Opinion
No. C6-96-1409.
Filed April 1, 1997.
Appeal from the District Court, Wright County, File No. F090693.
Charles M. Goldstein, (for Appellant).
David L. Olson, (for Respondent).
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Appellant challenges the trial court's refusal to eliminate his permanent spousal maintenance obligation and to reduce his child support obligation. Because we see no abuse of discretion in the trial court's decision not to consider respondent's interest income and no error in the trial court's findings as to appellant's income, we affirm.
FACTS
Appellant Bernard Garthe and respondent Debra Garthe married in 1972. They are the parents of three children, now aged 21, 19, and 16. Following the dissolution of their marriage in 1992, appellant had custody of the oldest child and respondent had custody of the two younger children; the youngest, still a minor, remains in her custody.
During the marriage, appellant worked in the food-service business; respondent worked on assembly lines or as a waitress. For the last five years of the marriage, appellant was the manager and part owner of Bernatello's, a frozen pizza manufacturing company, at a salary of $70,000 which was reduced to $50,000 in January 1991 and discontinued in August 1991. Prior to the dissolution, respondent was earning $1,600 monthly as the operator and manager of a pizza restaurant.
The parties stipulated to all issues except maintenance, child support, and attorney fees. Respondent received fifty percent of appellant's interest in Bernatello's. Appellant later brought an action against Bernatello's that resulted in settlement. The terms of appellant's settlement are confidential; however, he claims to have received "a substantial cash settlement together with significant monthly payments at least for the year of 1996, which will be followed with a lump sum payment in late 1999." For her interest in Bernatello's, respondent receives $2,750 per month until 1999, when she will receive $550,000.
Following trial, appellant was ordered to pay maintenance and child support. He challenged those orders in numerous court proceedings during 1992, 1993, 1994, 1995, and 1996. On appeal, he challenges the maintenance award on the ground that the trial court abused its discretion in failing to include respondent's interest income; he challenges both the maintenance and the child support obligations on the ground that the trial court erred in calculating appellant's income.
Appellant has made no voluntary support or maintenance payments. He has been cited for contempt for failure to meet these obligations.
DECISION 1. The Spousal Maintenance Award
"The standard of review on appeal from a trial court's determination of a maintenance award is whether the trial court abused the wide discretion accorded to it." Erlandson v. Erlandson , 318 N.W.2d 36, 38 (Minn. 1982). "There must be a clearly erroneous conclusion that is against logic and the facts on record before this court will find that the trial court abused its discretion." Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).
Respondent obtained enough income to meet her court-approved expenses until 1999 by selling the Bernatello's stock she received in the property division. Appellant's motion to suspend or terminate maintenance was partially successful. The court reduced maintenance from $1,700 to $1,000 monthly. Termination of maintenance was denied for two reasons. First, the court found that since both parties derived an income stream from selling their Bernatello's stock, that income did not represent a relative change in the parties' financial positions. The trial court reasoned that because there had been a substantial increase in the income of both parties, there was no appropriate basis for modifying maintenance. We find no error in that determination.
Second, the court found that the budget submitted by respondent for herself and the two children then in her custody provided a standard of living decidedly lower than the standard enjoyed during the marriage. Again, we find no error. Respondent's post-dissolution budget did not provide for trips, vacations, or recreational vehicles; entertainment was limited to $200 monthly. The nonessential items in the budget were chiefly things the children were accustomed to: music lessons, hockey, pets. At the time of dissolution, the parties owned their homestead with an equity of $77,000, an adjacent lot and garages with an equity of $23,000, an unencumbered lakeshore lot and cabin worth $128,000, two pieces of real estate, and two other pieces of business real estate as well as the businesses; they also owned two snowmobiles, a trailer, four boats, a dock and lift, a motorcycle, a golf cart, four cars, and two pick-up trucks. During the marriage, they took vacations and went on snowmobile trips.
Moreover, "[w]here there is some uncertainty as to the necessity of a permanent award, the court shall order a permanent award leaving its order open for later modification." Minn. Stat. § 518.552, subd. 3 (1994). Respondent's earning capacity is still at the minimum wage level; it has not changed since the decree. She does not have a high school diploma; although she indicated her desire to complete her education after the dissolution, the court noted that her ability to do so has been impaired by appellant's repeated failures to pay maintenance and support, the problems experienced by the children, and the effects of post-decree battles.
The trial court's conclusion that respondent should receive $1,000 monthly in permanent maintenance is not clearly against logic or the facts on the record.
2. Findings As to Appellant's Income
Appellant challenges both the child support and maintenance awards on the grounds that the trial court erred in its findings in regard to his income. An appellate court will not reverse a trial court's determination of net income used to calculate child support if it has a reasonable basis in fact. Strauch v. Strauch, 401 N.W.2d 444, 448 (Minn.App. 1987). 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).
The trial court used appellant's earning capacity as the basis for setting child support and maintenance. The use of earning capacity has been held appropriate in situations where obligors are self-employed or have improperly reduced their income. See, e.g., Resch v. Resch , 381 N.W.2d 460, 462 (Minn.App. 1986); Quick v. Quick , 381 N.W.2d 5, 9 (Minn.App. 1986); Ferguson v. Ferguson , 357 N.W.2d 104, 107-08 (Minn.App. 1984). Where a noncustodial parent's lifestyle is not commensurate with the stated taxable income, cash flow or gross receipts may be appropriately used to determine income for purposes of child support. Vitalis v. Vitalis, 363 N.W.2d 57, 59 (Minn.App. 1985).
The trial court used appellant's earning capacity because appellant had been vague and evasive in disclosing his net monthly income, his expenses, and the value of his business interests * * * * [and had] begrudgingly produced disorganized and incomplete financial records * * *.
The court explained that it determined appellant's earning capacity based on his ability to obtain unsecured personal and business loans in the amounts of between $25,000 to $30,000, his ability to purchase a third residence during the duration of this proceeding valued at $92,000; his habit of carrying on his person sums between $5,000 and $10,000 in cash, the success of his newly started Michael-John's Foods and Pickles; his past annual earnings from Bernatello's of $75,000.
The trial court actually used imputed earnings of $50,000 per year, or $2,590.21 per month after standard deductions, as the basis for awarding $1,000 in spousal maintenance and $777 for child support for two children, later $647 for one child. Appellant cites nothing in the record showing that his income is less than this amount; nor does he argue that the trial court failed to consider any of the evidence he presented. The trial court's finding as to appellant's income is not clearly erroneous.