This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. ß 480A.08, subd. 3 (1998).






In Re the Marriage of:

Helen Joanne Hovelson, a/k/a

Helen Joanne Ostrem, petitioner,





William Christian Hovelson,



Filed May 30, 2000

Affirmed in part, reversed in part.

Anderson, Judge


Hennepin County District Court

File No. DW122754


Kevin J. McGrath, Rodney H. Jensen, Jensen & McGrath, P.L.L.P., 1100 Northland Plaza, 3800 West 80th Street, Bloomington, MN† 55431 (for respondent)


John M. James, John C. James, 4530 IDS Center, 80 South Eighth Street, Minneapolis, MN† 55402 (for appellant)


Edward M. Cohen, Jr., Cohen & Friedberg, Ltd., 3015 Ottawa Avenue South, Minneapolis, MN† 55416 (courtís receiver)



††††††††††† Considered and decided by Anderson, Presiding Judge, Schumacher, Judge, and Peterson, Judge.

U N P U B L I S H E D†† O P I N I O N


††††††††††† †Appellant challenges the resolution of multiple issues regarding the division of property as established by the findings of a court-appointed receiver in a marital dissolution action.† Appellant also challenges the post-decree appointment of the receiver.† Because the district court properly determined that appellant dissipated marital assets, and that a receiver was necessary post-decree, but miscalculated the amount of the dissipation, we affirm in part and reverse in part.††††††


††††††††††† In 1994, appellant William Hovelson (husband) and respondent Helen Hovelson (wife) separated after over 30 years of marriage.† Husband is a manufacturerís representative with an average annual income of approximately $160,000.† Wife is a homemaker not employed outside the home.† During discovery husband refused to turn over certain financial documents and wife moved to compel discovery.† The court ordered husband to turn over the documents.† Although husband did provide some of the documents, wife suspected that husband was dissipating martial assets and made a motion to appoint an independent receiver to review the marital assets.†

††††††††††† The district court appointed a receiver to investigate, account for, and protect the marital assets of the parties.† In addition, the court ordered husband to account for all income received after January 1, 1994.†† In 1997, the receiver presented his findings to the court in a 37-page report.† The report detailed husbandís evasive financial practices and incomplete financial documents.† The receiver suspected husband of dissipating marital assets, filed a motion to sequester husbandís assets, and that motion was granted.† The receiver took control of the marital assets, paid wife $3,400 per month and paid husband $3,499 per month for reasonable monthly expenses.††

††††††††††† The receiverís final report stated that husband had earned approximately $800,000 from 1994 to 1998, and had dissipated between $120,000 and $180,000 in marital assets during that time.† In September 1999, the district court ordered husband to pay wife $3,400 per month in spousal maintenance, awarded wife $80,000 to equalize the property distribution, ordered husband to pay wifeís attorney fees, and ordered husband to pay the receiver's fees and costs.† In addition, the court ordered the receiver to continue to sequester husbandís finances to ensure the payment of maintenance, property settlement, attorney fees, and receiver costs.††


Husband challenges the district courtís decision that he dissipated $180,000 in marital assets and the appointment of a receiver post decree.† The district court has broad discretion when determining the division of marital property.† Rutten v. Rutten, 347 N.W.2d 47, 50 (1984).† The reviewing court must affirm the district court decision if the decision has an acceptable basis in fact and principle.† Bollenbach v. Bollenbach, 285 Minn. 418, 426-27, 175 N.W.2d 148, 154 (1970).

†Specifically, husband claims that: (1) there is no evidence that he dissipated assets in contemplation of separation or dissolution; (2) there is no evidence that he inappropriately used marital assets; (3) all post-separation assets are non-marital property and not subject to review; (4) even if the post-separation assets are part of the marital estate, the district court erred in calculating the 1997 and 1998 dissipation; (5) the district court erred in charging his marital account with a $41,936 gift to his daughter; and (6) the district court improperly appointed a receiver post-decree.


First, husband asserts that the record does not support a finding that he dissipated marital assets in contemplation of separation or dissolution.† Minn. Stat. ß 518.58, subd. 1(a) (1998) states:

If the court finds that a party to a marriage, without consent of the other party, has in contemplation of commencing, or during the pendency of, the current dissolution, separation, or annulment proceeding, transferred, encumbered, concealed, or disposed of marital assets except in the usual course of business or for the necessities of life, the court shall compensate the other party by placing both parties in the same position that they would have been in had the transfer, encumbrance, concealment, or disposal not occurred.


The parties were separated in October 1994 but the court asked the receiver to review the partiesí assets back to January 1994.†† Wife claimed that husband was dissipating assets in contemplation of their separation and dissolution during that time.†

During discovery, wife requested husbandís financial documents as far back as 1990; she repeatedly requested copies of husbandís tax returns, retirement benefit records, employment reimbursement information and other documents.† Husband continually refused to turn over the documents, and only turned over partial, inaccurate and disorganized records when the court ordered compliance with the discovery requests.† The district court inferred that husband was dissipating assets based on his refusal to obey the discovery order and his non-cooperation throughout the separation.† †See Federated Mut. Inc. Co. v. Litchfield Precision Components, Inc., 456 N.W.2d 434, 436-37 (Minn. 1990) (noting that failure to produce evidence permits inference that evidence, if produced, would have been unfavorable); Baker v. Citizens State Bank of St. Louis Park, 349 N.W.2d 552, 558 (Minn. 1984) (the district court may draw inferences from circumstantial evidence).† The district court ordered the receiver to review documents only as far back as January 1994; this order is reasonable in light of husbandís non-compliance in providing documents as far back as 1990.


Next, husband argues that the district court erred in finding that he dissipated assets.† ďDissipation is frivolous, unjustified spending of marital assets.Ē† Volesky v. Volesky, 412 N.W.2d 750, 752 (Minn. App. 1987).† If a party in a dissolution proceeding disposes of marital assets, the party shall be accountable for those assets unless the assets are justifiably consumed to meet necessities of life or in the usual course of business.† Minn. Stat. ß 518.58, subd. 1a (1998).†

†Husband claims that he did not have a nefarious purpose in spending the partiesí money.† But section 518.58 does not require a nefarious purpose.† Rather, section 518.58 states that both parties to a dissolution action owe a fiduciary duty to one another for any profit or loss derived without the consent of the other pending the dissolution.† Minn. Stat. ß 518.58, subd. 1a (1998).

There is extensive evidence that husband did not act as fiduciary for wifeís interests; for example (1) husband impeded wifeís attempt to investigate the partiesí financial affairs; (2) husband failed to disclose to the receiver, and presumably his wife, about the existence of an additional bank account; (3)† husbandís financial records were incomplete and often inaccurate; and (4) husband failed to file a 1994 tax return and the accuracy of his 1995, 1996 and 1997 returns is questionable.† In addition, there is evidence that husband wasted the partiesí assets prior to appointment of the receiver.† From 1994 through 1998 husband had an average net monthly income of nearly $10,000.[1]† During the separation, husband paid wife $3,400 a month in maintenance and, it appears, spent the remainder of the net income, approximately $7,000, every month.† When the receiver sequestered husbandís assets in 1997 he denied husbandís request for a budget of $15,000 and allowed husband $3,499 per month for reasonable living and business expenses.† Husband did not request an increase in his monthly budget and was able to earn nearly $130,000.† The receiver reasoned that husband had been dissipating approximately $3,000 per month prior to the receivership based on husbandís current budget.[2]

The record supports the district courtís finding that husband dissipated assets.† The disheveled state of husbandís financial records makes a more detailed analysis of husbandís finances difficult.† The district courtís estimate of $3,000 per month in dissipation is reasonable based on husbandís refusal to comply with court orders, his concealment of assets, and his ability to maintain his business on the receiver-appointed budget.


Husband also asserts that income after the partiesí separation in October 1994 is a non-marital asset and therefore not subject to dissipation review.† The district court considered all assets through December 1998 as marital assets subject to equal distribution.† Husband argues that wife is not entitled to property after October 1994 because they were separated for an extended period.† See Batsell v. Batsell, 410 N.W.2d 14, 17 (Minn. App. 1987) (property acquired during an extended separation, 20 years, was not marital property under Minn. Stat. ß 518.58), review denied (Minn. Sept. 30, 1987).† Unlike Batsell the parties in this case were only separated for five months before a dissolution petition was filed.† Although the dissolution took nearly five years to complete, the parties were continually pursuing the divorce and husbandís actions significantly contributed to the length of the proceedings.† For husband to now seek relief based on largely self-created delay is incongruous at best.† The district court did not abuse its discretion in finding that the parties accrued marital assets from October 1994 through December 1998.


Husband also asserts that the district court erred in finding that he dissipated assets after the receiver sequestered his income.† The receiver sequestered all of husbandís income beginning in October 1997.[3]† From that income, the receiver paid $3,400 in monthly maintenance payments to wife and $3,499 to husband.† The remaining amount was charged against husbandís marital account for the next fourteen months as dissipated.† Husband argues that the district court erred by charging his marital account with $17,115.52 in dissipated assets, calculated from October 1997 through December 1998.† We agree.†

The receiver testified that husband did not dissipate any assets after October 1997.† Despite this testimony, the district court included the months of November 1997 through December 1998, an amount totaling $17,115.52, when calculating dissipation.† The district court does not explain why these months were included in the calculation.

The receiver had full control of husbandís income after October 1997, therefore, including the $17,115.52 in additional dissipated assets is an error and we reverse.


††††††††††† Bank records show that the partiesí daughter and her business, Office Services Center, were the recipients of over $50,000 from her father or her fatherís business from 1994 through 1998.† The parties dispute whether the $50,000 was a loan or a gift.† Husband challenges the district courtís characterization of the $50,000 as a loan.

††††††††††† The district court found that daughter contemplated the repayment of the entire $50,000 and treated the full unpaid balance as an account receivable.† Daughter testified that she repaid over $8,000 of the money.† Accounts receivable are marital property subject to division.† See Davey v. Davey,415 N.W.2d 84, 88 (Minn. App. 1987) review denied (Minn. Jan.20, 1988).† The record supports the district courtís finding that the $50,000 was an account receivable and also supports the distribution of the $41,936 balance.


††††††††††† Finally, husband challenges the district courtís authority to maintain the appointment of the receiver post-decree.† In the September 1999 order, the district court ordered the receiver to continue to sequester husbandís assets to ensure the payment of maintenance, property settlement, attorney fees, and receiver costs.† The district court may appoint a receiver


by the judgment, or after judgment, to carry the same into effect, or to preserve the property pending an appeal, or when an execution has been returned unsatisfied and the judgment debtor refuses to apply property in satisfaction of the judgment


Minn. Stat. ß 576.01, subd. 1(2) (1996).† The district court made the following findings in support of appointing a receiver in 1997: husband was suspected of hiding assets, was uncooperative, and refused to comply with court orders.† In addition, husband continued to be uncooperative after the receiver was appointed; husband concealed the existence of a bank account and repeatedly misrepresented his income to the receiver.† Husbandís history of financial misdealings and his continued attempt to conceal assets support the district courtís decision to maintain a post-decree receivership.† While a post-decree receivership is necessary here, we have serious reservations about a commitment to a long-term receivership and the high costs associated with the receivership.† The district court has a continuing obligation to provide oversight to the receiver and to consider whether the receivership continues to be necessary.


††††††††††† Finally, we consider wifeís motion to strike husbandís supplemental appendix and section I of husbandís reply brief.† The appendix and the brief raise the issue of potential self-employment and Minnesota income tax liability for the first time on appeal.† A reply brief must be confined to matters raised in the brief of the respondent.† Minn. R. Civ. App. R. 128.02, subd. 3; see also State by Humphrey v. Ri-Mel, Inc., 417 N.W.2d 102, 110 (Minn. App. 1987) (explaining that a new issue raised in a reply brief ďis not properly before this court and will not be consideredĒ), review denied (Minn. Feb. 17, 1988).† Moreover, ď[t]his court will grant a motion to strike material submitted in a partyís appendix when that material did not come before the trial court.Ē† Cressy v. Grassmann, 536 N.W.2d 39, 43 (Minn. App. 1995) (citation omitted), review denied (Minn. Sept. 28, 1995).† Husbandís claim of additional tax liability was not raised in district court, was not raised in his main brief, exceeded the scope of wifeís brief, and therefore is not properly before us.† Accordingly, we grant wifeís motion to strike husbandís supplemental appendix and section I of the reply brief.

††††††††††† Affirmed in part, reversed in part.


[1] In his reply brief, husband claims for the first time that the district court miscalculated his net income by not accounting for his self-employment and Minnesota state income taxes. This issue is not properly before this court because husband did not raise the issue below or in his appellantís brief, therefore we decline to consider this issue.† Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (issues not litigated or raised in the district courtmay not be presented for the first time onappeal); McIntire v. State, 458 N.W.2d 714, 717 n.2 (Minn. App. 1990) (issues not raised in appellantís brief cannot be revived in reply brief), review denied (Minn. Sept. 28, 1990).

[2] Total monthly expenses equaled $6,900 ($3,400 for wife and $3,500 for husband).† $10,000 -$6,900=$3,100.

[3] Husbandís average net monthly income for 1997 was approximately $10,300 and in 1998 wasapproximately$7,700.