Opinion
No. A06-329.
Filed November 28, 2006.
Appeal from the District Court, Hennepin County, File No. Sp 143 852.
Peter J. Horejsi, McCloud Boedigheimer, P.A., (for appellant)
Mark Gray, (for respondent)
Considered and decided by Wright, Presiding Judge; Halbrooks, Judge; and Hudson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
On appeal from the district court's denial of appellant-husband's motion to modify or terminate respondent-wife's spousal maintenance, husband argues that the district court abused its discretion when it found that the parties' changed circumstances do not necessitate modification or termination of husband's maintenance obligation. We remand.
FACTS
The 26-year marriage of respondent Marjorie Roggeman (wife) and appellant Ben Roggeman (husband) was dissolved on March 22, 1990, by judgment and decree. The district court divided the parties' property and awarded each spouse one-half of husband's pension accounts as of the date of dissolution. The district court also ordered husband to pay monthly spousal maintenance to wife in the amount of $400 because wife lacked "sufficient income and sufficient property, including the marital property portion to her, to provide for her reasonable needs considering the standard of living established during the marriage." The judgment and decree specified that the spousal maintenance was subject to cost-of-living adjustments and was to continue "until the death of either party, the remarriage of [wife], or modification or termination by the Court, whichever first occurs." Since the marital dissolution, husband's monthly spousal-maintenance obligation has increased to $594 as a result of cost-of-living adjustments.
On April 1, 2005, in anticipation of his upcoming retirement on April 29, 2005, husband moved the district court to modify, reduce, or terminate spousal maintenance. Husband argued that changes in the parties' incomes since the dissolution are substantial and render husband's existing maintenance obligation unreasonable and unfair.
A referee heard husband's motion. In his recommended order, the referee found that wife has a net monthly income of $1,810.20, which includes her employment income and the payments she receives from her marital portion of husband's pension accounts. The referee found that husband's postretirement net monthly income, not including the payments husband receives from his marital portion of his pension accounts, equals $2,654.05. These figures, as compared with the parties' income levels at the time of dissolution, demonstrate that wife's income ( including the pension portion of her marital-property settlement) has increased 31 percent over inflation since dissolution while husband's income ( excluding the pension portion of his marital-property settlement) has increased 4.4 percent over inflation. The referee also calculated the parties' net monthly expenses and found that husband's expenses, not including his maintenance obligation, total $2,658.61, while wife's are $2,227.
The referee held that, pursuant to Kruschel v. Kruschel, the pension payments that husband receives from his marital share of his pension accounts cannot be deemed income for purposes of calculating husband's maintenance obligation. 419 N.W.2d 119, 122-23 (Minn.App. 1988) (holding that maintenance obligor's marital property may not be considered as income for purposes of calculating obligor's maintenance obligation, but that marital property may be considered when calculating total financial resources available to obligor and to obligee with which they can meet their own needs).
Based on these figures and the standard of living enjoyed during the parties' marriage, the referee found that the change in wife's income was substantial and made husband's present maintenance obligation unreasonable and unfair. In his recommended order, the referee granted husband's motion to modify spousal maintenance and decreased husband's monthly maintenance obligation from $594 to $200. The recommended order became effective when countersigned by the district court and wife sought review. Minn. Stat. § 484.70, subd. 7(c)-(e) (2004).
On review, the district court adopted the referee's findings regarding the parties' net monthly incomes and expenses. But the district court disagreed with the referee's finding that these figures represent a substantial change that renders husband's maintenance obligation unreasonable and unfair. The district court, therefore, reinstated husband's $594 monthly maintenance obligation. This appeal followed.
DECISION
"The district court has broad discretion in deciding whether to modify a spousal maintenance award." Kielley v. Kielley, 674 N.W.2d 770, 775 (Minn.App. 2004). We review a district court's modification decision for an abuse of discretion. Dougherty v. Dougherty, 443 N.W.2d 193, 194 (Minn.App. 1989). "A district court abuses its discretion when its decision is against logic and the facts on record." Kielley, 674 N.W.2d at 775 (quotation omitted).
Before a maintenance award may be modified, the party seeking the modification has the burden of proving that there has been a substantial change in circumstances, such as a substantial increase or decrease in the earnings or needs of a party or a substantial change in the cost of living for either party. See Minn. Stat. § 518.64, subd. 2(a) (2004) (addressing modification of maintenance); Tuthill v. Tuthill, 399 N.W.2d 230, 231-32 (Minn.App. 1987) (same). The moving party also must prove that the substantially changed circumstances make the current maintenance award unreasonable and unfair. Minn. Stat. § 518.64, subd. 2(a). Although the district court has broad discretion when ruling on a motion for modification, it must exercise its discretion in favor of modification "with great caution and only upon clear proof of facts showing that the circumstances of the parties are markedly different from those in which they were when the decree was rendered." Rubenstein v. Rubenstein, 295 Minn. 29, 32, 202 N.W.2d 662, 664 (1972).
Here, the district court determined that the 31-percent increase in wife's income is not substantial. It further held that husband's current maintenance obligation is fair and reasonable because, despite wife's increase in income, wife's current standard of living remains lower than husband's and lower than the standard of living that wife enjoyed during the marriage. The district court, therefore, denied husband's motion to modify or terminate husband's maintenance obligation.
Husband argues that the district court abused its discretion when it denied his motion because husband's current maintenance obligation will require him to use the portion of his pension accounts awarded to him as marital property to satisfy his maintenance obligation. We have held that, to the extent an obligor proves that his or her maintenance obligation will require the obligor to deplete his or her marital-property award to pay maintenance, the obligor's maintenance obligation is subject to modification under Minn. Stat. § 518.64, subd. 2. Kruschel v. Kruschel, 419 N.W.2d 119, 122 (Minn.App. 1988). Here, the district court's findings regarding husband's income and expenses, not including husband's maintenance obligation, indicate that husband will have a $4.56 monthly shortfall for covering husband's own expenses. In spite of this shortfall, the district court was "not persuaded that [husband] would have to invade his retirement accounts to pay maintenance."
Assuming husband does not choose to reduce his actual expenses, the district court may require husband to use the marital portion of his pension accounts to satisfy this shortfall. See Kruschel, 419 N.W.2d at 122-23 (holding that maintenance obligor's total financial resources, including income from obligor's marital-property award, must be considered in evaluating obligor's ability to meet his or her own needs). But as noted above, the district court cannot consider husband's marital portion of his pension accounts as income when calculating husband's maintenance obligation. Id.
The district court was well within its authority to make such a finding. We also observe that these sorts of findings generally are credibility determinations to which we give great deference. In re Welfare of M.D.O., 462 N.W.2d 370, 374-75 (Minn. 1990); Vangsness v. Vangsness, 607 N.W.2d 468, 472 (Minn.App. 2000). But the district court did not provide a sufficient basis for this finding to allow us to determine whether the denial of the motion to modify is against logic and the facts on the record and, therefore, an abuse of discretion. Given the district court's finding that husband will have a $4.56 monthly shortfall for covering his own expenses, logic and the facts on the record suggest that husband will have to invade the marital portion of his pension accounts to satisfy his monthly maintenance obligation. We, therefore, remand to the district court to explain or resolve the apparent inconsistency between its finding that it is "not persuaded" that husband will have to invade the marital portion of his pension accounts to satisfy his maintenance obligation and its findings regarding husband's income and expenses.
If on remand the district court finds that husband will have to invade the marital portion of his pension accounts to satisfy his maintenance obligation, the district court must determine whether this invasion necessitates modification of husband's maintenance obligation. There are two primary principles on which the district court must make that determination. The first is the principle that, when a maintenance obligor proves that the maintenance obligation will require the obligor to deplete his or her marital-property award, the obligor's maintenance obligation is subject to modification. See Kruschel, 419 N.W.2d at 122 ("To the extent that [a maintenance award] would require [the obligor] to deplete his property award to pay maintenance, it is subject to modification under Minn. Stat. § 518.64, subd. 2."). But see Richards v. Richards, 472 N.W.2d 162, 165 (Minn.App. 1991) (holding that Kruschel's rule "by no means rules out exceptions," and, therefore, property award may be invaded under certain circumstances, such as when obligor limited his or her income in bad faith).
The second is the principle that the "purpose of a maintenance award is to allow the recipient and the obligor to have a standard of living that approximates the marital standard of living, as closely as is equitable under the circumstances." Peterka v. Peterka, 675 N.W.2d 353, 358 (Minn.App. 2004). This principle dictates that the "maintenance obligor has a duty, to the extent equitable under the circumstances, to support the maintenance recipient at the marital standard of living." Id. at 358-59 (noting that when income of an obligor who pays sub-marital-standard-of-living maintenance award substantially increases, thereby rendering existing award unreasonable and unfair, maintenance award may be increased, even if obligee's monthly expenses did not increase, in order to bring obligee closer to marital standard of living); see also Walker v. Walker, 553 N.W.2d 90, 96 n. 2 (Minn.App. 1996) (holding that even though wife's annual income, including her maintenance award, exceeded her actual annual expenses, husband's maintenance obligation need not be decreased because wife's annual income was still lower than expenses associated with standard of living she enjoyed during marriage).
We acknowledge that these principles may conflict with one another if and when they are applied in this case. If indeed they conflict, the district court must balance those principles against one another and explain its reasoning. When the maintenance obligee urges that maintenance is insufficient and the maintenance obligor urges that it is excessive, the district court must discharge its duty equitably to balance the obligee's need against the obligor's ability to pay. Buhr v. Buhr, 395 N.W.2d 433, 436 (Minn.App. 1986) (holding that when district court discharges this duty, district court does not abuse its discretion even when it imposes a maintenance obligation that causes obligor's expenses to exceed obligor's income). We observe that the fact that an obligor's income is less than his or her expenses, including maintenance, does not by itself require a modification of the obligor's maintenance obligation. See, e.g., Ganyo v. Engen, 446 N.W.2d 683, 687 (Minn.App. 1989) ($201 shortfall); Buhr, 395 N.W.2d at 436 ($75 shortfall). If on remand the district court finds that husband will have a shortfall, the district court must determine whether modification of spousal maintenance is warranted by balancing wife's need against husband's ability to pay and explain why the maintenance award is "appropriate, given all the circumstances of the case." Ganyo, 446 N.W.2d at 687.
We, therefore, remand to the district court to address and, if necessary, correct the inconsistencies in the district court's findings, and to weigh any competing principles that may arise as a result of those corrections. Remanded.
Whether to reopen the record on remand rests within the district court's discretion.