This opinion will be unpublished and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:
Dennis Irving Hansen,
Mary Ann Hansen,
Filed March 27, 2001
Hennepin County District Court
File No. DC 210069
John A. Warchol, Warchol, Berndt & Hajek P.A., 3433 Broadway Street Northeast, Suite 110, Minneapolis, MN 55413-1783 (for appellant)
A. Larry Katz, Catherine A. Krisik, Katz & Manka, LTD., 4150 U.S. Bank Place, 601 Second Avenue South, Minneapolis, MN 55402 (for respondent)
Considered and decided by Peterson, Presiding Judge, Shumaker, Judge, and Foley, Judge.
U N P U B L I S H E D O P I N I O N
Appellant Dennis Hansen challenges the district court’s denial of his motion to reduce his support and maintenance obligations. He alleges that (1) the district court erroneously found he had not shown substantially changed circumstances; (2) the presumption that his support obligation is unreasonable and unfair was not rebutted; (3) the district court failed to make findings on the parties’ incomes and expenses; and (4) the district court improperly considered the payment of some of appellant’s expenses from his corporate checking account in denying his motion. Respondent Mary Ann Hansen seeks review of the district court’s denial of her request for attorney fees. We affirm.
The parties’ 16-year-marriage was dissolved by judgment and decree dated January 27, 1997. An order amending the judgment and decree was entered on April 23, 1997. Respondent was awarded full physical and joint legal custody of the parties’ three children. Appellant was ordered to pay ongoing child support of $1,975 per month and spousal maintenance of $1,000 per month.
Appellant has been self-employed since 1981. He is the sole shareholder of Handling Innovators, Inc., a closely held corporation, and sets his own salary and determines which of his personal expenses are paid by the company. At the time of the judgment and decree, the court found appellant’s monthly net income was $5,643, and his reasonable monthly living expenses were $3,148. The company went from seven paid employees in 1997 to two full-time sales people, including appellant, and one contract employee in 1998. Appellant receives 40% of the net profits on contracts he procures in addition to his annual draw; his draw goes against his commissions.
Appellant reduced his annual draw in October 1998 from $108,000 to $54,000, claiming the company experienced a decline in revenue since the dissolution. Appellant then moved to reduce his maintenance and support obligations. In her answer, respondent moved for attorney fees. In December 1998 the parties entered into a stipulated agreement to temporarily suspend spousal maintenance and reduce by nearly half the child support, pending the outcome of the evidentiary hearing on appellant’s motion. Respondent began working to make up the difference in the temporary suspension of maintenance and support, but she quit when parenting issues interfered with her job performance.
On January 13, 2000, the district court issued an order denying appellant’s motion in its entirety, providing a COLA adjustment for appellant’s maintenance and support obligations, and denying respondent’s request for attorney fees. Appellant was also ordered to pay back the difference in support and maintenance from the temporary suspension of obligations as laid out in the stipulated order. At the evidentiary hearing, respondent testified that her monthly income was $2,700. Further, the district court found that respondent’s monthly expenses increased from approximately $6,500 in 1997 to $7,000 in 1999. The district court also found that appellant had not proved that the company experienced the financial difficulties he claimed put him in substantially changed circumstances. Both parties moved for amended findings. In an order filed June 27, 2000, the court granted in part and denied in part the motions. The district court, however, did not change its order denying appellant’s motion to reduce maintenance and support and denying respondent’s motion for attorney fees. This appeal follows.
I. Modification of Maintenance and Support
Modification of child support or spousal maintenance is within the district court’s broad discretion and will not be reversed absent an abuse of that discretion. Stich v. Stich, 435 N.W.2d 52, 53 (Minn. 1989) (maintenance); Moylan v. Moylan, 384 N.W.2d 859, 864 (Minn. 1986) (child support). Such an abuse occurs when the district court resolves the matter in a manner that is “against logic and the facts on record.” Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). Also, findings of fact will not be set aside unless clearly erroneous. Minn. R. Civ. P. 52.01.
Modification of maintenance and support is governed by Minn. Stat. § 518.64, subd. 2(a) (2000), which provides in pertinent part:
The terms of an order respecting maintenance or support may be modified upon a showing of one or more of the following: (1) substantially increased or decreased earnings of a party; (2) substantially increased or decreased need of a party * * *; (3) receipt of assistance * * *; (4) a change in the cost of living for either party * * *, any of which makes the terms unreasonable and unfair.
The moving party bears the burden of demonstrating that a substantial change in circumstances under the statute has occurred and that the change in circumstances has rendered the original maintenance or support award unreasonable and unfair. Hecker v. Hecker, 568 N.W.2d 705, 709 (Minn. 1997) (maintenance); Kuronen v. Kuronen, 499 N.W.2d 51, 53 (Minn. App. 1993) (support), review denied (Minn. Jun. 22, 1993).
Appellant claims the district court erroneously concluded that he had not carried his burden of proof in demonstrating a substantial change in circumstances. He argues that he experienced a substantial change in circumstances, sufficient to warrant a modification of spousal maintenance and child support, because his income was reduced from $108,000 to roughly $54,000 due to a decrease in sales for the year.
The district court stated that appellant presented no expert analysis to substantiate his claim and that a mere showing of a decrease in his draw is not sufficient evidence. In fact, the district court found that appellant provided insufficient information to determine how his current net income compared to his net income at the time of the original decree. There is ample evidence on the record to support the district court’s findings that appellant’s financial situation has not substantially changed. Because appellant received compensation from the company in the form of a 1999 Suburban, meals, travel, and miscellaneous personal items, as well as payment of his Visa bill for personal expenses (e.g., repairs to his Austin Healy) and payment of other personal obligations, which were not charged back to appellant or deducted from his draw, in addition to receiving his regular income, it was difficult for the court to determine an exact income for appellant. The court, therefore, looked to other evidence to determine whether there was a substantial change of circumstances.
The district court found that appellant had not established a substantial change in circumstances based on the following: (1) several contracts retained by appellant and contracts under negotiation that would increase his income substantially; (2) the company’s expenses were lowered from the time of the decree by laying off several employees; (3) appellant’s lifestyle did not change to reflect the decreased income; (4) appellant voluntarily reduced his draw; and (5) appellant maintained several cash accounts and purchased stock after he reduced his income. Appellant challenges the district court’s findings on these five points, arguing that there is no record evidence to support them.
The district court commented, however, that it could not make findings based on appellant’s mere assertions of changed circumstances without actual proof of fact that he was earning what he states he was earning. An accountant did not verify many of appellant’s accounting statements. It is particularly important that appellant support his assertions with verifiable proof that he was actually experiencing what he was claiming because he is president of his own company and has complete control over its financial matters, including determining salary and supplemental benefits. See Ferguson v. Ferguson, 357 N.W.2d 104, 108 (Minn. App. 1984) (“[T]he opportunity for a self-employed person to support himself yet report a negligible net income is too well known to require exposition.”). The district court noted that appellant’s company showed operating losses for tax purposes before and at the time of the decree, much like he tried to show occurred in 1998, but that appellant still managed to make a steady income of between $92,000 and $108,000 from 1996-1997. While appellant claims that the gross revenues of the company, even with the anticipated contracts under negotiation coming through, will not reach the level of sales of previous years, he still can earn close to his previous salary because he receives 40% of net profits on contracts he brings in, and the company has drastically reduced its expenses.
The district court stated that appellant “[choosing] to take an operating loss for tax purposes, is the quintessential problem in analyzing the income changes of a self-employed person,” and therefore, appellant cannot use that as the basis of showing he has a substantial change of circumstances. It is not an abuse of discretion to use earning capacity to measure income in a case of a self-employed person where actual net income is impractical to determine. Fulmer v. Fulmer, 594 N.W.2d 210, 213 (Minn. App. 1999); see also Roatch v. Puera, 534 N.W.2d 560, 564-65 (Minn. App. 1995) (district court may impute income when impractical to determine actual income and may base net income on earning capacity for self-employed person reporting negligible income).
Further, the court can consider “the lifestyle of a sole business owner if the figures offered do not comport with the evidence of that person’s lifestyle.” Johnson v. Fritz, 406 N.W.2d 614, 616 (Minn. App. 1987). Here, the district court took into account the fact that appellant had (1) purchased two ATVs in the fall of 1997 and a snowmobile in the winter of 1998, (2) recently purchased a second fishing boat and a 1957 Austin Healy collector’s car, which he was restoring, and (3) taken two fishing trips to Canada in the last year, among other things. Because the record supports all of these facts, we will not set aside the district court’s findings as clearly erroneous. Based on these findings, the district court did not abuse its discretion in denying appellant’s motion to modify his maintenance and support obligations.
II. Proper Finding of Fact
Appellant argues that the district court abused its discretion by failing to make findings of fact regarding the parties’ net income and monthly expenses. Appellant emphasizes the fact that the court did not factor into respondent’s monthly expenses the $1,250 monthly tuition for one child to attend boarding school. This argument is unfounded.
This court will not set aside the district court’s findings of fact unless clearly erroneous. Minn. R. Civ. P. 52.01. Further, due regard is given to the district court’s opportunity to determine witness credibility. Id. The court is required to evaluate and make findings regarding the obligor, custodial parent, and children’s circumstances in order to determine whether the statutory presumption of changed circumstances has been rebutted. Johnson v. Johnson, 533 N.W.2d 859, 865 (Minn. App. 1995). The court evaluated and made findings regarding the parties’ circumstances and those of the children.
First, the court discussed the decrease in tuition costs, but found that respondent had direct expenses relating to the child living at home that she did not have while the child was at boarding school. This essentially was a shift of expenses rather than a decrease in expenses. Second, the court considered an itemized report of respondent’s expenses, which showed an increase of roughly $500. Third, the court found respondent had liquidated assets to cover living expenses since the stipulation order. Fourth, the court noted that respondent could no longer work outside the home because of problems with one of the children, which interfered with her job performance. Respondent therefore lost not only her income from that job, but she also incurred the additional expense of insurance for herself and the children under COBRA.
The district court examined appellant’s income and expenses and found no change in circumstance. The court made 18 findings of fact relating to appellant’s financial circumstances and concluded that he had not provided the court with sufficient information to ascertain how his current W-2 and other payments received from the company compared to his net income at the time of the decree.
Based on the evidence, the district court made proper findings of fact and did not abuse its discretion in denying appellant’s motion to modify his maintenance and support obligations.
Respondent argues that the district court erred in denying her motion for attorney fees and asks this court to award her fees and costs totaling $17,682.30 incurred in defending against appellant’s motion before the district court. On appeal respondent claims that she should receive attorney fees as mandated under Minn. Stat. § 518.14, subd. 1 (2000) or, in the alternative, under Minn. Stat. § 549.211, subds. 2, 3 (2000), or Minn. R. Gen. Pract. 9.01. In district court, however, respondent requested attorney fees based on need and conduct only under Minn. Stat. § 518.14, subd. 1. The district court found that both parties had the ability to pay their own legal fees and that there was no misconduct warranting an award of attorney fees.
Minn. Stat. § 549.211, subd. 4, requires the party requesting sanctions to make a separate motion setting out the specific conduct alleged to have violated the statute. The same steps are required under Minn. R. Gen. Pract. 9.01. Respondent’s request for attorney fees under Minn. Stat. § 549.211 and rule 9.01 is misplaced because review of the record shows that she did not bring the proper motions before the district court. Issues not properly raised and addressed below are generally not reviewable on appeal. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).
Under Minn. Stat. § 518.14, subd. 1, in considering a motion for a modification of child support and spousal maintenance, the court shall award attorney fees if the fees are necessary for the good-faith assertion of the party’s rights, the moving party does not have the ability to pay the fees, and the nonmoving party has the ability to pay them. This statute allows attorney fees based on conduct and need. An award of attorney fees under this section “rests almost entirely within the discretion of the [district] court and will not be disturbed absent a clear abuse of discretion.” Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn. App. 1998), review denied (Minn. Feb. 18, 1999); see also Katz v. Katz, 408 N.W.2d 835, 840 (Minn. 1987).
The district court made sufficient findings that both parties had financial resources to pay their own attorney fees. Determination of whether or not to award attorney fees need not be based solely on the parties’ income, but can also include other financial resources and assets of the parties. See Maeder v. Maeder, 480 N.W.2d 677, 680 (Minn. App. 1992) (district court has discretion to award attorney fees after considering financial resources of both parties), review denied (Minn. Mar. 19, 1992). Further, the district court made specific findings of no misconduct. The denial of respondent’s request for attorney fees is supported by findings of fact and was therefore within the district court’s discretion.