This opinion will be unpublished and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

C3-00-2233

 

 

In Re the Marriage of: 

J. Gerald Levey, petitioner,

Appellant,

 

vs.

 

Rita S. Levey,

Respondent.

 

 

Filed June 19, 2001

Reversed and remanded

Huspeni, Judge*

 

Hennepin County District Court

File No. DC123123

 

 

Robert J. Hajek, Warchol, Berndt & Hajek, P.A., Suite 110, 3433 Broadway Street Northeast, Minneapolis, MN 55413 (for appellant)

 

Michael Ormond, Ormond Law Offices, 300 Sexton Building, 529 South Seventh Street, Minneapolis, MN 55415 (for respondent)

 

 

            Considered and decided by Amundson, Presiding Judge, Foley, Judge,* and Huspeni, Judge.

U N P U B L I S H E D   O P I N I O N

HUSPENI, Judge

            Appellant challenges a post-decree district court order increasing his monthly spousal maintenance obligation.  Because the district court failed to determine the reasonable living expenses of each party and appellant’s non-pension income available for payment of maintenance, we reverse and remand for necessary findings. 

FACTS

            Appellant J. Gerald Levey and respondent Rita S. Levey dissolved their 31-year marriage in 1989.  Throughout the marriage, appellant enjoyed considerable success in the insurance business and respondent engaged in traditional homemaking responsibilities, including caring for the parties’ two children.  At the time of dissolution, the parties were each 56 years old; they are now 68.   

In the dissolution decree, appellant’s gross annual income was determined to be $233,000 and respondent’s annual earning capacity was determined to be $12,000.  The decree incorporated terms of the parties’ stipulation, providing for permanent monthly spousal maintenance of $4,000; for payment of an additional $80,000 in installments over a period of five years; for maintenance to continue until the death of either party, or the remarriage of respondent; for appellant to retain “his right to seek a decrease in spousal maintenance under applicable statutes”; and for respondent to waive “for all time any claim to an increase in spousal maintenance except [cost of living increases].”

The dissolution decree provided for an approximately equal distribution of the marital property, and awarded appellant as his property (1) one-half of his monthly pension benefit receivable from American International Life Assurance Company of New York, (2) one-half interest in the St. Paul Companies’ Employee’s Retirement Plan, if and when the pension became payable, (3) one-half interest in his vested 401(k) plan at St. Paul Companies; one-half interest in his unvested 401(k) benefits, and (4) his Individual Retirement Accounts (IRAs).  Accordingly, respondent was awarded as her property the remaining interests in the above-mentioned plans. 

In 1993, appellant moved to suspend or reduce his maintenance obligation based on his decreased income and increased expenses.  After filing the motion papers, but prior to the hearing date, appellant was terminated from his employment.  The district court found that appellant’s gross monthly income was $13,500 (as compared to a gross monthly income of $19,500 at the time of the dissolution), that appellant’s decreased income constituted a substantial change in circumstances, and reduced appellant’s monthly maintenance obligation to $2,000.  The court further ordered that this reduction

is effective from June 1, 1994 and will continue until such time as there is a change in [appellant’s] unemployment status, or until such time as [appellant] elects to take retirement benefits.  The court at that time will re-examine the amount of income available to pay spousal maintenance and will determine the appropriateness of maintenance increases. 

 

In 1999, respondent, alleging appellant’s earnings had increased, moved to restore her maintenance award to the originally stipulated $4,000.  The district court found that appellant’s 1999 annual net income was $199,511 and that respondent’s gross monthly income was $3,025.31.  The court concluded that the current maintenance award was unreasonable and unfair in that it “contravenes the agreement the parties reached at the time of the dissolution,” and increased maintenance to the originally stipulated $4,000 per month.  This appeal followed.

D E C I S I O N

Appellant alleges that the district court (1) failed to determine the parties’ reasonable living expenses, (2) failed to determine his income in accordance with Kruschel v. Kruschel, 419 N.W.2d 119 (Minn. App. 1988), and (3) understated respondent’s income.

1.         Reasonable Living Expenses of the Parties

In determining a party’s reasonable needs, a district court’s calculation of estimated living expenses must be supported by the evidence.  Rask v. Rask, 445 N.W.2d 849, 854 (Minn. App. 1989).  Both appellant and respondent submitted budgets to the district court.  Appellant claimed $7,402 as his monthly living expenses, and respondent claimed $7,615 as hers.  The court recited these figures in its findings and determined in regard to appellant that he no longer lived in England and, therefore, no longer incurred the increased cost of living that he had claimed in 1994.  With regard to respondent, the court determined that some of her expenses were unreasonably high.  The court did not, however, make any findings as to what the reasonable monthly expenses of each party would be.

The reasonable needs of the recipient are an essential part of the maintenance equation.  Lyon v. Lyon, 439 N.W.2d 18, 22 (Minn. 1989) (stating “maintenance depends on a showing of need”) (citation omitted).  Also, appellant claims that he is financially unable to meet a $4,000 per month maintenance obligation without invading assets awarded to him as property in the dissolution decree.  Thus, the court should factor in appellant’s reasonable living expenses in determining what income he has available for payment of maintenance.  Therefore, we must remand to permit the district court to determine the reasonable monthly living expenses of each party.

2.         Appellant’s Income

Appellant challenges the district court’s finding that his gross annual income is $269,896.  Appellant contends that his 1999 gross annual income was, instead, $64,104, and that the court erroneously included retirement benefit withdrawals when calculating income.

The district court, citing Kruschel, 419 N.W.2d at 123, correctly noted that pension benefits awarded as property in a dissolution cannot be included in the party’s income when determining that party’s maintenance obligation.  However, the court distinguished the present case from Kruschel, and stated:

Although [appellant] may not currently have a “job,” it is obvious that he spends his time managing his money, and is earning a significant annual income as a result.

 

As part of his property award under the dissolution decree, appellant received his IRA accounts.  He argues that $203,658 of taxable income reflected on his 1999 tax returns is a direct result of investing and liquidating his IRA accounts, and that these cash receipts are derived primarily from property rights previously awarded to him.  He argues that he has no earned income and has been able to meet his monthly living expenses “only by investing the retirement benefits and other assets awarded to me in the dissolution and by liquidating some of those assets * * * .”  He claims that he has insufficient non-Kruschelincome available to meet his monthly expenses or to pay a maintenance obligation.  The district court did not address these arguments, but instead appears to have considered all of appellant’s 1999 taxable income as income available for spousal maintenance purposes.

The district court’s failure to distinguish between appellant’s receipt of funds from the withdrawal or distribution of assets awarded to him as property at the time of the marriage dissolution, and his income received from other sources requires a remand.  On remand the district court shall determine, pursuant to Kruschel, what funds of appellant’s are available for consideration in awarding maintenance, and what funds are not.  The district court, in its discretion, may receive additional evidence to assist in that determination.

Appellant further contends that the district court failed to make the necessary finding of whether he retired in good faith as required by Richards v. Richards, 472 N.W.2d 162 (Minn. App. 1991).  He contends this finding is a prerequisite to application of the Kruschel case.  Appellant’s motive for retirement was not presented to and considered by the district court, however.  We decline to address a matter not argued and considered in the district court.  Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988).

3.         Respondent’s Income

Appellant challenges the district court’s finding that respondent’s 1999 gross monthly income was $3,025.31.  Specifically, he argues that the court erred in failing to impute investment income to respondent based on a market return rate of 8%; that respondent has an obligation to invest her assets prudently, and if she had done so, her monthly return would have been $1,457 instead of her actual return of $250.  Appellant’s argument on this issue must fail.

Appellant submitted no evidence regarding what respondent could earn without incurring substantially greater risk than at present.  While caselaw requires a district court to consider income from investment assets when determining maintenance, appellant cites no authority supporting his argument that investment income must be imputed at 8%.  Cf. Schreifels v. Schreifels, 450 N.W.2d 372, 373 (Minn. App. 1990) (treating investment earnings generated from $20,000 cash, received as part of marital property, as income when determining maintenance).  The district court did not err in finding respondent’s gross income to be $3,025.31.

4.         Standard for Modification of Spousal Maintenance

 

Finally, we note that the district court, in restoring maintenance to the amount established in the dissolution decree, described the 1994 reduction as “temporary,” and stated:

[T]he effect of requiring [appellant] to pay maintenance out of his pension benefits is not to modify the property award after the time for appeal of that award has expired.  Rather, it returns the parties to the agreement that the parties originally undertook.  To allow [appellant] to pay reduced maintenance because he is retired and no longer earns income from employment permits [appellant] to unilaterally change his agreement to pay permanent maintenance in the amount of $4,000.

 

To the extent that the district court relied on a standard for modification of a “temporary” reduction in maintenance different from that applied to modifications generally, that reliance was misplaced.  Neither party argues that two standards exist.  Nor has our independent research revealed any basis for such a distinction.  

The proper standard for modification of maintenance is set forth in the statute.

The terms of an order respecting maintenance or support may be modified upon a showing of * * * substantially increased or decreased earnings of a party * * * [or] substantially increased or decreased need of a party * * * .

 

Minn. Stat. § 518.64, subd. 2(a) (Supp. 1999).  A dual burden is placed on the party seeking the modification—first to demonstrate that there has occurred a substantial change in one or more of the circumstances identified in the statute and, second, to show that a substantial change has the effect of rendering the existing award unreasonable and unfair.  Nardini v. Nardini, 414 N.W.2d 184, 198-99 (Minn. 1987); Rydell v. Rydell, 310 N.W.2d 112, 115 (Minn. 1981).

On a motion for modification of maintenance, the court must apply, in addition to all other relevant factors, the factors listed in Minn. Stat. § 518.552 (1998), which exist at the time of the motion.  Minn. Stat. § 518.64, subd. 2(c) (Supp. 1999).  Based on the factors set forth in Minn. Stat. § 518.552, subd. 2, the equation for determining the amount and duration of maintenance is essentially the recipient’s need balanced against the obligor’s financial condition.  Erlandson v. Erlandson, 318 N.W.2d 36, 39-40 (Minn. 1982).

In a modification proceeding, particularized findings from the district court are necessary to show that the relevant statutory factors have been considered.  Tuthill v. Tuthill, 399 N.W.2d 230, 232 (Minn. App. 1987).  On remand, the district court shall consider all relevant statutory factors, and shall make the particularized findings necessary to support its determination of an award of maintenance.

 

Reversed and remanded.

 



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