Opinion
No. C6-96-308.
Filed August 27, 1996.
Appeal from the District Court, Hennepin County, File No. DC 140698.
Richard D. Goff, Shelly D. Rohr, Goff, Kaplan Wolfe, P.A., (for Appellant)
Michael D. Dittberner, Kathleen W. Kissoon, Kissoon, Clugg, Linder Dittberner, Ltd., (for Respondent)
Considered and decided by Parker, Presiding Judge, Randall, Judge, and Kalitowski, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. sec. 480A.08 § 3 (1994)
UNPUBLISHED OPINION
Appellant challenges the district court's amended judgment and decree ordering him to pay 15 percent of his gross income in spousal maintenance, subject to a floating cap of $30,000. We affirm in part, modify in part, and reverse in part.
FACTS
In 1989, the marriage of respondent Janet D. Solomon and appellant David J. Solomon was dissolved by stipulated judgment and decree. The initial decree ordered appellant to pay monthly child support and spousal maintenance to respondent. Between the time of the parties' divorce and entry of the order from which appellant now appeals, the parties sought and obtained no fewer than five orders modifying appellant's required monthly child support and spousal maintenance payments. Under these orders, appellant's monthly spousal maintenance payments ranged from $100 to $300. The parties obtained the most recent modification of their alimony rights and duties, in the form of an amended judgment and decree, on November 28, 1995.
Appellant seeks review of that portion of the trial court's November 28, 1995 order requiring appellant to make spousal maintenance payments to respondent in the amount of 15 percent of appellant's average annual gross income, not to exceed $30,000 in any one year. The order went on to state that in any year where appellant did not pay $30,000, the difference would be kept open, and in any year where 15 percent of his annual gross income exceeded $30,000, appellant would have to make up for the past years where the sum sent to respondent was not $30,000.
DECISION
A reviewing court will not disturb trial court modification of a maintenance award absent an abuse of discretion. Erlandson v. Erlandson , 318 N.W.2d 36, 38 (Minn. 1982). A trial court abuses its discretion where it makes clearly erroneous conclusions contrary to logic and the facts on record. Rutten v. Rutten , 347 N.W.2d 47, 50 (Minn. 1984).
I. Appropriateness of modification.
Appellant argues that respondent's changed needs did not justify the trial court's modification. We disagree. Minn. Stat. § subd. 2(a) (Supp. 1995) permits modification of a spousal maintenance award based on a finding of substantially increased need of a party which makes the terms of the previous decree unreasonable and unfair. See , e.g. , Wagstrom v. Wagstrom , 394 N.W.2d 841 (Minn.App. 1986) (increasing spousal maintenance based on deteriorating health of spouse payee), review denied (Minn. Nov. 26, 1986).
In this case, the trial court found that respondent's expenses had risen 12 percent since the parties' most recent alimony modification. The trial court determined this increase constituted a "substantially increased need," rendering the previous maintenance "unreasonable and unfair" within section 518.64, and supporting modification of the previous spousal maintenance award. While the record is thin, we cannot find, examining the record as a whole, that the trial court erred in finding modification appropriate. But we do modify the amount awarded.
Appellant contends that when the trial court computed respondent's monthly needs, it erroneously included her claimed monthly attorney fee payment of $500. We agree. The trial court's computation of respondent's monthly needs based on monthly attorney fees conflicts with this court's recent opinion in this case. See Solomon v. Solomon , C6-94-2555 (June 12, 1995). In that opinion, we affirmed the denial of an award of attorney fees to respondent on the ground that appellant had not engaged in improper discovery and that the attorney fees alleged were neither itemized nor properly substantiated. Id. While attorney fees may comprise a portion of respondent's monthly budget, that is between her and her attorney. The balance of her attorney fees, if any, do not constitute a part of her monthly expenses for purposes of computing what is reasonable maintenance for appellant to pay. Similarly, the trial court abused its discretion in computing respondent's need based on her alleged $700 monthly tax liability. Respondent's claim of monthly tax liability is unsupported in the record and is far too speculative to form the basis of an alimony award. See, e.g. , McCulloch v. McCulloch , 435 N.W.2d 564, 566-67 (Minn.App. 1989) (finding evidence of potential income too speculative to support maintenance award).
II. Level of maintenance.
A. Factors relevant to level of maintenance.
Appellant argues that the trial court improperly modified appellant's maintenance obligations by ignoring the parties' marital standard of living, by ignoring respondent's increased income, and by failing to consider appellant's monthly expenses and his ability to pay maintenance. Where the trial court finds modification of spousal maintenance appropriate, it sets the award based on factors including, among others, the financial resources of the parties, the parties' standard of living while married, the obligor's ability to pay, and the obligee's reasonable needs. Minn. Stat. § subd. 2(a), (c), and (g) (1994); See Maeder v. Maeder , 480 N.W.2d 677, 679 (Minn.App. 1992) (considering factors supporting an increase in maintenance), review denied (Minn. March 19, 1992).
The trial court did examine the parties' marital standard of living. The court found that appellant's original maintenance obligations were based not on the parties' marital standard of living, but on appellant's decreased income in the year of the parties' divorce, and that the parties' marital standard of living supported an upward modification of maintenance. The court also considered respondent's income from trusts in her name and in the names of her children, her existing alimony payments, and her parents' generous financial assistance. We recognize appellant's argument that the financial assistance of respondent's parents during the marriage may have contributed to an artificially high standard of living which he is not now responsible to maintain. But based on the totality of the record, we still conclude there is enough evidence to support an increased award of maintenance to respondent.
B. Maintenance formula.
Appellant argues the trial court abused its discretion by setting spousal maintenance as a percentage of appellant's gross income with a floating cap. We agree. Although approved in the past, maintenance awards strictly as a set percentage of an obligor's income are not favored. Erlandson v. Erlandson , 318 N.W.2d 36, 38 (Minn. 1982) (holding a trial court has broad discretion in awarding spousal maintenance and its determination will not be disturbed absent an abuse of discretion). See , e.g. , Schreck v. Schreck , 445 N.W.2d 861 (Minn.App. 1989) (affirming award of $2,200 per month plus 40 percent of annual bonus), review denied (Minn. Nov. 15, 1989); Doherty v. Doherty , 388 N.W.2d 1 (Minn.App. 1986) (affirming award of $500 per month plus 50 percent of net taxable income over $14,000). But it is important to remember that the purpose of maintenance is not to provide the obligee with a lifetime profit-sharing plan. Snyder v. Snyder , 298 Minn. 43, 53, 212 N.W.2d 869, 875 (1973).
Here, the court's modification required appellant to pay respondent 15 percent of his average annual gross income plus loans and advances, not to exceed $30,000 in any one year, with a "catch-up provision" for any year in which respondent did not receive $30,000. The payments thus ordered by the trial court provide respondent with alimony that varies with appellant's income, regardless of changes in respondent's needs, thereby establishing de facto profit sharing between appellant and respondent.
We conclude that on these facts, the profit sharing award ordered by the trial court is impermissible.
Appellant contends that under the trial court's modification calculating alimony based on appellant's annual income including gross income and loans and advances, appellant may be forced to pay alimony on loans and advances in both the year received and a later year in which such loans and advances become income. We agree. For under the trial court's modification, if appellant received a loan in Year A and then received forgiveness of that loan in Year B, he would be obligated to pay alimony on the amount of the loan once in the year received (Year A), and a second time in the year in which the loan became income (Year B).
Appellant argues that the trial court improperly required appellant, in the spousal maintenance modification, to inform respondent of appellant's income for each year by January 7 of the following year. Respondent has conceded the reasonableness of appellant providing this information at a later date, when all items of income have been determined and all tax returns finalized. Thus, we modify the order to reflect that appellant must provide the needed data on or before April 20 of each year rather than in January.
III. Retroactivity of modification.
Appellant argues that the trial court improperly increased appellant's alimony obligations to respondent by modifying appellant's obligations retroactively to Jan. 1, 1993, based on a motion for modification filed on November 26, 1993. We disagree. While the order did relate back to before the filing of the motion for modification, respondent was entitled under the parties' original stipulated judgment and decree to receive additional maintenance based on bonuses and commissions received by appellant throughout each year. See Minn. Stat. § 518.64, subd. 2(c) (Supp. 1995) (listing conditions for retroactive modification of maintenance). Respondent timely moved for modification as soon as she learned of appellant's November 1993 bonuses and commissions, thereby securing her right to receive maintenance throughout 1993 based on these items of appellant's income.
IV. Modification
We vacate that portion of the trial court's order requiring appellant to make payments averaging 15 percent of his gross income. Instead, appellant shall pay respondent 15 percent of his annual net income as reflected on his federal income tax returns. Minn. Stat. § subd. 5(b) (1994) (providing statutory guidelines for determining net income). Said maintenance shall be subject to a yearly ceiling of $30,000 ($2,500 a month), and a yearly floor of $21,600 ($1,800 a month). In any year when 15 percent of appellant's annual net exceeds $30,000, nothing happens, there is no carryover. But, if appellant claims that 15 percent of his annual net is less than $21,600, regardless, he must pay a minimum of $1800 a month to respondent unless he goes back into court and carries his burden of proof that he is entitled to a further reduction. This formula should help both parties stabilize anticipated expenditures and income. Each is looking at a hard figure of $21,600 to $30,000 per year. Hopefully this will help both parties decrease the high amount of attorney fees and costs that both sides have been spending to carry on this dispute.