STATE OF MINNESOTA
IN COURT OF APPEALS
In Re the Marriage of:
David Merten, petitioner,
Christine Merten, n/k/a Christine Bergquist,
Filed August 3, 1999
St. Louis County District Court
File No. F591101930
James R. Cope, Cope & Peterson, P.A., 415 First Street South, Virginia, MN 55792 (for respondent)
Considered and decided by Peterson, Presiding Judge, Short, Judge, and Shumaker, Judge.
This appeal is from an order denying appellant David Merten's motion to modify his child support obligation. We affirm.
In 1998, appellant moved for a reduction in child support, claiming that because he was closing his restaurant and filing for bankruptcy, his income had decreased. After the hearing on the motion, but before a decision was issued, appellant closed his restaurant and filed for bankruptcy. An administrative law judge (ALJ) concluded that there had not been a substantial change in circumstances and denied the motion. Appellant moved to amend the ALJ's order. A second ALJ denied the motion.
The decision whether to modify a child support obligation is within the district court's discretion and an appellate court will not reverse for an abuse of discretion unless it finds a clearly erroneous conclusion against logic and the facts on record. Moylan v. Moylan, 384 N.W.2d 859, 864 (Minn. 1986). The district court, however, must exercise its discretion within the limits set by the legislature. Id.
Under Minn. Stat. § 518.64, subd. 2 (1998), a child support order may be modified upon a showing that a substantial change in earnings of a party has occurred that renders the terms of the original support order unreasonable and unfair. The burden of showing a substantial change in earnings is on the moving party. Johnson v. Fritz, 406 N.W.2d 614, 616 (Minn. App. 1987).
"If the court finds that a parent is voluntarily unemployed or underemployed * * * support shall be calculated based on a determination of imputed income." Minn. Stat. § 518.551, subd. 5b(d) (1998); see also Beede v. Law, 400 N.W.2d 831, 835-36 (Minn. App. 1987) (earning capacity may be used as an appropriate measure of income if an obligor has unjustifiably self-limited earnings).
Appellant argues that the ALJ erred by imputing income to him without explicitly finding that he intentionally and in bad faith lowered his income for the purpose of avoiding his child support obligation. We disagree. Although the ALJ found that appellant has the ability to earn more than he currently earns, the order denying appellant's motion to modify child support was not based on an imputed income amount.
The ALJ found that appellant's "income at the time of the original order in 1991 and at the time of this hearing are comparable and not substantially different." It is apparent from the record that the ALJ's conclusion that appellant's income had not changed substantially since the dissolution was based on appellant's actual income, not on imputed income. The transcript reveals that appellant had hidden the fact that in 1993, he purchased a building that contains two apartments and a coin-operated laundry. The occupant of one of the apartments holds a life estate on the property and lives there without paying rent. Appellant receives $325 per month rent for the other apartment, and appellant's father manages the coin-operated laundry without paying appellant rent for the space. Schedule I of appellant's bankruptcy petition indicates that he receives $325 per month income from real property. Appellant testified that he uses the rental income from the building to make the payments on the building. But he did not provide other proof of the payments or their amounts. And the ALJ found that appellant had been "less than truthful with the Court concerning his income and business relationships."
The parties' 1991 dissolution stipulation provided that appellant would pay $600 per month in child support based on an average monthly income of $1,600. If appellant's $325 monthly income from real property is added to his $1,353 net monthly income from his new full-time job, his total $1,678 monthly income is about the same as his income at the time of the parties' divorce. Given these facts, the ALJ did not clearly err by concluding that there had not been a substantial change in circumstances that rendered appellant's existing child support obligation unreasonable or unfair. Appellant did not meet his burden of proving a substantial change in circumstances.