may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2002).
IN COURT OF APPEALS
Shirley Ann
Grams, petitioner,
Respondent,
vs.
Robert Alan Grams,
Appellant.
Peterson, Judge
Hennepin County District Court
File No. DC 215585
Susan A. Daudelin, A. Larry Katz, Katz, Manka, Teplinsky, Due & Sobol, LTD., 225 South Sixth Street, Suite 4150, Minneapolis, MN 55402 (for respondent)
John T. Burns, Jr., 115 Midway Bank Building, 14300 Nicollet Court, Burnsville, MN 55306 (for appellant)
Considered and decided by Peterson, Presiding Judge; Lansing, Judge; and Halbrooks, Judge.
U N P U B L I S H E D O P I N I O N
PETERSON, Judge
In this appeal from an order awarding maintenance, appellant-husband argues that the district court failed to make adequate findings and failed to properly apply the law. Respondent-wife filed a notice of review and argues that the district court erred in refusing to establish a higher, permanent maintenance award and abused its discretion in awarding her only $1,000 in attorney fees. Because the district court’s findings do not demonstrate that the court considered the applicable statutory factors, we reverse the maintenance award and the attorney-fee award and remand.
Appellant-husband Robert A. Grams and respondent-wife Shirley A. Grams dissolved their 24-year marriage in June 1997. During the marriage, husband worked for the Minneapolis Park Police, and wife was a homemaker. At the time of the dissolution, husband had just retired, and wife was not employed. During his last year of employment, husband earned $77,599. Before trial, the parties reached agreement on all issues except attorney fees.
The judgment granted wife one half of husband’s gross earned taxable income as spousal maintenance for five years beginning June 1, 1997. “Gross earned taxable income” was defined to exclude husband’s pension income and distributions from his deferred-compensation plan. The judgment expressly required maintenance to be reviewed de novo after the five-year period ended in June 2002. The judgment also required husband to pay for wife’s medical and dental insurance for five years as a way to distribute husband’s severance pay.
Following his retirement, husband worked as a United Nations peacekeeper in Bosnia. He was paid a base salary of $3,910.26 per month and $90 per diem payments. Because husband believed that this income was not taxable, he believed it was excluded from the maintenance award, and he did not pay respondent one half of this income. Following wife’s motion, the district court removed the word “taxable” from the maintenance provision and awarded wife one half of husband’s United Nations income.
In a July 3, 2002, motion, wife sought permanent maintenance in a fixed monthly amount, an order requiring husband to maintain medical and dental insurance for her as additional maintenance, and attorney fees. Husband filed a counter-motion. Following a hearing, the district court (1) awarded wife $400 per month in spousal maintenance; (2) ordered husband to maintain medical and dental insurance for wife as additional maintenance; (3) awarded wife $1,000 in need-based and conduct-based attorney fees; and (4) ordered husband to transfer certain savings bonds to wife. Both parties moved for amended findings.
In July 2003, the district court issued an amended order that reduced husband’s maintenance obligation to $307 per month. Husband appealed, and wife filed a notice of review.
Appellate courts review a district court’s maintenance award under an abuse-of-discretion standard. Dobrin v. Dobrin, 569 N.W.2d 199, 202 (Minn. 1997). A district court abuses its discretion regarding maintenance if its findings of fact are unsupported by the record or if it improperly applies the law. Id. “Findings of fact concerning spousal maintenance must be upheld unless they are clearly erroneous.” Gessner v. Gessner, 487 N.W.2d 921, 923 (Minn. App. 1992).
When reviewing maintenance de novo, the district court must consider the factors in Minn. Stat. § 518.552, subd. 2 (2002). Leroy v. Leroy, 600 N.W.2d 729, 733 (Minn. App. 1999), review denied (Minn. Dec. 14, 1999). No single statutory factor is dispositive. Elwell v. Elwell, 372 N.W.2d 67, 69 (Minn. App. 1985). In considering the statutory factors, “the basic consideration is the financial need of the spouse receiving maintenance and the ability to meet that need balanced against the financial condition of the spouse providing the maintenance.” Krick v. Krick, 349 N.W.2d 350, 352 (Minn. App. 1984). When conducting de novo review, the district court may consider anything that would be appropriate to consider for an initial maintenance award. Leroy, 600 N.W.2d at 733. An award must be supported by adequate findings. Id. Appellate courts may treat statutory factors for determination of spousal maintenance as addressed when they are implicit in a district court’s findings of facts. Dobrin, 569 N.W.2d at 201-02.
Husband argues that the maintenance award is based on a “split-the-difference” rationale that failed to adequately consider the statutory factors in Minn. Stat. § 518.552 (2002). Wife agrees that the “split-the-difference” rationale is faulty and argues that although the district court considered the statutory factors, its findings compel a conclusion that the maintenance award should be more than $307 per month.
The court found that wife’s reasonable monthly budget is $3,725 and her net monthly income is $2,900, which results in an $825 monthly shortfall, and that husband’s reasonable monthly budget is $1,733 and his net monthly income is $2,139.94, which results in a $406.94 monthly surplus. Based on these findings, the court explained the maintenance award in the July 2003 amended order as follows:
[Husband] requests that Finding No. 17 be amended to remove [husband’s] maintenance obligation. Because this request arises in a motion for amended findings, any adjustment to the result may only arise out of previously changed findings, not out of a new reconsideration or re-weighing of the overall approach to how maintenance was set in the January Order. The $400 per month maintenance awarded in the January Order was based on [husband’s] surplus, as then calculated, of $722 per month and [wife’s] shortfall of $825 per month. The maintenance award consisted of two elements: [Husband] paying [wife’s] health and dental insurance . . . and a monthly cash payment to otherwise strike a reasonable balance among their shortfalls and surpluses. The January Order did the latter by removing roughly half of [husband’s] surplus and applying it to cover roughly half of [wife’s] shortfall. Applying the same analysis under the amended facts is not entirely possible, because half of [husband’s] surplus is no longer roughly equivalent to half of [wife’s] shortfall. Half of [husband’s] surplus is $203. Half of [wife’s] shortfall is $412.50. The closest that can be approached to following the rationale of the January Order is to split the difference between these amounts, leading to an ongoing maintenance amount of $307 per month. . . . [Husband] shall pay [wife] $307 per month in spousal maintenance, effective November 1, 2002, until the date on which [wife] registers for Social Security, or turns 65, whichever comes first.
(Emphasis added.)
Husband argues that this rationale is defective because it fails to recognize that husband’s surplus is based on treating husband’s property award as income for maintenance purposes, there is not evidence to support the court’s finding that wife’s reasonable budget is $3,725 or that her financial ability to meet her needs is $2,900 per month, and, after splitting the difference, the court doubled husband’s maintenance obligation by also requiring him to pay for wife’s medical and dental insurance.
Maintenance may not be ordered to be paid from pension benefits awarded to a party as property until the party has received from the pension an amount equivalent to the value of the benefits awarded as property in the original property distribution. Kruschel v. Kruschel, 419 N.W.2d 119, 123 (Minn. App. 1988). After that amount is received, a court may consider pension benefits as income for maintenance purposes, even if the retirement is in good faith. Walker v. Walker, 553 N.W.2d 90, 94 (Minn. App. 1996). But where an obligor limits his income in bad faith, a property award may be invaded to pay maintenance. See Sieber v. Sieber, 258 N.W.2d 754, 757n.2 (Minn. 1977) (capital asset property considered in determining maintenance award when obligor voluntarily liquidated business, thereby diminishing his future earning capacity).
The dissolution judgment awarded each party one half of husband’s gross monthly pension benefits. The value of the benefits was not determined; the court simply split the benefits in half. Each party receives $1,632.54 per month. Husband also receives $710.42 per month from a deferred-compensation plan that was awarded to him as property in the dissolution.
Consequently, the $2,139.94 that the court determined husband receives as net monthly income is based on $2,342.96 that husband receives monthly as his property award. The court found that husband’s income from other sources is $140 per month. To the extent that husband’s income is derived from his property award, the income cannot be treated as income for maintenance purposes.
Wife argues that husband’s pension income can be considered for maintenance purposes because the court “effectively found” that husband retired in bad faith when it found that (1) husband’s income declined in the last four years; (2) husband has a better possibility of increasing his retirement assets before he reaches age 65 than wife does; and (3) a portion of wife’s credit-card debt was incurred because husband failed to pay maintenance over the years. We disagree.
The district court did not explicitly find in its January 2003 order or in its amended order that husband retired in bad faith, and the court’s findings do not indicate that the court effectively found that husband retired in bad faith. In the January 2003 order, after considering both parties’ approaches to retirement, the court found that “[e]ach of the parties’ expectations as to their finances at this point in their lives were and are reasonable.” The findings that wife cites do not imply anything about the basis for husband’s retirement. Because the district court erred by treating husband’s property award as income when determining husband’s maintenance obligation, we reverse and remand for reconsideration of the maintenance award.
Husband also argues that there is not evidence to support the court’s finding that wife’s reasonable monthly budget is $3,725 or that her financial ability to meet her needs is $2,900 per month.
Wife initially presented a $4,182 monthly budget, and the district court found in its January 2003 order that $3,725 is a reasonable monthly budget. The court specifically excluded $107 associated with wife’s adult daughter’s school loan, but it did not identify any other expenses that it found unreasonable. The court found in its amended order that of the $758 increase in wife’s budget since the time of the dissolution,
$316 is debt payments that were substantially caused by [husband’s] non-payment of his spousal maintenance obligation over the years since the parties’ dissolution. The remaining $442 is a very modest increase in budget considering the amount of time that has passed since the parties’ dissolution and considering that at the time of the dissolution, [wife] was unemployed.
The court’s finding that wife’s credit-card debt was caused by husband’s failure to pay his maintenance obligation is not supported by the record, which indicates that the only time that husband failed to pay his maintenance obligation was before the judgment was amended to require husband to pay as maintenance one half of his gross earned income, rather than one half of his gross earned taxable income. Before the amendment, husband did not pay one half of his United Nations income as maintenance. But when the court amended the judgment, it awarded wife a $26,585 judgment for maintenance that had not been paid based on husband’s United Nations income, and husband has paid that judgment. The court also implemented automatic withholding on husband’s future earnings, and there is no evidence that husband has since failed to pay his maintenance obligation. There is no explanation why, if wife incurred the credit-card debt due to husband’s failure to pay maintenance during this period, she could not pay off the debt when husband later paid the judgment for maintenance that was due. The evidence does not support the finding that wife’s debt was caused by husband’s “non-payment of his spousal maintenance obligation.”
Husband objects to some specific items in wife’s monthly budget, including $209 for a new car when the parties always purchased used cars during the marriage and $227 for medical and dental insurance when husband was ordered to pay for insurance as additional spousal maintenance. Husband also argues that wife’s credit-card bill is too speculative and potentially duplicative to include as part of her monthly expenses. But because the district court determined the amount of wife’s reasonable monthly budget without identifying the specific expenses that it found to be unreasonable, we cannot meaningfully review whether the district court disallowed part, or all, of the expenses that husband contends are unreasonable.
Husband also argues that the district court did not consider wife’s total financial resources when awarding maintenance. In determining the duration and amount of maintenance, the district court must consider “the financial resources of the party seeking maintenance, including marital property apportioned to the party.” Minn. Stat. § 518.552, subd. 2(a). “Implicit in [the statute] is that the spouse seeking maintenance demonstrate the need therefor[e]. . . .” Dobrin, 569 N.W.2d at 202. The district court found that wife’s reasonable monthly budget is $3,725 and that her monthly income is $2,900, which implies that the court determined that wife demonstrated a need for maintenance. See id. at 201-02 (permitting appellate courts to treat statutory factors as addressed when they are implicit in district court’s factual findings). But there is no indication that in making this determination, the court considered any of wife’s resources other than her monthly income. For example, the court found that wife owns the marital homestead free of any encumbrances other than a home equity loan, the proceeds of which were used by her adult daughter, and that “both parties have significant assets that they could perhaps more actively make use of to fund their desired lifestyles and prepare for retirement.” But instead of considering whether these assets should affect the maintenance award, the court “split the difference” between the parties’ shortfall and surplus. We conclude that the district court’s decision to simply split the difference does not demonstrate that the court considered the statutory factors when awarding maintenance, and the failure to consider the statutory factors was an abuse of the district court’s discretion.
Wife argues that the district court abused its discretion by failing to make the maintenance award permanent. But because the court’s order does not demonstrate that the court considered the statutory factors when awarding maintenance, we decline to address whether a temporary award was an abuse of discretion. On remand, the district court can apply the statutory factors to determine the duration of any maintenance award.
Finally, wife argues that the $1,000 attorney-fee award is not supported by appropriate findings, and a proper application of the statutory factors supports an increased award. Wife’s motion and accompanying affidavit sought $3,000 in attorney fees, and asked the court to amend its findings to reflect that husband had the ability to pay her attorney fees and to order husband to pay the fees based on her inability to pay and his “repetitive non-compliance of the Court’s Orders.”
An award of attorney fees under Minn. Stat. § 518.14, subd. 1 (2002), “rests almost entirely within the discretion of the trial court and will not be disturbed absent a clear abuse of discretion.” Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn. App. 1998) (quotation omitted), review denied (Minn. Feb. 18, 1999).
Generally, attorney fees in dissolution cases are governed by [section 518.14, subdivision 1], which allows both need-based and conduct-based fee awards. The standards for making need-based and conduct-based fee awards are different. Therefore, fee awards made under this provision must indicate to what extent the award was based on need or conduct or both. . . .
Geske v. Marcolina, 624 N.W.2d 813, 816 (Minn. App. 2001) (citation omitted). To award fees based on need, the district court must find that (a) the award is necessary to the recipient’s good-faith assertion of rights, (b) the payor has the ability to pay the fees, and (c) the recipient does not have the means to pay them. Minn. Stat. § 518.14, subd. 1. “Conclusory findings on the statutory factors do not adequately support a fee award.” Geske, 624 N.W.2d at 817. The court must make specific findings regarding the parties’ respective incomes and expenses. See id. at 817-18 (discussing findings necessary to support need-based award under Minn. Stat. § 518.14, subd. 1).
To award conduct-based fees, the district court must identify the offending conduct, the conduct must have occurred during the litigation process, and the conduct must be found to have unreasonably contributed to the length or expense of the proceeding. Minn. Stat. § 518.14, subd. 1; Geske, 624 N.W.2d at 819. Wife bears the burden of showing husband’s conduct unreasonably contributed to the length or expense of the proceeding. Geske, 624 N.W.2d at 818.
The district court found only that “[wife] has incurred legal fees in this matter well in excess of $10,000. It is appropriate that she be awarded need-based attorney’s fees. Furthermore, it is appropriate that [wife] be awarded conduct-based attorney’s fees with regard to [husband’s] non-disclosure of the existence of the Savings Bonds.”[1] The court ordered husband to pay $1,000 in need-based and conduct-based attorney fees, but it did not indicate to what extent the award was based on need or conduct.
The court’s failure to identify the portions of the fee award attributable to need and conduct precludes effective review. See Haefele v. Haefele, 621 N.W.2d 758, 767 (Minn. App. 2001) (remanding fee issue, stating lack of findings “preclude[d] effective review” of fee award where district court awarded need-based and conduct-based attorney fees but did not indicate how much of the award was for either reason), review denied (Minn. Feb. 21, 2001). Also, although the findings indicate that the conduct that provides the basis for the conduct-based fee award is husband’s failure to disclose savings bonds, the findings do not indicate how the failure to disclose contributed to the length or expense of the proceeding. Wife has discovered the bonds, but it is not apparent what expenses were incurred to make the discovery. Therefore, we reverse the attorney-fee award and remand for findings regarding how much of the award is for need-based and conduct-based fees and for findings that support the conduct-based fee award.
Reversed and remanded.
[1] The court found that husband failed to disclose the existence of savings bonds worth $6,452.40 that were purchased by husband before the dissolution.