Minn. Stat. sec. 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Peter P. Pangborn,
File No. DMF491686
Mary C. Lauhead, 3985 Clover Avenue, St. Paul, MN 55127 (for appellant)
Raymond M. Lazar, Richard D. Snyder, Elizabeth B. Bryant, Fredrikson & Byron, P.A., 1100 International Centre, 900 Second Avenue South, Minneapolis, MN 55402 (for respondent)
Considered and decided by Harten, Presiding Judge, Huspeni, Judge, and Klaphake, Judge.
Father appeals, among other things, the district court's denial of his motion to vacate the child support provision in the parties' dissolution judgment and retroactively impose appropriate guidelines child support because of mother's fraud on the court in understating her income at the default dissolution hearing. We conclude that the district court clearly erred in finding that the mother's misrepresentations were simply mistaken and did not rise to the level of fraud on the court. We therefore reverse and remand for further findings consistent with this opinion.
The parties were married on August 21, 1981, while both were college students. Two children were born to the parties during their ten-year marriage. Both parties continued to pursue various studies during much of their marriage, working at various jobs to make ends meet. In 1985, mother began studying to become a textile artist and obtained a B.S. in applied design in 1990, shortly before the parties' marriage dissolution. Father obtained a paralegal certificate during the mid-1980s and was working for the St. Paul City Attorney's Office (where he currently works) at the time of dissolution. Throughout the marriage, the parties' income was minimal.
In 1989, the parties separated and began negotiating a stipulated settlement. On August 28, 1990, mother signed a stipulation, which provided that father would have physical custody of the children and that mother would pay $63 monthly child support. It further provided that mother's net monthly income from her part-time employment with the Science Museum of Minnesota was $370 and that her reasonable monthly expenses were $800. At the time of mother's signing, her income was accurately represented. On September 24, 1990, however, mother began full-time employment as an exhibit developer at the science museum, thereby substantially increasing her income. She continued in that position until she resigned on November 20, 1992, to pursue an art career.
On May 2, 1991, at the default dissolution hearing, the district court accepted the parties' final stipulation, which provided that mother would pay $75 per month child support but contained no statement of mother's current income. Mother then testified under oath that she was "self-employed as a textile artist and [worked] on a part-time basis for the Science Museum." She also testified that her income varied, but was approximately $10,000.
On May 8, 1991, the dissolution judgment, which incorporated the terms of the final stipulation, was entered. Soon thereafter, mother remarried and father began requesting that mother voluntarily increase her child support payments. Mother agreed to increase her monthly payments to $85 beginning in January 1992 and to $100 beginning in October 1992, but refused any substantial increases. Mother and her current husband also refused father's repeated requests to examine their tax returns, but were willing to provide father with mother's income information, or their joint return if father would sign a confidentiality agreement.
On January 21, 1997, father moved the district court to, among other things, increase mother's child support payments. After discovering that mother's gross income was $20,448.79 in 1991 and $17,314.84 in 1992, and that at the time of the default hearing, she had been working full time at the science museum, father supplemented his motion to allege fraud on the court. Father argued that in quitting her full-time job with the science museum, mother had self-limited her income. He requested that the district court impute income to mother based on her skills and education.
The district court denied father's motions, finding that mother's misrepresentation of her income and employment status at the time of the default hearing did not rise to the level of fraud that would justify nullification of the stipulated child support order and retroactive imposition of guidelines child support. The district court also found that mother had been diagnosed with fibromyalgia and a major depressive disorder requiring anti-depressant medication, which limited her ability to work full time. Because mother's current income was minimal, the district court further found mother unable to contribute to father's work-related childcare expenses and the children's uninsured medical, dental, and counseling costs. The district court awarded father $3,802.30 in back child support from mother, however, which represented the guidelines child support amount on the difference between her actual 1991 and 1992 income and her estimated $10,000 income at the time of the default hearing. This appeal followed.
D E C I S I O N
1. Fraud on the Court
The district court found that the parties had originally negotiated child support at $75 per month based on an agreed estimate of mother's gross income of $10,000 per year. It further found that the failure to update mother's income information in the initial stipulation resulted from lack of communication between the parties and their attorneys rather than fraud on the court. Father argues that the district court clearly erred by finding that mother's income and employment misrepresentations at the default hearing did not constitute fraud on the court and by not imposing a retroactive guidelines child support obligation on mother from the time of the dissolution.
On appeal, we must uphold the district court's findings concerning allegations of fraud on the court unless they are clearly erroneous. Sanborn v. Sanborn, 503 N.W.2d 499, 502 (Minn. App. 1993), review denied (Minn. Sept. 21, 1993). In the context of marital dissolution actions, fraud on the court has three main components: (1) an intentional course of material misrepresentation or non-disclosure; (2) that misleads the court and opposing counsel; and (3) results in an unfair award. Maranda v. Maranda, 449 N.W.2d 158, 165 (Minn. 1989).
In finding that mother's conduct did not rise to the level of fraud on the court, the district court appears to have discounted the affirmative misrepresentations mother made at the default hearing regarding her then current income and job status. Mother stated that she was working part-time at the science museum when she was actually working there full time, and that her income was approximately $10,000 when it was actually over $20,000. At oral argument before this court, mother's counsel was obliged to concede that mother's statements at the default hearing were false. The inference that mother was attempting to portray her income as minimal in order to affect her child support obligation is virtually inescapable.
Nevertheless, mother argues that her misrepresentations did not mislead the court or opposing counsel because the district court referee at the default hearing said that he "could really care less" about receiving oral testimony regarding the basis of the stipulation and because father and his counsel did not even attend the default hearing. But the referee relied on father's acceptance of the negotiated stipulation. Because in a stipulated dissolution the court sits as a third party to the stipulation, if one party defrauds the other, that party necessarily defrauds the court. Maranda, 449 N.W.2d at 165.
Father was entitled to rely on mother's obligation to make a full and accurate disclosure of all assets and liabilities in the dissolution proceeding. See Ronnkvist v. Ronnkvist, 331 N.W.2d 764, 765-66 (Minn. 1983) (obligation to make full and accurate disclosure). Moreover, father had no reason to believe that the income figures that mother initially disclosed were no longer accurate.
The record indicates that father would not have agreed to child support of $75 per month for two children if mother had not misrepresented her income. Mother's estimated income of $10,000 apparently first entered the case when mother testified at the default hearing; it then became incorporated into the dissolution judgment. The initial stipulation and petition for dissolution stated mother's gross income as $203.75 every two weeks, which annualizes to $5,297.50.
The difference between the income disclosed by mother in the early negotiations and her actual income at the time of the default hearing is significant. Mother's misrepresentations at the default hearing resulted in an unfair and unjustified child support award significantly below guidelines. We conclude that the district court clearly erred in finding that mother did not commit fraud on the court.
Under Minn. Stat. § 518.145, subd. 2 (1996), a court may set aside a judgment for fraud on the court. Although a motion to vacate a judgment for fraud must be made within a reasonable time, there is no absolute time limit. In Maranda, the supreme court held that the wife's motion to set aside a six-year-old dissolution judgment was not barred by laches because the husband's conduct in failing to disclose the true value of the parties' assets prevented the wife from having sufficient facts to bring the motion earlier. Maranda, 449 N.W.2d at 166. Here, father began requesting verification of mother's current income within a year of the dissolution judgment, but he did not receive information from which he could discover mother's fraud until 1997. After father received the information, he promptly filed a motion to vacate the child support order. Under the circumstances, we decline to apply the doctrine of laches.
Because mother's minimal support obligation was obtained by fraud on the court, we reverse the district court's denial of father's motion to vacate the child support order. All other provisions of the judgment entered on May 8, 1991, unrelated to child support, remain undisturbed. On remand, the district court should establish child support in accordance with law and nunc pro tunc from May 8, 1991. In its discretion and in accordance with law, the district court also may consider modifying parts of the judgment associated with or having impact upon the child support award, such as financial responsibility for health insurance, unreimbursed medical costs, and work-related child-care expenses, if any.
2. Imputation of Income
It is undisputed that mother voluntarily quit her full-time job at the science museum on November 20, 1992, to pursue a career as an artist. Although the record contains a medical report from February 14, 1992, indicating that mother then suffered from symptoms of fibromyalgia, her fibromyalgia at that time was not incapacitating.
Minn. Stat. § 518.551, subd. 5b(c) (1992), as amended, controls the imputation of income to mother from November 20, 1992, to the present:
If the court finds that a parent is voluntarily unemployed or underemployed, child support shall be calculated based on a determination of imputed income. A parent is not considered voluntarily unemployed or underemployed upon a showing by the parent that the unemployment or underemployment: (1) is 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. Imputed income means the estimated earning ability of a parent based on the parent's prior earnings history, education, and job skills, and on availability of jobs within the community for an individual with the parent's qualifications. If the court is unable to determine or estimate the earning ability of a parent, the court may calculate child support based on full-time employment of 40 hours per week at the federal minimum wage or the Minnesota minimum wage, whichever is higher. If a parent is physically or mentally incapacitated, it shall be presumed that the parent is not voluntarily unemployed or underemployed.
The district court clearly erred in failing to require that mother prove that she qualified for an exception within this statute when she voluntarily quit her job at the science museum. From the time mother quit at least until the time she began to suffer from major depressive disorder, mother was exposed to a finding of imputed income for voluntary underemployment under the statute unless she could prove that her underemployment was statutorily excepted. On remand, the district court should determine at what point, if any, mother's fibromyalgia or major depressive disorder rendered her physically or mentally incapacitated.
We note that the following part of paragraph 2 of the district court's findings of fact regarding mother's current ability to work is unsupported by the record:
The Court is satisfied that [mother] is not self-limiting her income because she is self-limiting her work hours to less than full-time work. She is not able to work full time. She is not able to work full time in the area of skill and expertise for which she was trained, which is as an artist.
The record indicates that mother works full time (at least 40 hours per week) at her art and at a part-time job involving telephoning. Mother is thus capable of working full time. The real issue becomes whether mother is capable of working full time at a job outside her chosen career as an artist.
Mother argues that it would be unfair to impose retroactively an increased child support obligation based on income that she did not earn, and that father should have moved the court to impute income to mother years ago if he thought that she should have paid more child support. But this argument ignores the role mother's fraud on the court played in father's lack of information regarding her income history and his inability to proceed earlier than he did.
3. Attorney Fees
The district court denied father's request for attorney fees based on mother's bad faith because it found that mother had not committed fraud on the court and that father therefore failed to substantiate his claim of bad faith. Because we conclude that the district court clearly erred in finding no fraud on the court, we also reverse the district court's ruling on attorney fees. On remand, the district court should reconsider an award to father of reasonable attorney fees incurred as a result of mother's fraud, including fees for this appeal. See Minn. Stat. § 518.14, subd. 1 (1996) (court may award attorney fees "against a party who unreasonably contributes to the length or expense of the proceeding").
Reversed and remanded.