district court understated respondent's annual gross income. The district court determined that respondent's annual gross income was $27,000, and her monthly expenses were $3,693. The record suggests that respondent's hourly wage is $16.40, which would give her an annual gross income of $34,000, if she worked full time. Respondent testified that she did work 40 hours per week. The district court did not explain how it arrived at its finding that respondent's net income was $1,571. How this figure was calculated and how it is otherwise supported by the record is unclear. It is necessary for the district court to revisit its spousal-maintenance modification to make a finding of respondent's current net monthly income. See Stich v. Stich, 435 N.W.2d 52, 53 (Minn. 1989) (stating that "[e]ffective appellate review . . . is possible only when the trial court has issued sufficiently detailed findings of fact to demonstrate its consideration of all factors relevant to an award of permanent spousal maintenance."). Because the record is inconsistent, and because the basis for the district court's finding is unclear, we remand to the district court to determine respondent's current net income.
b. Appellant's Income
Appellant claims that his net monthly income is $950, substantially less than the district court's finding. The district court found in pertinent part that:
In the 2001 Order, the Court found [appellant's] gross income averaged $56,400 for the years 1996 to 1999. [Appellant's] adjusted gross income for 2001 was $57,664 (he paid $13,873 in maintenance) for an average over the five-year period of approximately $57,000, or $4,750 per month. It is reasonable to set [appellant's] net monthly income at $3,167, or two-thirds of $4,750.
The district court's rejection of appellant's claim of a $950 net monthly income shows that the district court found appellant's claimed net income not to be credible. Appellate courts defer to district court credibility determinations. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988). Here, however, in finding appellant's net monthly income, the district court did not rely on appellant's current financial information. We remand to the district court for a finding of appellant's current net income.
c. Outstanding Spousal-Maintenance
Appellant argues that the district court overstated his maintenance arrears by $1,600 because the district court failed to credit him for a $600 payment and two $500 payments he made to respondent in partial satisfaction of his unpaid spousal-maintenance. In papers filed with the district court, both respondent and her attorney recognize that appellant has paid the $1,600 in question. Therefore, we modify the portion of the district court's order to reduce appellant's outstanding spousal-maintenance arrears from $13,200 to $11,600.
d. Unfair and Unreasonable
At the time of the parties' separation agreement, appellant's annual gross income was $48,000. Appellant was entitled to deduct income taxes and certain other amounts from his gross income. Cf. Minn. Stat. § 518.551, subd. 5(b) (defining net income for purposes of child support). Assuming deductions totaling 25% of appellant's gross annual income, appellant would have approximately $36,000 a year for child support and spousal-maintenance payments. The separation agreement provided that appellant pay $32,916 a year in child support and spousal-maintenance, with a provision that once child support was gone, appellant would pay maintenance of $600 per week or $31,200 a year. This was an unfair and unreasonable result. Cf. Karon v. Karon, 435 N.W.2d 501, 503 (Minn. 1989) (stating, in the context of a dissolution, that the district court is "a third party to dissolution actions" and thus, has "dut[ies] to protect the interests of both parties" and "to ensure that the stipulation is fair and reasonable to all."). Not only did the district court adopting the separation agreement fail to make a complete record regarding the parties' net income, monthly expenses, and ability to support them, the separation agreement should not have been accepted by the district court in the first place.
When the parties later entered into a stipulation to amend the judgment of separation, appellant's income was $52,000. Child support was set at $950 per month and permanent spousal-maintenance at $1,050 per month, for a total of $24,000 a year. Appellant's spousal-maintenance obligation would increase to $1,600 per month when his child support obligation ended. After a hearing regarding dissolution of the marriage and appellant's motion for modification of his permanent spousal-maintenance obligation, the district court reduced appellant's permanent spousal-maintenance obligation to $1,200 per month. In its order, the court made the following finding of fact in pertinent part:
The court finds that there has been a substantial increase in [appellant's] expenses and a substantial increase in [respondent's] income. The court also finds that these changes render the amount of permanent spousal maintenance set forth in the order of September 18, 1996 unreasonable and unfair.
Here, the record could be read to suggest that respondent's gross annual income has increased from $27,000 a year to $34,000, and appellant's affidavit, that was subject to several non-specific challenges which the district court apparently believed, shows that now he is self-employed making a monthly gross income of just $1,500, or $18,000 annually. This suggests a monthly net income of about $950. Appellant is simply entitled to more relief. It is unfair and unreasonable for appellant to continue making monthly permanent spousal-maintenance payments of $1,200 when he maybe earned only $950 per month and when respondent may have sufficient income to support herself. We reverse the district court's refusal to modify appellant's permanent spousal-maintenance obligation, and remand to the district court for further evaluation consistent with this opinion Search Term Begin.
2. Evidentiary Hearing
Appellant argues the district court erred by failing to give him an evidentiary hearing. Absent good cause, the district court is not required to hold an evidentiary hearing on a motion to modify spousal-maintenance. Minn. Stat. § 518.64, subd. 2(f); Minn. R. Gen. P. 303.03(d).
The district court noted that appellant submitted numerous affidavits in support of his motion to modify or eliminate his permanent spousal-maintenance obligation. The district court also stated that an evidentiary hearing would not provide the court with any additional relevant information, but allowed appellant to explain why he wanted an evidentiary hearing. Appellant told the court that he intended to prove that respondent was dishonest. Consistent with the record, the district court responded by stating that there was nothing in the documents suggesting that respondent was dishonest, and further that it was not relevant to his motion. Accordingly, we find no error in the district court's refusal to give appellant an evidentiary hearing. However, since we are remanding on a number of issues, the district court is free to re-consider appellant's request for an evidentiary hearing if appropriate.
3. Attorney Fees
Appellant argues that the district court abused its discretion by awarding respondent attorney fees. A district court may sanction a party for failing to comply with an order for discovery. Minn. R. Civ. P. 37.01(d). The authority to grant fees and expenses pursuant to rule 37.01(d) is to the sound discretion of the trial court. Muehlstedt v. City of Lino Lakes, 473 N.W.2d 892, 900 (Minn. App. 1991) review denied (Minn. Sept. 25, 1991). This court will not reverse a district court's award of attorney fees unless the factual basis for the fees is clearly erroneous. Shepard v. City of St. Paul, 380 N.W.2d 140, 143 (Minn. App. 1985).
After three failed attempts to complete appellant's deposition, respondent brought a motion to compel discovery, which also included a request for attorney fees. The district court found that appellant failed to produce subpoenaed documents, refused to answer questions, offered redacted documents, and failed to disclose his income source or his current wife's finances. We conclude the record supports these findings. The district court ordered appellant to pay respondent $5,000 for attorney fees and costs for failing to abide by prior orders of the district court and unreasonably delaying the proceedings.
Although respondent and the district court did not cite authority for attorney fees, the record shows that the award was for appellant's failure to comply with discovery.
Under 37.01(d)(1) the court may award attorney fees:
If the motion is granted, or if the requested discovery is provided after the motion was filed, the court shall, after affording an opportunity to be heard, require the party or deponent whose conduct necessitated the motion or the party or attorney advising such conduct or both of them to pay to the moving party the reasonable expenses incurred in making the motion, including attorney fees, unless the court finds that the motion was filed without the movant's first making a good faith effort to obtain the discovery without court action, or that the opposing party's nondisclosure, response, or objection was substantially justified or that other circumstances make an award of expenses unjust.
(Emphasis added).
Appellant argues that the district court's award was excessive and not supported by the record. We agree. There is no factual basis to support the district court's award of $5,000 in attorney fees and costs. Respondent submitted a supplemental affidavit that reported her attorney fees and costs for representation from September 16, 2002 to February 14, 2003. But appellant's failure to comply with discovery occurred during only a three-week period, starting in mid-November and ending in the beginning of December 2002. The affidavit does not adequately reflect the fees associated with respondent's motion to compel discovery. We reverse the district court's award of $5,000 and remand to give respondent and her attorney the opportunity to re-file the affidavit of fees sought. Any fees awarded as a result of our remand of this issue are limited to respondent's motion to compel discovery.