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:
Beverly Jo Havrilak, petitioner,
Robert John Havrilak,
Filed May 4, 1999
Affirmed in part, reversed in part, and remanded
Hennepin County District Court
File No. DC 211541
Nancy Zalusky Berg, Tonia J. Rolfson, Walling & Berg, P.A., 121 South Eighth Street, Minneapolis, MN 55402 (for respondent)
Robert J. Havrilak, c/o SERVICE Environmental & Engineering, 2200 University Avenue West, Suite 110-A, St. Paul, MN 55114 (appellant pro se)
Considered and decided by Lansing, Presiding Judge, Schumacher, Judge, and Willis, Judge.
This is an appeal from judgment in a marital dissolution action and a post-dissolution order raising multiple issues on custody, spousal maintenance, and property division. We remand for additional findings on custody, valuation of a business, and determination of income and to credit a marital property liquidation. We affirm all other rulings, findings, and conclusions.
Following extended proceedings and a contested trial, the district court dissolved the Havrilaks' 15-year marriage. The court granted physical custody of children ages 16, 14, and 13 to Beverly Havrilak. The district court also ordered spousal maintenance for Beverly Havrilak for six years at $1,000 a month; ordered sale of the homestead; reserved one-third of the homestead proceeds for the children's college fund; declined to credit Robert Havrilak's marital property division by the amount of an asset he liquidated to pay his attorneys' fees; and declined to award Beverly Havrilak an interest in Robert Havrilak's co-owned S corporation, but awarded her $103,154.31 to equalize the property division.
The district court denied Beverly Havrilak's post-dissolution motion to hold Robert Havrilak in contempt for failing to meet with a parenting consultant; to enter judgment on a late cash-settlement installment and accelerate the full amount; and to enter judgment against Robert Havrilak in the amount of $1,500 for his half of the children's unreimbursed medical expenses.
In an excess of critical scrutiny, the parties assign more than 30 errors to the district court's findings and conclusions. In our analysis of the briefs, the dissolution judgment, and the post-dissolution motion, we identify nine disputed holdings. The holdings appealed by Robert Havrilak are (1) placing the children in the custody of Beverly Havrilak; (2) setting Beverly Havrilak's six-year maintenance at $1,000 a month based on Robert Havrilak's net income of $6,307 a month; (3) valuing Robert Havrilak's co-ownership interest in Service Environmental Engineering Corp.; and (4) declining to categorize Robert Havrilak's personal injury award as marital property. Beverly Havrilak, by notice of review, challenges the rulings (5) reserving one-third of the proceeds from the sale of the homestead for the children's college fund; (6) dividing the marital property and providing that Robert make cash settlement payments in installments rather than immediately; (7) declining to credit Robert Havrilak's marital division account with the amount of liquidated marital property he used to pay his attorneys' fees; (8) denying Beverly Havrilak's attorneys' fees; and (9) denying Beverly Havrilak's post-dissolution motions. We address each of these rulings in conjunction with the related objections.
"[A]ppellate review of custody determinations is limited to whether the trial court abused its discretion by making findings unsupported by the evidence or by improperly applying the law." Pikula v. Pikula, 374 N.W.2d 705, 710 (Minn. 1985). The record is reviewed in the light most favorable to the district court's findings. Ayers v. Ayers, 508 N.W.2d 515, 521 (Minn. 1993).
Custody of three children is at issue. Robert and Beverly Havrilak are the biological parents of two children, ages 13 and 14. Beverly Havrilak is the biological parent of a child age 16. Robert Havrilak alleges the court erred in finding that he requested joint physical custody rather than sole physical custody, that the children wanted to stay together, that one of the children had expressed a preference for their mother as a custodial parent, that the children were all emotionally and physically healthy, that Beverly Havrilak could provide better parenting, and that both parents would encourage and permit frequent contact with the other parent.
We reject four allegations of error. The record adequately supports the district court's finding that each parent would encourage and permit frequent parental contact with the children. The court noted some lack of cooperation by Beverly Havrilak, but reasonably evaluated the overall behavior. The record, including the custody evaluations, supports the court's determination that Beverly Havrilak is slightly better able to provide parenting because of her parenting skills and a greater ability to listen to the children. The record also supports the finding that all three children expressed a preference to stay together and that the oldest child preferred to stay with her mother. The record indicates that the middle child expressed no preference, and the youngest child told the custody evaluator that "he could live with his dad and visit his mom."
Two custody findings are unsupported by the record. The first is a finding that all of the children are physically and mentally healthy. The court apparently relied on a 1995 custody evaluation that has been superseded by more recent information confirming that the oldest child was diagnosed with Turner's syndrome in May of 1996 and, in late 1996 and early 1997, experienced unrelated panic attacks, hallucinations, and depression with suicidal ideation. Because the child's primary physician recommended that she stay with her mother until the attacks subsided, this divergence from the record might not, in itself, have required remand, but we consolidate it with the final custodial finding that does require remand.
The remaining disputed custodial finding is that Robert Havrilak requested joint physical custody rather than sole physical custody. That finding was apparently also based on the outdated 1995 custody evaluation and is similarly at odds with the record. In his counterpetition, Robert Havrilak requested sole physical custody of all three children. He consistently requested sole physical custody at the 1997 contested hearing and in his motion for amended findings of fact, conclusions of law, and order for judgment. Because the district court's discretion weighs heavily in deciding custody issues and because we are not certain whether this misunderstanding of Robert Havrilak's request would affect the custodial determination, we remand for further findings on this issue and on the oldest child's physical and emotional health.
The district court's determination that Robert Havrilak's net income was $6,307 a month is unsupported by the record. The referee found Robert Havrilak's net income was $6,051 per month. At trial, however, Beverly Havrilak asserted his net monthly income was $6,012, and Robert Havrilak argued a lower amount. The computation of Beverly Havrilak's monthly deficit of $328 is also unsupported. According to the court's relevant findings on expenses, income, child support, and maintenance, the deficit is closer to $1,000. We remand for further findings and, if necessary, reconsideration of the maintenance amount.
Both parties presented expert appraisal evidence on the worth of Robert Havrilak's 50-percent interest in Service Environmental Engineering Corp. The adjusted net income figures for the company were comparable, varying only between $135,128 and $139,000. The experts' capitalization rate was also close, varying only between 25 percent and 28 percent. Beverly Havrilak's expert, however, used a 10-percent marketability discount within the capitalization rate and added $42,000 in excess cash reserves. These differences resulted in a valuation ranging from $150,000 to $290,000.
The district court found that Robert Havrilak's interest in the company totaled $218,214. The court used Beverly Havrilak's expert's net income and capitalization rate, but reduced this value by $30,000 for a marketability discount. The court rejected applying a minority-shareholder discount (not disputed on appeal) and rejected the testimony on uncommitted cash reserves.
Because the record contains evidence that the cash was held for taxes and other corporate liabilities, the rejection of a cash reserve addition is not clearly erroneous. See Ronnkvist v. Ronnkvist, 331 N.W.2d 764, 766 (Minn. 1983) (valuation must be supported either by clear documentary or testimonial evidence or comprehensive findings issued by the court). The court did not, however, provide an explanation or a basis for the additional $30,000 marketability discount. The capitalization rate the court applied already included a 10-percent marketability discount. The court was not bound to accept either expert's calculations, but because the findings provide no basis for the second marketability discount, we remand for further findings.
The district court found that one-third of the proceeds from the sale of the homestead was traceable to a college fund for the parties' children. Evidence supported Robert Havrilak's claim that a fund had been created for the children's education from a relocation package he received, and that the parties decided to transfer this money from a savings account to real estate (the homestead) to get a better yield on the investment. He testified that they planned to sell the house in 12 years to provide funds for the children's educations. Because the court found that the allocation had been agreed to during the marriage, a written stipulation is not necessary to establish the intent of the parties. Cf. Peterson v Peterson, 319 N.W.2d 414, 414 (Minn. 1982) (post-secondary education fund cannot be imposed unless stipulated). The court did not abuse its discretion in allocating one-third of the proceeds for the children's college fund.
In dividing marital property, district courts have broad discretion that will be affirmed on review if it has an acceptable basis in fact and principle. Rohling v. Rohling, 379 N.W.2d 519, 522 (Minn. 1986) (quoting Bollenbach v. Bollenbach, 285 Minn. 418, 426-27, 175 N.W.2d 148, 154 (1970)). Beverly Havrilak asserts that the court abused its discretion by (1) awarding Robert Havrilak the majority of the marital assets, (2) dividing the parties' interest in the homestead equally and then granting all of Robert Havrilak's interest in the corporation to him with a cash settlement to her, and (3) not placing a lien against the property awarded for the amount of the cash property settlement.
The court basically divided the parties marital assets evenly. Without taking Robert Havrilak's payment of interest on the cash settlement into account, and offsetting his shareholder loan against the amount remaining on the second mortgage, the court awarded $177,835.49 of the marital assets to Robert Havrilak and $177,165.21 of the marital assets to Beverly Havrilak. This minor differential is not an abuse of discretion.
Beverly Havrilak asserts that the court should have awarded her a greater interest in the homestead and a lesser interest in the corporation so that she would not be dependent on cash settlement installments. But as a 50-percent shareholder in a closely held corporation, Robert Havrilak's selling stock to support himself and meet his financial obligations was not a reasonable option. Whatever method the court uses to divide the marital property justly and equitably, the goal is to place both parties in the optimum position. Nardini v. Nardini, 414 N.W.2d 184, 188 (Minn. 1987). The record indicates the court's property division put both in the optimum position, provided that the cash settlement installments are timely paid.
The record does not reflect that Beverly Havrilak requested a conditional lien on Robert Havrilak's property in either her initial arguments to the court or in her motion for amended findings and conclusions of law. We find no abuse of discretion in the court's decision not to impose an unrequested lien. See, e.g., Paul v. Paul, 410 N.W.2d 329, 333 (Minn. App. 1987).
Beverly Havrilak also appeals the denial of her post-dissolution motion to (1) hold Robert Havrilak in contempt for failing to meet with the parenting consultant, (2) enter judgment on the late property settlement installment or for the full amount, (3) enter judgment for Robert Havrilak's share of the children's unpaid medical bills, and (4) award attorneys' fees incurred on the motion. These rulings are all subject to the district court's discretion. See Looyen v. Martinson, 390 N.W.2d 465, 468 (Minn. App. 1986) (civil contempt motion); Minn. Stat. § 518.64, subd. 2(e) (1998) (judgment and acceleration); Solon, 255 N.W.2d at 397 (attorneys' fees). The record also reflects that, at the time of the hearing, Robert Havrilak had paid $14,713.50 of the $20,630.86 he owed for the first annual installment. The court did not abuse its discretion or err in denying the post-dissolution motions.
We affirm the district court's rulings, findings of fact, and conclusions, except we reverse the failure to credit Robert Havrilak's marital account for amounts withdrawn from the IRA, and we remand for additional findings and, if necessary, amended conclusions on custody, valuation of Robert Havrilak's business, and the determination of income for purposes of spousal maintenance. We direct the district court to correct Beverly Havrilak's birthdate to June 15, 1953.
Affirmed in part, reversed in part, and remanded.