Opinion
No. C5-97-276.
Filed September 16, 1997.
Appeal from the District Court, Hennepin County, File No. 202916.
Diane Marie Dube, (for Appellant).
Nancy Zalusky Berg, (for Respondent).
Considered and decided by Lansing, Presiding Judge, Short, Judge, and Foley, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. §. 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Dale Newton appeals from a dissolution judgment, challenging the trial court's (1) refusal to reserve spousal maintenance, (2) characterization and division of debt, (3) valuation and allocation of marital assets, and (4) refusal to award appellant attorney fees. We affirm in part, reverse in part, and remand.
FACTS
Appellant Dale Edwin Newton and respondent Andrea Ruth Een were granted a dissolution of their 23-year marriage on October 4, 1996. At that time, appellant was 46 years old and respondent was 49 years old. The parties have one minor child, now age eight. The court granted respondent sole physical custody of the child, while the parties share joint legal custody.
Appellant and respondent worked as teachers and musicians during their marriage. Since 1977, respondent has been employed by St. Olaf College and is presently an associate professor of music with a net monthly income of $2,468.81. At varying times, appellant has held teaching positions at St. Olaf College, and other colleges and universities. He is presently employed as a performing cellist and a freelance musician. Appellant's net monthly income is $1,063. Appellant underwent successful heart surgery in November 1992 that did not affect his ability to support himself.
At the time of the dissolution action, appellant had incurred in his name alone debts totaling $17,917.88, and respondent had incurred debts totalling $16,000. The parties then had marital assets of approximately $305,000, which included their homestead, valued at $100,000.
The trial court declined appellant's request to reserve spousal maintenance because of his medical history. The trial court also divided the parties' debt, making the parties responsible for their own debt. In dividing the parties' marital assets, the court subtracted seven percent from the value of the homestead for "real estate commission." The court gave appellant a lien on the homestead for his interest, payable no later than when the minor child reaches age 18. The court declined to award either party attorney fees. This appeal followed.
DECISION
Appellant filed a motion to accept a nonconforming reply brief. The reply brief submitted does not conform to the requirements of Minn.R.Civ.App.P. 128.01 in that it does not have a cover. The court accepts the reply brief, but we find that it does not change our decision in this matter.
I. Spousal Maintenance
Neither party sought spousal maintenance under Minn. Stat. § 518.552, subd. 1 (1996). Appellant, however, requested reservation of spousal maintenance on the sole ground of his health, claiming his future health is uncertain because of the following factors:
1. His medical insurance costs after he exhausts his COBRA benefits are unknown and are potentially quite high.
2. He must take two medicines for the remainder of his life and the costs and consequences of the medications are uncertain.
3. He may develop another aneurysm.
4. His artificial heart valve may malfunction.
The trial court found that, based on the testimony of appellant's physician, appellant's health is stable and no more uncertain than that of the general public. The trial court concluded that the only notable risk to appellant is an increased possibility of blood clots, but appellant's medication controls the risk. The court also viewed as unreasonable appellant's arguments regarding future health insurance and drug costs. Accordingly, the court found that appellant's arguments and evidence did not warrant a reservation of spousal maintenance. Cf. Tomscak , 352 N.W.2d at 465; Van De Loo v. Van De Loo , 346 N.W.2d 173, 177-78 (Minn.App. 1984). The record supports the trial court's decision declining to reserve spousal maintenance and thus the court did not abuse its discretion. See Erlandson v. Erlandson , 318 N.W.2d 36, 38 (Minn. 1982) (trial court has broad discretion in determining whether to award maintenance).
II. Marital Debt
Appellant contends the trial court abused its discretion in its characterization and allocation of marital debt. He asserts the trial court did not consider the parties' ability to pay the debts, ignored the character of the debts, and failed to consider that respondent controlled sufficient marital cash prior to the dissolution to fully repay his debts.
The trial court found that the $17,917.88 debt was in appellant's name alone. The court concluded that the debt was marital, as either living expenses or expenses incurred for the generation of income, and held appellant responsible for this debt. The court ordered respondent to pay debts to her parents totaling $16,000. The proceeds of these loans were used to pay off other marital debt incurred by appellant. Appellant used the remaining loan proceeds for home improvements. The court found that even though respondent's debts were incurred after the date of valuation, it was appropriate to consider them marital debts because respondent incurred the indebtedness to pay off other marital debts and for necessary expenditures for the maintenance of the marital homestead.
While the division of marital debt is not equal, we conclude the trial court did not abuse its discretion in allocating marital debt. See White v. White , 521 N.W.2d 874, 878-79 (Minn.App. 1994). Both appellant and respondent have liabilities and expenses that exceed their income, and respondent has sole physical custody of the parties' minor child. Given these circumstances, the court's allocation of debt was equitable. See Minn. Stat. § 518.58, subd. 1 (1996).
III. Marital Assets
Appellant objects to the valuation, allocation, and distribution of several of the parties' assets.
1. Respondent's Checking Account. Appellant asserts that the court erred in assigning no value to respondent's checking account, which had a balance of $15,200 at the time of separation. Appellant argues that pursuant to Minn. Stat. § 518.58, subd. 1a, the court should have treated respondent's depletion of this account as an advance on her portion of the marital property. At trial, respondent testified that these funds were used to purchase replacement household items and submitted evidence verifying the purchases. While the trial court found that the expenditures exceeded basic living expenses, the expenditures were for necessary household items within the meaning of Minn. Stat. § 518.58, subd. 1a ("necessities of life"). Because each party depleted marital assets prior to the dissolution, either in the form of spending marital cash or increasing marital debt, and the record and the trial court's findings demonstrate that these expenditures were off-setting, we conclude that the trial court did not abuse its discretion in declining to assign value to respondent's checking account. See Ruzic v. Ruzic , 281 N.W.2d 502, 505 (Minn. 1979).
2. Compact Disc Project. Appellant contends that the court erred in declining to value the parties' uncompleted compact disc project and to compensate appellant for services rendered in connection with the project. Shortly after the separation, the parties agreed that appellant would complete the project and respondent would pay him $1,000 for his work. The project never was completed, however, and each party contends that it was not completed due to the fault of the other. After hearing lengthy, contested testimony regarding the value of the project, the court assigned the project no value and awarded respondent all rights to the project. Based on the competing evidence presented at trial, the court did not abuse its discretion in its division of the project. See Hertz v. Hertz , 304 Minn. 144, 145, 229 N.W.2d 42, 44 (1975) (valuation conflicts to be resolved by trial court).
3. Homestead. Appellant contends that the court abused its discretion regarding the valuation and distribution of the homestead by (1) subtracting seven percent from the value for a real estate commission; (2) delaying appellant's receipt of his equity for up to 10 years; and (3) declining to award interest on appellant's lien.
A. Real Estate Commission. The parties stipulated that the value of their homestead is $100,000. The court reduced the equity by seven percent, which it stated was a commercially reasonable real estate commission in the community. Appellant argues that the court erred in deducting a real estate commission because it did not order the homestead to be sold and there was no evidence presented that respondent intended to sell the home. We agree.
Before the costs of sale may be deducted from the value of a marital asset, the court must find that a sale is likely to occur, Flynn v. Flynn , 402 N.W.2d 111, 117 (Minn.App. 1987), and the costs are not speculative. Reynolds v. Reynolds , 498 N.W.2d 266, 272 (Minn.App. 1993). There is no evidence in this record to suggest that respondent intends to sell the homestead. Further, there is no listing agreement in existence for sale of the homestead. Yet, the trial court concluded in its December 19, 1996 order amending judgment and decree that [i]n allowing for a real estate commission, the Court is anticipating that it will be necessary for Respondent to sell the homestead. Therefore, the Court cannot lose sight of the fact that there will be costs of sale involved.
Thus, the trial court abused its discretion in reducing the equity in the homestead by seven percent. Accordingly, we reverse the court's order regarding the value of the homestead and remand for findings consistent with this opinion.
B. Delayed Receipt of Equity. Appellant asserts that the trial court erred in delaying receipt of his equity in the homestead until at latest the 18th birthday of the minor child (now age eight), contending he needs his share of the equity to meet monthly living expenses and his debt payments. The court required respondent to pay appellant $6,000 in advance of his lien payoff, but delayed further payment of the lien because of appellant's admitted history of failure to pay child support and the child's need for a home. We conclude that the court reasonably delayed payment of the lien balance for the reasons enumerated. See Minn. Stat. § 518.63 (1996); Plonske v. Plonske , 473 N.W.2d 911, 913 (Minn.App. 1991); Goar v. Goar , 368 N.W.2d 348, 351 (Minn.App. 1985). The court's delay of the lien did not constitute an abuse of discretion.
C. Interest on Lien. Appellant claims that the trial court abused its discretion in giving appellant an interest-free lien on the homestead. He argues that the failure to award interest on the lien compounds the error in deferring payoff of the lien, and effectively prevents him from securing the benefit of the property division.
The trial court articulated specific reasons for placing a lien on the homestead relating to the appellant's history of nonpayment of child support and the need to provide a home for the minor child. These reasons are sufficient to justify the court's actions regarding interest on the lien. See Filkins v. Filkins , 347 N.W.2d 526, 528 (Minn.App. 1984) (trial court under no obligation to guarantee one spouse a percentage return on their equity when the other spouse receives no such guaranteed return). Accordingly, the trial court did not abuse its discretion in declining to award interest on appellant's lien.
4. Overall Property Distribution. Finally, appellant argues that the overall property division is unequal and gives respondent, who is financially advantaged, the greater share of the property. The trial court has broad discretion in dividing property, and appellate courts "will and must affirm if it has an acceptable basis in fact and principle even though [the appellate court] might have made a different disposition of the problem." Rohling v. Rohling , 379 N.W.2d 519, 522 (Minn. 1986) (quoting Bollenbach v. Bollenbach , 285 Minn. 418, 426-27, 175 N.W.2d 148, 154 (1970)).
The trial court made detailed findings regarding the property division based on the testimony of the parties and the evidence presented. Further, appellant's arguments regarding the inequity of the division assume that the trial court's characterization of the assets was incorrect. Reducing respondent's share of the assets by $15,200 (the excluded checking account), respondent received $155,445 in assets and appellant received $148,500 in assets. This division is equitable, particularly in light of the parties' custody and support arrangements. See Ruzic , 281 N.W.2d at 505.
IV. Attorney Fees
Minn. Stat. § 518.14, subd. 1 (1996), provides that the court shall award attorney fees if it finds the award (1) necessary to enable a party to carry on or contest the proceeding in good faith, and (2) will not contribute unnecessarily to the length and expense of the proceeding. Further, the court must determine whether the party from whom the fees are sought has the means to pay them and if the party seeking the award cannot pay them. Id. The trial court's findings demonstrate that both parties have significant debt and that the marital estate is not highly liquid. Thus, it was not an abuse of discretion to deny appellant attorney fees. See Solon v. Solon , 255 N.W.2d 395, 397 (Minn. 1977); Burns v. Burns , 466 N.W.2d 421, 424 (Minn.App. 1991) (trial court has broad discretion in awarding attorney fees and only rarely will appellant court overturn trial court's decision).