STATE OF MINNESOTA
IN COURT OF APPEALS
In Re the Marriage of:
Richard Lawrence Schubert, petitioner,
Barbara Anne Medinger,
Filed June 29, 1999
Affirmed in part, reversed in part, and remanded; motion denied
Washington County District Court
File No. F4-96-5261
Tracey A. Galowitz, Anne Greenwood Brown, Lawson, Marshall, McDonald & Galowitz, P.A., 3880 Laverne Avenue North, Lake Elmo, MN 55042 (for respondent)
Considered and decided by Toussaint, Chief Judge, Randall, Judge, and Foley, Judge.[*]
Appellant argues the district court abused its discretion when it divided and valued the parties' property, allowed certain expert witness testimony, and admitted certain pieces of documentary evidence. Respondent argues the district court abused its discretion when it divided the marital debt, calculated child support, and denied her request for attorney fees. We affirm in part, reverse in part, and remand; motion denied.
Schubert's homestead is located on a .75-acre parcel of land. Medinger's homestead is on an adjoining 5-acre parcel of land. In addition, the parties' own a vacant 12-acre parcel of property and a 9.1-acre parcel of property. The district court awarded Schubert the .75-acre and 9.1-acre parcels. Medinger was awarded her homestead located on the 5-acre parcel of land.
The parties also owned seven billboard signs as part of the Schubert Sign Company. Four of the signs were deemed marital and three were considered Schubert's nonmarital property. The district court found the testimony of the parties' experts credible on the value of the signs and used an averaging method to value the four marital signs. The district court awarded Schubert the Schubert Sign Company and ordered him to pay Medinger $60,703 as her interest in the marital signs.
The question of whether property is marital or nonmarital is one of law, but a reviewing court must defer to the district court's findings of fact unless they are clearly erroneous. Reynolds v. Reynolds, 498 N.W.2d 266, 270 (Minn. App. 1993). All property obtained during the marriage by either spouse is presumed marital, regardless of the form of ownership. Minn. Stat. § 518.54, subd. 5 (1998). A party challenging the presumption that property is marital "must demonstrate by a preponderance of the evidence that the property is nonmarital." Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997) (citing Wopata v. Wopata, 498 N.W.2d 478, 484 (Minn. App. 1993)). Nonmarital property includes property that is acquired by "gift, bequest, devise or inheritance made by a third party to one but not to the other spouse." Minn. Stat. 518.54, subd. 5(a) (1998). "The most important factor in determining whether a gift is marital or nonmarital is the donor's intent." Olsen, 562 N.W.2d at 800. The question of donative intent is one of fact and "demonstrated by the surrounding circumstances, including the form of the transfer." Id.
The evidence presented at trial established that on three separate occasions, Schubert's father attempted, by warranty deed or contract for deed, to convey the 12-acre parcel either to the parties jointly or to Schubert individually. Schubert relies on an income tax gift return purportedly prepared by his father to support his claim that the parcel was conveyed to him as a nonmarital gift. But we note that the return is not signed by Schubert's father, nor was any evidence presented that it was filed with the Internal Revenue Service. Under the circumstances, and viewing the record in the light most favorable to the district court's findings, we conclude that the district court did not err in finding that the conveyance was not a gift and the property was marital. See Ayers v. Ayers, 508 N.W.2d 515, 521 (Minn. 1993) (holding record must be viewed in light most favorable to district court's findings).
Because we conclude that the district court did not err when it ruled Schubert did not have a nonmarital interest in the property, the district court was not required to make specific findings of undue hardship under Minn. Stat. § 518.58, subd. 2 (1998) to award an interest in the property to Medinger.
The district court has broad discretion in dividing property and does not abuse that discretion unless it 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). An appellate court does not require the district court to be exact in its valuation of assets; "it is only necessary that the value arrived at lies within a reasonable range of figures." Hertz v. Hertz, 304 Minn. 144, 145, 229 N.W.2d 42, 44 (1975). The district court's division of assets must be just and equitable and need not be mathematically equal. Nazar v. Nazar, 505 N.W.2d 628, 635 (Minn. App. 1993), review denied (Minn. Oct. 28, 1993).
At trial, Schubert's expert witness William Schwab testified that he valued the Schubert family farm and Medinger's homestead in November 1995. Later, in 1997, at Medinger's request, Schwab revised his valuation and opined that the market value of the Schubert family farm increased in value by approximately 19%. Schwab testified that although he did not revalue Medinger's homestead, he "would feel comfortable saying [the Medinger homestead had] probably gone up at least in equal proportion." This was, in part, because the property abutted a small creek and waterfront property often sold for a premium price.
To appropriately value the parties' property, the district court should have considered the corresponding increase in value to Medinger's homestead and the cost of clearing title to the property. See Korf v. Korf, 553 N.W.2d 706, 711-712 (Minn. App. 1996) (remanding issue of valuation of parties' vehicles where district court subtracted debt owed on husband's vehicle, but not wife's, holding district court must be consistent in its treatment of the parties' assets). We remand this issue to the district court for a revaluation of the parties' property consistent with this analysis.
Determining the competency of an expert witness and the foundation for expert testimony is within the discretion of the district court, and even though the reviewing court may have reached a different result, the decision of the district court will not be reversed absent a clear abuse of discretion. Koch v. Mork Clinic, P.A., 540 N.W.2d 526, 529 (Minn. App. 1995), review denied (Minn. Jan. 12, 1996). A witness may be qualified to testify as an expert based on "knowledge, skill, experience, training, or education." Minn. R. Evid. 702.
Here, although Dodge is not a certified appraiser, he testified that as part of his tax practice he was in the business of assisting clients with business mergers and acquisitions and has been involved in approximately 50 such transactions. Dodge used the same base figures as Schubert's expert Richard Ruppert, but testified that he would have used a different rate to determine capitalization and operating expenses of the Schubert Sign Company. The district court noted the difference between appraisers and accountants and ruled that capitalization rates "and so on" were accounting functions that fell well within Dodge's expert qualifications. On this record, we cannot say Schubert showed that the district court abused its discretion when it allowed Dodge to testify as an expert on the valuation of the Schubert Sign Company.
Recognizing that Schubert had received notice that the ground lease for the Spring Lake Park sign was being terminated, the district court incorporated the cost of removal and reduced the value of the marital sign structures by $20,000. But, by including the Spring Lake Park sign in its calculations determining the value of the marital signs, the district court implicitly recognized that the sign had value. The testimony at trial, however, established that, due to the removal procedures, once the sign was removed it had no value. The district court improperly included the value of the Spring Lake Park sign in its valuation of the martial signs. To this extent, the district court's findings are erroneous, and we reverse and remand on this issue.
Schubert argues the district court abused its discretion when it failed to reduce the value of the fourth sign structure to reflect the amount it would cost to have the sign comply with OSHA standards. But contrary to Schubert's assertion, the district court reduced the value of the marital signs by $17,600 to account for the costs associated with renovating the signs to be in compliance with OSHA requirements. The district court did not abuse its discretion in this regard.
The district court need not be exact in its valuation of an asset and its valuation need only lie "'within a reasonable range of figures.'" Carrick v. Carrick, 560 N.W.2d 407, 413 (Minn. App. 1997) (quoting Johnson v. Johnson, 277 N.W.2d 208, 211 (Minn. 1979)). Generally, "[a]veraging is a fair method of calculation where there is no great disparity between estimated values." Flynn v. Flynn, 402 N.W.2d 111, 117 (Minn. App. 1987) (citing Balogh v. Balogh, 356 N.W.2d 307, 313 (Minn. App. 1984)), review denied (Minn. Nov. 24, 1987). When using the averaging method, the district court's decision "'should be supported by either clear documentary or testimonial evidence or by comprehensive findings.'" Balogh, 356 N.W.2d at 313 (quoting Ronnkvist v. Ronnkvist, 331 N.W.2d 764, 766 (Minn. 1983)).
In Balogh, this court held that the district court's use of the averaging method was reversible error because the district court failed to make any findings on why or how it arrived at its valuation figure. Balogh, 356 N.W.2d at 313. This rendered the court's valuation "purely arbitrary" and thus, clearly erroneous. Id. Unlike the court in Balogh, the district court here made specific findings on why it used the averaging method. Although there is a significant difference in the range of values presented by the parties' experts, the district court's figure lies within the range of credible figures presented at trial. Even though we may have chosen to value the company differently, the district court's decision is not arbitrary. Because the district articulated a specific reason why it used the averaging method and made specific findings as to how it arrived at its valuation, the district court did not clearly err in using the averaging method to value the marital signs.
Schubert contends that the district court erred when it received and considered Exhibit C. This exhibit was submitted as part of Medinger's post-trial submissions. Medinger argues Exhibit C is a summary of Dodge's trial testimony. The district court used the exhibit when it amended its findings and conclusions regarding the value of the company.
It is within a district court's discretion to admit or exclude evidence, and its decision will not be reversed unless it was an abuse of discretion or based on an erroneous view of the law. Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990). "Unless a party demonstrates that an erroneous evidentiary ruling was prejudicial, the party is not entitled to a reversal of a judgment." Cloverdale Foods of Minn., Inc. v. Pioneer Snacks, 580 N.W.2d 46, 51 (Minn. App. 1998) (citation omitted). "An evidentiary error is prejudicial if the error might reasonably have changed the result of the trial." Id. (citations omitted).
Here, the figures contained in Exhibit C are nearly identical to the figures submitted by Schubert's own expert and accurately reflect the trial testimony of Dodge. The district court did not abuse its discretion when it received and considered Exhibit C.
Medinger's argument misconstrues this court's inquiry on appeal. To successfully challenge the district court's findings on appeal, the party must show that the findings are clearly erroneous, regardless of whether the record could support other findings. See Elliott v. Mitchell, 311 Minn. 533, 535, 249 N.W.2d 172, 174 (1976) (affirming district court's finding while admitting "the evidence might support another conclusion"). Although the evidence was conflicting and might have supported a conclusion that the Columbus sign was marital, viewing the record in the light most favorable to the district court's findings as this court must, the district court's finding that the Columbus sign was nonmarital has support in the record and is not clearly erroneous. See Ayers, 508 N.W.2d at 521 (holding evidence must be viewed in light most favorable to district court's findings of fact).
Pursuant to the guidelines, child support obligations are based on the obligor's monthly "net income." Minn. Stat. § 518.551, subd. 5(b) (1998). Under the guidelines, net income is defined as total monthly income minus federal and state income tax, social security and pension deductions, health insurance, union dues, and other child support. Id. "The [district] court must determine current net income for the purposes of setting child support." Thomas v. Thomas, 407 N.W.2d 124, 127 (Minn. App. 1987). Earning capacity and earnings history can be properly used to determine an obligor's ability to comply with a child support order, especially if the obligor is self-employed. LeTendre v. LeTendre, 388 N.W.2d 412, 416 (Minn. App. 1986). It is proper to use earlier tax returns rather than current pay stubs when the use of the pay stubs would understate the obligor's monthly income. See Johnson v. Johnson, 533 N.W.2d 859, 864 (Minn. App. 1995) (holding district court did not err when it used earlier tax return because averaging current year pay stubs would understate obligor's monthly income). Thus, the district court may use past income tax returns when it is difficult to determine current net income and the past income tax return allows a more credible determination of net monthly income. See County of Nicollet v. Haakenson, 497 N.W.2d 611, 615 (Minn. App. 1993) (holding ALJ properly used past income tax return rather than testimony of current income where ALJ determined tax return was more credible evidence of net income).
Here, it is questionable whether Schubert's 1997 check book register accurately reflects his gross and net monthly income. From the testimony presented at trial, it appears that he often commingled business funds in his personal checking account and that the income and expenses from the business fluctuated dramatically depending on the time of year. Thus, given the difficulty in accurately determining Schubert's current monthly net income from the information contained in the check book register, the district court did not err when it used Schubert's 1996 income tax return to determine his monthly net income.
Medinger also argues the district court erred when it determined Schubert's monthly child support obligations. Schubert's child support obligation factored each child's emancipation and was reduced accordingly. He was required to pay child support as follows: $600 per month for three children; $450 per month for two children; and $200 per month for one child. The district court noted that the $600 was "excessive by Minnesota Guidelines," but that in light of the children's' ages, the amount would adequately support their needs.
Medinger takes exception to the court's determination as it relates to the amounts for the two youngest children. Although the district court's determination of child support for the three minor children results in an overpayment of $23.90, the support obligation for the two children results in a downward deviation from the guidelines in the amount of $43.80 and $211.50. If the district court deviates from the guideline amounts,
the court shall make written findings giving the amount of support calculated under the guidelines, the reasons for the deviation, and shall specifically address the [appropriate statutory factors] and how the deviation serves the best interests of the child.
Minn. Stat. § 518.551, subd. 5(i) (1998).
Because the district court failed to make the statutorily required written findings to support its departure from the guidelines, the district court abused its discretion when setting Schubert's child support obligation. Given the downward departure from the guidelines, especially with regard to the youngest child, this issue is remanded for appropriate findings.
Contrary to Schubert's assertion, the existence of a temporary order is not necessary before the district court can make an award of retroactive child support in the final dissolution decree. See Korf, 553 N.W.2d at 710 (holding district court may, in final decree, award retroactive child support to time parties separated but before action commenced under chapter 518). This is because a "temporary order does not in any way limit a court's ability to fashion a final dissolution order." In re Support of J.M.K., 507 N.W.2d 459, 461 (Minn. App. 1993). Thus, the district court had jurisdiction to award retroactive child support from the time of the parties' separation even though no temporary order for relief was in place, if the evidence supported such an award.
We conclude that the district court erred in its application of the law when it ruled that it lacked jurisdiction to award retroactive child support. Because the district court vacated its award of retroactive child support believing that it lacked jurisdiction to make such an award, we remand with instructions to the district court that it has jurisdiction to consider this issue. This remand reflects no opinion on the merits of either party's claim to the $11,050. Conceivably, the district court moved the $11,050 to Schubert's side of the ledger as part of an overall division of assets. We express no opinion as to what the district court should do, other than point out that it has jurisdiction.
Medinger's claim for attorney fees is based on alleged discovery violations. Medinger asserts that she was prejudiced and forced to incur additional attorney fees because Schubert failed to furnish her with copies of all documents. But Medinger fails to support her argument beyond mere assertion. She failed to list what documents Schubert did not produce in a timely manner or how she was forced to incur additional attorney fees. At the time, Medinger was appearing pro se and there is no evidence that she was forced to schedule or prepare for any court appearances to prosecute or defend her claims. The district court did not abuse its discretion when it refused to award attorney fees to Medinger.
Finally, following oral argument, Medinger moved this court to make a finding that opposing counsel misrepresented the facts at oral argument and for attorney fees for bringing the motion. We note that this court had full access to the record, heard the oral arguments, and is capable of evaluating the factual support for claims made by counsel in briefs and at oral argument. We deny Medinger's motion and request for attorney fees.
Affirmed in part, reversed in part, and remanded; motion denied.
[*] Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.