This opinion will be unpublished and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
In re the Matter of: Gregory
Beauchamp Washington, II, petitioner,
Valencia V. Anderson,
Affirmed in part, reversed in part, remanded
Hennepin County District Court
File No. PA 40349
Timothy D. Lees, Hennek Klaenhammer & Lees, P.A., 2585 Hamline Avenue North, Suite A, Roseville, MN 55113 (for appellant)
R. Donald Hawkinson,
Considered and decided by Lansing, Presiding Judge; Klaphake, Judge; and Minge, Judge.
Appellant Gregory Washington challenges the district court’s decision (1) increasing his child support obligation; (2) addressing retroactive modification of support; (3) applying the increase retroactively; (4) simultaneously creating a child support arrearage and entering judgment for the arrearage; (5) awarding respondent attorney fees; and (6) imposing a lien on appellant’s properties to secure future child support payments. We affirm in part, reverse in part, and remand.
The parties are the parents of a minor child, M.G.W., born November 27, 1997. Although the parties were never married to each other, appellant’s paternity was established by court order and the parties shared custody.
Child support has
been the subject of multiple proceedings.
In August 2001, a child support magistrate (CSM) ordered appellant to
pay temporary child support in the amount of $310.75 per month beginning July
1, 2001. In February 2002, a referee
found that appellant earned a total net monthly income of $2,550 from
employment with Northern Mortgage and
Litigation over child support continued. In October 2002, appellant submitted updated employment information to the court, which represented that he grossed $2,800 per month working as a liaison between stock brokers and as a church musician. In December 2002, the district court ordered that pending pretrial, all court orders, including child support remained in full force and effect; reserved respondent’s motion for attorney fees and child support arrearages; and ordered both parties to exchange financial information prior to trial. The hearing on child support was delayed. In October 2003, the court ruled on certain custody issues and again ordered both parties to exchange financial information and submit written arguments to the court. It appears from the record that neither party supplied information in compliance with either the December 2002 or October 2003 orders.
In January 2004, appellant filed a motion to modify his child support obligations. Appellant claimed that his only employment was as a musician, earning $1,000 a month. In May 2004, the CSM denied appellant’s motion to modify his child support obligations. The CSM found that appellant was voluntarily underemployed, had failed to disclose his sources of income, and had failed to make an effort to find employment. The CSM found that the appellant had earned more than $73,000 in 1999 and more than $54,000 in 2000. The CSM imputed income to appellant in the amount of $2,367 per month.
The legal proceedings related to child support continued. In June 2005, respondent’s attorney deposed appellant. During this deposition, appellant refused to answer questions posed to him, including those related to his child support obligations, assets, and income, citing the Fifth Amendment. On June 30, 2005, respondent filed a motion seeking sole custody of the child and an increase of monthly child support to $1,250. Also, because of appellant’s refusal to cooperate with the discovery proceedings, in early July respondent filed a motion requesting that as a sanction (under Minn. R. Civ. P. 37.02(b)(1) and (2)), the district court deny appellant the ability to provide evidence at the trial to support his January 2004 motion to reduce child support. Although appellant objected, the request was granted.
In July 2005, an evidentiary hearing was held. The district court enforced the sanction limiting appellant’s introduction of evidence. There was no evidence of his then current income. However, evidence was introduced that in 2000 and prior years appellant had had an income in excess of $100,000 per year; that in 2000 he had had liquid assets of more than $500,000; that he drove an expensive, newer model vehicle; that he had purchased several parcels of real estate for more than $1,100,000; and that he had an ownership interest in two businesses.
In October 2005, the district court issued its findings of fact, conclusions of law, and order. The district court imputed a net monthly income of $6,975 to appellant and found that he had the earning capacity to pay $1,500 a month in child support. The district court then ordered that amount be paid retroactively to October 2003, found that appellant was in arrears in the amount of $28,007.59, and ordered entry of judgment for that amount. The district court further ordered that as security for the payment of child support, appellant grant respondent a lien on two Hennepin County properties alleged to be appellant’s. Additionally, the district court ordered that appellant pay respondent’s attorney fees of $25,797.55 for representation in earlier proceedings. Because respondent’s attorney in the current proceeding was providing pro bono legal services, the district court ordered that appellant make a contribution, on behalf of himself and respondent’s attorney, to Habitat for Humanity in the amount of $6,615 and to Joyce Food Shelf in the amount of $6,615. The real estate lien was expanded to secure the total award of attorney fees. This appeal followed.
D E C I S I O N
first issue is whether the district court abused its discretion when it estimated
appellant’s net monthly income for child support purposes to be $6,975. A district court has broad discretion to set
support and abuses its discretion when it sets support in a manner that is
against logic and the factual record or misapplies the law. Putz v.
Putz, 645 N.W.2d 343, 347 (
district court may estimate a support obligor’s income where the obligor is “voluntarily
unemployed or underemployed” or where it is impracticable to determine the obligor’s
district court’s order and its statements from the bench show that it was aware
of appellant’s failure to adequately respond to respondent’s discovery
requests. Awareness of this failure can
be considered by the district court. See Federated
Mut. Ins. Co. v. Litchfield Precision Components, Inc., 456 N.W.2d 434, 436
Appellant also argues that the $6,975 net monthly income attributed to him is excessive and not supported by the record. But when a district court estimates a support obligor’s income, it may consider a broad range of information including the obligor’s lifestyle and cash flow, and other concrete evidence of resources available to the obligor. See, e.g., Johnson v. Fritz, 406 N.W.2d 614, 616 (Minn. App. 1987) (stating that court can take “lifestyle of a sole business owner” into account if income figures offered fail to comport with that lifestyle); Schelmeske v. Veit, 390 N.W.2d 309, 311-12 (Minn. App. 1986) (stating that district court may consider cash flow when calculating self-employed obligor’s income becomes “difficult task”); Ferguson v. Ferguson, 357 N.W.2d 104, 108 (Minn. App. 1984) (stating that district court has broad discretion to determine income of self-employed obligor because “the opportunity for a self-employed person to support himself yet report a negligible net income is too well known to require exposition”). Further, a support obligation need not be based solely on the obligor’s income. See Minn. Stat. § 518.551, subd. 5(c)(1) (2004) (requiring district court, when setting support, to consider “all earnings, income, and resources of the parents, including real and personal property”) (emphasis added); Darcy v. Darcy, 455 N.W.2d 518, 521 (Minn. App. 1990) (noting breadth of requirement that court consider earnings, income, and resources, and stating “[t]he exact parameters of what may or may not be used to satisfy or set a support obligation have not been fully determined”).
in addition to having interests in two corporations and various parcels of real
estate, appellant had a brokerage account with a balance of about $300,000 in
2000 and drove a newer, expensive vehicle.
Also, a “New Account Form” and an “Account Suitability Form” that he
supplied to securities firms indicated that he had had annual earnings more
than $100,000 in 2000, and liquid assets of $50,000 in 1999 and more than
$500,000 in 2000. Further, evidence of
recent property transactions indicates that appellant had a significant income
stream, and respondent secured property-tax records from
The second issue is whether prior statements by the district court precluded it from ordering retroactive child support. Appellant argues, correctly, that the written ruling retroactively increasing his support obligation is inconsistent with its statements from the bench that the retroactive modification of support would not be addressed in the current proceeding.
that this change of position is a result of inadvertent and improper acceptance
by the district court of a proposed order furnished by respondent. While the record before this court lacks a
copy of a document claiming to be respondent’s proposed findings of fact,
conclusions of law, and order for judgment, the record does include a letter to
the district court from appellant referring to and challenging respondent’s
proposed order. However, appellant’s
letter does not specifically identify any aspect of the proposed order that was
allegedly inconsistent with what appellant understood the district court’s
ruling to be. We note that the order
signed by the district court contains multiple handwritten alterations, each
individually initialed by the district court.
Thus, if the order signed by the district court was respondent’s
proposed order, the district court reviewed, and at numerous points altered, that
order before signing it. Cf. Schallinger
v. Schallinger, 699 N.W.2d 15, 23 (
In a letter to the
district court, appellant raised as an issue for the district court’s
consideration the consistency of its written rulings and its prior oral
statements. Our review of this
inconsistency is difficult because the district court’s written order failed to
explain why it chose to address an issue that it previously said would not be
addressed. However, the district court’s
prior statements were not a final disposition of the matter. Although the consistency of the district
court’s order and prior statements were at issue, we do not assume that a
district court erred by unknowingly issuing an order inconsistent with its
prior statements. Rather, we assume that
the district court simply reevaluated the suitability of its prior statements
that it would not address retroactive modification of support. Cf.
Loth v. Loth, 227
We decline to give a district court’s statements from the bench any greater preclusive effect than an unentered, tentative order for judgment. On this record, we decline to use the inconsistency between the district court’s statements from the bench and its subsequent written ruling as a basis for reversing the retroactive modification of appellant’s support obligation.
The third issue is
whether it was otherwise error to modify support retroactively. Generally, a support modification is
retroactive to the date the moving party served the motion to modify, but a
modification “may” be made retroactive to an earlier date if the district court
makes “express findings” that “the party seeking modification was precluded
from serving a motion by reason of . . . a material misrepresentation of
another party . . . and that the party seeking modification, when no longer
precluded, promptly served a motion[.]”
Minn. Stat. § 518.64, subd. 2(d)(1); see Gully v. Gully, 599
N.W.2d 814, 821 (
Appellant argues that respondent did not move for retroactive modification of support and that the district court failed to make the “express findings” required by Minn. Stat. § 518.64, subd. 2(d)(1), to allow a retroactive modification. But respondent’s affidavit requested that support be set retroactively to July 12, 2002. Respondent’s attorney also noted that the motion was based on Rule 37.02 (b)(1) and (2) for appellant’s failure to answer questions at the June 27, 2005 deposition.
assertion that the district court failed to make the findings required to retroactively
modify his support obligation, appellant is correct to the extent that he refers
only to the district court’s written findings.
From the bench, however, the district court stated that “it appears
quite clear that the [appellant] . . . answered no questions of substance” and
that appellant’s attempt to invoke the Fifth Amendment to avoid providing
information was “abusive of the process.”
Statements from the bench can be treated as findings of fact.
Despite the fact
that the district court did not use the phrase “material misrepresentation,” three
reasons support a conclusion that the district court’s statements from the
bench establish findings on all elements of material misrepresentation. First, in family cases parties have an
affirmative duty to disclose relevant information, and a failure to satisfy
that duty can be a material misrepresentation if the result of the failure to
disclose is an artificially low support obligation. Gully,
599 N.W.2d at 821-22; cf. Doering v. Doering, 629 N.W.2d 124, 131
(Minn. App. 2001) (discussing affirmative duty of parties to dissolution to disclose
relevant information), review denied
statements from the bench are supported by the record. In October 2002, appellant submitted an
affidavit and pay stubs to the district court in which he stated that he worked
as a liaison between stock brokers and earned an approximate monthly gross
income of $2,322, along with approximately $500 per month in supplemental
income from his work as a church musician.
After several pretrial dates, the district court ordered appellant to
provide financial information to respondent in October 2003. In May 2004, the CSM denied appellant’s
motion to modify his child support obligations finding that appellant was
voluntarily underemployed and/or had failed to disclose his sources of income,
and had failed to seek employment. The
CSM imputed income to appellant in the amount of $2,367 per month. But after appellant failed to comply with the
district court’s order to disclose and refused to answer questions at a June
2005 deposition, respondent submitted evidence that appellant owned several
Third, a remand for the district court to use the phrase “material misrepresentation” would, in this case, elevate form over substance and fail to recognize certain case law. See Grein v. Grein, 364 N.W.2d 383, 387 (Minn. 1985) (declining to remand and affirming custody decision when “from reading the files, the record, and the court’s findings, on remand the [district] court would undoubtedly make findings that comport with the statutory language” and reach the same result); Warwick v. Warwick, 438 N.W.2d 673, 678 (Minn. App. 1989) (ruling that, despite lack of an explicit finding of bad faith, district court “did not err in considering [maintenance obligor’s] earning capacity rather than his actual income” when record required the inference that the district court believed the obligor unjustifiably reduced his income by acting in bad faith).
Based on this unique record, because the district court’s statements from the bench are tantamount to a finding of a material misrepresentation, because we conclude the district court’s failure to make a written finding of a material misrepresentation is a harmless error under Minn. R. Civ. P. 61, and because the seemingly perpetual child support litigation in this matter renders it self-evident that respondent’s request for retroactive support was sufficiently prompt within the meaning of Minn. Stat. § 518.64, subd. 2(d)(1), we affirm the district court’s retroactive increase in appellant’s support obligation.
The fourth issue is whether it was error for the district court to retroactively increase appellant’s support obligation and, simultaneously, deem the amount due for the period covered by the retroactive increase to be unpaid arrears and award respondent a judgment for those arrears. The district court ruled that “[c]hild support arrearages shall become a judgment in favor of [r]espondent against [appellant].” Arrears are defined as
amounts that accrue pursuant to an obligor’s failure to comply with a support order. Past support and pregnancy and confinement expenses contained in a support order are arrears if the court order does not contain repayment terms. Arrears also arise by the obligor’s failure to comply with the terms of a court order for repayment of past support or pregnancy and confinement expenses. An obligor’s failure to comply with the terms for repayment of amounts owed for past support or pregnancy and confinement turns the entire amount owed into arrears.
Minn. Stat. § 518.54, subd. 13
next issue is whether the district court abused its discretion in ordering
appellant to pay attorney fees and in directing appellant to contribute
additional funds to charities in lieu of paying fees for respondent’s current
volunteer attorney. The district court
failed to identify the authority for its attorney fee award. For appeal purposes, however, we assume that
the fee awards were made under Minn. Stat. § 518.14, subd. 1 (2004), the
attorney-fee statute generally applicable in child support matters. Under that statute, the district court
“shall” award need-based attorney fees under certain circumstances and “may”
award conduct-based attorney fees under other circumstances.
Next we consider payment in lieu of attorney fees. “Attorney fees” is not defined in chapter 518. However, we recognize that courts have ordered payment of attorney fees for legal services provided by the public defender, legal-services organizations, and others who do not receive payment from their clients. See Brinn v. Tidewater Transp. Dist. Comm’n, 242 F.3d 227, 234-35 (4th. Cir. 2001) (“[C]ourts have consistently held that entities providing pro bono representation may receive attorney’s fees where appropriate, even though they did not expect payment from the client and, in some cases, received public funding.”). We also recognize that if conduct-based attorney fees are appropriate, they are an obligation imposed due to the wrongful actions of a party and that it would be an undeserved benefit for a bad actor to profit from the altruistic, pro bono work of a volunteer attorney. Finally, we acknowledge that in civil consumer protection and antitrust proceedings, parties have, as a part of a consent decree, agreed to make payment or provide goods or services to third-party governmental and nonprofit entities. However, we are not aware of any precedent for a court to order parties to pay attorney fees to entities unrelated to the provision of legal services outside a consent settlement. Also, ordering a party to contribute to a nongovernmental organization unrelated to the litigation goes beyond the appropriate role of the district court.
Here, Habitat for Humanity and Joyce Food Shelf have no apparent relationship to the litigation. They were named by respondent’s pro bono attorney as his favorite charities. We conclude it was error for the district court to order payment to such organizations. The record does not disclose whether respondent’s attorney may accept compensation notwithstanding his initial pro bono status. We also note that if the respondent’s attorney participated in a structured volunteer-attorney program with administrative expenses, ordering payment of an amount to that organization in lieu of attorney fees would be permissible. Further, if litigation expenses were incurred, the district court may order appropriate payment. We reverse the order to pay amounts to Habitat for Humanity and Joyce Food Shelf and remand for further proceedings consistent with this opinion.
The last issue is whether the district court abused its discretion by imposing a lien on appellant’s property to secure the payment of child support and attorney fees. We initially note that, depending on the results of the remand, security for the award of attorney fees may become unnecessary.
Under Minn. Stat.
§§ 518.24, .57, subd. 1 (2004), the district court has discretion to
secure a support obligation by sequestering or placing a lien on the obligor’s
property. Zagar v. Zagar, 396 N.W.2d 98, 102 (Minn. App. 1986) (security and
sequestration under Minn. Stat. § 518.24); Cavegn v. Cavegn, 378 N.W.2d 636, 639 (
Affirmed in part, reversed in part, remanded.
 Minnesota Rules of Civil Procedure rules 37.01 and
37.02 provide for a motion for sanctions and sanctions if a deponent fails to
answer questions propounded at a deposition including an order that “the
matters regarding which the order was made or any other designated facts shall
be taken to be established for the purposes of the action . . . .”