may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1998).
STATE OF MINNESOTA
IN COURT OF APPEALS
In Re the Marriage of:
Linda Lee Martin, petitioner,
John H. Martin,
Filed March 16, 1999
Anoka County District Court
File No. F99511384
John H. Martin, 910 Degree of Honor Building, 325 Cedar Street, St. Paul, MN 55101 (attorney pro se)
Donald A. Hillstrom, 744 Norwest Midland Building, 401 Second Avenue South, Minneapolis, MN 55401 (attorney for appellant)
Considered and decided by Halbrooks, Presiding Judge, Crippen, Judge, and Mulally, Judge.[*]
Appellant John Martin appeals the district court's denial of his motion for downward modification of spousal maintenance and award of attorney fees to respondent Linda Martin. Respondent seeks attorney fees and costs on appeal. Because we hold the district court did not abuse its discretion by denying appellant's motion for a downward modification of spousal maintenance and awarding respondent attorney fees, we affirm. We also award respondent attorney fees of $2,000 and the costs of this appeal.
John and Linda Martin's marriage was dissolved on March 12, 1997. Appellant is an attorney and has been self-employed in private practice for more than twenty-five years. His annual income has fluctuated throughout his career. Due to these fluctuations, the trial court determined appellant's annual income, for purposes of the dissolution decree, by averaging his annual income from 1990 to 1995. Using this methodology, the court determined appellant had an average gross annual income of $88,662.67 from the practice of law.
Respondent has a varied employment history. At the time of the dissolution decree she was employed in two part-time positions as a child-care provider. The court determined her gross annual income was $11,579.04. The court required appellant to pay respondent spousal maintenance of $2,000 per month.
Appellant appealed the dissolution judgment and decree on numerous grounds, including the trial court's method of calculating spousal maintenance. We affirmed the trial court's judgment. Martin v. Martin, No. C0-97-881 (Minn. App. Dec. 30, 1997), review denied (Minn. Mar. 19, 1998).
While the appeal was pending, respondent brought a motion for judgment on arrearages in spousal maintenance. Appellant filed a counter-motion to reduce his maintenance obligation. On February 2, 1998, the district court granted respondent's motion, but found appellant had not timely filed his motion and denied it without reaching the merits.
On April 20, 1998, appellant filed a second motion to reduce his spousal maintenance. The district court found appellant did not prove a substantial decrease in his earnings and denied his motion. The court granted respondent's motion for attorney fees.
Appellant challenges the district court's denial of his motion for downward modification of maintenance and provision of attorney fees to respondent. Respondent requests attorney fees for defending this appeal.
1. Modification of Spousal Maintenance
Modification of maintenance awards is within the district court's broad discretion. General v. General, 409 N.W.2d 511, 513 (Minn. App. 1987). Deference is given to the district court's assessment of credibility of witnesses. Id.; Minn. R. Civ. P. 52.01 (stating due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses). We will find an abuse of discretion only when the district court reaches "a clearly erroneous conclusion that is against logic and the facts on record." Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). We will affirm if the determination has an acceptable and reasonable basis in fact. Bliss v. Bliss, 493 N.W.2d 583, 586 (Minn. App. 1992), review denied (Minn. Feb. 12, 1993).
The terms of an order respecting maintenance or support may be modified upon a showing of * * * substantially increased or decreased earnings of a party * * * which makes the terms unreasonable and unfair.
Minn. Stat. § 518.64, subd. 2(a) (1998). The party requesting modification has the burden of proving that a substantial change in circumstances has occurred. Meier v. Connelly, 378 N.W.2d 812, 818 (Minn. App. 1985).
Appellant contends the district court's determination that he did not show a substantial change in circumstances is contrary to the facts in the record. He asserts his annual income from his law practice has decreased by thirty-seven percent and his expenses have increased by $275.91 per month. Additionally, he asserts respondent's income has increased by thirty percent.
a. Appellant's income
In order to demonstrate his decreased income, appellant submitted his 1996 and 1997 tax returns and an "itemized category report" of his law business and rental income from January 1998 through March 1998. According to his tax returns, appellant earned gross income of $25,391 from his law practice in 1996 and $24,670 in 1997.
Respondent contends the business expenses appellant listed in his tax returns include excessive personal and recreational expenditures that artificially decrease his actual net income from law. She alleges schedule "C" of appellant's tax returns shows deductions for personal car expenses, health insurance payments, interest payments on the homestead mortgage, excessive meals and entertainment, and the utility payments for the homestead. She also submitted an affidavit alleging several of the entries in appellant's itemized categories report are for personal expenses.
To "test" respondent's assertions, the court used appellant's tax returns to construct a chart comparing appellant's business income, expenses, actual profit, and percent of expenses to profits from 1990 to 1997. The court analyzed this information and determined appellant's claimed income was not realistic and he was "obviously padding his expenses." The court observed that because $24,514 of the income included in appellant's business income is a guaranteed annuity from two prior settlements, appellant earned only $876 in 1996 and $155 in 1997. The court concluded these claimed earnings were not credible.
The court also compared the percentage of appellant's profits to expenses from 1990 to 1997. The court found the percentage of appellant's expenses to his profits was significantly higher in 1996 and 1997 than in any other year except 1993, and his expenses were "extraordinarily high overall." The court also noted that appellant had provided the trial court with inconsistent information about his 1996 income during the dissolution proceedings.
We conclude there are facts in the record supporting the court's determination, and the court was justified in drawing an adverse conclusion from appellant's failure to explain discrepancies regarding his income. See General, 409 N.W.2d at 514. Respondent's affidavit, analyzing appellant's "itemized categories report," reveals a number of the "business expenses" appellant used to reduce his income were actually personal expenses. Appellant listed the home mortgage, his spousal maintenance, his son's pager, and a $650 payment to his adult daughter. He also had travel and entertainment expenses of $3,256 and personal draws of $2,901 for a three-month period.
Moreover, appellant had the burden of presenting evidence supporting a substantial decrease in his income. See Meier, 378 N.W.2d at 818. He is required to make a full, accurate disclosure of his assets and liabilities. Solon v. Solon, 255 N.W.2d 395, 396 (Minn. 1977).
[A] trial court [is] justified in drawing an adverse conclusion from the failure to adequately explain * * * discrepancies in * * * tax returns and the drastic reduction in * * * annual salary.
General, 409 N.W.2d at 514. Appellant never directly contradicted respondent's assertion that he included personal expenses with his business expenses. He simply stated his tax returns were credible evidence of his decreased income and there was no evidence he was padding his expenses.
Appellant failed to explain how his profits dropped so significantly in 1996 and 1997, while his expenses remained nearly the same from 1990 to 1997. He merely supplied anecdotal evidence in his affidavit that the practice of personal injury law was changing. Under the facts in this case, we hold it was not clearly erroneous for the district court to conclude appellant's income evidence was not credible and he failed to show a substantial decrease in income.
b. Respondent's income.
Appellant also claims that an increase in respondent's income supports a finding of a substantial change in circumstances. Appellant asserts respondent had a thirty percent increase in income. He erroneously arrived at this conclusion by comparing respondent's net annual income at the time of the dissolution trial with her gross annual income in 1997.
At the time of the trial, the court found respondent's gross annual income was $11,579.04. According to her tax return and W-2 forms, respondent's gross annual income in 1997 was $12,869.36. This represents an increase of eleven percent.
Respondent left her employment in May 1998, approximately a week before the hearing on the motion for modification of support. Appellant suggests respondent's unemployment was "voluntary and temporary for the purpose of influencing the court."
The district court's determination that respondent's increased income is not a substantial change in circumstances is not clearly erroneous. The increase was only eleven percent, not thirty percent as appellant concluded. Additionally, there are facts in the record from which the court could have reasonably concluded respondent did not leave her employment in order to defeat appellant's motion for modification of support. In her affidavit, respondent stated she could not physically handle her job as a child-care provider, and she attached copies of her medical reports related to the injuries she received in the course of her former employment. She also stated her pay had decreased and her supervisor was frustrated with requests for time off to attend court.
Finally, it is implicit in the court's order that it believed respondent's reasons for leaving her employment and did not credit appellant's allegations. We defer to the district court's credibility determinations. General, 409 N.W.2d at 513.
2. Attorney Fees
The district court awarded respondent $2,000 for attorney fees. Appellant objects to the award because the court did not make specific findings of need pursuant to Minn. Stat. § 518.14, subd. 1 (1998).
The allowance of attorney fees in family law cases is almost entirely within the discretion of the district court, and we will rarely reverse that decision. Maeder v. Maeder, 480 N.W.2d 677, 680 (Minn. App. 1992), review denied (Minn. Mar. 19, 1992). Courts have discretion to award fees "against a party who unreasonably contributes to the length or expense of the proceedings * * * ." Minn. Stat. § 518.14, subd. 1; see Dabrowski v. Dabrowski, 477 N.W.2d 761, 766 (Minn. App. 1991) (holding "[f]ee awards under Minn. Stat. § 518.14 may be based on the impact a party's behavior has had on the costs of the litigation regardless of the relative financial resources of the parties" (citation omitted)).
We find no abuse of discretion by the district court. The court made findings regarding the parties' finances and specifically exercised its discretionary authority to award fees based on appellant's conduct. In awarding fees to respondent, the court stated appellant had "repeatedly failed to comply with the requirements of previous court orders" forcing respondent to bring motions to enforce them.
3. Attorney Fees on Appeal
Respondent requests attorney fees of $7,500 incurred in defending this appeal. She asserts she does not have the means to pay the fees, appellant is capable of paying them, and appellant's modification motion was brought in bad faith.
We find no evidence of bad faith in appellant's appeal, but given the disparity in the parties' relative financial resources, we award respondent attorney fees of $2,000. See Minn. Stat. § 518.14, subd. 1 (fees "may be awarded at any point in the proceeding"); see also Novak v. Novak, 406 N.W.2d 64, 69 (Minn. App. 1987) (granting respondent's motion for attorney fees on the basis of financial need), review denied (Minn. July 22, 1987). Appellant shall pay this amount directly to respondent's attorney within 60 days after entry of the judgment on appeal. If the fees are not paid, they shall be deducted from appellant's share of the proceeds from the sale of the real property located at 13807 Furman Street North, Forest Lake, Minnesota 55025.
[*] Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.