This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2000).
IN COURT OF APPEALS
Debora Lee Sullivan, petitioner,
Timothy Lee Sullivan,
Douglas County District Court
File No. F1001049
Carol M. Klaphake, Hall & Byers, P.A., 1010 West St. Germain, Suite 600, St. Cloud, MN 56301 (for respondent)
Michael J. Dolan, Thornton, Hegg, Reif, Dolan & Bowen, P.A., 1017 Broadway, P.O. Box 819, Alexandria, MN 56308 (for appellant)
Considered and decided by Halbrooks, Presiding Judge, Kalitowski, Judge, and Hanson, Judge.
In these consolidated family proceedings, appellant alleges that the district court erred in its interpretation of the parties’ mediated settlement agreement regarding apportionment of the parties’ 2000 tax obligation. Appellant also argues that the district court abused its discretion in its award of child support arrearage. Because the record supports the district court’s interpretation of the settlement agreement, we affirm on the tax-liability issue. But because the district court failed to make sufficient findings with respect to the child support award, we reverse and remand on that issue alone.
Appellant Timothy Sullivan and respondent Debora Sullivan dissolved their marriage of 23 years on August 20, 2001. The parties have six children, four of whom were minors at the time of dissolution. The parties agreed to joint legal custody of the children with respondent having sole physical custody. During the marriage, appellant operated a construction business, The Tradesmen Construction, as a sole proprietorship. In 2000, the assets of the company were sold to a corporation, The Tradesmen Construction, Inc. Appellant is one of three shareholders of the corporation.
The parties reached a mediated settlement on March 16, 2001. They agreed that the settlement would constitute a marital termination agreement that would form the basis for a dissolution decree. By agreement, issues of child support and child support arrearage were to be resolved separately by the child support magistrate.
Among other terms, the settlement agreement required appellant to pay respondent a property settlement of $400,000 and contained no provision for maintenance. With respect to the distribution of the sole proprietorship, the district court reached the following conclusion:
Prior to the time of the parties’ divorce, the parties were the owners of a sole proprietorship entitled, Tradesmen. This entity is an entity separate from Tradesmen, Inc. The sole proprietorship, Tradesmen, currently has certain liabilities, certain accounts receivable and assets on hand. All other assets in Tradesmen, the sole proprietorship, have been transferred or extinguished. The parties have divided the cash on hand in Tradesmen, the sole proprietorship, and the parties shall each be awarded the cash which they have received in connection with Tradesmen, the sole proprietorship. The [respondent] shall receive the accounts receivable from Tradesmen, the sole proprietorship. To the extent that additional liabilities exist with regard to Tradesmen, the sole proprietorship, which are currently unknown to the parties, the [appellant] shall assume those obligations and hold harmless and indemnify the [respondent] thereon.
In addition, [appellant] shall hold the [respondent] harmless and indemnify her from any and all lawsuits, debt, liabilities, past, present, or future and any attorneys’ fees associated therewith.
With respect to the scope of the parties’ agreement, the settlement agreement provided as follows:
j. Except as otherwise provided herein, neither party has any claim or interest in any property or income of the other. Each party releases and discharges the other and their heirs, legal representatives or assigns and may dispose of their property in any way free from any claim or right of the other. Each party understands that THIS DOCUMENT CONSTITUTES A FULL, FINAL AND COMPLETE SETTLEMENT of all issues that have arisen or may arise in this action for dissolution of marriage. [Handwritten language added to document:] except as reserved herein. The parties hereby mutually release each other from all rights, claims and other obligations arising out of or during the course of their marriage relationship, except as specifically set forth elsewhere in this agreement.
* * * *
Neither party may withdraw their consent to this agreement and each are bound by the terms and conditions of this agreement from and after the date of its execution.
The agreement constitutes a full, final and complete settlement of all of the provisions outlined herein and the terms of this agreement are binding upon the parties, their attorneys, and the parties’ heirs and assigns.
* * * *
The purpose of this written document is to ensure for all parties that the provisions outlined herein have been resolved on a permanent basis and all parties agree to be bound by those terms and waive their right to withdraw their consent therefrom.
Appellant moved the court to issue findings of fact, conclusions of law, order for judgment and judgment and for an order allocating 2000 tax liabilities between the parties. In the alternative, appellant requested an evidentiary hearing on the issue of apportionment of tax liability. The district court issued its findings of fact, conclusions of law, order for judgment and judgment on August 20, 2001. In paragraph 29, the court concluded:
The parties have reached no agreement regarding tax filing for the year 2000. However, the parties agree that they shall share information regarding their debts, liabilities and other tax information for the year 2000 through an accountant for the purpose of minimizing tax payments by either or both parties and in order to attempt to fairly allocate the tax consequences or tax benefits for tax year 2000 and the future.
Following a hearing, the court issued supplemental findings of fact on November 15, 2001. The court ruled that appellant waived any right to apportion taxes between himself and respondent when he signed the settlement agreement. The court noted that, as part of the agreement, appellant received all of the stock in the sole proprietorship/corporation and agreed to assume all related liabilities. The court stated that appellant knew or should have known that he would bear a significant tax obligation for 2000, as his business income in 2000 was similar to the income in 1999. Appellant also made occasional quarterly tax-estimate payments, and he had not made any in 2000. Finally, the court noted that respondent agreed to waive maintenance and attorney fees in the settlement agreement and that the property settlement would be inequitable if it required equal division of income tax liability.
The dissolution decree reserved the issue of child support for determination by a child support magistrate. Respondent moved for child support payments on May 30, 2001, and again on September 21, 2001. The child support magistrate found that respondent’s net monthly income was $650, and her monthly living expenses were $2,692. The child support magistrate found that appellant’s net monthly income from his construction work was $2,924, supplemented by a significant annual bonus. With the inclusion of the bonus, appellant’s monthly net income was $7,330 and his expenses were found to be $7,812. The magistrate ruled that appellant should pay $1,140 per month as ongoing child support, plus $228 per month for arrearages. The order also directed appellant to pay 39% of the net of any bonuses he receives from his employer as child support. In total, the court ruled that appellant owed $46,980 for past support based on monthly net income of $2,924 from February 1, 2001, to August 31, 2001, plus 39% of the $100,000 annual bonus appellant received.
Appellant brought a motion for reconsideration, seeking relief from the award of back child support. In the alternative, if required to pay the arrearage, appellant requested that the magistrate specify the method used to calculate the amount of the arrearage. The magistrate denied appellant’s request to modify the arrearage award and stated that the order established a sufficient basis for determining how the amount was calculated. This appeal follows.
1. Apportionment of Tax Liability
We review district court findings of fact under a clearly erroneous standard. Minn. R. Civ. P. 52.01. “Findings of fact are clearly erroneous only if the reviewing court is left with the definite and firm conviction that a mistake has been made.” Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999) (quotation omitted). We defer to the district court’s determination of witness credibility. Minn. R. Civ. P. 52.01.
Appellant argues that the settlement agreement’s silence regarding allocation of tax liability creates ambiguity, and that the district court should have admitted parol evidence in order to determine the parties’ intent. Determining whether language is ambiguous is a question of law. Columbia Heights Motors, Inc. v. Allstate Ins. Co., 275 N.W.2d 32, 34 (Minn. 1979). Ambiguity exists when the language in question “is reasonably subject to more than one interpretation.” Id. (citation omitted). If a document is unambiguous, parol evidence is not admissible to vary or contradict its terms. Webb v. Webb, 360 N.W.2d 647, 649 (Minn. App. 1985).
We agree with the district court that parol evidence is inadmissible in this case, because the language in question is unambiguous. The agreement’s failure to address the tax issue specifically does not create ambiguity when the agreement contains a clear “catch-all” provision:
Each party understands that THIS DOCUMENT CONSTITUTES A FULL, FINAL AND COMPLETE SETTLEMENT of all issues that have arisen or may arise in this action for dissolution of marriage. [Handwritten language added to document:] except as reserved herein. The parties hereby mutually release each other from all rights, claims and other obligations arising out of or during the course of their marriage relationship, except as specifically set forth elsewhere in this agreement.
Because there was no reservation of the issue of tax liability, the record supports the court’s findings of fact. Because ambiguity does not exist with regard to the tax allocation issue, the district court did not err in failing to admit parol evidence on this issue.
In the alternative, appellant argues that he is entitled to repudiate or withdraw from the settlement agreement based on mistake or fraud. Although appellant did not follow the procedures for obtaining a release from a stipulation established in Minn. Stat. § 518.145, subd. 2 (2000), we will, nevertheless, address the merits of his argument.
Appellant contends that the stipulation is a fraud on the court because the stipulation represents an intentional course of material misrepresentation or nondisclosure, misled the court or opposing counsel, and made the property settlement unfair. Kornberg v. Kornberg, 542 N.W.2d 379, 387 (Minn. 1996). Appellant claims that he was unaware of the amount of the parties’ 2000 tax liability. Respondent, he alleges, either (1) knew of the tax obligation, in which case she fraudulently concealed it, or (2) did not know of the obligation, in which case the parties did not reach an agreement on this issue. Because full and complete disclosure in marital dissolution proceedings is essential, a party must only demonstrate fraud as defined in Minn. Stat. § 518.145, subd. 2(3) (2000): “denominated intrinsic or extrinsic, misrepresentation, or other misconduct of an adverse party.” Doering v. Doering, 629 N.W.2d 124, 129 (Minn. App. 2001), review denied (Minn. Sept. 11, 2001).
Appellant is unable to satisfy this standard. The district court found that the basis of appellant’s fraud claim—that appellant was unaware of the amount of the 2000 tax obligation—lacked credibility. The record supports this finding, as appellant had income in 2000 that was similar to his income in 1999 and was aware of the amount he paid in taxes for 1999. And we defer to the district court’s assessment of witness credibility. Minn. R. Civ. P. 52.01.
Appellant also requests relief from the stipulation based on a theory of mistake. Appellant claims that, because he was unaware of the amount of the tax obligation, his failure to insert a provision in the settlement agreement that provided for equal division of the 2000 tax burden was a mistake entitling him to withdraw from the stipulation. The district court, however, found that appellant’s assertion that he was unaware of the obligation was not credible. Therefore, appellant’s failure to insert a provision dividing the tax liability is not a “mistake” entitling him to relief.
Finally, appellant seeks to withdraw from the settlement agreement on the ground of improvidence. Appellant asserts that it is “unimaginable” that he would not address a $200,000 obligation in the settlement agreement and that the resulting agreement was improvident and a violation of good conscience. Appellant asserts that he was “unaware of the magnitude and/or existence of the obligation” and that lack of awareness “is the very nature of improvidence.” This argument is problematic because the district court did not credit appellant’s position that he was unaware of the tax obligation to be credible. Moreover, the authority cited by appellant in support of this theory is inapposite. Haefele v. Haefele, 621 N.W.2d 758, 763 (Minn. App. 2001), review denied (Minn. Feb. 21, 2001), for example, affirmed a trial court’s finding of mistake because of inconsistencies in valuation of marital property. The appellant in Haefele used tax records, past appraisals, and pure estimation to ascertain the value of the parties’ property. Id. Appellant also misvalued respondent’s art collection, inflating its value by more than $800,000. Id. In this case, there was no dispute as to the valuation method or the amount of the tax liability. Moreover, the district court found that appellant was an experienced businessman who should have been aware of the potential tax burden. Appellant’s argument that the “improvidence” of the settlement warrants a re-opening of the judgment is, therefore, untenable.
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). The district court abuses its discretion when it establishes child support in a manner that is against logic and the facts. Id.
Appellant argues that the child support order does not state whether it awarded back child support from February 2001, the date that respondent alleged that appellant stopped sharing his income with her, or August 2001, when the district court entered the custody order. Appellant also argues that the court erred in that it did not explicitly state how the arrearage of $46,980 was computed. In paragraph 10 of the order, the court notes that
[f]or the twenty-four (24) month period preceding the commencement of this action, the obligor had the ability to pay support to the Obligee in the amount of $46,980.00. This amount is based on the Obligor’s net monthly income or ability to earn income of $2,924.00 from February 1, 2001, to August 31, 2001, and a bonus received from his employer in the amount of $100,000.00.
While the total amount of the arrearage is clear from the court’s order, the order does not provide a sufficient basis for concluding how the court computed the arrearage award. An explanation by the court is necessary because, if the child support commenced on February 1, 2001, the total amount for the seven-month period through August 31, 2001, would be subject to the net-income monthly cap established pursuant to Minn. Stat. § 518.551, subd. 5(k) (Supp. 2001). Because appellant paid actual support for the children until February 1, 2001, that date appears to be the earliest appropriate one to use for commencing child support arrears. Consequently, we reverse the award of child support arrearage and remand on that issue alone.
Affirmed in part, reversed in part, and remanded.