This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2004).







In re the Marriage of:

Louisa Johnsen, petitioner,





Rick Lee Johnsen,



Filed April 5, 2005


Crippen, Judge*


Ramsey County District Court

File No. F8-98-97


David F. Herr, Dawn Van Tassel, Maslon Edelman Borman & Brand, LLP, 3300 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN  55402-4140; and


William R. Skolnick, Sean A. Shiff, Skolnick & Associates, P.A., 2100 Rand Tower, 527 Marquette Avenue South, Minneapolis, MN  55402-1308 (for appellant)


Raymond M. Lazar, Judy S. Engel, Fredrikson & Byron, P.A., Suite 4000, 200 South Sixth Street, Minneapolis, MN  55402 (for respondent)


            Considered and decided by Kalitowski, Presiding Judge, Peterson, Judge, and Crippen, Judge.

U N P U B L I S H E D   O P I N I O N


            In these consolidated appeals, appellant Louisa Johnsen argues that (1) the district court erred in finding that certain terms in the parties’ March 2004 judgment, based on a marital termination agreement, were ambiguous; and (2) the district court’s interpretation of those terms inequitably modified the judgment by relieving respondent Rick Johnsen of various obligations without relieving appellant of her waiver of permanent spousal maintenance.  Respondent filed a notice of review challenging the district court’s recalculation of an amount to be awarded to appellant from one account and its denial of his request for conduct-based attorney fees.

            Because the district court did not err in finding certain terms of the parties’ judgment ambiguous and in receiving parol evidence to ascertain the parties’ intent, and because the court did not abuse its discretion by denying attorney fees or otherwise clearly err in its findings, we affirm.


            Throughout the parties’ marriage, respondent was the sole shareholder and president of a sheet metal fabrication company, Aries Precision Sheet Metal Co.  During the marital dissolution proceeding, which began in November 1998, the parties agreed that respondent would wind-down and dissolve the corporation.  In August 2002, on the advice of his attorney, respondent withdrew $5.8 million from the corporation; from these funds, he paid approximately $1.9 million in estimated taxes and deposited the remaining $3.9 million into an individual account in his name at U.S. Bank.

            In October 2002, after several days of trial, the parties reached a settlement on the property issues, which was read into the record.  At the time, the corporation’s wind-down process was underway but not yet complete.  In pertinent part, the parties agreed that the corporation and the marriage would be dissolved in 2003; that appellant Louisa Johnsen would receive the parties’ unencumbered homestead; that respondent Rick Johnsen would pay appellant approximately $3.4 million “upon her signing” of the marital termination agreement (MTA); that the parties would file a joint tax return for the year 2002 and that respondent would receive the refund, which the parties estimated would total $1.9 million; that each party would pay one-half of the corporate capital gain on their separate 2003 returns; that the corporation would pay up to $50,000 of the professional fees necessary to complete the wind-down and that respondent would pay any fees in excess of that amount; that the collection of corporate receivables, estimated to be approximately $8,000, would be completed; and that each party would receive one-half of the remaining cash and corporate assets.

            In December 2002, after appellant signed a draft of the MTA, $3.4 million was transferred to her out of respondent’s U.S. Bank account.  In January 2003, the parties executed the final draft of the agreement.

            The judgment was entered in March 2003.  Neither party filed any post-judgment motions or otherwise appealed from the judgment.

            In May 2003, respondent received the parties’ joint 2002 income tax refund checks totaling approximately $1.9 million; under the terms of the judgment, appellant was to endorse the checks over to respondent.  When she refused to do so, respondent filed a motion in June 2003 to have her held in contempt.  Appellant opposed the motion and claimed that respondent had acted improperly in connection with the wind-down of the corporation.

            The district court issued an order requiring that appellant sign the refund checks and that the funds be held by the court, along with the quitclaim deed to the home, until the parties’ disputes were resolved.  The court then appointed a special master to gather the information necessary to resolve the disputes and issue a recommendation.  The special master was given “the authority to determine procedures and issues” to be addressed if the parties were unable to reach an agreement.

            After extensive discovery, the special master held a multi-day “mini-trial” that began in December 2003.

            The special master determined that because certain provisions of the March 2004 judgment were ambiguous, it was necessary for him to review and consider additional evidence “regarding the financial settlement reached by the parties on October 3, 2002 and in their MTA of January 14, 2003,” particularly with regards to the provisions relating to the dissolution of the corporation.

            Of particular importance to the issues presented here on appeal, the special master determined that ambiguities existed as to (1) whether the $3.4 million transferred to appellant on December 2, 2002, was an “advance” against her agreed upon share or constituted “additional consideration for the property transfers set forth herein”; (2) whether the parties both owed notes receivable to the corporation, or whether they had no liabilities other than their monthly expenses; and (3) the meaning of the term “distribute” as used in the provision requiring the corporation to “distribute” to each party one-half of the equity of the corporation.  Based on the evidence presented, the special master issued detailed findings, including a finding that the parties did not intend to require the corporation to collect the notes executed by each party.

            The special master’s recommended decision was adopted, with slight modifications, by the district court, and this appeal followed.



            Absent ambiguity, it is not proper for a court to construe a stipulated judgment.  See Starr v. Starr, 312 Minn. 561, 562-63, 251 N.W.2d 341, 342 (1977) (stating general rule that “where the language employed by the parties is plain and unambiguous there is no room for construction”).  The determination of whether language in a stipulated judgment is ambiguous is a question of law.  Halverson v. Halverson, 381 N.W.2d 69, 71 (Minn. App. 1986).  An agreement is ambiguous when its language has at least two reasonable but conflicting interpretations or meanings.  See id.  In determining whether ambiguity exists, the entire agreement must be considered, not just an isolated part or word.  Landwehr v. Landwehr, 380 N.W.2d 136, 139 (Minn. App. 1985).

            Appellant challenges the district court’s adoption of the special master’s determination that certain provisions of the judgment are ambiguous.  This challenge puts in issue these determinations of the special master:

            8.         Certain provisions of the J & D are ambiguous because they are susceptible to more than one meaning:


                        (a)       Finding XVII(B)(3) . . . states that $3,428,500, which was part of the funds advanced to Respondent from the Corporation, was transferred to [appellant] on or about December 2, 2002, as an advance against [appellant’s] agreed upon share of the marital estate.  Conclusion of Law 16 . . . , however, states that this $3,428,500 is “additional consideration for the property transfers set forth herein.”  On their face, these two provisions . . . are inconsistent.


                        (b)       Finding of Fact XVIII . . . states that as of February 3, 2003, neither party had any liabilities other than their regular monthly expenses.  However, Findings of Fact XVII(A)(1)(a)(iii) and (iv) . . . indicate that [appellant] and Respondent both owed notes receivable to the Corporation.  On their face, these two provisions . . . are inconsistent.


. . . .


                        (d)       Conclusion of Law 13(b)(5) . . . states that the Corporation shall distribute to each party one-half of the equity of the Corporation.  The term “distribute” as used in this provision is not adequately defined and is inconsistent with the provisions of Finding of Fact XVII(B)(3) and Conclusion of Law 16.


Appellant challenges these findings and insists that the language of the judgment is clear.  But appellant’s arguments ignore the main disputes between the parties and fail to acknowledge that the judgment does not clarify or resolve those disputes, which involve whether the $3.4 million payment was intended to be “additional consideration” or an “advance” against appellant’s final property settlement, and whether the corporation must collect the $5.8 million note from respondent or whether that note was executed as a mere formality that was never intended to be collected.  The $3.4 million was paid to appellant out of the initial $5.8 million that respondent withdrew from the corporation in August 2002; these funds make up the bulk of the marital estate.

            And although appellant insists that the judgment is clear and unambiguous[1] as to how these funds are to be treated, the meaning she assigns cannot be sustained:  She claims that this $3.4 million payment was “additional consideration” made to her in exchange for her waiver of spousal maintenance and that this payment was to be tax-free to her.  She further claims that by the time the corporation is dissolved, she should have received one-half of $9.7 million, a figure that includes the $3.4 million.  Because acceptance of appellant’s position would require us to ignore other language of the judgment and lead to what would be an absurd result, we must affirm the district court’s determination that the judgment contains ambiguities that require interpretation.

            Appellant next argues that the district court committed reversible error by using parol or extrinsic evidence to change or vary the terms of the agreement, rather than merely clarify those terms.  When using extrinsic evidence, the object is to ascertain the parties’ intent.  See Starr, 312 Minn. at 562, 251 N.W.2d at 342 (affirming consideration by referee of evidence of surrounding circumstances, negotiations preceding stipulation, and practical considerations of meaning of terms).  If a judgment is ambiguous, extrinsic evidence is admissible to resolve the ambiguity and construe or clarify the judgment.  Stieler v. Stieler, 244 Minn. 312, 318-19, 70 N.W.2d 127, 131 (1955); Anderson v. Archer, 510 N.W.2d 1, 4 (Minn. App. 1993).  The meaning of ambiguous language is a fact question reviewed under a clearly erroneous standard.  Landwehr, 380 N.W.2d at 139-40.

            In this instance, the special master considered evidence regarding the parties’ negotiations and actions leading up to the January 2003 signing of the MTA, as well as the parties’ positions afterwards.  Appellant’s dispute of the special master’s determinations is directed at these findings of fact:

            13.       At the time the parties reached settlement, . . . [appellant] wanted to move income from 2002 to 2003 in order to be able to take tax advantage of her divorce related expenses.  To assist [her], the parties agreed to the following basic settlement terms:

                        (a)    The parties would remain married until 2003, and they would file joint income tax returns for 2002.

                        (b)    [Appellant] would receive the bulk of her property award ($3,428,500) “up front,” upon the signing of the [marital termination agreement], and these funds were to come from the $3.9 million that Respondent had received as an advance from the Corporation and deposited into the U.S. Bank account.

                        (c)    The funds advanced would remain on the Corporation’s books as advances and the Corporation would not be dissolved until 2003.

                        (d)    Because Respondent had paid approximately $1.9 million in estimated taxes in August 2002, based on his belief that the Corporation would be dissolved in 2002 and the advances would be accounted for as part of the final liquidating distribution, the agreement to postpone the corporate dissolution and final liquidation crated an overpayment of taxes by approximately $1.9 million in 2002.  These overpayments would be refunded to the parties after they filed their 2002 joint income tax return in 2003, and Respondent would be entitled to 100% of the refunds as a portion of his property award.

                        (e)    In early 2003, [appellant] would be awarded one-half of the shares of the Corporation and it would be dissolved.  At that time, the [parties] would each receive one-half of the liquidating distribution for income tax purposes and pay one-half of the tax associated with the liquidation.

                        (f)     The advances were not to be collected.


            14.       The postponement of the corporate dissolution, however, caused a potential income tax issue.  Because the advances were carried on the books through the end of the fiscal year 2002, it was important from an accounting perspective that the Corporation account for the advances in a manner that would not cause the IRS to reclassify the advances as dividends.  This was important, because if the IRS were to reclassify the advances as dividends, it would have created an income tax obligation inconsistent with the parties’ settlement.


            15.       On December 10, 2002, [Tim Skelly, the corporation’s accountant,] discussed this issue with Larry Plowman, [appellant’s] financial expert[.]  [The two men] agreed that the best way to assure that the IRS did not reclassify the advances as dividends was to create formal notes and to distribute the notes as part of the liquidating distributions.  [The two] agreed, consistent with the October 3, 2002 oral settlement, that the notes would not be collected between the parties.


            16.       Mr. Plowman’s consent to the creation and accounting of the notes was done with the authority granted him by [appellant] as her agent to assist her in completing the settlement.  [Respondent] did execute his Note but [appellant] did not.  However, there is no dispute about the amount of [appellant’s] advance [$106,***] from the Corporation.


            17.       Additionally, although [appellant’s] attorney, Jill Poppe, said she did not get a copy of Mr. Skelly’s letter of December 12, 2002 setting forth the agreement, the Court finds that she did.  Further, Robert Hensley, attorney for the Corporation, testified that he specifically discussed the notes with Ms. Poppe sometime in late December 2002, or early January, 2003, before the parties signed the MTA.  Ms. Poppe testified that she did not discuss the notes with Mr. Hensley.  The Court finds the conversation did occur.  Ms. Poppe knew that the advances were not to be collected between the parties.


            18.       Further support for the finding that the advances were not to be collected is found in Finding XVIII of the J & D which states:


“As of February 3, 2003, [appellant] has no outstanding balances or liabilities other than her regular monthly expenses.  Respondent has no liabilities other than his regular monthly expenses.”


That Finding does not reference the notes or the advances in any manner and it is inconsistent with the idea that the parties intended the advances and notes to be treated as “real” liabilities to be repaid.  If they were to be repaid they would have been identified as liabilities to the parties.


            19.       While the parties were negotiating the corporate “closing” documents (i.e.: Stock Certificates, Proxy, Memorandum of Understanding, etc.), [appellant’s] attorney specifically approved the language in the proposed Memorandum of Understanding between the parties, which provided in relevant part:


“In connection with the fulfillment of the terms of the Marital Termination Agreement, the Parties will treat the Notes as fully paid and satisfied, such that neither of the Parties will owe each other any outstanding principal or interest in connection with the Notes that may be distributed to them in their capacity as shareholders of Aries.”


If the advances were to be collected, [appellant’s] attorney would not have approved that closing document.


              * * *


            21.       The parties did not intend in their settlement to require that the Corporation, prior to its dissolution and final liquidation, collect the advances or that the parties had the right to collect them from the Corporation’s assets to be distributed to each.


These findings focus on the parties’ intent and the negotiations leading up to the execution of the MTA.

            The district court was required to accept the special master’s findings unless clearly erroneous.  See Minn. R. Civ. P. 53.05(b) (stating that in actions tried without jury, district court shall accept referee’s findings unless clearly erroneous).  In turn, we must accept the findings of the district court unless clearly erroneous.  See Minn. R. Civ. P. 52.01 (“Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.  The findings of a referee, to the extent adopted by the court, shall be considered as the findings of the court.”).  Based on our review of the extensive record in this case, we are not left with a definite and firm conviction that a mistake has been made, nor are we convinced that the findings are manifestly against the weight of the evidence.  See Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999); Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101 (Minn. 1999).  We therefore affirm the district court’s adoption of the special master’s recommended findings regarding the existence of ambiguities in the judgment and the ascertainment of the parties’ intent.


            Appellant insists that “[t]here is no dispute that [she] waived her right to permanent spousal maintenance in exchange for a tax-free, lump-sum property settlement.”  She claims that the district court made this property settlement taxable by labeling the funds she received in November 2002 ($3,428,500) as an “advance” of her half of the equity in the corporation.  As an alternative to reversal, she requests that this court remand with directions to give her permanent spousal maintenance.

            The special master rejected appellant’s claim that she received the $3.4 million in exchange for her waiver of spousal maintenance.  In particular, the special master found that “the specific language of the J & D does not specify that the sum received was for a Karon type waiver of spousal maintenance and specifically says it was related to the property transfers” and that “there is no evidence, and it defies common sense to conclude, that a trade off for spousal maintenance was worth $3.4 million when Respondent was liquidating the business and had no employment income.”

            In addition, once we accept the special master’s determination that the $3.4 million was received by appellant as an advance against her share of the equity of the corporation, her claim that the funds were intended to be tax-free crumbles.  The judgment specifically states that each party agreed to “report one-half of the capital gains associated with the dissolution and final distribution of the approximately $9,750,000 in retained earnings [of the corporation] on their respective separate 2003 income tax returns.”  We therefore reject appellant’s claim that the district court’s interpretation of the parties’ judgment places upon her a burden not contemplated by the parties or supported by the evidence.


            Appellant also challenges the process followed here.  She first argues that the district court erred by allowing the special master to exceed the authority granted him by the order of reference.  See Minn. R. Civ. P. 53.03 (stating that referee has authority to “do all acts and take all measures necessary or proper for the efficient performance of the referee’s duties specified in the order”).  The order of reference here specifically gave the special master the authority to address “unresolved issues raised by Respondent’s motion dated June 5, 2003, and [appellant’s] response of June 25, 2003.”  Respondent’s motion requested that appellant be held in contempt for failing to sign the tax refund checks; appellant’s responsive affidavit requested that the district court “supervise a liquidation [of the corporation] and distribution of its assets” and further provided the court with a list of matters that she alleged respondent had failed to perform, including collection of the $5.8 million outstanding note receivable and distribution to her of one-half of the corporation’s $9.7 million in retained earnings.  In order to resolve the parties’ disputes, as directed by the order of reference, the special master necessarily had to address appellant’s claim that the judgment required the corporation to collect all of its outstanding note receivables, including the $5.8 million note from respondent, so that these funds could be distributed as part of the equity of the corporation.  We therefore conclude that the special master did not exceed the authority granted him by the order of reference.

            Appellant next argues that, in adopting the special master’s recommended decision with slight modifications, the district court erred by reopening the judgment without satisfying the requirements of Minn. Stat. 518.145, subd. 2 (2002) (allowing relief from dissolution judgment for reasons that may include mistake, newly discovered evidence, or fraud).  But this case was presented and litigated as one involving the clarification or interpretation of a stipulated judgment.  Indeed, the parties argued throughout that their particular interpretation of the stipulated judgment was the correct one, and neither party alleged fraud or mistake so as to require reopening of the judgment.  Thus, Minn. Stat. § 518.145 has not been violated.  See Landwehr, 380 N.W.2d at 139 (Minn. App. 1985) (stating that district court’s “inquiry into the [parties’] intent . . . did not constitute a reopening of the judgment without fraud, mistake, or other grounds”).


            By notice of review, respondent argues that the district court abused its discretion when it denied his request for conduct-based attorney fees against appellant under Minn. Stat. § 518.14, subd. 1 (2002).  Under that statute, a party is entitled to an award of fees and costs if the other party “unreasonably contributes to the length or expense of the proceeding.”  Id.  The district court’s decision to award or deny fees under this statute is discretionary.  Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn. App. 1998), review denied (Minn. Feb. 18, 1999).

            In this case, the district court refused to award additional attorney fees to either party.  In particular, the court adopted the following finding of the special master:

Each party requested attorneys[’] fees from the other, each alleging that the other acted in bad faith and/or unreasonably contributed to the length and expense of the case.  The conduct of each party in this matter has been less than exemplary.  [Appellant] refused to sign tax refund checks although the J & D required it while Respondent refused to abide by the $50,000 cap and proposed a proxy that went way beyond the scope of the J & D.  The Court will not attempt to assign a percentage of blame to each party, suffice to say, the parties each incurred substantial legal fees that they would have been able to avoid.  But since they chose to continue their fight, they each [are] responsible for their own attorneys fees and costs incurred herein.


The district court later denied respondent’s additional request for an award of conduct-based fees in connection with his alternative motion to reopen, explaining that “both parties have contributed to the length, delays and high costs of these proceedings [and an] award of . . . conduct-based fees to either party in connection with any motions pending before the Court is not supported by the record.”  Based on our review of the record, we conclude that the district court did not abuse its discretion when it denied respondent’s request for attorney fees.


            Respondent challenges the district court’s recalculation of the amount to be received by appellant from the First Minnesota Bank account.  He insists that the court made a calculation error when it awarded appellant $703,630, rather than $693,630, to account for the $10,000 that he was entitled to receive for his final week of compensation from the corporation.

            But a careful reading of the district court’s explanation of its recalculation establishes that the court properly reduced the $1,412,260 balance remaining in the account by $10,000, which is the amount of respondent’s last week of salary, and then distributed one-half of $1,402,260, or $701,130, to appellant.  Acceptance of respondent’s argument here, that the $10,000 should have come solely from appellant’s share of this account, would have made her solely liable for his last week’s salary, not the corporation.  We therefore conclude that the district court did not clearly err when it recalculated the amount due to appellant from this account.

            Finally, we note that the parties have framed as issues other arguments that we either find to be without merit or that we need not discuss, given our decision here.  We therefore affirm the district court’s decision.


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

[1]  Appellant further argues that, to the extent that the judgment might contain ambiguous language, those ambiguities should have been construed against respondent because his attorney drafted the marital termination agreement.  See ICC Leasing Corp. v. Midwestern Mach. Co., 257 N.W.2d 551, 555 (Minn. 1977).  But that rule does not apply when the language of an instrument is drafted by both parties, as it was here:  while respondent’s attorney submitted the initial draft of the agreement, appellant’s attorney added substantial revisions to that draft and resubmitted it to respondent.