may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Steven James Rich, petitioner,
Theresa Mary Rich,
Filed July 22, 1997
St. Louis County District Court
File No. F9-94-60020
Larry M. Nord, Orman & Nord, 1301 Miller Trunk Highway, Suite 400, Duluth, MN 55802 (for Respondent)
Considered and decided by Norton, Presiding Judge, Amundson, Judge, and Holtan, Judge.[*]
Appellant Steven Rich challenges the district court's findings of fact, conclusions of law, and order, arguing that it was an abuse of discretion for the district court to: (1) award wife permanent spousal maintenance of $475 per month; (2) recalculate child support payments based upon husband's imputed income of $2,500 per month; and (3) award $1,000 in attorney's fees to his former wife. We affirm.
At trial, the district court determined that the parties' lifestyle during the marriage was more affluent than the earned income available. They were partially supported by husband's parents throughout the marriage. The district court found that, at the time of the trial, husband's employment status was temporary and that his income would increase in the future. The court also found that husband ignored court requirements by transferring marital property in violation of restraining orders during the pendency of the case. The court required husband to report monthly to the child support unit regarding his employment status and income. The district court reserved maintenance based on the temporary nature husband's employment status. The court also set a temporary child support amount.
In March 1996, subsequent to the entry of the judgment and decree, an additional contempt proceeding was brought, and the court again found husband to be in contempt of court for failing to comply with the terms and conditions of the court's prior orders. On June 13, 1996, the court reaffirmed its contempt order. The allegations made included husband's failure to report as directed to the child support office, failure to pay child support arrearage, and failure to pay certain income taxes that were husband's responsibility pursuant to the express terms of the divorce decree. The district court's orders reaffirmed husband's already existing obligations based on his representations concerning his income and financial status, and slightly increased husband's child support obligation.
Husband again failed to comply with the district court's orders. Additional information developed to support the fact that husband had additional income available to him beyond that which he had represented to the court in his prior affidavits. The income was from a retail store, sales of automobiles that he had placed in the names of others, and a regular pattern of gifts, not loans, from his family. Associates of husband revealed comments that he made that established his purposeful behavior to avoid his responsibilities for payment of family support. As a result of these disclosures, another contempt proceeding was initiated. This proceeding resulted in the November 26, 1996 order that is the subject of this appeal. In addition to failing to comply with the terms and conditions of court orders, husband: (1) failed to make full disclosure concerning his income and job status; (2) failed to transfer titles to automobiles that the court ordered him to do; (3) failed to pay income taxes and allowed wife's wages to be garnished; (4) failed to pay child support; and (5) sold property in violation of court orders. The motion on appeal here is a continuation of the efforts that previously had been made to require full disclosure of husband's financial resources and set an appropriate amount for child support and maintenance as reserved by the original judgment and decree.
In support of the most recent motion, in addition to the comparison of husband's lifestyle with his apparent income, affidavits from two of husband's prior girlfriends detailed financial resources that husband had available both before and after the divorce. The affidavits show a consistent pattern of gifts from husband's family. Evidence was provided that illustrated husband's use of others to hide and disguise income, both from the operation of a store and also from the purchase and sale of motor vehicles.
Husband admitted his sales of automobiles, and he told the district court that he had quit selling cars. The district court did not believe husband's statements and found that husband had additional funds available on a consistent basis from his family and from business dealings.
Because husband provided no accurate figures, the district court had to make some determination regarding income. The district court went back to the original judgment and decree and imputed income at a level consistent with that found by the original district court as being representative of husband's earnings.
Pursuant to the judgment and decree, husband was ordered to pay approximately $200,000 in marital debt from failed businesses that husband had operated. Rather than paying these obligations, husband filed bankruptcy. The bankruptcy filing cleared any responsibility that he had for the business debts, except for income taxes owed to the state and federal governments. The district court found that this discharge of the debts further enabled husband to pay spousal maintenance.
Husband did not pay his tax obligations; rather, he allowed the taxing authorities to garnish wife's wages to collect the tax balance due. The district court, again, ordered husband to provide vehicle titles to wife and to repay her for the income she lost due to the tax garnishment of her wages.
The district court reviewed wife's income and expense situation. The court considered her income, her monthly expenses, her standard of living, and her efforts to become self-supporting. The court was aware that the parties' situation may change; therefore the court included the possibility of future review of its order.
The district court considered the issue of attorney fees and found that husband's failure to abide by court orders created the need for the additional proceedings and awarded wife $1,000 in attorney's fees. This appeal followed.
I. Permanent Maintenance
In determining the amount of maintenance and whether maintenance should be temporary or permanent, the district court must consider several factors, including:
(a) the financial resources of the party seeking maintenance, including marital property apportioned to the party, and the party's ability to meet needs independently, including the extent to which a provision for support of a child living with the party includes a sum for that party as custodian;
(b) the time necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment, and the probability, given the party's age and skills, of completing education or training and becoming fully or partially self-supporting;
(c) the standard of living established during the marriage;
(d) the duration of the marriage and, in case of a homemaker, the length of absence from employment and the extent to which any education, skills, or experience have become outmoded and earning capacity has become permanently diminished;
(e) the loss of earnings, seniority, retirement benefits, and other employment opportunities foregone by the spouse seeking spousal maintenance;
(f) the age, and the physical and emotional condition of the spouse seeking maintenance;
(g) the ability of the spouse from whom maintenance is sought to meet needs while meeting those of the spouse seeking maintenance; and
(h) the contribution of each party in the acquisition, preservation, depreciation, or appreciation in the amount or value of the marital property, as well as the contribution of a spouse as a homemaker or in the furtherance of the other party's employment or business.
Minn. Stat. § 518.552, subd. 2 (1996). Where uncertainty exists as to whether the award should be permanent or temporary, the court shall order a permanent award and leave the order open for subsequent modification. Minn. Stat. § 518.552, subd. 3 (1996). A court may modify a maintenance order upon a showing of substantially increased or decreased need of a party or the child. Minn. Stat. § 518.64, subd. 2(a) (1) (1996). On a motion for modification of maintenance, including a motion for the extension of the duration of maintenance, the court shall apply the factors contained in Minn. Stat. § 518.552. Minn. Stat. § 518.64, subd. 2(b) (1996). In summary, a maintenance determination is a balancing of the incomes and needs of the two spouses. The central determination in that balancing process is the available resources of each spouse. Maeder v. Maeder, 480 N.W.2d 677, 679 (Minn. App. 1992), review denied (Minn. March 19, 1992).
In the present case, husband continually disobeyed the district court's orders. The record illustrates three occasions where husband was brought to court for failing to comply with court orders. From the time the parties separated in 1993 to the present, husband has avoided his responsibility to pay court-ordered support. In addition to failing to pay support, husband failed to pay taxes when ordered to do so, he refused to transfer titles to vehicles when ordered to do so, and he continually attempted to mislead the district court and wife concerning his actual financial resources.
Minn. Stat. § 518.64, subd. 2(c) (1996), provides for retroactive modification of support or maintenance where there was a material misrepresentation. Misrepresentation can be defined as "concealing or not disclosing certain facts that render the facts that are disclosed misleading." M. H. v. Caritas Family Services, 488 N.W.2d 282, 289 (Minn. 1982). Misrepresentations of material fact make it impracticable to determine actual income and justify imputing income. Therefore, based on husband's conduct of misleading the district court and wife, modification of maintenance was appropriate.
In imputing income, Minn. Stat. § 518.54, subd. 6 (1996), defines income as any form of periodic payment to an individual. Gifts regularly received from a dependable source may properly be included in income. Barnier v. Wells, 476 N.W.2d 795, 797 (Minn. App. 1991). Based on the record, the district court properly concluded that husband misrepresented his income from regular gifts made by his parents, from placing business ownerships in the name of others, and by conducting business with others in the sale of automobiles. Husband failed to disclose any of these activities to the court until after he was held in contempt of court. Additionally, husband did not dispute these facts, rather, he simply stated that things had changed.
After the district court set the permanent maintenance amount of $475 per month, the court stated that wife's situation would likely improve (based on her desire to gain additional education), and, therefore, the court left the order open for subsequent modification. See Minn. Stat. § 518.552, subd. 3 (1996). The district court did not abuse its broad discretion by ordering husband to pay $475 per month in permanent spousal maintenance to wife.
The child support system contained in Minn. Stat. § 518.551 is predicated on the obligor's net income. Roatch v. Puera, 534 N.W.2d 560, 564 (Minn. App. 1995). Pivotal to family law is the concept that both parties in a dissolution proceeding must make fair, accurate, and complete financial disclosure. Sanborn v. Sanborn, 503 N.W.2d 499, 502-3 (Minn. App. 1993) review denied (Sept. 21, 1993). When it is impracticable to determine actual income, child support must be set by imputing income. Roatch, 534 N.W.2d at 564. Minnesota law provides for retroactive modification of support where there is a material misrepresentation. Minn. Stat. § 518.64, subd. 2(c). Misrepresentations of material fact make it impracticable to determine actual income and therefore justify imputing income.
If an obligor is voluntarily underemployed, child support shall be based on a determination of imputed income. Minn. Stat. § 518.551, subd. 5b(d) (1996). A parent is not voluntarily underemployed if the underemployment is:
(1) temporary and will ultimately lead to an increase in income, or
(2) represents a bona fide career change that outweighs the adverse effect of that parent's diminished income on the child.
Minn. Stat. § 518.551, subd. 5b(d) (1996). Additionally, a parent is not voluntarily unemployed or underemployed unless the parent chooses to be unemployed or underemployed. Franzen v. Borders, 521 N.W.2d 626, 629 (Minn. App. 1994).
In the present case, as the original judgment and decree reflected, this family lived beyond its apparent income. The family continually received support from husband's parents. Additionally, husband continually misled the court and wife about his actual financial situation. Husband consistently hid money and participated in "under the table" deals to avoid reporting income. Additionally, based on husband's occupation prior to the divorce, he had specialized training in the television industry, yet he chose work in a completely unrelated field as a car salesperson.
Because the district court was in the best position to weigh the evidence presented and because the district court specifically found that husband was hiding income and that he was voluntarily underemployed, we affirm the district court's decision. The district court did not abuse its discretion in recalculating child support payments based on husband's imputed income of $2,500 per month.
(1) that the fees are necessary for the good-faith assertion of the party's rights in the proceeding and will not contribute unnecessarily to the length and expense of the proceeding;
(2) that the party from whom fees, costs, and disbursements are sought has the means to pay them; and
(3) that the party to whom fees, costs, and disbursements are awarded does not have the means to pay them.
Minn. Stat. § 518.14, subd. 1 (1996). Further, the court may order additional fees against a party who unreasonably contributes to the length or expense of the proceeding. Minn. Stat. § 518.14, subd. 1 (1996); see also Dabrowski v. Dabrowski, 477 N.W.2d 761, 766 (Minn. App. 1991) (holding that fee awards may be based on the impact of a party's conduct effecting the costs of litigation regardless of the relative financial resources of the parties).
In the present case, the district court found that "[t]he proceedings herein having been engendered by the conduct of petitioner [husband] it is appropriate that respondent [wife] be awarded the sum of $1,000 as and for attorney's fees." Thus, wife's award of attorney fees is justified under Minn. Stat. § 518.14, subd. 1 1996).
[ ]* Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.