This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
IN COURT OF APPEALS
In re the Marriage of:
Joan Ellen Boxall, petitioner,
Filed June 17, 2003
Affirmed in part, reversed in part, and remanded; motions denied
Ramsey County District Court
File No. F1993076
Edward L. Winer, Ben M. Henschel, Moss & Barnett, P.A., 4800 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402-4129 (for respondent)
Marilyn J. Michales, Lisa M. Meier, Honsa & Michales, P.A., 5500 Wayzata Boulevard, Suite 1075, Minneapolis, MN 55416 (for appellant)
Considered and decided by Randall, Presiding Judge, Shumaker, Judge, and Huspeni, Judge.*
GORDON W. SHUMAKER, Judge
In this appeal from the judgment dissolving the parties’ marriage, appellant contends that the district court abused its discretion by failing to consistently apply the property valuation date to all assets; by awarding spousal maintenance; by failing to award nonmarital property to appellant; and by failing to consider future tax consequences in valuing certain assets. Appellant also contends that the court made clerical and mathematical errors as to property divisions. Respondent argues that the court abused its discretion by basing the spousal-maintenance award on a standard of living below that enjoyed during respondent’s marriage and by failing to award to respondent her attorney fees. Respondent also moves for an award of attorney fees on appeal.
Because the district court abused its discretion only as to the application of the property valuation date and the failure to include the cost of health insurance in respondent’s living expenses, and because the court made clerical and mathematical errors, we affirm in part, reverse in part, and remand. We also deny the parties’ motions for attorney fees and appellant’s motion for sanctions on appeal.
Appellant-husband David Boxall and respondent-wife Joan Boxall married in 1969 and dissolved their marriage in November 2001. Until 1973, wife worked outside the home, while husband attended medical school. Thereafter, wife assumed the role of homemaker, and husband practiced the medical specialty of orthopedic surgery. Four children were born to the parties during the marriage. By the dissolution date, only one child was a minor. The parties acquired substantial real and personal property while they were married.
The district court entered its Order for Temporary Relief on March 13, 2000. In its judgment and decree dated November 16, 2001, the court found that the parties had separated before March 13, 2000; that their individual living expenses were subject to their discretion after that date; and that “a specific accounting of expenditures and acquisitions” after that date could not be done on the evidence presented. The court chose March 13, 2000, as both the separation and marital-property valuation date, stating: “Realistically, all marital property could be valued as of the date of separation.” The court then indicated that
expenditures made by either party after the Temporary Order of March 13, 2000 and up to the date of the commencement of trial on June 11, 2001 are not marital property.
In its final judgment and decree, the court divided the parties’ assets, ordered the husband to pay an “equalizer payment” to the wife; awarded permanent spousal maintenance to the wife, and awarded child support for the parties’ minor child. The court found that the husband is gainfully employed as an orthopedic surgeon, has average annual earnings of over $888,000, and has reasonable monthly living expenses of $17,492. The court found that the wife is unemployed and has reasonable monthly living expenses of $10,369.
The court awarded to the wife monthly spousal maintenance of $14,622; a parcel of residential real estate that she bought while the dissolution was pending; various household goods; half of the parties’ $378,000 wine collection; her jewelry; a 1996 Toyota Land Cruiser; various bank accounts; $369,000 in investments; $1,558,000 in retirement accounts; half of the parties’ tax refunds; half of various business interests; and an “equalizer payment” of $533,000. The wife’s share of the marital property totaled approximately $2.8 million.
The court awarded the husband a home he purchased during the pendency of the dissolution; Idaho vacation property; various household goods; half of the parties’ wine collection; $4,782 in wine he bought while the dissolution was pending; $6,000 in jewelry and clothing bought for another person; a 1998 Toyota Avalon; funds for the lease of a Lexus automobile for another person; various bank accounts; $409,527 in investments; $1,530,000 in retirement assets; $125,000 as the value of his medical practice; various business interests; half of the parties’ tax refunds; $81,000 in VISA expenditures during the pendency of the dissolution; and $33,000 of income not deposited in the parties’ joint savings account. His award totaled approximately $2.8 million.
The parties agreed to sell their homestead and their Madeline Island property and to divide the net sale proceeds equally.
Both parties moved for amended findings or, in the alternative, a new trial. The court amended some of its findings. The court amended its findings a second time at the parties’ request. After the second amendment, the husband appealed and the wife filed a notice of review.
On appeal, the husband argues that the district court abused its discretion by inconsistently applying the marital property valuation date, by awarding spousal maintenance, by failing to award his nonmarital interest in the homestead, and by failing to consider future tax consequences in valuing marital assets. The husband also contends that the court made mathematical and clerical errors. The wife contends that the court abused its discretion by limiting her to monthly living expenses below the parties’ standard of living when the court determined the spousal-maintenance award, and by failing to award attorney fees to her.
In a marriage-dissolution proceeding, property that the parties individually acquire after the valuation date is considered nonmarital property. Minn. Stat. § 518.54, subd. 5(d) (2002). The valuation date is determined in any of three ways:
The court shall value marital assets for purposes of division between the parties as of the day of the initially scheduled prehearing settlement conference, unless a different date is agreed upon by the parties, or unless the court makes specific findings that another date of valuation is fair and equitable.
Minn. Stat. § 518.58, subd. 1 (2002).
The initial prehearing conference was scheduled for, but was not held on, September 26, 2000. The parties did not agree to a specific valuation date, but the court found that March 13, 2000, the date of the temporary hearing, was the appropriate valuation date. The court found that the parties were separated before that date, that they exercised individual discretion as to expenditures and acquisitions after that date, and that a realistic valuation was possible as of that date. Thus, the court satisfied the requirement that it make specific findings that the valuation date it chose was fair and equitable.
The husband contends that, although the court selected March 13, 2000, as the valuation date, the court improperly included in the marital estate assets acquired and liabilities incurred after that date. See Minn. Stat. § 518.54, subd. 5 (2002) (creating presumption that property acquired after parties’ marriage and before valuation date is marital property, and that property acquired after the valuation date is nonmarital property). “Whether property is marital or nonmarital * * * is a question of law subject to de novo review.” Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002 (citation omitted).
In paragraph XXVIII of the findings of fact, the court provides a chart showing the property distribution. It appears that the court included in the marital estate post-valuation-date items, including, but not necessarily limited to, the husband’s furnishings for his new home, certain wine, a ring, lease payments on a Lexus automobile, and certain credit-card expenditures. By including such nonmarital property in the marital estate, the court erred, unless the court finds that the husband used marital assets to acquire post-valuation property. See Minn. Stat. § 518.58, subd. 1a (2002) (providing that “[d]uring the pendency of a marriage dissolution * * * each party owes a fiduciary duty to the other for any profit or loss derived by the party, without the consent of the other, from a transaction or from any use by the party of the marital assets”). Thus, we reverse and remand for the court’s determination as to which post-valuation items are not properly includible in the marital estate.
The husband also argues that the court erred when it included for division a debt of $5,232 that the wife incurred when she failed to make a timely down payment on a parcel of real estate she was buying. The wife argued that the husband caused the indebtedness by unreasonably withholding his consent to an advance from the marital-estate division that would have provided funds for the down payment. The court determined that the husband’s delayed consent contributed to the creation of this debt and divided it between the parties. In doing this, the court neither erred by including it in the marital estate nor abused its discretion in apportioning the debt. See Dahlberg v. Dahlberg, 358 N.W.2d 76, 80 (Minn. App. 1984) (holding that the district court can consider which party is responsible for incurring debts when apportioning those debts).
The husband contends that the district court abused its discretion by awarding spousal maintenance because the wife can use the interest from her $1.5 million retirement account to meet her marital standard of living and her reasonable expenses. We review the district court’s maintenance award for an abuse of its wide discretion. Erlandson v. Erlandson, 318 N.W.2d 36, 38 (Minn. 1982). We will reverse the district court’s decision only if its decision is “against logic and the facts on record.” Prahl v. Prahl, 627 N.W.2d 698, 702 (Minn. App. 2001) (citation omitted).
Under Minn. Stat. § 518.552, subd. 1(a) (2002), the district court may award maintenance to a spouse who
lacks sufficient property, including marital property apportioned to the spouse, to provide for reasonable needs of the spouse considering the standard of living established during the marriage.
Minn. Stat. § 518.552, subds. 2, 3 (2002), give the factors the district court must consider when setting a maintenance amount. But we need not analyze those factors because the husband does not challenge the amount of maintenance, but contends that the wife has sufficient resources from her retirement income to meet her needs without the supplement of maintenance. The district court found that the maintenance award should not be based on the wife’s premature retirement-account distributions. The court found that premature retirement distributions would deplete her retirement assets sooner and would result in an invasion of capital because of the amount of money that the account would lose over time. The court also ruled that
distributions from retirement accounts cannot be considered as part of a spousal maintenance analysis unless and until those distributions equal the total amount that party receives as a property award. Such early distributions would have the effect of Petitioner losing the purchasing power of her capital, which is not required or permitted under Minnesota law in these circumstances. Here, [the wife] is receiving total retirement assets valued at $1,557,994 as of March 31, 2001 * * * . Thus, under applicable law, [the wife] may receive that amount of distributions from the retirement plans before any such retirement distributions may be considered in the spousal maintenance analysis.
We conclude that the district court did not abuse its discretion when it declined to consider the wife’s ability to take premature retirement-account distributions, because her retirement assets are not considered income to her at this time. We have held that
[p]ension benefits awarded as property in a dissolution cannot be included in the income of a party when determining that party’s maintenance obligation. * * * [T]his court [has] held that a district court could not order an obligor to pay maintenance out of his pension payments until he “received from the pension an amount equivalent to its value as determined in the original property distribution.” Once the obligor has received that amount, a court may properly consider his subsequent pension benefits as “income” for maintenance purposes.
Walker v. Walker, 553 N.W.2d 90, 94 (Minn. App. 1996) (quoting Kruschel v. Kruschel, 419 N.W.2d 119, 123 (Minn. App. 1988) (citations omitted)). Kruschel provided that a pension should be “viewed as property or income, but not both.” Kruschel, 419 N.W.2d at 122.
The husband argues that Kruschel allows the wife’s premature retirement-account distributions because she is not invading the principal asset. Kruschel does not stand for this proposition, but instead provides that the wife must receive the actuarial equivalent of $1.5 million before any of her retirement assets may be considered income. See id. at 123. It is beneficial to both parties to keep their individual retirement accounts. If the wife is forced to take retirement distributions now to achieve her customary standard of living, her assets will likely be depleted sooner and her need for maintenance will likely increase in the future.
We need not address the husband’s argument that the district court improperly relied on the wife’s financial analyst’s allegedly erroneous projections because Kruschel does not support premature retirement-account distributions when they are considered a property award. Id. at 122. We also do not determine whether the district court improperly found that the wife’s retirement assets would decrease by 15% over the next five years if she made these withdrawals; even if the district court erred, it was harmless error because the retirement assets are property, not income. Where the findings necessary for a legal conclusion are adequately supported, the district court’s inclusion of other unsupported findings is harmless error. Hanka v. Pogatchnik, 276 N.W.2d 633, 636 (Minn. 1979).
The husband’s last argument is that the court abused its discretion when it did not use the actual rate of return on the investments for determining the income the wife could earn from her investable assets. The court found that with a conservative investment approach her rate of return would be 9% per annum, minus 3% for inflation. The husband contends that the investment rate of return was 49% from 1996 to 2000 and 17% in 2001. The court did not believe that the wife’s financial situation allowed her to invest so aggressively. We conclude that the district court properly found she could earn a 6% annual return because both parties’ analysts agreed that the wife should invest conservatively.
We affirm the district court’s award of permanent spousal maintenance and the exclusion of the wife’s retirement assets when calculating her ability to support herself according to her customary marital standard of living, as well as the district court’s findings regarding the rate of return on her investments.
Wife’s Expense Award
The wife filed a notice of review on the question of whether the district court abused its discretion by not including in the wife’s monthly expenses the cost of her health insurance, a future car payment, and the cost of a future vacation property. She argues that the district court must consider these items and must recalculate the maintenance award so as to prevent her from having to live below the marital standard of living.
We review the district court’s maintenance determinations for abuse of discretion. Erlandson, 318 N.W.2d at 38. We also review the district court’s findings of facts concerning maintenance under a clearly erroneous standard of review. Gessner v. Gessner, 487 N.W.2d 921, 923 (Minn. App. 1992).
The district court ordered the wife to compensate the husband for the cost of her health-insurance coverage. The district court failed to include this cost of health insurance in the wife’s list of reasonable expenses, and, thus, the district court clearly erred when it failed to find that the wife had health-insurance expenses. Because the court abused its discretion, this issue is reversed and remanded.
The wife also contends that the district court should have included the cost of a future vacation home in her expenses. The district court found that
expenses for a vacation home for [the wife] have not been included in [the wife’s] budget because: (a) [the wife] did not establish by a fair preponderance of the evidence that this is an expense she will actually incur; and (b) [the wife] has not demonstrated a past interest in owning or using a vacation home.
The record provides evidence that the wife did demonstrate a past interest in using a vacation home because she spent four to six weeks each summer at the parties’ Madeline Island vacation property. Thus, the district court clearly erred when it made that finding.
However, the error was harmless because the court properly declined to award the wife this expense because whether she would buy vacation property in the future was too speculative. See Katz v. Katz, 408 N.W.2d 835, 839 (Minn. 1987) (stating that “we will not reverse a correct decision simply because it is based on incorrect reasons”). The wife provided evidence only that she was looking at certain vacation property and that its price would be around $400,000. We have held that “[a] trial court’s calculation of living expenses must be supported by the evidence.” Rask v. Rask, 445 N.W.2d 849, 854 (Minn. App. 1989). In Rask, the district court abused its discretion when it awarded to the spouse, as part of her living expenses, a mortgage expense that she intended to incur in the future when she purchased a home because the record did not provide any evidence of when, if ever, the spouse would incur this mortgage payment. Id. This case is analogous to Rask, because the wife’s purchase of this vacation property is also as speculative as the mortgage payment in Rask. The district court properly did not include the wife’s future vacation property as part of her monthly living expense.
Lastly, the wife argues that her expenses should include the expense of a future car payment or purchase. Because the wife did not provide evidence that she was purchasing a new vehicle, or what her payment would be, under Rask the district court properly did not speculate as to her payment expense for a new vehicle.
Husband’s Nonmarital Funds
The husband argues that the district court erred when it found that he did not adequately trace his allegedly nonmarital homestead assets. We review de novo the question of whether property is to be characterized as marital or nonmarital. Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997). But we “must defer to the trial court’s underlying findings of fact.” Id. The supreme court has held:
[I]f we are “left with the definite and firm conviction that a mistake has been made,” we may find the trial court’s decision to be clearly erroneous, notwithstanding the existence of evidence to support such findings.
Id. (citation omitted).
It is presumed that all property acquired by either party during the marriage is marital property. Minn. Stat. § 518.54, subd. 5 (2002). This presumption can be overcome by “a showing that the property is nonmarital property.” Id. Nonmarital property means
property real or personal, acquired by either spouse before, during, or after the existence of their marriage, which * * * is acquired as a gift, bequest, devise or inheritance made by a third party to one but not to the other spouse.
Id., subd. 5(a). We have held that “[w]here a party cannot show that nonmarital money was invested in a readily traceable asset, the trial court should characterize it as marital property.” Wopata v. Wopata, 498 N.W.2d 478, 484 (Minn. App. 1993). “Commingling of nonmarital and marital property is not fatal to a party’s claim that property remained nonmarital.” Carrick v. Carrick, 560 N.W.2d 407, 413 (Minn. App. 1997). The husband does not have to strictly trace the nonmarital assets, but only needs to prove by a preponderance of the evidence that “the asset was acquired in exchange for nonmarital property.” Id. (citation omitted).
Because neither party argues about the factual findings on this issue, we review de novo the court’s characterization of the property. Campion v. Campion, 385 N.W.2d 1, 4 (Minn. App. 1986). The husband contends that he received a $100,000 inheritance from his mother’s estate and $48,000 from the proceeds of the sale of his mother’s house. The district court found that the husband did not provide sufficient evidence of his receipt of these funds. This finding is clearly erroneous because the husband did provide sufficient evidence that he received $148,000 from an inheritance and from the sale of his mother’s house.
But the question of whether the husband was able to trace these funds into the parties’ homestead purchase raised a credibility issue. The husband claimed that he used those funds for a down payment on the homestead or for improvements to the homestead. Yet his own exhibit of the parties’ home-loan application provides evidence that this down payment came from the proceeds of the sale of their previous home. The same title company closed both house sales on the same day. Then the husband claimed that his inheritance went to pay down the mortgage and for improvements to their new homestead. He provided no evidence that his inheritance was used to pay down the mortgage. He also contradicted his interrogatory answer in which he stated that the parties opened a Norwest credit line on their Madeline Island property for improvements on their homestead. Because the husband provided contradictory evidence about the use of his inheritance and the proceeds of the sale of his mother’s house, the district court ruling that the husband did not meet his burden of tracing his nonmarital assets was properly within the court’s discretion.
Husband’s tax consequences on vacation property
The husband argues that the district court abused its discretion when it failed to consider tax consequences when valuing his Idaho vacation property award. The district court has broad discretion when dividing marital property. Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001). The supreme court has held:
Both parties contend that the district court made clerical errors in its findings of fact and conclusions of law. Minn. R. Civ. P. 60.01 states that
[c]lerical mistakes in judgments, orders, or other parts of the record and errors therein arising from oversight or omission may be corrected by the court at any time upon its own initiative or on the motion of any party and after such notice, if any, as the court orders.
A clerical error is one merely of form and “includes one made by the court which cannot reasonably be attributed to the exercise of judicial consideration or discretion.” Wilson v. City of Fergus Falls, 181 Minn. 329, 332, 232 N.W. 322, 323 (1930). The district court did make clerical errors that must be corrected on remand.
The parties agree that the district court made a clerical error when it awarded the husband $189,330 from a Dain Rauscher cash and money-market fund, account number 1101-1725-5421, in findings XXA2 and XXVIII, but failed to include this award in conclusion of law 10. Because this is an omission in form, the district court must amend conclusion of law 10 to include this award.
The district court made a clerical error in amended finding of fact XXVII when it stated that the date of the temporary order was March 13, 2001, when in fact the date was March 13, 2000. On remand the district court must amend the amended findings to state the correct date of March 13, 2000.
The wife concedes the district court’s clerical error in finding of fact XXVII, which states that the husband was not in constructive receipt of $81,810.42 spent on his Visa account or of $33,477 of his individual income that he did not deposit into a joint account. But then the district court erroneously found and charged those amounts against the husband on the balance sheet at paragraph XXVIII. On remand, the district court must correct this clerical error by striking those amounts from finding XXVIII and by adjusting the equalizer payment in conclusion of law 14.
The other alleged clerical errors that the husband raises are not actual clerical errors but are substantive determinations within the district court’s discretion. We find no abuse of that discretion respecting the remaining alleged clerical errors.
For this appeal, the wife moved for need-based fees under Minn. Stat. § 518.14, subd. 1. The husband also moved for attorney fees and sanctions under Minn. Stat. § 549.211, subd. 3 (2002). We conclude that neither party is entitled to appellate fees and that the husband is not entitled to sanctions. Therefore, we deny the parties’ respective motions.
* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.