This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
STATE OF MINNESOTA
IN COURT OF APPEALS
In re Sharon Ann Bestrom-Drori,
Filed May 11, 2004
Hennepin County District Court
File No. DW 280 774
Carla C. Kjellberg, 333 West Parkdale Plaza, 1660 South Highway 100, St. Louis Park, MN 55416 (for appellant)
A. Larry Katz, Susan A. Daudelin, Katz, Manka, Teplinsky, Due & Sobol, Ltd., 225 South Sixth Street, Suite 4150, Minneapolis, MN 55402 (for respondent)
Considered and decided by Harten, Presiding Judge, Randall, Judge, and Klaphake, Judge.
In this dissolution matter, appellant Sharon Ann Bestrom-Drori challenges the district court’s judgment awarding respondent Abraham Drori a lien of $29,875.47 against her home, which she owned prior to the marriage. The parties’ antenuptial agreement excluded each party from claiming an interest in the other party’s nonmarital property, but provided that the parties would divide any assets acquired during the marriage according to their contributions to the acquisition. The district court concluded that respondent contributed nonmarital funds toward improvements to the home and treated the resulting increase in equity as an asset acquired during the marriage. The court thus awarded respondent a lien against the home representing the present value of his nonmarital contribution.
Based on the record before us, we conclude that the district court did not err in construing the antenuptial agreement and did not abuse its discretion in making the property division. We therefore affirm.
D E C I S I O N
1. Construction of Antenuptial Agreement
An antenuptial agreement is a contract subject to the usual rules of construction. Pollock-Halvarson v. McGuire, 576 N.W.2d 451, 455 (Minn. App. 1998), review denied (Minn. May 28, 1998). Appellant is not attacking the antenuptial contract itself, but rather the court’s interpretation of the language of the contract, thus raising questions of contract construction, rather than issues specific to antenuptial contracts. The construction and effect of an unambiguous contract is a question of law, subject to de novo review. Turner v. Alpha Phi Sorority House, 276 N.W.2d 63, 66 (Minn. 1979).
Certain principles of construction apply when reviewing a contract for ambiguity: (1) language must be given its plain and ordinary meaning; (2) a contract term must be read in the context of the entire contract so as not to lead to a “harsh and absurd result”; and (3) a contract should be interpreted to give meaning to all its provisions. Brookfield Trade Ctr., Inc. v. County of Ramsey, 584 N.W.2d 390, 394 (Minn. 1998). The reviewing court will accept the district court’s findings of fact unless they are clearly erroneous. Kauffman Stewart, Inc. v. Weinbrenner Shoe Co., 589 N.W.2d 499, 501 (Minn. App. 1999).
The district court sought to reconcile two terms of the antenuptial agreement. The first clause states:
Each party shall be released from all obligations to the other [in the event of marital dissolution] and will make no claim to any part of the other’s marital and non-marital property or for maintenance or alimony. Each party shall have the right to retain their separate property [acquired before the marriage or by inheritance, bequest or devise] and any increase, accretion, income, substitution and/or proceeds of any such property, free and clear of any claim, right or interest of the other.
The second clause provides:
All other property acquired by the parties during marriage and all property placed or held in common or joint ownership, shall be allocated between the parties as follows:
All of [respondent’s] assets, accumulated by [him] subsequent to the marriage of the parties including appreciation thereof, shall be allocated to [him] as his sole property.
All of [appellant’s] assets, accumulated by [her] subsequent to the marriage of the parties including appreciation thereof, shall be allocated to [her] as her sole property.
Any assets acquired during the marriage from the property of both parties, shall be divided between the parties in proportion to the actual monetary contribution provided by each and any such assets that cannot be so divided shall be sold and the proceeds attributable to each party’s contribution shall be distributed to such party.
The district court concluded, and we agree, that respondent’s nonmarital contributions toward home improvements created equity that otherwise would not exist. If no improvements had been made, and the value of the house had risen solely because of market forces, the increased value of appellant’s home would be hers alone. But respondent’s contributions in essence allowed the parties to acquire increased equity, which they would otherwise not have. Thus, under the second clause, respondent is entitled to a portion of this equity according to his actual monetary contributions.
Read in the context of the entire contract, this interpretation gives meaning to all the contract provisions. We conclude that the district court did not err in its interpretation of the contract.
2. Valuation of Nonmarital Contribution
A district court’s property divisions are reviewed for abuse of discretion. Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002). Respondent asserts that the district court abused its discretion by distinguishing between “improvements” and “maintenance” and basing the valuation of his lien only on the improvements, and not on his total contribution toward work done on the house. Appellant argues that the district court erred by applying the Schmitz formula to respondent’s contribution.
The district court relied on two pieces of evidence in distinguishing between mere maintenance and improvements. First, the contractor who performed some of the work testified that what he had done went beyond mere maintenance and represented an improvement to the house. Second, appellant’s appraiser testified that the remodeling of the bathroom had a negligible effect on the overall market value of the house, because it replaced a fully functional bathroom. Respondent presented no testimony disputing this. Based on this, the court could well conclude that only a portion of the work done represented reimbursable improvements, rather than mere maintenance. Because the court’s decision has a basis in the record, we find no abuse of discretion.
The Schmitz formula, first adopted in Schmitz v. Schmitz, 309 N.W.2d 748 (Minn. 1981), attempts to determine the value of marital and nonmarital interests in property. Antone, 645 N.W.2d at 102. It can be used either to determine the value of marital contributions to nonmarital property or the present value of a nonmarital asset used in the acquisition of marital property. Id. Here, the district court concluded that respondent “used nonmarital assets to increase a marital asset [the increased equity due to the improvements].”
In Antone, the supreme court describes the Schmitz formula as follows:
[t]he present value of a [nonmarital interest in property acquired before the marriage] is the proportion the net equity . . . at the time [of the marriage] bore to the value of the property at the time of [the marriage] multiplied by the value of the property at the time of separation. The remainder of equity increase is characterized as marital property.
Antone, 645 N.W.2d at 102 (quotation omitted).
Appellant does not dispute the accuracy of the court’s figure, but rather any usage of the Schmitz formula, arguing that it should only apply if one can prove that the investments in property will appreciate at the same rate as the property itself. Our reading of Schmitz and Antone is that the formula provides the court with a tool to calculate a proportional increase in equity that might otherwise evade valuation. The district court’s findings are not clearly erroneous and its property award is therefore not an abuse of discretion.