Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
James Carl Valenta, petitioner,
Joan Mary Valenta,
f/k/a Joan Mary Plante,
Filed June 30, 1998
File No. F496105
Jon K. Sannes, Brown & Sellnow, 124 Lake Street South, P.O. Box 60, Long Prairie, MN 56347 (for appellant)
John A. Cairns, Briggs & Morgan, P.A., 2400 IDS Center, Minneapolis, MN 55402 (for respondent)
Considered and decided by Toussaint, Chief Judge, Willis, Judge, and Holtan, Judge.*
*Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.
In an appeal from a dissolution decree, appellant James Valenta challenges the district court's division of property and award of spousal maintenance. We affirm.
Appellant James Valenta (husband) and respondent Joan Valenta (wife) were married in 1965. Their one child is now an adult. Wife, who is 58 years old and has a high school diploma, worked outside the home sporadically in the 1970s but subsequently was primarily a homemaker. In 1981, husband inherited a lakefront cabin then worth $9,000, which the parties improved into a year-round residence.
Husband received a work-related back injury in 1980 and his physician pronounced him to be totally disabled. The district court found that husband received $1,200 per month in social security disability benefits and an additional $300 in workers' compensation benefits after social security offsets. But in prehearing filings, husband listed his monthly income as $2,544, of which $1,355 was workers' compensation. The record provides no explanation for the district court's finding.
In 1990, husband set fire to the homestead, destroying the house and damaging the garage. He was convicted of arson and served a prison sentence. Wife received $21,723.85 in insurance proceeds and contemporaneously inherited $17,469.24. She presented documentation showing that she spent $28,456.01 on home repairs and $4,765 to replace lost furniture.
The parties separated in December 1995. In 1996, husband petitioned for dissolution. Wife entered a job training program for seniors. Husband was ordered to pay temporary maintenance but did so only sporadically. He stated that he was attempting to start his own business, the nature of which is not clear from the record.
Husband agreed that wife should receive the parties' 1988 Ford Bronco because husband had no driver's license. While the dissolution was pending, wife allowed husband's cousin to drive the Bronco; the cousin had an accident and the Bronco was destroyed. Wife used the insurance proceeds to pay off the outstanding car loan.
Shortly after filing for dissolution, husband claimed in an affidavit that his back was improving due to release from the "stress" of the marriage, and in October 1996, he accepted a $16,000 lump sum settlement for his workers' compensation claims, based on income of $54.20 per month for the remainder of his life expectancy. Husband used proceeds from the settlement to pay several court-ordered outstanding judgments to wife; he provided receipts showing that he spent the rest on equipment allegedly for his business, which he later claimed had been repossessed.
The parties waived an oral hearing and stipulated to the division of most of their personal property, further stipulating that the division would be deemed equal. A court-appointed appraiser determined that the marital homestead was worth $40,100. Of that amount, the original, inherited lakefront lot (minus the destroyed cabin) was valued at $8,350. The district court presumed that the insurance proceeds from the house fire would not have been payable to husband as the arsonist and reasoned that it would be inequitable to include them as a marital asset in any event. The court thus determined that all of the $28,456 of insurance and inheritance proceeds that wife spent on repair of the homestead constituted wife's nonmarital contribution.
The district court then made two offsets to reduce husband's interest in the homestead to zero. First, the court deemed husband's workers' compensation settlement proceeds to be a marital asset, reasoning:
There was no itemization of benefits paid for wage loss or personal injury and * * * [the recovery] was based on the projection of his receiving $54 per month for the remainder of his 24.6 [year] life expectancy, and thus seems more directed at supplementing disability income.
The court found that husband did not need to deplete the settlement proceeds to pay his court-ordered obligations and other expenses. It concluded that wife would have been entitled to $6,000 from the settlement and offset that amount against husband's homestead interest.
Second, the court found that although wife, who was then working two days per week, was able to work full-time, her age and lack of recent job experience or skills made it unlikely that she could obtain employment sufficient to pay her reasonable expenses. The court concluded that although husband's expenses equaled his social security income and the court declined to impute any additional business income,
neither party will be able to have the standard of living they had during the marriage, and the decrease in living standard should be borne relatively equally by both parties; under that analysis, [husband] has the ability to meet his reduced living expenses and still contribute to those of [wife], who is otherwise not able to meet her reasonable expenses from employment income or with income from property awarded to her.
The court ordered husband to pay $250 monthly in permanent maintenance, which was nearly a two-thirds reduction from the temporary award.
The court determined that husband, who had stopped paying maintenance after December 1996, owed wife $2,250 in arrearages, calculated at the reduced rate of $250 per month, and the court offset that amount against husband's homestead interest. Together with the $6,000 from the workers' compensation settlement, this virtually eliminated husband's $8,350 nonmarital interest in the homestead. The court awarded the homestead to wife free and clear of any claim or lien by husband, reasoning that this provided husband with the added benefit of reducing wife's need for spousal maintenance.
Husband, who had sought an order for sale of the homestead and equal division of the proceeds, brought a motion for amended findings or a new trial, challenging numerous aspects of the property division. The district court denied the motion without comment, and this appeal followed. We affirm.
Husband argues that the district court erred in deeming the proceeds from his workers' compensation settlement to be marital property. The determination of whether property is marital or nonmarital is one of law, in which this court gives no deference to the district court, but we will defer to the district court's findings as to the underlying facts. Campion v. Campion, 385 N.W.2d 1, 4 (Minn. App. 1986).
All property acquired by either spouse during the marriage and before the dissolution valuation date is presumed to be marital property. Minn. Stat. § 518.54, subd. 5 (1996). Personal injury or workers' compensation settlement proceeds can be nonmarital property if they are found to be in exchange or a replacement for a nonmarital interest. See Van de Loo v. Van de Loo, 346 N.W.2d 173, 176 (Minn. App. 1984) (providing that personal injury proceeds are nonmarital when injury personal to spouse); see also Gerlich v. Gerlich, 379 N.W.2d 689, 691 (Minn. App. 1986) (applying Van de Loo personal injury discussion to workers' compensation), review denied (Minn. Mar. 21, 1986). Personal injury settlement proceeds that compensate for economic loss occurring after the marriage has ended are not marital property. Ward v. Ward, 453 N.W.2d 729, 732 (Minn. App. 1990), review denied (Minn. June 6, 1990).
The party claiming that personal injury settlement proceeds are nonmarital property has the burden of proving that they are calculated to compensate for a nonmarital interest. Id.; see also Hafner v. Hafner, 406 N.W.2d 590, 593 (Minn. App. 1987) (affirming designation of workers' compensation proceeds as marital property where claimant failed to prove otherwise). The district court here concluded that husband had failed to carry his burden of proof because he provided no information as to how his workers' compensation settlement was calculated except that it was based on income of $54.20 per month for husband's life expectancy. But husband entered into the settlement after the valuation date of June 6, 1996, and all the economic loss for which the settlement compensates occurred after that date. We conclude that the district court erred in deeming the settlement proceeds to be marital property.
Whether or not they constitute marital property, however, periodic payments of workers' compensation benefits are included in income for purposes of spousal maintenance. Minn. Stat. § 518.54, subd. 6 (1996). In dissolution cases, district courts have very broad discretion to determine how income and property are to be distributed. Swanstrom v. Swanstrom, 359 N.W.2d 634, 636 (Minn. App. 1984); see id. at 637-38 (upholding court's discretion to award property in monthly payments rather than in lump sum). Based on the record, husband accepted the settlement in lieu of more than $300 per week in income; the district court's conclusion that before the settlement he received only $300 per month in workers' compensation benefits was clearly erroneous.
The district court explained that its purpose in awarding $6,000 from the settlement to wife was to compensate her for the loss of income to husband from which she otherwise would have been entitled to draw a larger maintenance award. We conclude that under the circumstances it would be within the district court's discretion to award wife, in addition to her continuing maintenance payments, $6,000 from the workers' compensation settlement as a one-time, lump-sum maintenance award designed to compensate her for husband's decision to forgo future income, and to offset that amount against husband's nonmarital homestead interest. In a dissolution case, "we will not reverse a correct decision simply because it is based on incorrect reasons." Katz v. Katz, 408 N.W.2d 835, 839 (Minn. 1987). Because the district court would not have abused its discretion in offsetting husband's homestead equity by the amount of a $6,000 lump-sum maintenance award, and because we determine that the overall property division was just and equitable, we conclude that the district court's decision to consider the settlement proceeds to be marital property was harmless error. See Hanka v. Pogatchnik, 276 N.W.2d 633, 636 (Minn. 1979) (stating that where findings relevant to conclusion are adequately supported, inclusion of other unsupported findings is harmless error).
A district court has broad discretion in dividing property in a dissolution action and this court will affirm a division that is supported by an acceptable basis in fact and principle, regardless of whether we might have arrived at a different result. Balogh v. Balogh, 356 N.W.2d 307, 312 (Minn. App. 1984). A division need not be mathematically equal as long as it is just and equitable. Jensen v. Jensen, 409 N.W.2d 60, 62 (Minn. App. 1987); see also Gabrielson v. Gabrielson, 363 N.W.2d 814, 817 (Minn. App. 1985) (affirming as just and equitable a decision that arguably left party with negative net worth).
Although husband's motion for a new trial, incorporated by reference into his letter brief, attacks many elements of the property division, we address only those assignments of error that he supports with argument. See Schoepke v. Alexander Smith & Sons Carpet Co., 290 Minn. 518, 519-20, 187 N.W.2d 133, 135 (1971) (stating that absent obvious prejudice, assignments of error based on "mere assertion" and not supported by argument or authority are waived).
Husband argues that the district court lacked sufficient evidence from which to conclude that wife's use of insurance proceeds to rebuild the home after husband's arson created a nonmarital interest. The district court admitted that it had no direct proof that the insurance company would not have paid husband as the arsonist, but we conclude that the court could take judicial notice of the fact that most homeowners' insurance policies exclude coverage for intentional property damage by an insured. See Minn. R. Evid. 201(b), (c) (allowing judicial notice of commonly known or easily verifiable facts); cf. Woida v. North Star Mut. Ins. Co., 306 N.W.2d 570, 572-74 (Minn. 1981) (interpreting insurance policy exclusion for intentional personal injury). We note that no provision of section 518.54, subdivision 5, excludes such insurance proceeds from the definition of marital property. See Minn. Stat. § 645.19 (1996) (providing that exceptions expressed in law are construed to exclude all others). But the district court has broad discretion in the allocation of marital property and, under the property division statute, it was required to consider husband's role in the depreciation of the homestead and wife's role in its preservation and appreciation. See Minn. Stat. § 518.58, subd. 1 (1996). Thus, although the district court appears to have erred in designating the insurance proceeds as nonmarital property, the error is harmless because the court did not abuse its discretion in determining that wife was entitled to their value.
Husband argues, without citation to authority, that the district court improperly took "fault" or "marital misconduct" into account in awarding the home to wife. See Minn. Stat. § 518.58, subd. 1 (stating that court shall divide property "without regard to marital misconduct"). But both the property division statute and case law are clear that a court may consider a party's misconduct to the extent that it results in depreciation of marital property. See id. (requiring court to consider each spouse's contribution to preservation, depreciation, or appreciation of property); Letsch v. Letsch, 409 N.W.2d 239, 241-42 (Minn. App. 1987) (upholding award of homestead to wife where alcoholic husband had urinated on carpet and cut hole in bedroom door with chainsaw). Husband does not dispute that he destroyed the parties' most significant asset and that wife rebuilt it using not only insurance proceeds that the court found that husband likely could not have claimed, but also using virtually her entire inheritance. In awarding all of the marital interest in the home to wife, the district court took into account these factors as well as wife's limited earning capacity, her inability to use her inheritance for retirement, and the effect of the property division on a maintenance award. As we have already noted, the $6,000 offset against husband's nonmarital homestead interest can be construed as a substitute for lost maintenance; the district court would also have been within its discretion to award maintenance arrearages at the full temporary rate of $730 per month rather than at the continuing rate of $250. The court thus had several legitimate methods available by which it could have offset husband's $8,350 in nonmarital homestead equity. On the facts of this case, we conclude that the award of the home unencumbered to wife was just and equitable and within the district court's discretion.
Husband contends that the district court should have placed some degree of blame on wife for the destruction of the Ford Bronco, but he does not dispute that wife was not driving the vehicle at the time and he provides no evidence that wife was negligent in entrusting it to his cousin or in using the insurance proceeds to pay the outstanding marital debt on the vehicle. Husband also challenges the district court's allocation of the parties' debts, but the district court was well within its discretion to allocate debts to the party who incurred them. The district court chose to credit wife's account of who incurred what debts, and this court generally defers to a district court's determinations of witness credibility. General v. General, 409 N.W.2d 511, 513 (Minn. App. 1987). We therefore affirm the district court's property division in all respects.
On appeal from an award of maintenance, this court asks only whether the district court abused its broad discretion. Erlandson v. Erlandson, 318 N.W.2d 36, 38 (Minn. 1982). Underlying factual findings will be set aside only if clearly erroneous. McCulloch v. McCulloch, 435 N.W.2d 564, 566 (Minn. App. 1989).
A district court may award maintenance if it finds that a spouse is unable to support herself reasonably through employment in view of the standard of living established during the marriage. Minn. Stat. § 518.552, subd. 1(b) (1996). While Minn. Stat. § 518.552, subd. 2 (1996), lists factors for the court to consider in determining the amount and duration of maintenance, the issue is, in essence, a balancing of the recipient's need against the obligor's ability to pay. Erlandson, 318 N.W.2d at 39-40. Where there is uncertainty as to whether a permanent award is necessary, the district court must order permanent maintenance but retain jurisdiction for later modification. Minn. Stat. § 518.552, subd. 3 (1996). The district court properly followed the statutory mandate.
Permanent maintenance is appropriate in cases that, as here, involve the "dissolution of a long-term traditional marriage in which there is an older, dependent spouse who has little likelihood of achieving self-sufficiency because of an absence from the labor market for a long period of time." Gales v. Gales, 553 N.W.2d 416, 421 (Minn. 1996); see also Dobrin v. Dobrin, 569 N.W.2d 199, 201 (Minn. 1997) (explaining Gales holding). Husband has produced no evidence that questions wife's calculation of her present living expenses at $865 per month. He also has not demonstrated that the district court clearly erred in accepting wife's statement that she needed to purchase a reliable used car because the $500 car she bought to replace the Bronco would not be suitable for the winter. Wife's pay stubs support the district court's finding that wife can realistically expect to earn only $600 to $700 per month in net income, based on full-time work at minimum wage or slightly higher, because her skills and experience "are not current to today's job market."
The district court noted that husband's claimed monthly expenses, less those he admitted were for non-essentials, equal his $1,225 monthly social security income. The court further noted that there is no evidence of how much income husband's business produced, but it deemed him able to contribute some additional amount to his expenses; husband has not established that this finding was clearly erroneous. The court then determined that the reduction in living standard resulting from the dissolution should be divided equally between the parties. This principle that changes in living standards resulting from dissolution should be equalized is supported by supreme court precedent stating that a spouse requesting maintenance is entitled to support that is "not simply that which will supply her with the bare necessities of life, but such a sum as will keep her in the situation and condition in which [the other spouse's] means entitle her to live." Arundel v. Arundel, 281 N.W.2d 663, 666-67 (Minn. 1979).
The record shows that husband has a guaranteed social security income that is considerably more than wife is able to earn and that husband may be earning additional income. Although husband's expenses are higher than wife's, we conclude that the district court's award of permanent maintenance in the relatively small amount of $250 per month was not an abuse of discretion. We therefore affirm the district court's judgment in all respects.