Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
In Re the Marriage of:
Judith Ann Polasek, petitioner,
James Ambrose Polasek,
Filed December 23, 1997
Affirmed in part, reversed in part, and remanded
Morrison County District Court
File No. F2951096
Kevin L. Holden, Murphy & Holden, P.A., 30 North Seventh Avenue, P.O. Box 866, St. Cloud, MN 56302 (for appellant)
Gerald R. Grote, Rinke-Noonan, 700 Norwest Center, P.O. Box 1497, St. Cloud, MN 56302 (for respondent)
Considered and decided by Randall, Presiding Judge, Toussaint, Chief Judge, and Thoreen, Judge.
Appellant argues that the district court erred in awarding her former husband a nonmarital interest in the parties' homestead and farm, failing to award her spousal maintenance, and failing to award her attorney fees. We affirm in part, reverse in part, and remand for further findings.
Appellant was primarily a homemaker during the parties' marriage, but worked outside the home in a clerical position before the daughter's birth and again during the last seven years of the marriage part-time as an educational assistant. Appellant's net monthly income from employment is $799.25. Appellant has no post-secondary education, has some health problems, and appears to have little prospect of significantly bettering her employment.
During the entire 23-year marriage, respondent worked full-time for U.S. West. His net monthly income from employment is $2,560. Respondent also has some income from a hobby farm, but losses from the farm over the years have far exceeded income from the farm.
The parties stipulated that appellant would have sole physical custody of the parties' two children and that respondent would pay guideline monthly child support of $766.10. The parties were unable to resolve the issues of property division, spousal maintenance, and attorney fees. Accordingly, a one-day trial was held in Morrison County District Court on June 25, 1996.
At trial, appellant submitted monthly expenses of $1,776.91 for herself and the children. Respondent submitted monthly expenses of $3,022, of which $533 was for individual expenses and the rest for farm-related expenses. The district court found that each party had monthly expenses of $1,600. The district court denied appellant's request for spousal maintenance, but reserved jurisdiction on the issue.
The district court found that the parties' homestead, which was purchased in 1978 for $43,000, was currently worth $60,000. Finding that the $27,000 down payment for the homestead came entirely from CDs that respondent owned before the marriage from his sale of nonmarital livestock and machinery, the district court awarded respondent a $27,000 nonmarital interest in the homestead, plus $8,500, which was one-half the increase in the value of the homestead.
The district court also awarded respondent an $11,000 nonmarital interest in the parties' farm, finding that $11,000 of the down payment for the farm came from the sale of certain lots that respondent had purchased before the marriage.
The district court declined to award attorney fees.
Appellant brought a motion for amended findings of fact, or in the alternative for a new trial, seeking relief from the district court's award of nonmarital property to respondent and refusal to award appellant spousal maintenance and attorney fees. The district court denied appellant's motion.
Whether property is marital or nonmarital is a question of law that an appellate court may review with independent judgment. Appellate courts must defer to the district court's findings of underlying facts, however, unless the findings are clearly erroneous. Swick v. Swick, 467 N.W.2d 328, 330 (Minn. App. 1991), review denied (Minn. May 16, 1991).
Property acquired by either spouse during the marriage is presumed to be marital property, unless a party proves that the property was acquired in exchange for property owned prior to the marriage or was a gift. Minn. Stat. § 518.54, subd. 5 (1996). A spouse claiming that property is nonmarital must prove the necessary underlying facts by a preponderance of the evidence. Wopata v. Wopata, 498 N.W.2d 478, 484 (Minn. App. 1993). Where a party does not show that nonmarital money was invested in a readily traceable asset, the court should characterize it as marital property. Id.
(a) Nonmarital Interest in Homestead
Respondent testified that he netted approximately $30,000 from an auction of livestock and machinery in March of 1972, and that he put the money in CDs in his own name until the parties cashed them for the down payment on their house in 1978. Respondent testified that these CDs were the sole source of the parties' $27,000 down payment on the homestead. Respondent did not provide any evidence tracing his nonmarital interest in the homestead other than his testimony, however.
Appellant testified that she came into the marriage with approximately $7,000-$9,000 in insurance proceeds from her former husband's death, in addition to a civil service death benefit of $6,821, and that this money was pooled with respondent's money in CDs and other savings. Appellant admitted that respondent had received some money from his 1972 auction, but did not know exactly how much he had netted and thought that a significant amount of the auction money had been used to pay off the mortgage on the auctioned property. Appellant claimed that the parties merged their money together during the marriage to such an extent that it was not really possible to say whose money bought the homestead or the farm.
Respondent admitted that appellant also came into the marriage with some money of her own, that they essentially pooled all of their money from the beginning and throughout their marriage, and that some of the pooled money was used to purchase CDs. Respondent still maintained, however, that the down payment for the homestead the couple purchased five years after they were married came mostly from his CDs.
"Commingling of nonmarital and marital property is not fatal to a party's claim that property remained nonmarital." Carrick v. Carrick, 560 N.W.2d 407, 413 (Minn. App. 1997). A party seeking to trace an asset to a nonmarital source is not held to a "strict tracing" standard, but need only show by the preponderance of the evidence that the asset was acquired in exchange for nonmarital property. Id.; see also Nash v. Nash, 388 N.W.2d 777, 781 (Minn. App. 1986) ("Tracing does not require a party to produce the serial numbers of the dollar bills used."), review denied (Minn. Aug. 20, 1986).
The district court accepted respondent's testimony that the down payment for the homestead came primarily from his nonmarital CDs. As the trier of fact, the district court "has the opportunity to observe the parties and to appraise their testimony, credibility, general character, and disposition." Doering v. Doering, 385 N.W.2d 387, 391 (Minn. App. 1986). Given the district court's unique perspective, its finding that $46,500 of the value of the homestead was traceable to a nonmarital source must be upheld as not clearly erroneous.
(b) Nonmarital Interest in Farm
The district court found that $11,000 of the purchase price for the farm came from the sale of certain lots in Waite Park, Minnesota that respondent purchased before the marriage for $3,500, and awarded respondent an $11,000 nonmarital interest in the farm.
When respondent purchased the Waite Park lots, however, he placed the lots in both his and appellant's names in joint tenancy, even though they were not yet married. Appellant testified that respondent placed the property in both their names because he wanted her to have the property if anything happened to him. Respondent did not contest this testimony. Appellant further testified that she repaid respondent $100 per month for approximately one year for her share of the property. Respondent testified that he could not remember such repayment.
Because the Waite Park lots were owned in joint tenancy before the marriage, both parties had equal nonmarital interests in the losts. See Minn. Stat. § 518.54, subd. 5. Moreover, the uncontradicted evidence indicates that respondent intended the placing of the property into joint tenancy to be a gift to appellant, which precludes respondent from claiming a sole interest in the property flowing from his purchase of the lots with his own funds. See McCulloch v. McCulloch, 435 N.W.2d 564, 568 (Minn. App. 1989) (although homestead originated as husband's nonmarital property, husband affirmatively acted to convey interest in homestead to wife, thereby losing his nonmarital interest).
Although the district court was free to disbelieve appellant's testimony that she contributed approximately one-third of the purchase price of the Waite Park lots, it was not free to ignore the fact that the lots were owned by both parties before the marriage. The district court clearly erred in awarding an $11,000 nonmarital interest in the farm to respondent and the case is remanded to correct this error.
2. Spousal Maintenance
The district court has broad discretion in setting the amount and duration of spousal maintenance, and an appellate court will reverse for abuse of discretion only if there is a clearly erroneous conclusion that is against logic and the facts on the record. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).
The district court may order maintenance for either spouse if it finds that the spouse seeking maintenance:
(a) lacks sufficient property, including marital property apportioned to the spouse, to provide for reasonable needs of the spouse considering the standard of living established during the marriage, especially, but not limited to, a period of training or education, or
(b) is unable to provide adequate self-support, after considering the standard of living established during the marriage and all relevant circumstances, through appropriate employment, or is the custodian of a child whose condition or circumstances make it appropriate that the custodian not be required to seek employment outside the home.
Minn. Stat. § 518.552, subd. 1 (1996).
The district court found that appellant did not currently need spousal maintenance because she could meet her own needs with her income, child support, and income from other assets in her possession, but properly reserved jurisdiction on the issue.
Appellant submitted a monthly budget for herself and the children of $1,776.91, which did not include the cost of individual health insurance for herself or attorney fees for the divorce. The district court found appellant's monthly expenses to be $1,600, but did not specify what submitted expenses it thought unreasonable. Appellant has net monthly income from work of $799.25 and monthly child support of $766.10 from respondent, equalling $1,565.35. It is not clear, however, what interest income would actually be available to appellant from her nonmarital assets and the marital assets granted to her in the judgment.
We are particularly concerned that there is no finding regarding the cost of individual health insurance for appellant. The district court ordered that respondent keep appellant insured through the continuation coverage provided by his employer's health insurance coverage, but that appellant pay the cost of such insurance. Given that appellant's ability to meet her needs is a close issue and the cost of individual health insurance for appellant could be significant, a determination of the cost of such insurance is necessary to properly evaluate whether spousal maintenance is warranted.
Appellant's submitted budget did include $90 a month for "medical, dental and prescriptions," but this is presumably for health costs unreimbursed by insurance for appellant and the children, such as co-payments for doctor visits and prescriptions and other uncovered procedures. To the extent that this $90 does not represent part of the premium for appellant's health insurance and such premium is significant, it is possible that appellant may not be able to meet her and the children's needs from her income, assets, and child support. We therefore remand the issue of spousal maintenance for further findings and re-evaluation.
3. Attorney Fees
The district court has very broad discretion in allocating attorney fees in dissolution proceedings. Reinke v. Reinke, 464 N.W.2d 513, 516 (Minn. App. 1990). Appellate courts will reverse a district court's decision on attorney fees only for a clear abuse of discretion. Davis v. Davis, 306 Minn. 536, 538, 235 N.W.2d 836, 838 (1975).
The record indicates that appellant has adequate liquid resources to pay her own attorney fees, but that her payment of attorney fees will reduce her income-producing assets and might affect her ability to meet her monthly needs without spousal maintenance. Because appellant can presently pay her own attorney fees, and because we are instructing the district court to consider any effect such payment may have on appellant's need for maintenance on remand, we find no abuse of discretion in the district court's refusal to grant attorney fees. Furthermore, we decline to award attorney fees for this appeal.
Affirmed in part, reversed in part, and remanded.