This opinion will be unpublished and

may not be cited except as provided by

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






In Re the Marriage of:

Patricia Gail Lewis, petitioner,
Respondent (C2-00-327),
Appellant (C3-00-353),


Franklin T. Lewis,
Appellant (C2-00-327),
Respondent (C3-00-353).


Filed December 5, 2000

Affirmed; motion to strike denied

Crippen, Judge


Steele County District Court

File No. F197692



Tim A. Staum, Mackall, Crounse & Moore, PLC, 1400 AT&T Tower, 901 Marquette Avenue, Minneapolis, MN 55402 (for Patricia Lewis)


Douglas G. Sauter, Jason P. Rietz, Douglas G. Sauter & Associates, P.A., Suite 108, 199 Coon Rapids Boulevard, Coon Rapids, MN 55433 (for Franklin Lewis)


            Considered and decided by Willis, Presiding Judge, Crippen, Judge, and Forsberg, Judge.*


U N P U B L I S H E D   O P I N I O N


            In these consolidated appeals, both parties challenge the trial court’s findings and conclusions regarding the primary marital asset, an investment in a bank holding company that owns about two-thirds of the stock of the Community Bank of Minnesota.  We affirm, finding no basis for appellate relief on (a) appellant’s[1] assertion that the court erroneously dismissed as mere speculation his expert’s testimony that appreciation of the investment during the twenty-year marriage was passive in nature, produced by inflation or market conditions—justifying a larger nonmarital award to appellant, (b) respondent’s related contention that the court’s 13% valuation of appellant’s nonmarital interest, purported to exclude consideration of passive appreciation, nevertheless rested on overstatement of the marriage-date value of the investment, and (c) appellant’s claim that the trial court abused its discretion in concluding that the investment must be sold to fairly accomplish division of the asset between the parties.  We also affirm the trial court’s denial of an award of attorney fees to respondent and deny appellant’s motion to strike.


            Appellant Franklin Lewis is 64 years of age and respondent Patricia Lewis is 44 years of age.  The parties were married from January 1978 until their divorce in October 1999.  The primary issue at trial was the valuation of stock in a bank holding company and the degree to which any of the stock constituted appellant’s nonmarital property.  The trial court ordered the parties to sell their interests in the holding company, awarded appellant a 13% nonmarital interest in the proceeds, and awarded each party one-half of the remaining 87% of funds to be received.

In 1968, appellant and his business partner purchased a total controlling interest of 60% in the Owatonna State Bank, now the Community Bank of Minnesota.  By the end of 1977, after acquiring minority shares, appellant and his partner each owned 41.8% of the Community Bank’s stock.

In 1982, appellant and his partner created a holding company, Owatonna Bancshares, Inc., which took ownership of their Community Bank stock. Appellant bought out his partner’s interest in 1985, when he also formed an Employee Stock Ownership Plan that owned a minority interest in the holding company.  As of December 31, 1998, Bancshares’ primary asset was a 90.13% ownership of the Community Bank.  Appellant and respondent together owned 64.99% of Bancshares.  Experts differed on their assessment of the value of this investment, appellant’s expert finding it worth $5.9 million and respondent’s expert putting the value at least $1.3 million higher.  During the marriage of the parties, Community Bank assets rose from $16.6 million, when the controlling interest in the bank was shared by appellant and his partner, to $63.9 million, with appellant having the controlling interest in the bank.

In findings on the value of the asset the trial court attributed, without dispute, “courage and foresight” to appellant in acquiring the bank and “ten years of blood, sweat, and tears in the business prior to his marriage” to respondent.  Explaining its choice against a specific statement of the value of the investment in 1978, which the court observed to be “at best a couple of hundred thousand,” the court determined to give “recognition” of appellant’s “gamble” and “years of effort made prior to [the] marriage,” and the court found a 13% nonmarital share of appellant, calculated by comparing the bank assets appellant controlled in 1978 with those he controlled in 1998.

Deliberating on a fair division of the banking investment, the trial court compared three models advanced by the supreme court in Nardini:  (a) in-kind division of a readily divisible asset, (b) division of the proceeds of a court-ordered sale of the asset, and (c) granting to one party both the asset and the obligation to pay to the other a just share of its value.  Nardini v. Nardini, 414 N.W.2d 184, 188 (Minn. 1987).  Because expert witnesses were “millions of dollars apart in their opinions of value” of the investment, and because the court found it “unrealistic to order Frank Lewis to go millions of dollars in debt at 63 years of age,” the court opted for a division of sale proceeds—reciting the Nardini court suggestion that this method of distribution “has the advantage of certainty and may be necessary for equitable division when an indivisible asset constitutes the bulk of the marital property.”  Id.



The trial court has broad discretion in determining a property division.  Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).  The issue of whether property is marital or nonmarital is a question of law, but we defer to the trial court’s underlying findings of fact unless they are clearly erroneous.  Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997).


All property obtained during the marriage by either spouse is presumed to be marital property.  Minn. Stat. § 518.54, subd. 5 (1998).  The party making a nonmarital claim must prove by a preponderance of the evidence that the property is nonmarital.  Olsen, 562 N.W.2d at 800. 

Appellant contends that the trial court abused its discretion in calculating his nonmarital stock interest to be 13%, claiming a greater nonmarital interest as reflected by inflation and passive market forces.  At the core of the issue before us is the trial court’s observation that “(t)he experts poured over inflation factors and market-place factors, all of which are speculative in nature.”  Appellant disputes that characterization of the evidence.

Appellant’s expert testified that, because there was no way to determine the economic growth specifically attributable to the parties’ work efforts, his analysis focused on separately establishing the stock growth due to inflation as well as the growth due to market forces.  But the witness conceded the existence of other factors that affected the value of the stock and the difficulty in giving credit to any particular factor over the 21-year period the parties were married.

Respondent’s expert offered contradictory testimony, applying a method of analysis showing much less influence from passive factors.  Finding some credibility in the approaches of both experts, the trial court had a rational basis to find that each of their opinions was speculative.  We must defer to the trial court’s assessment of the weight to be given to the witnesses’ testimony.  See Alstores Realty, Inc. v. State, 286 Minn. 343, 354, 176 N.W.2d 112, 118 (1970) (stating appellate courts defer to trial court determinations on weight and credibility of evidence presented through experts).

Apportionment of appreciation in these circumstances is largely governed by Nardini, 414 N.W.2d 184.  In Nardini, the supreme court recited the general principle applied when apportioning marital and nonmarital interests in a homestead, that the “present value of each interest is essentially proportionate to the amounts of the respective investments.”  Id. at 195.  The court determined that this concept might be applied when apportioning marital and nonmarital interests in a closely held business, but stated that strictly applying the formula in such a situation is not the most suitable solution.  Id. at 194-95.  A business, the Nardini court observed, “like a garden, must be tended if it is to flourish.”  Id. at 194.  With account further taken for reinvestment of business earnings, the court determined that “[n]early the entire present value of [the closely held business at issue in Nardini] should be apportioned as marital interest.”  Id. at 195.  The court then approved equal allocation of the asset to the parties.  Id.

We conclude that the trial court’s finding of a nonmarital interest is reasonable, especially in the aftermath of Nardini.  It is significant in this regard that the court, when considering the early stages of appellant’s banking career, was clearly impressed with the level of effort made to enlarge the value of the business. The trial court did not abuse its discretion in its assessment of active and passive appreciation of the bank investment.


Respondent’s related argument is that the trial court wrongfully looked at the increase in bank assets to determine appellant’s nonmarital share and should have made findings on the actual increase in value of the parties’ investment between the date of their marriage and their divorce. 

As respondent suggests, a study of bank assets does not openly take into account the extent of appellant’s control of the bank from time to time.  And the record does not state compelling reasons to reject the trial court’s findings.  The court pointedly examined the evidence on appellant’s pre-marital contributions to the value of the investment, suggesting that these efforts partly explain later successes.  In this sense, as the court evidently believed, the evidence shows a significant level of passive appreciation after 1978.

Respondent is not correct in suggesting that Nardini prohibits any attention to passive appreciation in appropriate circumstances.  The trial court did not abuse its discretion in calculating appellant’s nonmarital share at 13%.


Appellant finally argues that the trial court abused its discretion by ordering the sale of the Community Bank.  Minn. Stat. § 518.58 (1998) authorizes the trial court to “make a just and equitable division of the marital property of the parties” when a marriage is dissolved.  As the trial court noted, it can employ one of three approaches to the award of marital property, either dividing it in kind, dividing proceeds of sale, or distributing the asset to a recipient who also must make an offsetting payment to the other party.  Nardini, 414 N.W.2d at 188.  There is no exact method to determine the value of a closely held business and the third method “has the greatest potential for error and unfairness, particularly where the asset is the major marital asset.”  Id. at 188-89. 

            We can find no abuse of discretion in light of the considerations supporting the trial court’s choice of disposition.  And we are mindful, as was the trial court, of the unusual boldness in suggesting that a 30-year business investment be liquidated.  First, the record made it difficult, as the trial court observed, to accurately ascertain the current value of the investment.  Second, as respondent suggests, the record does not make it evident that appellant could arrange a multi-million dollar payment to offset his proposal that the stock be awarded to him.  As the trial court surmised, it would be unrealistic to order appellant to go into debt, considering appellant’s age of 63 years and that respondent would not otherwise receive her full and equitable interest if the buyout price was set low enough for appellant to pay.  Third, these considerations of certainty and necessity were, as the trial court seemed to contemplate, specifically invited by the supreme court in Nardini.  The trial court rightfully lamented that it was put in the position of “killing the golden goose” in order to arrive at an equitable division.  It did not commit reversible error in doing so. 


Respondent argues that the trial court erred in not awarding her attorney fees.  This court reviews a trial court’s ruling regarding attorney fees on an abuse-of-discretion standard.  Gully v. Gully, 599 N.W.2d 814, 825 (Minn. 1999).  “The denial of fees may be an abuse of discretion when there is a wide disparity in the financial resources of the parties.”  Worden v. Worden, 403 N.W.2d 909, 912 (Minn. App. 1987).

As the trial court determined, the record shows the adequacy of resources of each party to pay fees. Each party suggests fault of the other in prolonging the proceedings, and the record does not establish a compelling, dominant equity for either party in this regard.  The trial court did not abuse its discretion


            Appellant has moved to strike portions of respondent’s brief and appendix.  Respondent’s briefing characterizes material in the record in the course of argument and does not constitute submission of extra-record evidence.  Appellant’s motion to strike is denied.

            Affirmed; motion denied. 


* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] For purposes of this opinion, we disregard the designations of the second appeal, in which John Lewis is the respondent and Patricia Lewis is the appellant.