Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Lee Ann Oczak, petitioner,
Joseph Francis Oczak,
File No. F68932782
Steven B. Schmidt, Rider, Bennett, Egan & Arundel, 2000 Metropolitan Centre, 333 South Seventh Street, Minneapolis, MN 55402 (for respondent)
Barbara N. Nevin, Milavetz, Gallop & Milavetz, P.A., 6500 France Avenue South, Edina, MN 55435 (for appellant)
Considered and decided by Amundson, Presiding Judge, Huspeni, Judge, and Kalitowski, Judge.
Joseph F. Oczak appeals the district court's award of $1,000 per month in permanent spousal maintenance to respondent Lee Ann Oczak. We affirm in part, reverse in part, and remand.
The parties' 23-year marriage was dissolved in 1992. The original 1992 decree awarded custody of the parties' children, child support, and permanent spousal maintenance to respondent. The decree provided that the issue of spousal maintenance would be redetermined after appellant's support obligation for the youngest child terminated in June 1996. In May 1996, respondent made a motion requesting permanent spousal maintenance of $1,600 per month. Based on the language of the decree that directed a re-evaluation of the maintenance issue after June 1, 1996, the district court properly based its determination on the parties' existing circumstances and did not require either party to show a substantial change of circumstances that made the prior award unreasonable and unfair under Minn. Stat. § 518.64, subd. 2 (1996).
The district court may grant maintenance if it finds that the spouse seeking maintenance lacks sufficient property to provide for reasonable needs considering the standard of living established during the marriage, or is unable to provide adequate self-support through appropriate employment. Minn. Stat. § 518.552, subd. 1 (1996). In determining the amount and duration of maintenance, the district court shall consider the factors listed in Minn. Stat. § 518.552, subd. 2 (1996), but the basic test is the ability of the spouse seeking maintenance to meet needs balanced against the financial condition of the spouse from whom maintenance is sought. Erlandson, 318 N.W.2d at 39-40.
1. Respondent's Needs
At the time of the 1992 dissolution, respondent worked part time for Northwest Airlines. Following the dissolution, respondent maintained this employment and completed law school. The district court found that respondent's reasonable monthly expenses were $1,846.65, plus a $600 monthly school loan repayment, for a total of $2,446.65. The district court found that respondent's net monthly income from her part-time job with Northwest Airlines and her second part-time job as a law clerk totaled $1,885. The court found that respondent required an after-tax spousal maintenance award of $660 per month to meet her needs.
Appellant contends that if respondent's net income of $1,885 and the $660 in net maintenance are added together, the sum equals $2,545, or $98.35 more than respondent's monthly expenses of $2,446.65. We agree. Reversal and remand of the amount of the award are required to correct the calculation error. See Lyon v. Lyon, 439 N.W.2d 18, 22 (Minn. 1989) ("maintenance depends on a showing of need").
The district court determined that $1,000 maintenance was needed to allow respondent to net $660 after taxes. Appellant argues that the district court's consideration of the tax consequences of the award to respondent should be reversed as speculative. We disagree.
The district court has discretion to consider tax consequences of its award, but "such considerations are not controlling." Aaron v. Aaron, 281 N.W.2d 150, 153 (Minn. 1979). In this case, respondent indicated in an affidavit that spousal maintenance is taxable to her at a 33% combined state and federal tax rate. Because there is evidence in the record to support the district court's finding regarding the tax consequences of the award to respondent, we cannot say the district court abused its discretion in considering those consequences.
2. Appellant's Income
At the time of the 1992 decree, appellant's annual adjusted gross income from employment was $70,387. Appellant lost this employment in July 1994. Appellant was employed in a temporary position from December 1994 until November 1995. Appellant found a permanent position, but was terminated from that employment in January 1996. Appellant was unemployed until February 1997, when he accepted a position with a base salary of $40,000 per year plus commissions for sales in excess of the base sales of $235,000. Appellant's net monthly income from his base salary is $2,490. The district court found that appellant's reasonable expenses are $2,030 per month.
The district court found that neither appellant nor his employer anticipate that appellant's salary will be only $40,000 per year and that it is "reasonable to assume" that appellant still has the ability to earn an adjusted gross income of $70,387. Appellant argues the district court abused its discretion by imputing $30,387 in annual gross income to him without a finding that he is underemployed in bad faith.
If the district court makes an award of maintenance based on the obligor's earning capacity, there must be a finding of bad faith. Bourassa v. Bourassa, 481 N.W.2d 113, 116 (Minn. App. 1992). In this case, appellant documented his unsuccessful efforts to obtain more highly paid employment. The record does not support a finding that appellant's acceptance of his current position was made in bad faith.
Bonuses that provide a dependable source of income may properly be included in the calculation of future income for the purpose of determining maintenance. Lynch v. Lynch, 411 N.W.2d 263, 266 (Minn. App. 1987), review denied (Minn. Oct. 30, 1987). Here, appellant provided a letter from his employer indicating that, in view of appellant's current duties, it would be "unreasonable" to expect appellant to produce sales over the base delivery minimum of $235,000. On this record, appellant's future commission income is too uncertain to form a basis for calculating the level of the maintenance award. Because the record indicates appellant cannot pay maintenance of $1,000 per month and meet his own needs based on his net income of $2,490 per month, the district court's consideration of appellant's potential bonus income was not harmless error. On remand, in its discretion, the district court may reopen the record to take additional evidence on appellant's commission income and, if appropriate, award maintenance in a fixed sum plus a percentage of appellant's incentive pay. See Bourassa, 481 N.W.2d at 115 n.3 (fixed sum maintenance award plus a percentage of bonus income is permissible, but may be subject to a cap).
3. Respondent's Income
Appellant argues that the district court abused its discretion in finding that respondent has made a good faith effort to become self-supporting, because respondent provided no proof of any efforts she had made to obtain full-time legal employment. We disagree. Respondent was not required to increase her income following the dissolution because the 1992 decree characterized the maintenance award as "permanent." See Sand v. Sand, 379 N.W.2d 119, 124 (Minn. App. 1985) (award of permanent maintenance does not contemplate future self-sufficiency), review denied (Minn. Jan. 31, 1986).
Because the 1992 decree provided for redetermination of maintenance after June 1, 1996, the district court's order is reviewed as an initial maintenance award. In determining an initial award, a district court may not find bad faith underemployment and impute earning capacity as income when the party seeking maintenance has continued to work the same number of hours as at the time of separation, has been employed in the same type of position as during the marriage, and there is no evidence of an intent to reduce income. Carrick v. Carrick, 560 N.W.2d 407, 410 (Minn. App. 1997).
The record supports the district court's findings that respondent made reasonable efforts to increase her ability to support herself by obtaining a law degree, and that despite good faith efforts, respondent has not been able to earn enough to meet her basic expenses. The district court did not abuse its discretion in refusing to impute income to respondent.
Appellant further argues that the district court abused its discretion by failing to make findings regarding whether respondent has income available from the marital property settlement or from an investment account. Interest income that may be generated from the recipient spouse's property should be considered when calculating spousal maintenance. Rask v. Rask, 445 N.W.2d 849, 853-54 (Minn. App. 1989). Respondent's tax returns indicate that she may have income from investments that would affect the determination of the appropriate level of maintenance. On remand, the district court shall make findings on this issue.
4. Duration of Maintenance
In view of the parties' 23-year traditional marriage, during which respondent had only part-time employment, and the uncertainty that respondent will be able to meet her needs without maintenance, the district court acted within its discretion in ordering an award of permanent maintenance. See Minn. Stat. § 518.552, subd. 3 (1996) (when there is some uncertainty as to the necessity of a permanent award, the court shall order a permanent award, leaving its order open for later modification).
In conclusion, we affirm the district court's decision to award permanent maintenance, but reverse as to the amount of maintenance because of: (1) a computational error in the determination of the shortfall between respondent's income and expenses; (2) the overestimation and uncertainty of appellant's income; and (3) the lack of findings regarding respondent's investment income. We remand for the district court's determination as to the amount of maintenance in such proceedings as the district court deems appropriate.
Affirmed in part, reversed in part, and remanded.