This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
IN COURT OF APPEALS
Carol Jean Walbon, petitioner,
Thomas D. Walbon a/k/a Darby Thomas Walbon,
Filed May 3, 2005
Toussaint, Chief Judge
File No. F0-02-987
James B. Dickinson,
Matthew N. LaJoy, Koening & Dickinson, Limited,
Linda Ojala, Kurzman,
Grant & Ojala,
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
Appellant challenges the district court’s dissolution judgment, arguing the court erred (1) in imputing income to him for purposes of determining spousal maintenance; (2) in its valuation of the family business; (3) in sanctioning him for selling off assets in violation of the court’s restraining order; and (4) in awarding respondent attorney fees. We reverse the district court’s award of attorney fees and remand for reconsideration of whether such an award is appropriate and if so, the proper amount of such an award, but we affirm the district court’s decision in all other respects.
Appellant Thomas D. Walbon and respondent Carol Jean Walbon were married in 1972. At the time of the dissolution, appellant was 52 years old; respondent was 50 years old. There are six children of the marriage, four of whom were minor or dependent children at the time of the dissolution. The oldest of the children still living at home suffers from schizophrenia and has difficulty attending school; two of the other children also have special needs. Throughout the marriage, respondent has not worked outside the home and was a stay-at-home mother.
For most of the marriage, appellant and his two brothers have operated a trucking operation. The operation consists of three companies: Walbon & Co., Inc., a long-haul trucking company; Walbon Transport, a local-haul trucking business; and Walbon Partnership, a real estate holding company that rents land to the trucking companies. Appellant owned a 42.5% interest in all of the businesses and was the president of the companies; it is undisputed that the ownership interest is a marital asset. As president, appellant earned between $70,000 and $110,000 per year. From 1995 to 2001, appellant's average income was approximately $92,600 per year.
In 2001, appellant quit his position as president and began working as a full-time truck driver for Con-Way Central Express, earning $16.15 per hour. Appellant testified he quit because of medical problems he began suffering in the late 1990s that made it difficult for him to swallow and to eat. Appellant testified that he was restricted to a liquid diet for two and a half years. Appellant further testified that after meeting with numerous doctors, it was determined that his medical problems were related to stress and that during the late 1990’s and into 2000, he was experiencing high levels of stress at his job. He testified that he quit his position as president believing it was necessary for his health and to save his marriage. Respondent testified that she was not aware of any health problems appellant had in 2001 that prevented him from performing his job and that appellant had threatened to resign his position as president if she continued with the divorce proceedings.
Kathy Baggenstoss, Walbon & Co.’s office manager, also testified to appellant’s physical conditions. She testified that in the late 1990s she noticed that appellant was losing weight and could not focus or make decisions quickly. During cross-examination Baggenstoss admitted that by the late fall of 2001, appellant’s problems with swallowing were gone. She also admitted that the years she noticed the swallowing problems were 1998 through 1999.
On April 1, 2002, after receiving the dissolution summons, which stated, “Neither party may dispose of any assets except (i) for the necessities of life or for the necessary generation of income or preservation of assets, [or] (ii) by agreement in writing,” appellant sold his interest in all three companies to his brothers. Respondent testified that she never consented to the sale and played no role in the negotiations. The brothers agreed that appellant would receive $140,250 for his interest in Walbon Partnership (the real estate holding company) and $158,312 for the two trucking businesses to be paid without a down payment and monthly payments over 20 years at 7% interest. The district court found the terms of the sale to be in direct violation of the companies’ cross-purchase agreements. The district court also found that the sale of the companies violated the court’s order and Minnesota statutes, disregarded the sale as evidence of the value of the companies, found appellant’s “actions in selling the marital interest in these three family business assets [to be] presumptively fraudulent,” and ordered that the debt appellant owes respondent for impermissibly selling the assets is not dischargeable in bankruptcy.
At trial, respondent offered the expert testimony of Samuel Kantos, a Certified Public Accountant who is also an expert on the fair market value and liquidation value of trucking companies, on the value of the three companies. Kantos testified that he prepared a valuation of the companies for both 2001 and 2002, and that he determined the value of each company based on its “book value.” Kantos determined that for 2001, the value of the companies was as follows: Walbon Co. at $1,501,325; Walbon Transport at $340,157; and the value of assets held by the Walbon Partnership at $811,838.
The district court adopted Kantos’s value of all three companies and determined that the total value of the marital assets was $1,464,683, of which respondent’s share was exactly half. The court then determined that it “must award [respondent] a larger portion of the parties’ marital assets as she has no vocational skills and has no likelihood of future employment.” The court awarded respondent the couple’s homestead with net equity of $182,000, one-half of the sales contracts under which appellant sold the 42.5% interest in the family businesses, two vehicles, the cash value of the private life insurance, and one-half of the retirement accounts, for a total in cash and equity of approximately $402,110. The court also ordered appellant to reimburse respondent for the money used from the sales contract to pay appellant’s support obligation in the amount of $17,672, leaving a deficiency judgment of $312,235. The court stated, “This judgment results from [appellant’s] deliberate and undervalued sale of significant marital assets in direct contravention to the standing order of this [c]ourt and Minnesota Statutes.”
Respondent also requested spousal maintenance. The district court determined that respondent is in need of spousal support because she has no skills and still needs to care for four children, three of whom have special needs. In determining whether appellant had the ability to pay support, the court concluded that he was voluntarily underemployed. The court found that appellant was “an able bodied individual, fully capable of earning a gross income in excess of $100,000 per year” and imputed an income of approximately $92,600 to him. Based on the imputed income, the district court determined that appellant had the ability to pay spousal maintenance.
The district court also found that appellant’s actions in selling the interest in the family business was without respondent’s consent, and at less than fair market value, caused her “to incur substantial attorneys fees to protect her marital interests in these assets. Moreover, [respondent] does not have the ability to pay her own attorneys fees. [Appellant] has the earning capacity and the ability to contribute to [respondent’s] attorneys fees.” The court ordered appellant to pay respondent $20,000 for her attorney fees.
Whether to impute income to child
support and maintenance obligors is discretionary with the fact finder. See
Putz v. Putz, 645 N.W.2d 343, 352 (
Here, the district court used imputed income to determine spousal maintenance without specifically stating that appellant acted in bad faith, but the district court found he was “an able bodied individual, fully capable of earning a gross income in excess of $100,000 per year. . . . In fact he continues to drive a truck yet today and has no credible excuse for his timely voluntary quit.” We conclude the court made the necessary determination to support imputing income for purposes of setting spousal maintenance and appropriately awarded spousal maintenance to respondent.
Appellant also argues that the district court’s statement that “[h]e has not proven he is disabled” impermissibly shifted the burden to him on the issue of imputed income. We conclude that properly placed in the context of the district court’s findings, the statement is a finding that appellant’s claim that he quit due to a medical disability lacked credibility and is not an indication that the court placed any burden on appellant regarding the issue of imputed income.
the district court erred in its valuation of the family businesses. An appellate court will not reverse a
district court’s valuation of marital assets unless it is “clearly erroneous on the record
as a whole.” Hertz v. Hertz, 304
Here, the district court was presented with two conflicting values of appellant’s 42.5% interest in the three companies. Respondent offered a value based on the expert testimony of Samuel Kantos, who reached his value using the “book value” method. Appellant offered a value based on the expert testimony of the companies’ accountant, Steve Demorlis. Demorlis’s valuation was based on the liquidation value method, which Demorlis himself had stated “clearly produces the lowest stock value.” Appellant argues the district court erred in adopting Kantos’s valuation because it is not based on the Nardini factors.
The supreme court in Nardini
v. Nardini recognized that placing a value on a closely held business is an
inexact science. 414 N.W.2d 184, 189-90
1. The nature of the business and the history of the enterprise from its
2. The economic outlook in general and the condition and outlook of
the specific industry in particular.
3. The book value of the stock and the financial condition of the
4. The earning capacity of the company.
5. The dividend-paying capacity.
6. Whether or not the enterprise has goodwill or other intangible value.
7. Sales of stock and the size of the block of stock to be valued.
8. The market price of stocks of corporations engaged in the same or a
similar line of business having their stocks traded in a free and open
Kantos testified that he has experience with the trucking industry as an accountant and he was aware of the value that tractor-trailers often have even after being depreciated. Kantos also testified that he reviewed tax returns for all three companies for the tax years 2000, 2001, and 2002, and that the businesses’ financial outlook was not as bleak as appellant portrayed it to be. Although Kantos’s valuation is based on the book value, after reviewing the entire record we conclude that he did consider other factors and, therefore, the district court did not abuse its broad discretion in accepting Kantos”s valuation of the companies.
Appellant argues the district court erred in applying a per se rule to the sale of assets contrary to a restraining order rather than considering “equities” and circumstances surrounding the sale, citing this court’s decision in American Family Life Ins. Co. v. Noruk, 528 N.W.2d 921 (Minn. App. 1995), review denied (Minn. April 27, 1995). In American Family we stated:
We agree that the purpose of the mandatory summons language [in Minn. Stat. § 518.09] and temporary orders prohibiting changes in beneficiary designations is to maintain the status quo pending the final outcome of a dissolution proceeding. Courts issuing such orders legitimately expect the parties to comply, and can impose sanctions for violations. When one of the parties dies, however, a temporary restraining order has no effect and the court's jurisdiction to enforce it ends.
. . . .
We therefore hold that when a life insurance policy’s designated beneficiary is changed in violation of a dissolution court’s temporary order, and the death of one of the parties intercedes before a final judgment is rendered, equitable considerations control in determining the ownership of policy proceeds.
Appellant argues the district court erred in awarding respondent attorney fees. Without citing any authority for its award, the court awarded respondent $20,000 in attorney fees. See Geske v. Marcolina, 624 N.W.2d 813, 816 (Minn. App. 2001) (“Because there are different requirements for a fee award, depending on the authority upon which the award is based, a proper review requires that the district court identify the authority for its fee award.”). The usual authority for granting attorney fees in family matters is Minn. Stat. § 518.14, subd. 1 (2004), which allows a district court to award both need-based fees and conduct-based fees.
Here, the district court’s only
findings related to attorney fees are that appellant’s actions in selling the
42.5% interest in the family business “caused [respondent] to incur substantial
attorney fees to protect her marital interest in these assets. Moreover, [respondent] does not have the
ability to pay her own attorney fees.
[Appellant] has the earning capacity and the ability to contribute to [respondent’s]
attorney fees.” In awarding fees, the
district court “must indicate to what extent the award is based on conduct or
need or both” and, if based on conduct, what conduct justified the award. Geske, 624 N.W.2d at 816, 819. Although a lack of specific findings is not
necessarily fatal, the district court’s findings regarding attorney fees must
permit meaningful appellate review. Gully
v. Gully, 599 N.W.2d 814, 825-26 (
Affirmed in part, reversed in part, and remanded.