Opinion
No. A04-2022.
Filed September 6, 2005.
Appeal from the District Court, Dakota County, File No. FX-99-12419.
Sally Mortenson, Mortenson Law Office, (for respondent).
Michael Ormond, Ormond Zewiske, (for appellant).
Considered and decided by Randall, Presiding Judge; Kalitowski, Judge; and Worke, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
In this post-dissolution proceeding, appellant argues that the district court abused its discretion by denying his motion to modify his spousal-maintenance obligation when his income was significantly decreased by a substantial change in circumstances that was not within his control and was not in bad faith. Because the district court did not abuse its discretion in denying the motion to modify, we affirm.
FACTS
On April 26, 1999, the parties' marriage was dissolved by a decree incorporating their stipulated agreement. At the time of the dissolution, appellant Dale James Larson was employed as a plant manager with a gross monthly income of $5,833. Respondent Darlene Louise Zeller was employed as a sales clerk earning $7 per hour. The parties' stipulated decree included a finding that respondent's "earning capacity has been and will be limited by a lack of work skills outside the home and health problems. She is entitled to permanent spousal maintenance." The decree provides that appellant shall pay respondent $1,500 per month in permanent spousal maintenance. The provision states that the amount was based on appellant's current employment and income, and that "if his income significantly decreased by circumstances not in his control and not by bad faith conduct," his spousal-maintenance obligation would be reconsidered and recalculated. Appellant was also ordered to maintain health-insurance coverage for respondent through his employer.
In December 2001, appellant voluntarily quit his job as a plant manager claiming that excessive work-related stress resulted in hair loss and other adverse physical manifestations. Appellant scheduled an appointment with his doctor regarding his stress-related issues and was informed that there was nothing physically wrong with him. After the doctor's appointment, appellant did not pursue the matter any further. As a result of appellant quitting his job, the parties lost their health-insurance coverage, which was maintained through appellant's employer. On August 28, 2002, the court ordered appellant to make additional spousal-maintenance payments to respondent in the amount of $35 every two weeks to cover the cost of her health-insurance premiums.
Appellant ceased paying spousal maintenance as of December 1, 2001. On October 14, 2002, on a motion by respondent, the court found appellant in contempt of court for his failure to make spousal-maintenance payments from December 1, 2001, to September 5, 2002. The court ordered appellant to serve 45 days in jail or purge himself of the contempt by February 10, 2003, by paying respondent the full amount of arrears; making all spousal-maintenance payments through February 10, 2003; and depositing $19,000 with respondent's attorney to be held in escrow as security for future spousal-maintenance payments. Appellant purged himself of the contempt by the court imposed deadline.
Appellant was also found in contempt of court for failing to pay attorney fees and for failing to provide respondent proof of a life-insurance policy, as required under the original judgment and decree.
On September 30, 2003, again on a motion by respondent, the court found appellant in contempt of court for his failure to make spousal-maintenance payments from February 1, 2003, to September 30, 2003. The court ordered appellant to serve 45 days in jail or that he purge himself of the contempt by October 30, 2003, by paying respondent the full amount of arrears; making all spousal-maintenance payments through September 30, 2003; and depositing $19,000 with respondent's attorney to be held in escrow as security for future spousal-maintenance payments. Appellant failed to purge himself of the contempt by October 30, 2003, and served the 45-day jail sentence.
On April 23, 2004, respondent filed her third motion for contempt of court. A hearing on the motion was scheduled for May 24, 2004. Appellant filed a responsive motion requesting that his spousal-maintenance obligation be modified or, in the alternative, that the matter be scheduled for a future hearing following the completion of a psychological evaluation. In connection with his motion, and for the first time since appellant quit his job, appellant's attorney sent him to a psychologist to be evaluated. Based on the results of that evaluation, appellant argued that his efforts to find work were complicated by undiagnosed depression. Appellant started a full-time job beginning June 1, 2004, earning $12 per hour. Respondent also obtained a new job earning $12 per hour and obtained health insurance, which cost her $125 per month. On June 8, 2004, the court ordered appellant to undergo a psychological evaluation.
A hearing on the motions was held on July 27, 2004. On August 27, 2004, the district court found appellant in contempt of court. The court ordered him to serve 45 days in jail or purge himself of the contempt by October 13, 2004, as follows: (1) pay to respondent $10,500 in spousal-maintenance arrears for the period October 1, 2003, to March 31, 2004; and (2) pay to respondent $380 for health-insurance-premium arrears for the period from November 1, 2003, to March 31, 2004. The court further ordered that, commencing September 1, 2004, appellant was to pay to respondent the sum of $125 per month for the cost of health-insurance premiums at her new job. Appellant's motion to modify his spousal-maintenance obligation was denied. The court attached to the order a memorandum that details the court's findings on each of the factors used to initially determine the spousal-maintenance obligation. Appellant purged himself of the contempt by the court-imposed deadline. Appellant now appeals the district court's denial of his motion to modify his spousal-maintenance obligation.
DECISION
Appellant argues that the district court abused its discretion by imputing income to him, as a maintenance obligor, without making a finding of bad faith. A district court has broad discretion over issues of spousal maintenance, and this court will not reverse a district court's decision absent an abuse of that discretion. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). In relevant part, Minn. Stat. § 518.64, subd. 2(a) (2004), provides: "The terms of an order respecting maintenance or support may be modified upon a showing of one or more of the following: (1) substantially increased or decreased earnings of a party . . . which makes the terms unreasonable or unfair." The party moving to modify maintenance bears the burden to show there has been a substantial change in circumstances and that the current support order is unreasonable and unfair. Minn. Stat. § 518.64, subd. 2; Hecker v. Hecker, 568 N.W.2d 705, 709 (Minn. 1997).
"When a stipulation fixing the respective rights and obligations of the parties is central to the original judgment and decree, the district court considering the modification motion must appreciate that the stipulation represents the parties' voluntary acquiescence in an equitable settlement." Beck v. Kaplan, 566 N.W.2d 723, 726 (Minn. 1997). Nevertheless, a stipulation "does not operate as a bar to later consideration of whether a change in circumstances warrants a modification." Hecker, 568 N.W.2d at 709. Although the district court is vested with broad discretion to determine the propriety of a modification, district courts have been instructed to exercise that discretion carefully and only to reluctantly alter the terms of a stipulation governing maintenance. Beck, 566 N.W.2d at 726.
Appellant argues that the district court erred in denying the motion to modify his maintenance obligation because it imputed income to him without making a finding of bad faith. Appellant relies on Maurer v. Maurer, 607 N.W.2d 176 (Minn.App. 2000), rev'd, 623 N.W.2d 604 (Minn. 2001); Carrick v. Carrick, 560 N.W.2d 407 (Minn.App. 1997); and Bourassa v. Bourassa, 481 N.W.2d 113 (Minn.App. 1992), to support his proposition that the district court must make a finding of "bad faith" before it may impute income to appellant. But the lack of a finding of bad faith is not fatal to the district court's ability to impute income. See Warwick v. Warwick, 438 N.W.2d 673, 678 (Minn.App. 1989) (ruling that, despite the lack of an explicit finding of bad faith, the district court "did not err in considering [maintenance obligor's] earning capacity rather than his actual income" where the record required an inference that the district court believed the obligor unjustifiably reduced his income by acting in bad faith). Here, while the district court failed to explicitly find that appellant acted in bath faith by not pursuing employment more vigorously, the findings, taken as a whole, overwhelmingly require the inference that the district court believed that appellant's conduct was in bad faith. Whether a party's employment-related decisions are in bad faith is a credibility determination, Devault v. Waller, 494 N.W.2d 92, 94 (Minn.App. 1992), and appellate courts defer to district court credibility determinations. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988). Therefore, here, while the district court erred by imputing income to appellant without explicitly finding that appellant acted in bad faith, that error is harmless and not fatal to the imputation. See Minn. R. Civ. P. 61 (requiring harmless error to be ignored).
Apparently recognizing that the district court implicitly found that he acted in bad faith, appellant also challenges that implicit finding: he argues that his undiagnosed depression, a condition over which he alleges he had no control, prevented him from finding a new job, and hence that his continued unemployment could not have been in bad faith. We reject this argument for two reasons. First, while it is undisputed that appellant's mental health has deteriorated since the dissolution, notably absent from his medical records is any indication that his undiagnosed depression prevented him from working, or even that his depression reduced his income or earning potential. Indeed, the district court observed that appellant's psychological report notes that a larger problem for appellant is his passive approach to life. Second, as noted above, whether appellant's unemployment-related conduct is in bad faith is a credibility determination which the district court resolved against appellant, and to which this court must defer.
Finally, we note that parties to a dissolution may "bind themselves to a level of performance higher than that which the courts could require of them." Plath v. Plath, 393 N.W.2d 401, 403 (Minn. 1986) (citing In re LaBelle's Trust, 302 Minn. 98, 111, 223 N.W.2d 400, 408 (1974)). Here, the parties' stipulated dissolution judgment included an award of permanent maintenance to respondent because she had no work skills and had health problems that affected her ability to work. The parties also agreed that if appellant's income decreased significantly by "circumstances not in his control and not by bad faith conduct," his spousal-maintenance obligation would be reconsidered and recalculated, meaning appellant bound himself to a maintenance-modification standard different from, and arguably higher than, the statutory standard. See Minn. Stat. § 518.64, subd. 2 (reciting statutory standard for maintenance modification). In light of both the district court's implicit finding that appellant acted in bad faith, and our rejection of appellant's challenge to that finding, appellant has not satisfied the requirements in the stipulated judgment for modifying the maintenance obligation to which he voluntarily bound himself. Thus, we conclude that based on the evidence before it, the district court acted within its discretion in denying appellant's motion to modify his spousal-maintenance obligation.
Affirmed.
I respectfully dissent. I would reverse and remand to the district court for a rehearing. At appellant's initial hearing, the literal (and certainly not ambiguous) terms of the parties' negotiated stipulation decree were not followed.
The dissolution decree, as adopted by the district court, contains a clear statement that appellant's spousal maintenance obligation will be reconsidered and recalculated "if his income significantly decreased by circumstances not in his control and not by bad faith conduct." The district court acknowledged this language, and the majority opinion quotes it, but I cannot find that it was adhered to. The district court order denying appellant's motion to modify his maintenance obligation did not include a specific finding that appellant's income significantly decreased because of circumstances in his control and that appellant exhibited bad faith conduct. By the express terms of the stipulation, I cannot find any authority for the district court not to modify the maintenance obligation downward unless that finding is specifically made.
In its memorandum of law, which the district court incorporated into the decree by reference, the court found appellant's net monthly income to be $1,768 and his reasonable monthly living expenses to be $1,787. The district court found that his live-in girlfriend contributes $500 a month toward the rent, bringing his monthly expenses down to $1,287. Appellant is not "living large." He has a scant $480 per month surplus to get by on, and that only exists as long as a "non-obligor," a live-in girlfriend, chooses to contribute $500 a month toward his living expenses. She can legally stop doing that tomorrow. Appellant's legal obligation to pay full rent will continue after tomorrow.
Despite this, the court continued to require appellant to pay $1,500 a month in spousal maintenance, which, based on his present financial circumstances, is a physical impossibility. That continued requirement has caused appellant to go thousands of dollars in arrearages, all of which he has managed to make up by, according to appellant, depleting his savings, and getting money from his parents and his friend. I suggest the requirement to pay $1,500 per month maintenance cannot stand on these facts unless there is a specific finding of bad faith and a specific finding of circumstances "within appellant's control."
The majority bases its analysis that a specific finding of bad faith is not required by looking at the modification standard. The majority cites Warwick v. Warwick, 438 N.W.2d 673, 678 (Minn.App. 1989) for that general proposition. However, the law clearly allows parties to bind themselves to a higher level of performance than normally required. Plath v. Plath, 393 N.W.2d 401, 403 (Minn.App. 1986). "Unquestionably, parties to a marriage dissolution may bind themselves to a level of performance higher than that which the courts could require of them." Id. (citing In re LaBelle's Trust, 302 Minn. 98, 111, 223 N.W.2d 400, 408 (Minn. 1974)). It cannot be contradicted that the parties here bound themselves to a level of performance calling for appellant's spousal maintenance to be reconsidered and recalculated downward if (a) appellant's income decreased significantly; (b) it was because of circumstances not in appellant's control and not by bad faith conduct.
Appellant quit a high paying job for claimed reasons of ill health, was out of work for a while, and is now back at work, earning $12 an hour. That accounts for his monthly net take-home pay of $1,768, as found by the district court. The $1,500 per month permanent spousal maintenance was specifically based on his previous salary of approximately $70,000 per year. There is no showing in the record that there are any $60,000 to $70,000 per year jobs out there that were offered to appellant that he turned down. There is no evidence that his old job is available to him. There is no evidence in the record that at his age, $70,000 per year jobs can be found by just looking.
Respondent's income went up from $7 an hour to $12 an hour, the same hourly wage as appellant is now making. The district court made the remarkable statement that there was no evidence in the record indicating that her earning capacity had improved since the time of the dissolution "despite the fact that her income had increased from $7 per hour at the time of the dissolution to $12 per hour at the time of appellant's motion." That does not track! The single most significant factor of one's earning capacity is what one actually earns! If respondent is being paid $12 an hour, which she is, we are hard pressed to state that her previous earning capacity of $7 an hour has not improved!
It is true that there is conflicting evidence in the record about the state of appellant's mental health, but there is no finding in the record that his change of jobs constitutes bad faith. I strongly argue that without that explicit finding, the stipulated decree controls, and appellant's spousal maintenance obligation has to be reconsidered and recalculated downward if there has been a significant decrease in his income. The district court record shows that appellant's gross income went from $70,000 per year down to $26,000 per year. That is a significant decrease in income as a matter of law.
Appellant, age 57, is in somewhat ill health and is approaching the age of retirement. Can the courts force people against their will not to change jobs, forbid them from moving from a high stress level to a lower stress level, all in the name of paying maintenance? Assume an obligor has moderate breast cancer or prostate cancer, and the attending physician says, "Well, you can work full time if you want to. Just keep up with your medicine and report back to me every three months." Does that obligor have to keep working? Can an older obligor, in ill health, retire when he is not feeling well but has not yet been ordered to stay home by his physician?
I suggest that an obligor has to have that option. We no longer have indentured servants in this country. If a maintenance decree is not specific, what can an obligor do at 59-1/2 when they can begin to draw deferred income with no penalty? What can the courts force an obligor to do when he or she reaches the age of 62 and can legitimately quit work and draw social security?; at age 63?; at age 64?; at age 65, and full retirement?
As the record indicates, appellant previously has paid up in full all arrearages and satisfied all contempt orders. Appellant points out that this was only able to be accomplished by getting financial help from his parents and from his girlfriend. I suggest that unless appellant's obligation is fairly recalculated, this situation of massive arrearages will restart, and there will never be an answer in this case. Respondent has made no showing that $70,000 per year jobs are out there "going wanting" until appellant reapplies.
It is obvious that respondent and the district court developed a dislike for appellant because he went from a job that paid more to his present job that pays less. I am not sure how the law can prevent that! With no explicit finding of bad faith on the part of appellant, as required by the stipulated decree, I find no authority in the district court or in this court to continue a $1,500 per month maintenance, an amount set when appellant's income was three times what it is now.
I dissent. I would reverse and remand to the district court.