This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
STATE OF MINNESOTA
IN COURT OF APPEALS
In Re the Marriage of:
Jill N. Stein, petitioner,
Scott E. Stein,
Hennepin County District Court
File No. 222982
Barbara Ann Ohnmacht, Walling & Berg, P.A., 121 South Eighth Street, Suite 1550, Minneapolis, MN 55402 (for appellant)
John T. Hartmann, Brutlag, Hartmann & Okoneski, P.A., 1100 Pillsbury Center, 200 South Sixth Street, Minneapolis, MN 55402-1400 (for respondent)
Considered and decided by Toussaint, Chief Judge, Stoneburner, Judge, and Foley, Judge.*
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
Appellant contends the district court erred in: (1) imputing appellant’s income for the purposes of child support and maintenance; (2) determining respondent’s income for child support and maintenance; (3) finding that respondent did not dissipate martial assets; (4) modifying respondent’s child support and maintenance retroactively; and (5) not awarding appellant attorney fees. Because the district court’s findings are not clearly erroneous and because it did not abuse its discretion, we affirm.
The Steins were married on June 13, 1982, while they were in college. Early on in the marriage, appellant was employed as a bookkeeper then as a secretary.
In 1987 respondent obtained a real estate license and during that same year the couple worked together in a sole proprietorship called Stein & Stein Relocation Management (Stein & Stein). In her resume, appellant describes herself as the co-owner and manager of Stein & Stein. She was in charge of bookkeeping and purchasing office equipment. Appellant handled all the billing, wrote checks, handled the taxes, ran the bookkeeping software and did the marketing. During that time, appellant worked approximately 40-45 hours per week.
After the Steins’children were born between 1987 and 1990, the child rearing responsibilities were shared.
Initially, the Steins had a very successful business, which produced pre-tax income of $137,485 in 1993 and $209,691 in 1994. The parties separated in 1995. Respondent continued to operate Stein & Stein. Appellant, is no longer working for the company. Since the separation, she has maintained only sporadic employment in nonprofessional, low-income positions. However, in 1995, the company had a loss of $89,484. The Steins had to sell their 1995 Jeep and liquidated respondent’s pension plan. They also sold their wave-runner and liquidated their Michael Foods, Inc. stock, and were ordered by the court to sell their home. It was sold on September 30, 1999, for $375,000. After expenses, the parties received $57.73 each. As of February 28, 1999, respondent’s debts totaled $120,815.93, of which $103,936.03 was claimed to be joint debt.
Appellant commenced this marital dissolution against respondent Scott Stein in June of 1996. The judgment awarded the parties joint legal and physical custody, awarded appellant with $300 per month for maintenance, $293.75 child support to appellant, discharge of arrearages by respondent, divided net proceeds of the home equally, awarded each party household goods in their possession and ordered each responsible for their own attorney fees. This appeal followed.
Appellant argues that the evidence does not support the district court’s findings that she is underemployed and has the capacity to earn $33,800 per year. An appellate court will not reverse a district court’s determination of imputed income unless it is against logic and the facts on the record. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). In relevant part, Minn. Stat. § 518.551, subd. 5b(d) (2000) provides that:
If the court finds that a parent is voluntarily unemployed or underemployed * * *, [child] support shall be calculated based on a determination of imputed income. A parent is not considered voluntarily unemployed or underemployed upon a showing by the parent that the unemployment or underemployment: (1) is temporary and will ultimately lead to an increase in income; or (2) represents a bona fide career change that outweighs the adverse effect of that parent’s diminished income on the child. * * *
If a parent is mentally incapacitated, “it shall be presumed that the parent is not voluntarily unemployed or underemployed. Id. atsubd. 5b(e).
Accordingly, courts are mandated to impute income where an obligor is voluntarily unemployed or underemployed because the legislature recognized that the state has a compelling interest in assuring parents provide primary support for their children. See Murphy v. Murphy, 574 N.W.2d 77, 82 (Minn. App. 1998).
Before determing net income using earning capacity of one who has voluntarily limited their income or is unemployed, the district court is to determine whether actions were in bad faith. Nazar v. Nazar, 505 N.W.2d 628, 634 (Minn. App. 1993), review denied (Minn. Oct 28, 1993). When setting child support, bad faith is not required before considering a parent’s earning capacity. Walker v. Walker, 553 N.W.2d 90, 95 n.1 (Minn. App. 1996). Since there is evidence of voluntary underemployment and self-limited income by appellant, the requirements of Minn. Stat. § 518.551, subd. 5b(d) have been met. Bad faith has been defined as an unjustifiable self-limitation of income. See Schneider v. Schneider, 473 N.W.2d 329, 332 (Minn. App. 1991). In Schneider, this court concluded that, in determining whether a spouse has unjustifiably self-limited income, district courts should address the spouse’s ability to work, opportunity to find employment, desire and will to earn money and contribute reasonable amounts to support the family, and diligence in seeking employment. Id.; see also Veit v. Veit, 413 N.W.2d 601, 605-06 (Minn. App. 1987) (finding it was proper to determine earning capacity based on prior work history).
Here there are sufficient facts that support the district court’s finding of bad faith, and unjustifiable self-limitation of income, by appellant. Before and during her marriage, appellant acquired an education level and work experience that would permit her to be employed as a professional, earning a salary between $33,592 per year to $49,857. Appellant has seven years of college education and obtained a bachelor of fine arts degree. Further, as the record reflects, appellant was in charge of bookkeeping and for the day-to-day operations management of Stein & Stein between 1987 and 1996.
Yet, since the termination of her marriage, the record reflects that appellant has maintained a sporadic work history and limited herself to nonprofessional positions with low-income potential. Further support for this conclusion is found in the testimony of Ms. Lynn Arbogast’s, a vocational expert. Arbogast testified that appellant: (1) was “significantly underemployed” voluntarily; (2) was currently employed well below what she is capable of doing; (3) should not have any problem finding a professional position with the current job market; and (4) was not cooperative, was not credible, and downplayed every job she had. This testimony was unrefuted by appellant by her own expert testimony or reports. Moreover, appellant’s credibility was at issue regarding her employment dates, job descriptions and the reasons for her employment terminations. At a review hearing on May 2, 1997, appellant was wearing a neck brace, indicated that she was in a car accident in January 1997, and asserted that she could not work as a result. However, when asked, appellant could not provide the court with documentation of the alleged accident. On another occasion, appellant signed an affidavit stating that she was unemployed when in fact Christopher Cardozo, a telemarketing agency, employed appellant. Because there is evidence of self-limiting income and evidence of misrepresentation by appellant, the district court did not err in imputing appellant’s income for child support and maintenance requirements.
Appellant argues that the district court erred in determining respondent’s child support and maintenance obligations. A district court has broad discretion to provide for the support of the parties’ children. Rutten v. Rutten, 347 N.W. 2d 47, 50 (Minn. 1984). A district court’s findings on net income for purposes of child support will be affirmed on appeal, “if those findings have a reasonable basis in fact and are not clearly erroneous.” State ex rel. Rimolde v. Tinker, 601 N.W.2d 468, 470 (Minn. App. 1999).
Appellant argues that respondent changed the accounting method used by Stein & Stein, from which he derives his income, in order to manipulate his income level downward. After the parties separated, respondent changed the accounting method used by Stein & Stein from the cash basis of accounting to the accrual basis of accounting. Appellant called three accountants, Thomas Harjes, Mark Ziessman and Margaret Holahan, to testify as experts. None of these experts testified that respondent committed improprieties in either deductions of expenses or taxes for the business. In fact, it was appellant’s trial exhibit number 45 prepared by Harjes that the court used to determine child support. Because there is no evidence that shows respondent manipulated his income to avoid child support and maintenance, the district court did not clearly err in finding respondent’s income.
Appellant argues that respondent unilaterally dissipated $132,000 of personal property and other marital assets during the separation and argues that respondent should be held accountable for those to appellant. Trial courts have broad discretion regarding the division of property in marriage dissolutions, and will be reversed only for a clear abuse of discretion. Crosby v. Crosby, 587 N.W.2d 292, 296 (Minn. App. 1998), review denied (Minn. Feb. 18, 1999). If a party in a martial dissolution “transferred, encumbered, concealed or disposed of marital assets,” the party will be held accountable by the court unless it was “in the usual course of business or for the necessities of life.” Minn. Stat. § 518.58, subd. 1a (2000).
The history of the parties’ spending habits shows that their expenses exceeded their income, forcing them into debt. The district court found that before the separation in June of 1996, respondent sold his SEP account, the Michael Foods stock, the Jet Ski, the universal gym, selling the piano and a Rainbow play system to pay some of the joint debt. Respondent also admitted he traded the Nordic track machine for haircuts for their children, and sold the riding lawn mower in the summer of 1997 to send their children to summer camp. Finally, a sculpture remained with the house and was sold with it as a fixture. Because respondent disposed of marital assets in the usual course of business to pay off joint debt and for their children’s necessities, respondent should not be held accountable. Accordingly, the district court did not abuse its discretion.
Appellant argues that the district court erred in retroactively modifying maintenance and child support and in forgiving respondent’s arrearages. Appellant also argues that respondent has the ability to pay, and has failed to show that appellant’s need for maintenance and child support was any less at the time of the temporary orders. Retroactive modification of a maintenance order is within the discretion of a district court. Guyer v. Guyer, 587 N.W.2d 856, 859 (Minn. App. 1999). The district court has broad discretion in setting the effective date of a modified support order. Borcherding v. Borcherding, 566 N.W.2d 90, 93 (Minn. App. 1997). Under Minn. Stat. § 518.64, subd. 2(d) (2000), a district court has the discretion to order a modification retroactive during the time in which the petitioning party has a motion pending. Modification can be applied to an earlier date if a court finds material misrepresentation and/or fraud, by an opposing party. Id. In its finding of fact, the district court stated that appellant “committed material misrepresentations and fraud upon the court” and accordingly, “all claimed arrearages of child support and spousal maintenance should be discharged, rendered void, or otherwise forgiven by the court under these circumstances.” The record supports this analysis. Appellant: (1) intentionally misrepresented respondent’s income as $900,000; (2) indicated that she was unemployed in her affidavit when in actuality, she was employed at Christopher Cardozo at the time of signing that affidavit; and (3) appeared in court in a neck brace claimed she was unable to work because of a neck injury. Appellant, however, was not able to produce a medical opinion of her condition or documentation of her alleged neck injury which allegedly prevented her from working, and did not wear her neck brace when she was in New York City for work after the accident but prior to the court appearance. Finally, appellant never disclosed her employment situation or income following the May 2, 1997 hearing until June 1998, just before respondent’s motion for modification. Based on appellant’s misrepresentations, the district court did not err in retroactively modifying child support and maintenance payments.
This court will uphold a district court’s denial of a request for attorney fees absent an abuse of discretion by that court. Walker v. Walker, 553 N.W.2d 90, 97 (Minn. App. 1996).
[T]he failure to award attorney fees cannot be characterized * * * as an abuse of discretion where the property and income of the parties, following the reapportionment of the martial property and the award of permanent maintenance, should be relatively evenly balanced.
Nardini v. Nardini, 414 N.W.2d 184, 199 (Minn. 1987)
In denying appellant’s request for attorney fees, the district court found that
“[appellant] has not met her burden of showing that [r]espondent has the ability to pay her fees. Further, petitioner [appellant] contributed to the length of these proceedings by her multifarious and creative answers throughout trial. Each party shall bear their own costs and attorney’s fees.”
The record supports this finding. Because the record shows that appellant cannot prove her burden and has not made a good faith assertion for attorney fees, the district court has not abused its discretion.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.