This opinion will be unpublished and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: Mary Richarda Ridgway, petitioner,
Mark Elwin Ridgway,
Washington County District Court
File No. F8905671
John Garrett Westrick, Tammy Lynn Merkins, Westrick & McDowall-NIX, P.L.L.P., 400 Minnesota Building, 46 East Fourth Street, St. Paul, MN† 55101 (for respondent)
Mark J. Vierling, Tanya Evangeline Maurice, Eckberg, Lammers, Briggs, Wolff & Vierling, P.L.L.P., 1835 Northwestern Avenue, Stillwater, MN† 55082 (for appellant)
††††††††††† Considered and decided by Crippen, Presiding Judge, Amundson, Judge, and Anderson, Judge.
††††††††††† Appellant Mark Ridgway challenges the district courtís denial of his motion to modify or suspend his spousal-maintenance obligation.† The district court (1) refused to modify appellantís maintenance, finding that there was insufficient financial information available at the time of the hearing to determine if appellantís income had decreased, and (2) refused to suspend his obligation, noting that husbandís desire to start a business did not relieve him of his obligation to pay maintenance.† Because the district courtís findings are unclear and are not clarified by review of the record, we remand.
††††††††††† In 1991, Appellant Mark Ridgway (husband) and respondent Mary Ridgway (wife) were divorced after 21 years of marriage.† At the time of the decree, husband earned $2,340.47 per month and wife earned $480 per month.† Wife was awarded $429 per month in temporary spousal maintenance.†
In 1998 wife moved to modify spousal maintenance.† Husband notified the court that he had been laid off from his job in May 1997 because of a corporate merger, but that he had found employment with Robert Half International (RHI) on a temporary basis.† The district court estimated that husbandís gross income for 1998 would be between $71,000-$75,000.† The district court granted wifeís motion and awarded her $1,200 per month in permanent spousal maintenance.†
In May 1999, husband brought a motion to modify or suspend his spousal-maintenance obligation, claiming that his income had substantially decreased.† Husband also presented a business plan to start his own company, asking that the court suspend his maintenance obligation until he opened his business.† Wife brought a counter-motion requesting that husband secure the spousal maintenance by naming her as a beneficiary to a $50,000 life insurance policy.† In September 1999, the district court denied husbandís motion for modification or suspension of his spousal-maintenance obligation but granted wifeís motion requiring husband to name wife as a sole beneficiary on a $50,000 life insurance policy.† This appeal by husband followed.
D E C I S I O N
††††††††††† Husband challenges the district courtís denial of his motion to modify or suspend his spousal-maintenance obligation.† Modification of spousal maintenance is within the sound discretion of the district court.† Rapacke v. Rapacke, 442 N.W.2d 340, 343 (Minn. App. 1989).† In order for this court to find an abuse of discretion, ď[t]here must be a clearly erroneous conclusion that is against logic and the facts on record.Ē† Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984) (citation omitted).† Maintenance may be modified for a number of reasons, including a showing of substantially increased or decreased earnings of a party or substantially increased or decreased need of a party, which makes the terms unreasonable and unfair.† Minn. Stat. ß 518.64, subd. 2(a) (1998).
The district court declined to modify husbandís maintenance obligation, holding that husband had not shown an adequate change in circumstances and that husbandís claimed inability to support himself was merely speculative.†† The court determined that husbandís 1999 tax returns were necessary to determine if husbandís income had declined and that husbandís desire to start a business did not affect his obligation to pay spousal maintenance.†
Husband asserts that a decrease in his 1999 income was a mathematical certainty and not a matter of speculation.† As of the hearing date in August 1999, husband presented evidence that he had only earned $14,537.27, working sporadically for Robert Half Industries (RHI) earning $50 per hour.† In addition, if husband were able to continue to work for RHI and worked eight hours per day at a rate of $50 per hourfrom September through December 1999 he could only have earned an additional $35,200 for an approximate gross income in 1999 of $49,700.
Despite information in the record establishing that husbandís actual income for 1999 was only $14,537.27 and evidence that the district court could have estimated husbandís income for September through December 1999, the court declined to make a finding on husbandís 1999 income.† Instead, the district court chose not to credit husbandís testimony and evidence, concluding that the 1999 tax returns were necessary to determine if husbandís income had actually decreased as steeply as he claimed.† While the district court is given broad discretion in assessing the credibility of parties, Minn. R. Civ. P. 52.01, here the district court gave no explanation for discrediting husbandís testimony and written documentation.
Wife offers four explanations for the district courtís refusal to credit husbandís testimony.† First, she asserts that husband was not forthcoming with his financial information in 1998, when the parties were disputing the potential increase in spousal maintenance and that this is evidence that he is currently acting in bad faith.† But the record does not support her contention.† In September 1998, husband disclosed that he had made approximately $47,000 from his employment at RHI.†† In its February 1999 order, the district court found that husbandís ďgross income for the year 1998 is between $71,000 and $75,000.Ē† Although the district court did not explain how it arrived at the $71,000-$75,000 figure, it is consistent with an estimate of the amount that husband could earn if he worked all of the work days between September and December 1998 at his then current pay rate of $50 per hour.
In addition, wife points to husbandís 1998 tax returns to demonstrate that he was underestimating his income in 1998 and is again likely to underestimate his income for 1999.† According to husbandís 1998 tax return, his adjusted gross income for 1998 was $130,987.† But, wife admits that approximately $30,000 of this income is a capital gain from the sale of the homestead and approximately $28,500 received by husband is severance pay.† These two additional aberrational payments explain the gap between husbandís estimated and actual income for 1998.† †The record does not support wifeís contention that husband was hiding assets from the court or was dishonest in his income estimate or documentation.
Nor does the record support wifeís assertion that husband purposely worked less in 1999 to avoid paying maintenance.† Husbandís 1998 income was earned almost exclusively from independent contractor projects brokered through RHI.† Although he earned more than $75,000 at RHI in 1998, husband explains that he worked on every available project offered to him by RHI.† RHI wrote a letter explaining that husband had never turned down an assignment in 1998 or in 1999.† In addition, husband testified that he attempted to find a job with eight other potential employers, to no avail.† The evidence simply does not show that husband withheld himself from the job market in 1999.
Wife also argues that the district court did not err in finding husbandís claims speculative because she believes that husband has an earning capacity of approximately $75,000 per year based on his education and work history.† Generally, earning capacity is not an appropriate measure of income unless the obligorís actual income is impracticable to determine or is unjustifiably self-limited.† Beede v. Law, 400 N.W.2d 831, 835 (Minn. App. 1987); see also Warwick v. Warwick, 438 N.W.2d 673 (Minn. App. 1989) (extending the child support principle of considering earning capacity to spousal maintenance).† Neither situation is present here.† Husband was employed, although temporarily, throughout 1999.† He supplied actual income data for 1999 and therefore it is not impracticable to calculate his actual income.† See Veit v. Veit, 413 N.W.2d 601, 605-06 (Minn. App. 1987) (court determined earning capacity based on prior work history when the obligorís unemployment made it impracticable to determine actual income).† Nor is there a finding that husbandís income was unjustifiably self-limited.† See Hedburg v. Hedburg, 412 N.W.2d 43, 47† (Minn. App. 1987) (requiring in a child-support context, that the district court make a specific finding of bad faith in order to find that obligor unjustifiably self-limited his income).
The district courtís determination that (1) the 1999 tax returns were necessary to determine husbandís 1999 income, and (2) that husbandís claims were speculative, are not supported by the record.† The court chose to discredit husbandís testimony without explaining why and there is no evidence in the record which would allow this court to reach a similar conclusion.† Because the reasoning of the district court is not apparent from the record, the issue of modification is remanded for a more detailed explanation based on the maintenance-modification standards set out in Minn. Stat. 518.64, subd. 2 (a) (1998).† We note that the husbandís 1999 tax returns are presumably available at this time; therefore we leave to the district court (1) the discretion to reopen the record and consider the 1999 tax returns, and (2) the determination of the degree to which possible maintenance modification is retroactive under Minn. Stat. ß 518.64, subd. 2(c) (1998).††
In addition, the need to increase the insurance as security for the maintenance award is directly tied to the amount of spousal maintenance, and therefore we also remand the issue of the insurance.†††
Husband asserts that the district court erred by not suspending his maintenance obligation to allow him to start his own business.† If a decrease in income is made in good faith, the separated spouse should share in the hardship as she would have done if the family remained together.† Giesner v. Giesner, 319 N.W.2d 718, 719-20 (Minn. 1982).† When determining whether voluntarily decreased income is justifiable, the district court ďmust make findings on the obligor's subjective intent in choosing a course of action that created the financial hardship.Ē† Gilbertson v. Graff, 477 N.W.2d 771, 774 (Minn. App. 1991).
Husband provided the court with more than 400 pages of documentation in response to the district courtís request for financial information.† Husband explained that starting his own business would be the best long-term opportunity for him to provide for himself and to fulfill his maintenance obligation.† According to his affidavit, husband believes that starting a credit-outsourcing business would allow him to take advantage of his skills in credit management and allow him to overcome the disadvantages of decreased employment opportunities due to his age and education.† In support of this business concept, husband provided the court with a detailed business plan.† The plan included the proposed business purpose, an analysis of the potential market and competition, a list of strengths and weakness, and projected revenue and expense sheets.† This evidence cannot be viewed in a vacuum.† There is no doubt that appellantís advancing age limits his employability.† It is undisputed that he has unsuccessfully sought employment.† The record also reflects that appellant has been relying on temporary positions.† The advancement of this business opportunity does not appear to be an unreasonable response to these realities.
††††††††††† It appears that the court did not fully consider husbandís request to suspend or modify his maintenance obligation.† The courtís handling of this issue was limited to the observation that husbandís ďchoice to start an outsourcing business does not alleviate his obligation to pay spousal maintenance.Ē† While this statement is not inaccurate, husbandís attempt to better provide for himself and to meet his maintenance obligations deserved more rigorous analysis.† The district court did not make appropriate findings on husbandís intent to start a business or, even more critically, why wife should not share the burden of husbandís proposed decreased income.† Under these facts, a remand is required.