A05-1624

In re the Marriage of:

Kerri Ann Baker, petitioner,

Appellant,

vs.

Jeffrey Daniel Baker,

Respondent.

Filed June 13, 2006

Affirmed in part, reversed in part, and remanded

Worke, Judge

Dakota County District Court

File No. F7-03-12710

Wayne A. Jagow, Jagow, Groves & Meinerts, 300 West Burnsville Parkway, Suite 625, Burnsville, MN 55337 (for appellant)

Peter H. Watson, Peter H. Watson & Associates, P.A., 2124 Dupont Avenue South, Minneapolis, MN 55405, and

Leland S. Watson, 836 Wells Fargo Midland Building, 401 Second Avenue South, Minneapolis, MN 55401 (for respondent)

Considered and decided by Kalitowski, Presiding Judge; Hudson, Judge; and Worke, Judge.

U N P U B L I S H E D O P I N I O N

WORKE, Judge

On appeal from the district court’s denial of appellant’s motion to reopen the dissolution judgment, appellant argues that the district court erred by (1) failing to address respondent’s receipt of escrow funds that he obtained when the mortgage on their marital homestead was satisfied and (2) ordering appellant to pay a share of the children’s counseling fees. Because the district court erred in determining that a disability payment received by respondent was not marital property, we reverse in part and remand.

D E C I S I O N

Disability Payment

In April 2005, appellant Kerri Ann Baker moved to reopen the January 4, 2005 dissolution judgment and modify its terms based on respondent Jeffrey Daniel Baker’s failure to disclose disability benefits that he received. After the time to appeal has expired, property divisions in dissolution actions are final and can be modified only if the standards that justify reopening a judgment exist. Minn. Stat. § 518.64, subd. 2(e) (2004); Redmond v. Redmond, 594 N.W.2d 272, 275 (Minn. App. 1999). The decision to reopen a dissolution judgment is within the district court’s discretion. Clark v. Clark, 642 N.W.2d 459, 465 (Minn. App. 2002). “An incorrect application of the law constitutes an abuse of the district court’s discretion.” Id. “Factual findings that resolve whether the judgment was the product of fraud, duress, or mistake will be upheld unless they are clearly erroneous.” Haefele v. Haefele, 621 N.W.2d 758, 763 (Minn. App. 2001), review denied (Minn. Feb. 21, 2001).

A district court may reopen a decree for “fraud, whether denominated intrinsic or extrinsic, misrepresentation, or other misconduct of an adverse party[.]” Minn. Stat. § 518.145, subd. 2(3) (2004). The district court should treat a motion to reopen a dissolution judgment as it would a complaint in a separate action alleging fraud, and may not summarily dispose of such motion unless there is no genuine issue of material fact in dispute. Doering v. Doering, 629 N.W.2d 124, 130 (Minn. App. 2001), review denied (Minn. Sept. 11, 2001). When such facts are present, an evidentiary hearing is appropriate. Id.

Appellant argues that although respondent claimed that he would not receive compensation for his disability that occurred during the marriage, he had or would receive benefits. The district court found that respondent received a $163,716.67 settlement for a disability that occurred during the marriage. The district court also found that respondent told appellant that he would use any money he received to reduce the debt incurred as a result of his disability. Despite finding that respondent received disability benefits for a disability sustained during the marriage, the district court characterized all of the funds as a nonmarital asset. Not all disability funds are marital. See Gerlich v. Gerlich, 379 N.W.2d 689, 691 (Minn. App. 1986) (stating that money received for personal injuries is nonmarital, but that money received to compensate for lost wages due to an injury is marital property), review denied (Minn. Mar 21, 1986); cf. Minn. Stat. § 518.54, subd. 5 (2004) (defining marital property as “property, real or personal, . . . acquired [or vested] . . . during the existence of the marriage”). On this record, it is not clear that the district court’s determination was appropriate.

Any marital interest in respondent’s disability benefits was omitted from the dissolution judgment. Omitted property may be apportioned after a dissolution judgment has been finalized. See Neubauer v. Neubauer, 433 N.W.2d 456, 461 n.1 (Minn. App. 1988) (stating that a pension omitted from an initial property division could be divided as “omitted property”), review denied (Minn. Mar. 17, 1989). Regardless of whether respondent intended to use the disability benefits to pay debts that he assumed under the marital-termination agreement, such benefits would have had implications for the parties, including the apportionment of marital debt and asset division. We, therefore, reverse the district court’s denial of appellant’s motion to reopen the dissolution judgment and remand for proceedings to ascertain the extent, if any, of the marital interest in respondent’s disability benefits and the division of any marital interest as marital property. We leave to the district court’s discretion whether an evidentiary hearing is required.

Mortgage Escrow Funds

Appellant next argues that the district court erred by failing to require respondent to remit $1,650 from a mortgage escrow fund that he received when appellant refinanced the marital homestead. Appellant maintains that the escrow proceeds should have been provided to her per the dissolution decree. The district court ordered respondent to “immediately execute and deliver a quitclaim deed conveying his interest in the parties’ homestead to [appellant].”

A district court “may issue orders to implement, enforce, or clarify the provisions of a decree, so long as it does not change the parties’ substantive rights.” Redmond, 594 N.W.2d at 275. On appeal, a district court’s construction of its own decree is given great weight. Mikoda v. Mikoda, 413 N.W.2d 238, 242 (Minn. App. 1987), review denied (Minn. Dec. 22, 1987). The parties’ marital homestead was “awarded to [appellant], subject to a lien in favor of [r]espondent in the amount of $25,000.00. The underlying mortgage on said property shall be refinanced to remove [r]espondent from all liability and [r]espondent’s lien shall be satisfied by no later than January 7, 2005.” Respondent was required to vacate the homestead by August 30, 2004, and, through that date, assume responsibility for “mortgage payments, insurance premiums, assessments, real estate taxes, utility payments, and the like.” The record shows that appellant refinanced, and the district court recognized the completion of that obligation by compelling execution of the quit-claim deed.

The dissolution decree gives no direction for the distribution of escrow proceeds from the prior mortgage. Because such funds are generally used to pay property taxes and insurance and respondent’s obligation to pay had expired in August 2004, it is difficult to determine how much of this overage was contributed by respondent. But given that the escrow funds were remitted to respondent at the time the mortgage was satisfied, the district court’s decision to allow respondent to keep those funds was an appropriate exercise of the district court’s discretion.

Counseling Fees

Appellant also argues that the district court erred by ordering her to pay part of an overdue bill for their children’s counseling services. The district court found that respondent paid $2,280 of the bill and ordered appellant to pay $1,605. Under the dissolution decree, each party is obligated to pay one-half of medical expenses which, like the counseling expenses, are not covered by insurance. The bill was $3,885—less $2,280 paid by respondent, leaves $1,605, the amount the district court allocated to appellant. An equal division would require each party to contribute $1,942.50; thus, although the district court may have erred in its allocation of this expense, it did so to appellant’s benefit.

Appellant argues, however, that the district court’s action amounted to a modification of the property division mandated by the dissolution decree because respondent was allocated a $450 counseling debt. We disagree because the decree does not address future amounts owed for counseling and the record is silent as to whether the previous debt was included in the $3,885. In light of our deference to a district court’s interpretation of its own decrees, we affirm the district court’s order with respect to the allocation of the counselor’s fees.

Affirmed in part, reversed in part, and remanded.