Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
In Re the Marriage of:
Barbara Ann Becksted Otto,
f/k/a Barbara Ann Kreisler, petitioner,
David Alan Otto,
Filed May 26, 1998
Goodhue County District Court
File No. F9961183
Thomas L. Steffens, Linda DeBeer, Steffens & Rasmussen, 300 Southdale Place, 3400 W. 66th St., Edina, MN 55435 (for appellant)
Michael D. Dittberner, Kissoon, Clugg, Linder & Dittberner, Ltd., 3205 W. 76th St., Edina, MN 55435-5244 (for respondent)
Considered and decided by Shumaker, Presiding Judge, Huspeni, Judge, and Schumacher, Judge.
U N P U B L I S H E D O P I N I O N
In this marital dissolution action, appellant challenges the trial court's findings of fact, its denial of her request for an equitable share in respondent's home and business, and its denial of her motion for a new trial. Because we see no error in the trial court's decisions, we affirm.
In 1990, appellant Barbara Ann Otto began working for respondent David Alan Otto and his first wife as an assistant in their chiropractic clinic. In September 1991, when both appellant and respondent were having problems in their respective marriages, the parties developed a romantic relationship.
In December 1991, respondent purchased an office in Cannon Falls for the purpose of opening a new chiropractic clinic. The building was in poor condition and required extensive remodeling. Respondent was also in the process of remodeling the home that he purchased during his first marriage. The labor and materials for these renovation projects were provided by various people including respondent, respondent's parents, appellant, appellant's children, paid contractors, and the landlord of the office building. Roughly $13,000 in labor and materials was obtained by bartering services at respondent's clinic. Appellant was not compensated for the remodeling work that she did on the clinic or the home.
Appellant and respondent divorced their respective spouses in the summer of 1992. In late 1993, appellant and respondent began living together. They separated in January 1994. During the separation, appellant attended massage therapy school that was paid for by respondent. In February 1994, appellant became concerned about money that she had invested in the remodeling projects and had respondent sign a document acknowledging that she had contributed $19,000 to remodeling the home and clinic. She informed respondent that if he did not sign the document, they "were through." In June, the parties reconciled and appellant began doing massages at respondent's clinic; the proceeds from these massages were deposited in respondent's business account. Both parties admitted that the clinic's business account was used by them to pay their living expenses.
Appellant and respondent married in May 1995. By this time, a substantial amount of the work on the home had been completed. In October 1995, 50% of the clinic was sold to Dr. Fiona Fletcher for $52,200. Both respondent and Dr. Fletcher agreed to keep the revenue from their respective practices and to split the cost of the clinic's overhead. Appellant, also a signatory to the purchase agreement, retained her massage therapy practice and worked seven hours a week as office manager in lieu of paying overhead.
The parties separated again in May 1996. In July of that year, respondent sold his home for $151,000. After paying the mortgages and $5,263 in taxes, and advancing appellant $7,000 for attorney fees, the remaining $42,016 was placed in a trust account established by appellant's attorney. In September 1996, appellant filed for divorce, which was granted in May 1997.
The trial court awarded each party one-half of the proceeds that remained from the sale of 50% of the clinic, deducting the cost of appellant's massage therapy education from her share. The court awarded respondent ownership of the remaining unsold 50% interest in the clinic. In addition, the court awarded to respondent for his bartered services $13,273 from proceeds of the home sale. The court divided the remaining home sale proceeds 67% to respondent and 33% to appellant, stating that the home and the clinic proceeds awarded to appellant were compensation for the unpaid work that she had done at the clinic between May 1994 and October 1995. The court also determined that because appellant acted only as an employee of the chiropractic clinic, she did not acquire any interest in it and that she did not contribute any money to the remodeling of respondent's home.
In her motion for a new trial or amended findings, appellant attempted to introduce as new evidence a supplemental affidavit from Dr. Fletcher stating that she had heard respondent admit that he and appellant were co-owners of the chiropractic clinic. The court amended clerical errors in the original dissolution decree, but denied appellant's motion for a new trial.
D E C I S I O N
1. Findings of fact
Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.
Minn. R. Civ. P. 52.01.
Reimbursement of financial contributions
Appellant consistently challenges the trial court's findings that "[r]espondent has traced and shown that [appellant] made no financial contributions to these improvements [to the home]." Appellant argues that respondent's testimony established that appellant contributed around $55,000 to his business account and that she was only paid $1,500 directly from respondent. We see no error in the trial court's rejection of this argument.
At trial, respondent introduced an exhibit detailing the financial transactions that occurred between appellant and himself during their relationship. Though it showed that appellant transferred $58,408 to respondent, it also showed that respondent transferred $56,624 to appellant. In addition, respondent testified that he had repaid appellant almost all the money that appellant lent him by the time they moved in together, and after that time, they shared expenses. Though appellant argues that $32,129 of this money was simply deposited back into the business account, both parties admit that this account was used to pay their respective living expenses.
Because the trial court is given the responsibility of judging credibility and weighing evidence, it was in the best position to decide whether respondent had paid back the money to appellant. This finding of fact is not clearly erroneous. See Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988) (appellate courts defer to trial court credibility determinations).
Appellant argues that she is entitled to a portion of the $13,273 awarded to respondent as compensation for bartered services because she performed some of those services at the clinic, and her position as office manager was integral to performing those services. The trial court, however, found that appellant was acting only as an employee of the clinic and awarded her a portion of the home and business as compensation for her work. We see no error in this determination. The fact that appellant facilitated a barter between respondent and others does not entitle her to both wages and the benefits of the bartered services.
Contribution of rent
Appellant also argues that because the revenue from her work at the clinic was deposited into the business account and the business account was used to pay respondent's mortgage, the trial court erred in finding that appellant made no contribution toward rent. As previously noted, the trial court found that appellant was acting only as an employee of the clinic. How the proceeds from an employer's work are used is at the discretion of the employer, which in this case is respondent. The court did not err in finding that appellant made no contribution to rent while living with respondent.
We see no merit in appellant's challenge to the trial court's finding that a $3,397 loan from Marquette Bank Lakeville was a joint marital debt. The record indicates that appellant herself listed the debt as a joint debt in her February 18, 1997, memorandum to the court. Therefore, the court did not err in finding that the parties were jointly obligated to pay the loan.
2. Distribution of the home and the clinic
Appellant challenges the trial court's determination that her claim to an equitable interest in the home and clinic was barred by Minn. Stat. §§ 513.075, 513.076 (1996), and that she could not recover under either the equitable theory of unjust enrichment or Minn. Stat. § 518.58 (1996) (awarding nonmarital property to one party to avoid an unfair hardship).
Minn. Stat. §§ 513.075, 513.076
The construction of a statute is clearly a question of law and thus fully reviewable by an appellate court. Hibbing Educ. Ass'n v. Public Employment Relations Bd., 369 N.W.2d 527, 529 (Minn. 1985). Appellant argues that Minn. Stat. §§ 513.075, 513.076 do not bar her claim to an equitable interest in respondent's home and chiropractic clinic. We disagree. Minn. Stat. § 513.075 states:
If sexual relations between the parties are contemplated, a contract between a man and a woman who are living together in this state out of wedlock, or who are about to commence living together in this state out of wedlock, is enforceable as to terms concerning the property and financial relations of the parties only if:
the contract is written and signed by the parties, and
(2) enforcement is sought after termination of the relationship.
Absent a contract, courts are without jurisdiction to hear any claim by one party to the other's property if that claim "is based on the fact that the individuals lived together in contemplation of sexual relations and out of wedlock." Minn. Stat. § 513.076.
i. Application of the statutes
Appellant argues that Minn. Stat. §§ 513.075, 513.076 do not apply to this action because she acquired an interest in the properties before she moved in with respondent and because she was more like a partner in the business than an unmarried cohabitant. In making this argument, appellant relies on the supreme court's holding in In re Estate of Eriksen, 337 N.W.2d 671 (Minn. 1983), that in the absence of a written agreement, a female cohabitant was nevertheless entitled to an interest in the home of her deceased male cohabitant because the home was purchased with joint funds and her role was that of a "joint venturer or partner." Id. at 674. That reliance is misplaced. Eriksen "represents a narrow factual exception to the statutory requirement of a written contract governing the finances for nonmarried couples in Minnesota." Roatch v. Puera, 534 N.W.2d 560, 564 (Minn. App. 1995). In Eriksen the parties purchased their home with joint funds. Here respondent purchased both the home and business with his own funds. In addition, the court here found that appellant did not contribute to the renovation of the home and acted only as an employee in remodeling the clinic. These factual determinations will not be disturbed unless this court "is left with a definite and firm conviction that a mistake has been made." Hollom v. Carey, 343 N.W.2d 701, 704 (Minn. App. 1984). On this record, we do not have such a conviction.
We believe that this case is analogous to other cases that find Minn. Stat. §§ 513.075, 513.076 applicable. In Mechura v. McQuillan, 419 N.W.2d 855 (Minn. App. 1988), this court applied the statutes to deny co-ownership in a home even though the parties held title in joint tenancy. In that case, the trial court found that one party had furnished the entire amount for the purchase of the home while the other contributed only a small amount for living expenses, and that the parties did not intend to share in ownership of the home and did not reduce any agreement to writing. Id. at 857-58. Based on those findings, the parties did not comply with the statute. Id. at 850; see also Roatch, 534 N.W.2d at 564 (reversing an award of car and interest in home because claimant did not contribute financially to purchase of home or car, there was no agreement that they were jointly owned, and parties did not execute agreement regarding distribution of property).
The trial court rejected appellant's argument that she acquired an interest in respondent's home and clinic before the parties began living together and that her role was like a partner. As a result, her attempt to acquire an interest in respondent's home and clinic is the type of claim governed by Minn. Stat. §§ 513.075, 513.076. The trial court did not err in applying these statutes to this case.
ii. Satisfaction of the statutes
In the alternative, appellant argues that if Minn. Stat. §§ 513.075, 513.076 do apply to this case, two documents satisfy the written contract requirement: the February 1994 document signed by respondent acknowledging that appellant had contributed $19,000 to the improvement of respondent's home and business, and the asset purchase agreement from the sale of 50% of the clinic to Dr. Fletcher.
The February 1994 document, signed by respondent, does acknowledge that appellant had invested approximately $19,000 in the home and clinic. However, the trial court disregarded this document finding that the number was a guess by the two parties and that appellant threatened to break off the relationship if respondent did not sign it. The court went on to rule that "[t]here was never an understanding that the [appellant] had an ownership interest in either the house or clinic, and no written contract exists regarding this matter." This document is not a contract for the purposes of these statutes.
The asset purchase agreement for the clinic lists both appellant and respondent as "Sellers" and states that both parties are entitled to one-third ownership of any growth if the clinic is resold. The asset purchase agreement, however, also stated that appellant may keep any income generated by her massage therapy work; this provision indicates that appellant's only interest in the practice was in her massage therapy clients. Since appellant was seeing clients when 50% of the clinic was sold, it seems reasonable that she was required to sign the purchase agreement. This does not, however, constitute a contract or entitle her to 50% of respondent's share of the clinic. See Mechura, 419 N.W.2d at 859 (holding that owning property in joint tenancy was insufficient to satisfy contract requirement of Minn. Stat. § 513.075 because "[s]pecifically absent in these real estate documents [was] any reflection of the terms and conditions of the purported promises").
b. Unjust enrichment
Appellant argues that respondent will be unjustly enriched by her "countless hours of renovation and remodeling of both [the clinic] and the home" if she does not receive a one-half interest in each. She also claims that the court erred in failing to place a constructive trust on the property or to find an implied contract.
Appellant relies on Eriksen to support the proposition that a constructive trust should be imposed. See id., 337 N.W.2d at 674. Eriksen, however, involved a person who contributed equally to the purchase and maintenance of the home and to the insurance premiums that eventually paid off the mortgage to the home. Id. In this case, respondent owned the home and clinic before living with appellant and paid for the maintenance of the home and clinic out of his business account; this case is not analogous to Eriksen, and there are no grounds for a constructive trust.
Appellant also asserts that the trial court erred in finding no implied contract. An implied contract, like an express contract, requires a meeting of the minds between the parties. Mjolsness v. Mjolsness, 363 N.W.2d 839, 842 (Minn. App. 1985). In the present case, the court found that no agreement between the parties existed that detailed ownership or distribution of the home or clinic. Without such an agreement, there could be no meeting of the minds necessary to support an implied contract under Mjolsness.
c. Unfair hardship
Appellant argues that she should be awarded an equitable interest in the home and the clinic to avoid an unfair hardship. See Minn. Stat. § 518.58, subd. 2 (1996) ("the court may, in addition to the marital property, apportion up to one-half of the property otherwise excluded * * * to prevent [an] unfair hardship"). "A very severe disparity between the parties is required to sustain a finding of unfair hardship necessary to apportion nonmarital property." Reynolds v. Reynolds, 498 N.W.2d 266, 271 (Minn. App. 1993).
Appellant relies only on her labor and financial investment as grounds for finding an unfair hardship. The trial court awarded appellant a percentage of both the home and the clinic as compensation for her work, and she made approximately $22,782 as a massage therapist in 1996. Nothing in these facts indicates the "very severe disparity" contemplated in Reynolds, and the court did not err in finding that no unfair hardship existed.
3. Motion for a new trial
Lastly, appellant argues that the trial court erred in denying her motion for a new trial because it refused to consider a supplemental affidavit from Dr. Fletcher asserting that respondent admitted in her presence that he and appellant co-owned the clinic. Minnesota Rule of Civil Procedure 59.01(d) states that a new trial may be granted where there is "[m]aterial evidence newly discovered, which with reasonable diligence could not have been found and produced at the trial." In reviewing this issue, we need only examine "whether the trial court's refusal to [grant a new trial] involved the violation of a clear legal right or a manifest abuse of judicial discretion." Disch v. Helary, Inc., 382 N.W.2d 916, 918 (Minn. App. 1986), review denied (Minn. Apr. 24, 1986).
Appellant argues that Dr. Fletcher's affidavit "corroborates and expands" on her testimony from her deposition and contradicts the court's findings regarding ownership of the clinic. Appellant cites no case law to support introduction of the supplemental affidavit and does not state why this evidence could not have been produced before trial. Instead, appellant chooses to cite other evidence that supports the proposition that she and respondent co-owned the clinic. The trial court addressed the issue of ownership; nothing in Dr. Fletcher's supplemental affidavit indicates new evidence warranting a new trial. The trial court did not abuse its discretion in refusing to grant a new trial. See generally Minnesota Mut. Fire & Cas. Co. v. Retrum, 456 N.W.2d 719, 723 (Minn. App. 1990) ("not an abuse of the trial court's discretion to deny the motion for a new trial in which [the moving party] raised a new theory and new factual arguments for the first time").
 While we may have decided this issue differently, our standard of review on the credibility of evidence and testimony is narrow. Sefkow, 427 N.W.2d at 210. In addition, we note that even if we were to assume that the document was a contract, our decision would not change. It is proper to infer the $19,000 that appellant claims to have contributed was accounted for in respondent's exhibit showing that all the money provided by appellant had been paid back.