This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2002).







In re the marriage of:

James S. Deming, petitioner,





Kathleen A. Deming,




Filed May 18, 2004

Affirmed in part, reversed in part and remanded

Toussaint, Chief Judge


Ramsey County District Court

File No. F4-00-1278



Michael Ormond, Ormond & Zewiske, 303 Butler North Building, 510 First Avenue North, Minneapolis, MN 55403 (for appellant)


Leigh Jane Klaenhammer, Steven T. Hennek, 2585 Hamline Avenue North, Suite A, Roseville, MN 55113 (for respondent)


            Considered and decided by Toussaint, Chief Judge; Anderson, Judge; and Huspeni, Judge.*


U N P U B L I S H E D  O P I N I O N

TOUSSAINT, Chief Judge


On appeal in this marital dissolution, appellant James S. Deming challenges the trial court’s (a) adoption of the respondent’s proposed findings; (b) imputation of income to appellant for maintenance purposes; (c) finding that appellant dissipated certain assets; (d) findings that appellant’s inheritance was marital; and (e) award of attorney fees to respondent.  Because the trial court’s findings and conclusions, except for double accounting of a single asset, were proper and supported by the record, we affirm in part, reverse in part, and remand.


Appellant and respondent Kathleen A. Deming were married in 1969.  In 1995, the parties separated, and appellant began sending respondent $1,000 and later sent her $1,500 each month.  He ceased making payments on June 15, 2000.

On August 23, 2000, appellant filed a petition for dissolution.  Respondent moved for temporary maintenance, and by court order dated November 7, 2000, she was awarded $500 per month.  A four-day trial commenced on August 19, 2002 to determine property division, attorney fees, and maintenance.

The record reflects that respondent had not worked since 1985, and was in a car accident in 1993, that rendered her unable to become fully or partially self-supporting.  Appellant, until 2000, was employed at a consulting company, Compuware Corporation in Minnesota, most recently earning a gross annual income of $72,892.92. 

In December 2000, upon advice by a counselor to “get a life,” appellant decided to move to North Carolina, seek a divorce, and pursue a love interest.  He attempted to secure employment with the Compuware Company in North Carolina, but was unable to do so.  Notwithstanding his inability to find work, he carried through with his relocation plans. 

At trial, appellant provided only his own testimony about his efforts to secure employment in North Carolina.  He explained that he inquired at two placement companies and contacted two local people.  He also testified that he communicated with a number of companies, primarily through e-mail, and he attended “open houses, job seminars, and those types of things.”  He observed that he went to North Carolina about the time the entire technology market crashed and Compuware was “shutting down personnel all over the United States.”  He was offered a $55,000 position in January 2001, but held out for higher pay.  By mid-year, he was willing to take a lower salary. 

In October 2001, appellant was hired by Compuware in North Carolina.  His base salary was $55,000, with additional benefits, resulting in a stipulated gross monthly income of $5,148.87.  When he left his employment in Minnesota, he had a stipulated gross monthly income of $6,074.41.

The trial court, in its January 9, 2002, judgment and decree found that appellant had become underemployed in bad faith and imputed the difference in salaries to determine his income for the maintenance award.  Two weeks later the court amended two findings and corresponding conclusions pursuant to respondent’s request.  On January 31, 2003, appellant filed a motion to amend.   On July 22, 2003, the court filed an order granting in part and denying in part appellant’s motion for amended findings.  Appellant now appeals.






Imputed Income for Calculation of Spousal Maintenance

This court will reverse a trial court’s maintenance award only if the court abused its wide discretion.  Erlandson v. Erlandson, 318 N.W.2d 36, 38 (Minn. 1982).  A trial court will be found to have abused its discretion only if its decision is based on “a clearly erroneous conclusion that is against logic and the facts on the record.”  Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).

Preliminarily, appellant argues that the referee adopted respondent’s proposed findings and conclusions. A comparison of respondent’s proposed findings and the trial court’s findings reveals very few changes.  While appellant concedes that the adoption of the findings is not reversible error, he contends that it reflects a “failure to review those proposed findings with the proper care.”  Although the wholesale adoption of one party’s findings raises the question of independent evaluation of the evidence, Bliss v. Bliss, 493 N.W.2d 583, 590 (Minn. App. 1992), review denied (Minn. Feb. 12, 1993), the record demonstrates that the trial court properly considered and evaluated the evidence before rendering its final judgment:  (1) there were a significant number of stipulated facts with regard to values so certain issues were not disputed; (2) there were some specific changes from respondent’s proposals on disputed issues regarding appellant’s expenses, the parties’ debts, and her attorney fees; (3) the court inquired to clarify the testimony of witnesses; and (4) the court demonstrated appropriate review of its own findings pursuant to appellant’s motion to amend by explaining its findings and ordering a number of amendments. 

Appellant’s primary argument is that there was no evidence of bad faith underemployment.  He states that the trial court “grossly misconstrued the context” within which he had stated that his unemployment was the direct result of his decision to “get a life.”  He contends that his “transfer” to North Carolina was orderly and he received a check from Compuware in North Carolina at the end of 2000.  He also argues that he carefully planned his “employment transfer” and was a victim of the downturn in the technology sector. 

There is no evidence of an employment relationship between Compuware in North Carolina and appellant until October 2001.  Appellant actually testified that (1) Compuware in North Carolina told him before he moved in December 2000 that it could not hire him; (2) he received a check from Compuware in North Carolina in 1999 (when he was employed by Compuware in Minnesota); and (3) Compuware in Minnesota “transferred [his] employment number and account when he received the 1999 check.”  Appellant provides no documents supporting his assertions that there was an actual transfer of employment or that he received a check from North Carolina in 1999 or 2000.  And his testimony that Compuware in North Carolina could not hire him is inconsistent with such a transfer.

The trial court found initially, and confirmed in its amended findings, that during the dissolution proceedings, appellant voluntarily quit his Compuware position in Minnesota and moved to North Carolina without first securing employment and with the expectation that he would not earn as much in North Carolina as he had in Minnesota.  The court also found that this was voluntary underemployment and that appellant was underemployed in bad faith. 

Imputing income in spousal maintenance cases derives from caselaw.  See Warwick v. Warwick, 438 N.W.2d 673, 677-78 (Minn. App. 1989) (extending earning capacity measurement rules from child support cases to spousal maintenance).  In order to impute income to a party for purposes of setting maintenance, the trial court must find that the party was voluntarily underemployed in bad faith.  Carrick v. Carrick, 560 N.W.2d 407, 410 (Minn. App. 1997).  Bad faith can exist where a maintenance obligor “unjustifiably limit[s]” his income.  Warwick, 438 N.W.2d at 678 (stating that finding obligor had unjustifiably limited income was effectively finding of bad faith).  “A maintenance obligor has a duty to the extent equitable under the circumstances, to support the maintenance recipient at the marital standard of living.” Peterka v. Peterka, 675 N.W.2d 353, 358-59 (Minn. App. 2004).  Here, while appellant may not have quit his job to avoid paying maintenance, he apparently quit his job without considering his maintenance obligation at all.  Under these circumstances, we cannot alter the trial court’s determination that the reduction of appellant’s income was unjustified and therefore in “bad faith” for maintenance purposes.  This court defers to the trial court’s factual determination of whether or not a party’s employment decisions exhibited bad faith.  See id. at 358

Appellant argues that the trial court’s finding of bad faith failed to consider (1) his careful preplanning of the move; (2) the reasonableness of his acceptance of his present employment; and (3) the impact of the “bursting of the tech bubble.”  The trial court heard appellant’s testimony regarding employment prospects in North Carolina, but   appellant provided no documentation of his efforts, employment opportunities in North Carolina, or the decline in the North Carolina technology sector during this period of time.  See Eisenschenk v. Eisenschenk, 668 N.W.2d 235, 243 (Minn. App. 2003) (noting that major reason for limited support for income finding was party’s failure to provide credible evidence regarding financial status), review denied (Minn. Nov. 25, 2003).  Because the court had appellant’s testimony on the North Carolina job market and still determined there was underemployment, it can be inferred that the court’s findings were made on a credibility determination adverse to the husband.  Therefore, we need not remand for additional evidence.  See Tuthill v. Tuthill, 399 N.W.2d 230, 232 (Minn. App. 1987) (noting party “cannot complain” where one reason for district court ruling against party on maintenance is that party’s failure to provide court with sufficient evidence to fully address question);  Kuchinski v. Kuchinski, 551 N.W.2d 727 (Minn. App. 1996) (remanding for taking of additional evidence on motion to suspend child support, where there was insufficient evidence of availability of employment in new community).  Because the trial court is in the best position to assess credibility, Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988), and appellant provided limited support for his position regarding his employment search, the trial court did not clearly err in imputing income at the level of his previous employment.


Classification of Inheritance as Marital Asset

Whether property is marital or nonmarital is a question of law, but a reviewing court must defer to the district court’s underlying findings of fact.  Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997).

The trial court found that appellant had testified that the inheritance from his mother was nonmarital property.  In both the initial findings and in the order denying amendment to the findings on the inheritance, the trial court noted that appellant had not produced evidence showing that the amounts were nonmarital and because he failed to establish the nonmarital character, the asset would be deemed marital and divided. 

The record does not indicate that appellant, as he argues, “unequivocally” asserted a nonmarital claim to the funds disbursed from his mother’s estate after commencing the dissolution proceedings.  Nevertheless, he indicates that some of the inheritance was not commingled and was held by his sister as executrix.  He states that he was confused about the amounts and yet provided no documentary evidence to support his position on the inheritance.

Property acquired during the marriage is presumed to be marital.  Minn. Stat. § 518.54, subd. 5.  An inheritance from a third party to one but not to the other spouse is nonmarital.  Id., subd. 5(a). For property to retain its nonmarital character, it must be kept separate from marital property or be readily traceable to an identifiable nonmarital asset.  Robert v. Zygmunt, 652 N.W.2d 537-541 (Minn. App. 2002).  Where 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).

The parties stipulated that appellant had inherited $147,338.84 during the marriage.  Out of that total inheritance, $65,476.95 was spent and accounted for during the marriage, and $30,000 was invested in a joint Edward Jones account.  Respondent argues that the remaining  $51,861.89 was neither accounted for nor traced.

The only document to explain the inheritance and its whereabouts was the appellant’s own statement, exhibit 4, which was excluded by the trial court.  With no documentary evidence to trace or identify the whereabouts of the inheritance, the court had only the testimony of the parties.  The confusing testimony created a credibility issue for the court to decide, which is in the discretion of the trial court.  A trial court’s discretionary decisions will not be reversed absent a showing of an abuse of that discretion.  Minn. R. Civ. P. 52.01.  Therefore, the trial court did not abuse its discretion in characterizing the $51,861.89 as a marital asset.

The second issue involves property characterized by the trial court as “property held by others.”  The court awarded appellant $15,000 that he said was held by his sister and $20,000 that he said was held by his significant other, Sharon Ragsdale.  Again, no documentation supported those amounts or where they came from.  Appellant stated at trial, apparently sarcastically, “my sister was in the mode of holding money so they would not show up in the divorce.”

Appellant’s sole reliance on his own testimony to establish the nonmarital nature of the inheritance and his admitted transfer of monies to his significant other and sister were an adequate basis for the trial court to question his credibility and to characterize the assets as marital.  See Carrick, 560 N.W.2d  at 413 (transferring money through family members was part of basis for dissipation determination). Even though an inheritance may be a nonmarital asset, absent documentation tracing the nonmarital asset, and considering the confusing testimony suggesting even more funds than those stipulated to, the trial court did not clearly err in its characterization of the assets as marital and including them in the equitable division of the parties’ marital property.


Dissipating Marital Assets

Following the finding of bad faith voluntary termination of appellant’s job in Minnesota, the trial court determined that his use of certain marital assets while unemployed was a dissipation of marital assets.  Appellant challenges the following items: (1) $8,192 of Compuware stock proceeds; (2) $2,552 withdrawal from an investment account; (3) $5,000 mail deposit, source disputed; and (4) $1,858 of joint tax refunds.  He does not challenge other findings that he dissipated two joint checking accounts ($1,553 and $919) and 149 shares of stock ($4,727).

All marital assets are subject to equitable division.  See Ronnkvist v. Ronnkvist, 331 N.W.2d 764, 766 (Minn. 1983).  The trial court shall make a just and equitable division of the marital property of the parties and shall consider the contribution of each in the acquisition, preservation, depreciation or appreciation in the amount or value of the marital property.  Minn. Stat. § 518.58, subd. 1 (2002).  During the pendency of a marriage dissolution or in contemplation of commencing 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.  Id., subd. 1a.  If the trial court finds that a party without consent of the other party has transferred, encumbered, concealed, or disposed of marital assets except in the usual course of business or for the necessities of life, the court shall compensate the other party.  See Lynch v. Lynch, 411 N.W.2d 263, 266 (Minn. App 1987) (use of money in one party’s discretion is assignable to that party as distribution), review denied (Minn. Oct. 30, 1987).  The burden of proof is on the party claiming that the other party transferred, encumbered, concealed, or disposed of the property.  Minn. Stat. § 518.58, subd. 1a.

Appellant testified that he had “dissipated” the stock proceeds (paying his attorney and purchasing an IRA) and had “dissipated” the investment account (paying for living expenses while unemployed).  The trial court found, based on his own testimony, that he had dissipated these assets.  He now argues that it was “palpably obvious” that he did not understand the pejorative sense of the term  “dissipation.”  Respondent cites to testimony of appellant indicating that he understood the meaning of dissipation.   We cannot say on the record before us that the trial court clearly erred in its findings regarding these assets.  The trial court is in the best position to resolve issues of credibility, Minn. R. Civ. P. 52.01, which is at the root of this dispute.  While use of assets to pay living expenses normally may be excused, appellant’s need was caused by his voluntary unemployment.

As for the tax refund, the trial court included $1,858 as “dissipated” assets.  Appellant now concedes that he appropriated $626 of the $1,858.  At trial, respondent provided an exhibit showing the tax refunds.  Appellant testified that he kept the state refund of $523 and had “split” some refunds with respondent but provided no documentation to the court.  Respondent satisfied the burden of identifying the amounts of the refunds and that they were made to appellant.  Beyond that, appellant would be the party in possession of documentary evidence to show the whereabouts of the proceeds. On this record, the trial court’s finding is not clearly erroneous.  

As for the $5,000 mail deposit from an unknown source, appellant testified that he received a check for inheritance from his sister in October 2000, which he deposited into his account for moving expenses to North Carolina.  Although there is no documentation tracing the source of the $5,000, appellant’s testimony identified it as part of the disputed inheritance.  While the testimony is confusing, it appears the $5,000 check was part of the amounts already included in the property division as either inheritance or as property held by his sister.  Therefore, we conclude it was clearly erroneous to find the $5,000 was a separate dissipated asset when it was part of the inheritance.  This issue is remanded for correction of the judgment in accordance with this opinion.


Need-based Attorney Fee Award

The trial court awarded respondent need-based attorney fees under Minn. Stat. § 518.14, subd. 1 (2002).  The court found that respondent’s fees were necessary for her defense, she did not have the ability to pay them, and appellant had the ability to pay them.  A trial court’s decision to award attorney fees rests almost entirely within the discretion of the trial 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).

Appellant argues that respondent paid her attorney fees by liquidating marital assets and states that she liquidated her life insurance and an Edward Jones account, as well as incurred credit card debt to pay the attorney fees.  Respondent did not testify that those assets were sold to pay attorney fees; she testified that she needed the proceeds for living expenses.  Accordingly, the trial court also did not find that those sources were used to pay the attorney fees; the court found that those sources had been used to meet her basic monthly living expenses.  Therefore, appellant’s argument that respondent was receiving double assets is not based on the record and the trial court did not abuse its discretion.

Appellant also argues that respondent received attorney fees as a monthly expense and he complains that she will not incur any more fees.  This prolonged litigation indicates that this argument also lacks merit.

Affirmed in part, reversed in part, and remanded.  



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