Opinion
No. C3-02-1782.
Filed July 15, 2003.
Appeal from the Wabasha County District Court, File No. FX96384.
Kristine L. Dicke, Ryan Grinde, Ltd., (for respondent)
Lawrence Downing, Lawrence Downing Associates, (for appellant)
Considered and decided by Anderson, Presiding Judge, Peterson, Judge, and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
In this dissolution proceeding, appellant Rick Kowalewski argues that (1) he is entitled to a new trial because the initial trial court judge retired before the final disposition of the case; (2) the trial court erred in concluding that he is not totally disabled; (3) the trial court abused its discretion in determining his child-support obligation and in its determinations of the parties' marital and nonmarital property; and (4) he was denied an unbiased and independent review of the evidence by the trial court's adoption of respondent's proposed findings of fact and conclusions of law. We affirm the trial court's property distribution, the court's underlying determination of appellant's child-support obligation, and the court's conclusion that appellant is not disabled from all employment. But because we conclude that the trial court erred by allocating the proceeds of appellant's second FELA settlement over a three-year period for purposes of calculating additional child support, we reverse on that issue and remand. We also remand the issue of the division of appellant's pension benefits as the record before us is incomplete.
FACTS
Appellant Rick Kowalewski and respondent Sheila Kowalewski married on July 11, 1989, and separated on July 1, 1996, after the issuance of a domestic-abuse order for protection. The parties' two minor children were then in respondent's custody. Appellant formerly worked as a brakeman, conductor, and locomotive engineer for the Union Pacific Railroad. Respondent is employed as an engineer with Cytec-Fiberite, Inc.
Formerly known as the Chicago Northwestern Transportation Company.
On August 20, 1996, the court in the domestic-abuse proceeding ordered appellant to pay $787.80 per month in child support and $143.80 in daycare expenses for a total monthly expense of $936.63. The amount was based on appellant's attorney's calculation of appellant's then-net income of $2,626 per month. But child support was temporarily suspended by court order on July 14, 1997, based on appellant's claimed physical disability and financial hardship.
Following a three-day trial, the court filed its initial findings of fact, conclusions of law, order for judgment, and judgment and decree on December 23, 1998, and an amended order on March 22, 1999. Pursuant to the parties' agreement, the court ordered joint legal and physical custody of the parties' two children. The parties agreed that respondent would have physical custody of the children for the nine months of the school year and that appellant would have custody during the three summer months. Because respondent was not seeking child support at the time of trial, the trial court reserved the issue. But the court found that appellant had misrepresented his financial condition in order to obtain a suspension of his previous child-support obligation and ordered appellant to pay $13,066.02 in child-support arrears. Appellant was also ordered to pay one-half of the children's private-school tuition and to provide medical and dental insurance for the children.
By way of history, appellant was injured while working as a brakeman on October 15, 1988, nine months before the parties were married. Appellant brought a claim against the railroad under the Federal Employee's Liability Act (FELA), ultimately settling the claim in May 1993 for $180,000. From the total amount, appellant netted approximately $120,000. In its amended order, the trial court addressed appellant's claim that the $120,000 settlement was nonmarital property and denied it. The court concluded that the money from the FELA settlement had been commingled with marital funds, that appellant had made no effort to segregate the settlement amount, and that it was not traceable.
Appellant eventually returned to work for the railroad after his 1988 injury. In the two years before the parties separated, he worked as a locomotive engineer, earning approximately $59,383.94 and $51,943, respectively. Appellant sustained another on-the-job injury on March 2, 1997, after the parties separated. He brought a second FELA claim against the railroad that was still pending at the time of the dissolution trial. In the amended decree, the trial court instructed appellant to keep the court and respondent apprised of the status of the FELA claim and reserved the issue of the equalization of the property division until that claim was resolved.
Appellant was awarded one-half of respondent's 401(k) retirement account with Cytec-Fiberite as of October 28, 1997. The court also ordered the parties to equally divide appellant's railroad retirement annuity as of the same date.
In an order dated June 21, 2001, the court determined that respondent had no property right in any settlement arising out of appellant's second FELA claim but concluded that the amount appellant owed toward child support from that settlement amount, if any, would be determined at a later hearing.
The court issued supplemental findings of fact, conclusions of law, judgment, and order for judgment on July 3, 2002. The court imputed net monthly income to appellant in the amount of $2,678.83, and, accordingly, imposed a child-support obligation of $803.64 per month when the children are in respondent's custody. As a result of appellant's second FELA settlement in the gross amount of $265,000, the court imputed an additional net monthly income to appellant in the amount of $2,007.33 for the time frame of September 1999 through June 2002, resulting in an additional $602.20 per month in child support for the school-year months from September 1999 through May 2002. The court also ordered appellant to pay one-half of respondent's annual cost for providing the children with medical insurance.
Based on respondent's net monthly income of $3,473.50, the court ordered her to pay child support of $1,042.05 per month during the three summer months that the children are with appellant. Additionally, the court ordered respondent to pay appellant $3,336.69 in equalization of the property distribution.
Appellant's motion for amended findings and a new trial was denied. This appeal follows.
DECISION 1. Successor Judge
Appellant argues that he is entitled to a new trial because the initial trial court judge left the proceedings in a "mess" and then retired before the final disposition of the case, leaving the final decisions to a successor judge. Appellant raises for the first time on appeal this issue of the successor judge's ability to decide this case. Generally, this court will not consider on appeal matters that were not first presented to and considered by the trial court. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). But in this instance, we choose to consider the issue and conclude that appellant's claim has no merit. Minn.R.Civ.P. 63.01 states:
If by reason of death, sickness, or other disability a judge before whom an action has been tried is unable to perform judicial duties after a verdict is returned or findings of fact and conclusions of law are filed, any other judge regularly sitting in or assigned to the court in which the action was tried may perform those duties; but if such other judge is satisfied that the duties cannot be performed because that judge did not preside at the trial or for any other reason, that judge may exercise discretion to grant a new trial.
Retirement of a judge constitutes "other disability" for purposes of Minn.R.Civ.P. 63.01. Brown v. Comm'r of Revenue, 322 N.W.2d 194, 197 (Minn. 1982).
The first judge assigned to the case presided over a three-day trial on all issues, with the exception of custody of the children. The trial court subsequently issued two lengthy, detailed orders that resolved all issues with the exception of the issues of child support and final equalization of the property settlement as a result of appellant's then-pending FELA claim. Those issues were specifically reserved.
Following the trial judge's retirement, the subsequently assigned judge presided at four posttrial evidentiary hearings in this very protracted proceeding, entered nine temporary orders, and issued detailed supplemental findings of fact, conclusions of law, order for judgment, and judgment. The case received careful consideration from the trial court from beginning to end. Therefore, appellant's request for a new trial is denied.
2. Disability
Appellant argues that the trial court erred by its initial holding that he was not disabled. This court will not set aside the trial court's findings of fact unless they are clearly erroneous. Minn.R.Civ.P. 52.01. A reviewing court is not bound by and need not give deference to a trial court's decision on a purely legal issue. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984). With respect to the trial court's findings and conclusions, appellant is, in essence, attempting to relitigate before this court the issue of his capacity to work. In its memorandum following the hearing on appellant's motion for amended findings, new trial, or other relief, the trial court stated:
In a contested case, the party's ability or lack of ability to earn income is always an issue. Furthermore, the husband offered a considerable amount of testimony regarding his injuries and claimed inability to work. However, he presented no expert testimony to support his claim. As the finder of fact, the Court is the sole judge of the credibility of testimony and the husband simply has not met his burden of proving that he cannot work. Curiously, the husband seems to take the position that the wife has the burden of proving that he can work which is not the law. Never before in this Court's experience has a party claiming to be disabled failed to produce medical evidence to support the claim and then argued that the other party has the burden of disproving the claim. The respondent had more than ample time to have a medical evaluation before trial and therefore has not shown that he should have a new trial based upon his claims of accident or surprise, or that material evidence is now available which with reasonable diligence could not have been produced at trial.
Appellant also assigns error to the successor court. He contends that the successor court erred in concluding that appellant was barred by collateral estoppel from asserting that he is disabled, based on a contrary decision of the Railroad Retirement Board (RRB). "Collateral estoppel precludes the relitigation of a right, question, or fact distinctly put in issue and directly determined in a prior adjudication." Coughlin v. Radosevich, 372 N.W.2d 817, 819 (Minn.App. 1985), review denied (Minn. Nov. 1, 1985). Collateral estoppel applies if
(1) the issue was identical to one in a prior adjudication; (2) there was a final judgment on the merits; (3) the estopped party was a party or in privity with a party to the prior adjudication; and (4) the estopped party was given a full and fair opportunity to be heard on the adjudicated issue.
Cook v. Connolly, 366 N.W.2d 287, 290 n. 2 (Minn. 1985) (quotations omitted).
The issue before the RRB was whether appellant was entitled to disability benefits under the Railroad Retirement Act as a result of a claimed permanent disability that prevented him from all employment. The RRB, after a contested hearing and based on the extensive medical evidence before the board, determined that, while appellant could no longer work as a brakeman or locomotive engineer, he was physically able to perform sedentary work.
While we agree that collateral estoppel does not operate to bar appellant's assertions of disability in this context, we note that appellant's characterization on appeal of the successor court's basis for its conclusion that he is not totally disabled is incomplete and misleading. In addition to relying on the evidence before the RRB and its final conclusion, the successor court also reopened the hearing and received new evidence in the form of a surveillance videotape that showed appellant doing construction work and the testimony of an investigator who observed him doing heavy work, including roofing. Further, the successor court noted that appellant had been given an opportunity to retrain at the railroad's expense but that he had quit college after a short duration. The record supports the findings made in this matter by both the trial court and the successor court.
3. Child Support
Appellant asserts that the trial court abused its discretion in determining his child-support obligation. A trial court has broad discretion to provide for the support of the parties' children. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). The trial court abuses its discretion when it sets child support in a manner that is against logic and the facts on the record. Id.
The successor trial court imputed annual gross income of $39,000 to appellant for child-support purposes. In order to determine that figure, the court examined the deposits to appellant's bank accounts and then reduced the amount of the deposits by the amounts appellant received from the second FELA settlement and from a loan from his parents.
Appellant contends that the court erred by imputing income to him for purposes of calculating his ongoing child-support obligation. Minn. Stat. § 518.551, subd. 5b(d) (2002), states:
If the court finds that a parent is voluntarily unemployed or underemployed or was voluntarily unemployed or underemployed during the period for which past support is being sought, support shall be calculated based on a determination of imputed income.
Minn. Stat. § 518.551, subd. 5b(e) (2002), states further that
[i]f a parent is a recipient of public assistance under section 256.741, or is physically or mentally incapacitated, it shall be presumed that the parent is not voluntarily unemployed or underemployed.
Here, the successor court found that
[appellant] has not acted in good faith with respect to his child support obligation. He has either unjustifiably self-limited his personal income by not being diligent in seeking employment opportunities or he has not disclosed employment income sources for the deposits into his bank account. Due to the fact that [appellant] has not been forthcoming with this information, the Court is unable to make an exact determination of [appellant's] earning potential.
Based on this record, we conclude that the trial court was within its broad discretion by imputing an annual gross income of $39,000 to appellant and by imposing an ongoing child-support obligation of $803.64 per month for the nine months of the year that respondent has custody of the children.
Next, appellant challenges the court's imputation of additional income derived from his second FELA settlement in the calculation of his child-support obligation. The court imputed an additional sum of $27,500 each year for the three years from September 1999 until June 2002. As a result, the court imposed on appellant an additional child-support obligation of $602.20 per month for the nine-month intervals of September through June from September 1999 through June 2002. The successor court concluded that, based on these calculations and appellant's failure to pay earlier child support, he owed arrearages of $16,259.40.
Generally, when setting or modifying child support, the court is to consider, among other things, "all earnings, income, and resources of the parents, including real and personal property." Minn. Stat. § 518.551, subd. 5(c)(1) (2002). We conclude that the second FELA settlement was a resource available to appellant and that the successor court properly considered that settlement in determining appellant's child-support obligation. But in the context of child support, the settlement should be viewed as it affects appellant's overall obligation to support his children. See Lenz v. Wergin, 408 N.W.2d 873, 877 (Minn.App. 1987) (holding that a lump-sum workers' compensation settlement should be allocated from the date of the injury until the obligation to pay child support ends). Thus, while we conclude that the trial court properly considered the second FELA settlement as a resource in determining appellant's child-support obligation, the successor court erred in allocating the settlement over a three-year period. On remand, the court should allocate that resource over the years from the date of the underlying injury until the date when appellant's obligation to support his children ends.
Finally, appellant claims that the trial court abused its discretion in ordering him to pay for half of the children's health-insurance costs and half of their private-school tuition. Appellant argues that he is unable to make these payments because of his disability and income level. Because the court did not err in determining that appellant is not disabled and because the court properly imputed income to appellant, we conclude that it was within the court's discretion to order appellant to share in the costs of his children's schooling and health care.
4. Property Division
Appellant argues that the trial court abused its discretion in its distribution of the parties' property because a significant portion of it was nonmarital. "District courts have broad discretion over the division of marital property, and we will not disturb the division on appeal absent a clear abuse of discretion." Chamberlain v. Chamberlain, 615 N.W.2d 405, 412 (Minn.App. 2000) (citation omitted), review denied (Minn. Oct. 25, 2000). For this court to conclude that the trial court abused its discretion, the trial court's decision must be "against logic and the facts on [the] record." Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984) (citation omitted). Generally, whether property is marital or nonmarital is a question of law that we review de novo, but we defer to the trial court's findings of fact. Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997).
Marital property is defined as
property, real or personal, including vested public or private pension plan benefits or rights, acquired by the parties, or either of them, to a dissolution, * * * at any time during the existence of the marriage relation * * * . All property acquired by either spouse subsequent to the marriage and before the valuation date is presumed to be marital property * * * .
Minn. Stat. § 518.54, subd. 5 (2002). Nonmarital property is defined as property real or personal, acquired by either spouse before, during, or after the existence of their marriage, which
(a) is acquired as a gift, bequest, devise or inheritance made by a third party to one but not the other spouse;
(b) is acquired before the marriage;
(c) is acquired in exchange for or is the increase in value of property which is described in clauses (a), (b), (d), and (e);
(d) is acquired by a spouse after the valuation date; or
(e) is excluded by a valid antenuptial contract.
Id.
A. Pension Benefits
Appellant argues that the court erred in awarding one-half of his pension benefits as of October 28, 1997 to respondent because appellant worked for the railroad for nine years before the parties were married and respondent is only entitled to a portion of the pension benefits that accumulated during the time of the parties' marriage and any appreciation of those benefits.
The trial court found that as of July 8, 1998, appellant had an estimated retirement annuity of approximately $1,579 per month. The court noted that state and federal laws govern the division of appellant's railroad retirement pension and that respondent's portion of the annuity would be significantly less because she can only share in a portion of the Tier II benefits. See Larkin v. Larkin, 415 N.W.2d 924, 925-26 (Minn.App. 1987) (stating that Tier I railroad retirement benefits may not be considered in dividing marital property, and Tier II railroad retirement benefits resemble a private pension and are subject to division as marital property). The court held that the parties should equally split appellant's retirement pension as of the designated date and stated that the division would be made pursuant to an "appropriate Court order to be drafted by the [appellant's] attorney and approved by the [respondent's] attorney." But the court did not specifically limit the division of appellant's pension to appellant's Tier II pension benefits, or the portion of the pension that accumulated while the parties were married. See White v. White, 521 N.W.2d 874, 878 (Minn.App. 1994) (stating that marital property includes pension acquired during marriage and any appreciation attributable to those benefits, and nonmarital property includes pension benefits acquired prior to marriage and any appreciation attributable to those benefits). To the extent that the court's order can be understood to require the division of appellant's entire railroad retirement pension, which includes nine years of benefits that accumulated before the parties married, or to include appellant's Tier I pension benefits, we reverse. We remand this issue to the trial court to enter an appropriate order equally dividing the portion of appellant's Tier II railroad retirement pension that accumulated during the parties' marriage and any appreciation of those pension funds.
B. 1993 FELA Settlement Proceeds
Appellant argues that the trial court erred in concluding that the $120,000 he received in 1993 from the settlement of the first FELA claim is marital property. Whether a personal-injury award is marital or nonmarital property depends on the purpose of the recovery. Ward v. Ward, 453 N.W.2d 729, 731-32 (Minn.App. 1990) (stating that recovery for wage loss or impact on earning capacity during the marriage is marital property, while recovery for loss of future wages or pain and suffering is nonmarital property), review denied (Minn. June 6, 1990). This court has held that the burden of proving the purpose of part or all of a personal-injury recovery falls on the party seeking the nonmarital classification. Id. at 732.
There is no dispute that the injury giving rise to the claim occurred nine months before the parties married. Appellant took the position at trial that none of his net recovery is attributable to lost wages, despite the fact that he was off work for a period of several years. But the trial court found appellant's assertion to be inconsistent with his sworn responses to interrogatories in the FELA litigation where appellant claimed "lost wages from 10/15/88 to 2/06/91 and from July 22, 1991 to the present and continuing" and other assertions appellant made in the FELA-litigation context. Based on this record, we conclude that appellant has not met his burden of proving that any part of the recovery was nonmarital property. The trial court did not err in determining that the settlement is marital property.
Finally, appellant argues that the trial court's division of marital property is inequitable and an abuse of discretion. Trial courts have broad discretion in dividing marital property. Chamberlain, 615 N.W.2d at 412. The law does not say that the distribution of marital property must be equal, only that it must be just and equitable. Minn. Stat. § 518.58, subd. 1. In the end, the trial court held that respondent owed appellant an equalization payment of $3,336.69. The court thoroughly considered the substantial amount of evidence involved in this case and, aside from the division of appellant's railroad retirement annuity, we conclude that the trial court made a just and equitable distribution of the parties' marital property.
5. Adoption of Findings of Fact and Conclusions of Law
Appellant contends that he was denied an unbiased and independent review of the evidence by the trial court's use of respondent's proposed findings of fact and conclusions of law. This court has held that the verbatim adoption of a party's proposed findings and conclusions is not reversible error per se. Sigurdson v. Isanti County, 408 N.W.2d 654, 657 (Minn.App. 1987), review denied (Minn. Aug. 19, 1987). Adoption of a party's proposed findings by a trial court is generally an accepted practice. Bliss v. Bliss, 493 N.W.2d 583, 590 (Minn.App. 1992), review denied (Minn. Feb. 12, 1993). But it raises the issue of whether the court has independently evaluated each party's testimony and evidence. Id. While the trial court adopted the vast majority of respondent's findings and conclusions, it also made some significant changes. Further, the court issued amended findings of fact and conclusions of law in response to appellant's posttrial motions. We conclude that the trial court did not act improperly by adopting much of respondent's proposed order and that appellant was given an unbiased and independent review of the evidence.