Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
In re the Marriage of: Candace E. Hestad, petitioner,
Wayne E. Hestad,
Affirmed as modified
Anoka County District Court
File No. F6-95-9947
William K. Goodrich, Randall, Dehn & Goodrich, 2140 Fourth Avenue North, Anoka, Minnesota 55303 (for respondent)
Donovan D. Larson, 7040 Lakeland Avenue North, Suite 115, Brooklyn Park, Minnesota 55428 (for appellant)
Considered and decided by Randall, Presiding Judge, Lansing, Judge, and Harten, Judge.
Appellant challenges the district court's spousal maintenance determination, property division, and attorney fees award. Appellant also challenges the validity of an antenuptial agreement. Respondent requests attorney fees on appeal. We affirm as modified.
Respondent, age 65, is retired, with a net monthly income of $537.75, consisting of a $97.75 monthly pension and social security benefits. Her estimated monthly expenses are $1,500. Appellant, age 62, is also retired. At the time of dissolution, he was receiving a $1,386.68 monthly pension and monthly payments from his General Mills Voluntary Investment Plan (VIP account) averaging $766. As of October 18, 1997, appellant began receiving approximately $1,000 a month in social security benefits, which reduced his monthly pension to $956. His estimated monthly expenses are $901.49.
The district court ordered appellant to pay respondent permanent maintenance and to continue providing health insurance for respondent through his former employer at respondent's own expense. Respondent was awarded sole interest in her pension benefits. The district court concluded that appellant had a 58.7% nonmarital interest in his pension. Appellant was awarded his nonmarital share of the pension, and the marital portion was divided equally between the parties. Appellant was awarded the greater of $53,834 or 75% of his VIP account, and respondent was awarded the remainder.
Appellant sold a mobile home for $6,000 prior to the couple's marriage. Respondent also owned a homestead (Old House) before marriage. Old House was sold in 1994, and the parties purchased another home (New House). The parties owned New House valued at $133,900 at the time of their marriage dissolution. During their marriage, they purchased a five acre lot from respondent's son for $8,000, which was sold in 1995 for $25,000, and the proceeds used in purchasing New House.
The district court awarded New House to respondent. Tangible, marital personal property was divided between the parties, and both were awarded their premarital personal property and any cash or bank accounts under their individual control. The district court also awarded respondent $16,500 in attorney fees and issued a mutual restraining order.
"The standard of review on appeal from a trial court's determination of a maintenance award is whether the trial court abused the wide discretion accorded to it." Erlandson v. Erlandson, 318 N.W.2d 36, 38 (Minn. 1982).
A. Statutory Factors
After considering the statutory factors in Minn. Stat. § 518.552, subd. 2 (1996), the district court found that, based on respondent's age, education, health, and dated job skills, it is improbable that she will ever be self-supporting. The district court ordered appellant to pay permanent maintenance of $485 a month until November 1, 1997, when these payments will increase to $575 a month.
Respondent receives a monthly pension and net social security benefit totaling $537.75. The district court determined that she will receive an additional $477.85 each month (25% of appellant's VIP account and 50% of the marital portion of appellant's pension). The reduction in appellant's monthly pension due to his receipt of social security reduces respondent's property award to approximately $389 a month. The balance of her property award includes New House and approximately $10,000 in personal property.
The district court concluded that respondent left her full-time position at a bank early in the parties' 15-year marriage to act as a homemaker, has not been employed full-time since 1983, and has outdated employment skills. Respondent has health problems preventing her from standing for long periods, and takes anti-depression medication.
The district court also determined that the parties maintained a comfortable standard of living during their marriage. They purchased a new home, owned two automobiles, did modest traveling, entertained, dined at restaurants, went to movies, and enjoyed individual hobbies. Their total income in 1994 was $41,100.
Finally, the district court considered appellant's ability to pay maintenance. It concluded that after the property division and until appellant reached age 62, he would receive approximately $1,674 monthly from his pension and his VIP account. It also determined that his monthly expenses totaled $901.49. When appellant turned 62 on October 18, 1997, he began receiving social security benefits of approximately $1,000 a month. Although this reduced his pension benefits, appellant gained approximately $570 in monthly income.
Appellant argues that the district court's order requiring him to pay maintenance effectively reduces his property award. The district court may consider pension benefits when allocating property or when making maintenance awards. Kruschel v. Kruschel, 419 N.W.2d 119, 121 (Minn. App. 1988). Considering the same pension benefits both in dividing property and in awarding maintenance effectively reduces the property award of the party ordered to pay maintenance. See id. at 122 (stating that considering pension benefits as both income and property results in other party receiving larger portion of marital assets).
Here, the district court divided the couple's marital property including appellant's pension and VIP account and ordered appellant to pay permanent maintenance. Appellant had no source of earned income at the time of the dissolution. As of October 18, 1997, he began receiving social security of approximately $1,000 each month.
Appellant's pension and VIP account were improperly categorized as both property and income for the purposes of maintenance, effectively reducing appellant's property award. Recognizing the extensive amount of attorney fees generated by this litigation, and taking into consideration the social security benefits appellant is now receiving, however, we decline to disturb the district court's maintenance order. Cf. Wibbens v. Wibbens, 379 N.W.2d 225, 227 (Minn. App. 1985) (refusing to remand for de minimis error). We also conclude that the district court adequately considered the statutory factors for awarding maintenance, and its maintenance decision need not be altered.
2. Property Division
The district court has broad discretion in dividing marital property. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). Whether property is classified as marital or nonmarital is a question of law that we review de novo. Wopata v. Wopata, 498 N.W.2d 478, 484 (Minn. App. 1993). We affirm the district court's findings of fact unless they are clearly erroneous. Freking v. Freking, 479 N.W.2d 736, 739 (Minn. App. 1992).
It is presumed that property acquired by either spouse during the marriage is marital property. Minn. Stat. § 518.54, subd. 5 (1996). Property owned by a spouse prior to marriage is nonmarital. Id. To maintain its nonmarital character, property is not to be commingled with marital property, and a party seeking to prove commingled property nonmarital, must show by a preponderance of the evidence that the property can be readily traced to a nonmarital source. Wopata, 498 N.W.2d at 484.
A. Old House
After the parties' marriage, they lived in the home owned by respondent before marriage (Old House). The district court determined that a proportion of Old House was nonmarital property because of respondent's prior ownership and the couple's antenuptial agreement. Valued at approximately $50,000 at the time of their marriage, Old House was sold in 1994 for a net profit of $86,280.25. The parties made a number of improvements to Old House during the marriage. Crediting the testimony of a real estate expert, the district court concluded that not all of the improvements increased the value of the property. The district court determined that respondent's nonmarital portion totaled $77,782. This amount included the $50,000 value at the time of marriage, $12,000 from a mortgage satisfied from respondent's nonmarital pension proceeds, and $15,782 attributable to inflation. In 1994, the parties purchased New House with the funds from the sale of Old House. The court determined that 58% of New House's value was nonmarital deriving from respondent's nonmarital interest in Old House.
Appellant argues that his nonmarital assets were used to improve Old House and that respondent did not satisfy the home mortgage with her nonmarital funds. Before the parties' marriage, appellant sold his mobile home for $6,000; a month after the marriage, he withdrew $13,635.89 from his VIP account. Appellant contends that he used the $6,000 to improve Old House and the VIP funds both to improve Old House and to purchase a five acre lot. Appellant, however, furnished no corroboration of these claims at trial. Moreover, he was unable to state clearly what improvements were made or when they were made, and he conceded that the money was deposited into the parties' joint bank accounts. The district court determined that the funds were commingled with the parties' other funds and that appellant's effort to trace his nonmarital funds failed.
Appellant points to no evidence tracing his nonmarital funds. He argues that the value of the improvements are reflected in the fact that the tax basis of Old House had increased to $110,850. That figure, however, is only the tax basis, which does not aid in tracing appellant's nonmarital funds. The home sold in 1994 for $98,000 with net proceeds of $86,280.25. We agree with the district court that appellant has not shown by a preponderance of the evidence that these commingled funds are traceable.
In March of 1982, the parties entered into a $12,000 mortgage, secured by a lien on Old House. In 1984, respondent received a $22,000 lump sum payment from her pension fund. The district court determined that $12,000 could be traced, as a nonmarital asset, to the repayment of a mortgage on the Old House. Although appellant denies that he signed the mortgage or knew anything about it until this litigation, the district court did not find his testimony credible. See Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988) (noting appellate courts defer to district court credibility determinations). The district court concluded that the funds were used for family expenses and Old House improvements.
We cannot say the district court erred in its classification of New House as part marital property and part respondent's nonmarital property. Appellant did not adequately trace his nonmarital funds to Old House improvements, and no evidence corroborates his contentions regarding the mortgage. We conclude that the district court did not err in rejecting appellant's claims.
B. Five Acre Lot
During their marriage the parties purchased a five acre lot from respondent's son for $8,000. Appellant contends that this lot was purchased with the $13,635.89 taken from the nonmarital portion of his VIP account in September 1981 and should be classified as nonmarital. Although appellant testified that the lot was purchased in 1981, deposition testimony by respondent's son indicated that the sale occurred sometime in 1984. The district court noted that in 1984 respondent received a lump sum payment of $22,000 from her nonmarital pension and it is possible that those funds were used to purchase the lot. Appellant also testified that his nonmarital funds were deposited in the couple's joint accounts. The district court found that appellant had not adequately traced the lot purchase to nonmarital funds and therefore the lot was a marital asset. On this record, the district court's finding is not clearly erroneous.
C. Dissipation of Marital Funds
Parties owe each other a fiduciary duty "[d]uring the pendency of a marriage dissolution, separation, or annulment proceeding, or in contemplation of commencing" such actions. Minn. Stat. § 518.58, subd. 1a (1996). The party alleging a breach of this duty by the other party bears the burden of proof. Id.
Appellant alleges that respondent withdrew approximately $25,000 from the parties' savings account sometime between September 8, 1989, and May 1995. The district court determined that a majority of the savings withdrawals were deposited in the parties' joint checking account. It concluded that regardless of whether the funds were used ultimately for respondent personally, the evidence did not support a conclusion that respondent had secretly taken the funds or that she usurped them. Appellant claims that he knew nothing about the savings account during the time respondent was making withdrawals and that respondent did not adequately explain her use of the money.
The $25,000 was withdrawn over a six-year period ending May 1995. The parties separated in August 1995. As respondent notes, there is no evidence that the money was withdrawn in contemplation of the marriage dissolution. The district court determined that all but $100 of the withdrawals from 1993-94 corresponded with the dates and amounts of deposits into the parties' joint checking account.
During the marriage, respondent managed the parties' financial records and generally deposited appellant's checks in the bank, receiving a portion of each check in cash. Both parties agree that appellant received part of this cash and respondent kept the remainder. Appellant contends that by these means respondent took over $50,000 for herself.
Appellant argues that his contentions that respondent took over $25,000 from the parties' savings account and over $50,000 from his checks are supported by the alleged destruction of records by respondent in her attempt to hide evidence. The district court determined there was no evidence to support a finding that respondent hid or unreasonably destroyed any joint bank account records. Appellant supports his contention that respondent intentionally destroyed records solely by the fact that respondent was unable to produce complete financial records for the parties' entire marriage. The record does not support appellant's contentions that respondent withdrew funds or received cash back from appellant's checks in contemplation of the parties' separation and eventual marriage dissolution. We cannot say the district court erred in finding that these claims lacked merit.
3. Antenuptial Agreement
Appellant argues that the district court improperly determined that the parties executed a valid antenuptial agreement prior to their marriage. We conclude that the district court's decision regarding the validity of this agreement had no effect on the property division in this case. After declaring the agreement valid, the district court relied on it only to support its finding that respondent had a nonmarital property interest in the fair market value of Old House at the time of the parties' marriage. Regardless of the antenuptial agreement, nonmarital property includes property acquired by a spouse prior to marriage. Minn. Stat. § 518.54, subd. 5. It is therefore unnecessary for us to address this issue.
4. Attorney Fees Awarded by District Court
An award of attorney fees will be upheld unless there is "clear abuse of discretion." Kitchar v. Kitchar, 553 N.W.2d 97, 104 (Minn. App. 1996), review denied (Minn. Oct. 29, 1996). It is within the district court's discretion to award fees "against a party who unreasonably contributes to the length or expense of the proceeding." Minn. Stat. § 518.14, subd. 1 (1996). A showing of one party's inability to pay attorney fees is not required; rather, an award "may be based on the impact a party's behavior has had on the costs of the litigation regardless of the relative financial resources of the parties." Dabrowski v. Dabrowski, 477 N.W.2d 761, 766 (Minn. App. 1991).
The district court ordered appellant to pay $16,500 in respondent's attorney fees, which totaled $18,534. Appellant's own attorney fees and costs totaled $28,597.54. The district court determined that the extensive attorney fees were primarily the fault of appellant--that this case had been over-litigated and that appellant had conducted extensive, unreasonable, and unnecessary discovery with which respondent reasonably complied. The district court concluded that the
extensive discovery and prolonged litigation has produced nothing in the way of new marital assets and/or improper conduct by [respondent]. [Appellant's] claims as to concealed assets were frivolous and unfounded.
Appellant argues that he was entitled to an award of attorney fees based on his claim that respondent engaged in misconduct, misrepresented facts, and failed to comply with discovery rules. The record does not support these allegations.
The district court's findings of fact included two sections on attorney fees, findings 51-55 and finding 56. Finding 56 appears to be the district court's conclusion regarding attorney fees. The conclusions of law made no mention of attorney fees. Respondent has requested that we correct this error and order that finding 56 be relabeled a conclusion of law.
Although the attorney fees awarded to respondent were extensive, we conclude that the court did not abuse its discretion in awarding them nor in refusing to award attorney fees to appellant. We also find respondent's request to have the attorney fees award designated a conclusion of law would properly reflect the district court's intentions. See Minn. R. Civ. P. 60.01 ("[E]rrors * * * arising from oversight or omission may be corrected by the court at any time * * *."); Graphic Arts Educ. Found. v. State, 240 Minn. 143, 145, 59 N.W.2d 841, 844 (1953) ("[T]he labeling of a conclusion of law as a `finding of fact' is not determinative of its true nature * * *.). We therefore modify the findings of fact and conclusions of law to designate finding of fact 56 as a conclusion of law.
5. Attorney Fees on Appeal
Respondent has requested attorney fees and costs on appeal. "Attorney fees may be awarded in dissolution cases where the appeal was frivolous or in bad faith." Dabrowski, 477 N.W.2d at 766. Attorney fees shall be awarded on appeal if respondent does not have adequate resources to present a good faith defense on an appeal and appellant has the financial resources to pay respondent's attorney fees. Minn. Stat. § 518.14, subd. 1.
Respondent contends that she needs an attorney fee award to finance her good faith defense to the appeal; she further argues that this appeal was made in bad faith. We conclude that appellant's arguments on appeal are not entirely frivolous, and although respondent's resources are limited, she is not completely without funds. We also note that appellant has already been ordered to pay $16,500 of respondent's attorney fees. We decline to order additional attorney fees.
Affirmed as modified.