Melissa Brett, Appellant, vs. Dr. Alexander Watts, Respondent.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (1998).

STATE OF MINNESOTA

IN COURT OF APPEALS

C9-99-1791

In Re the Marriage of:

Sherri Marie Serino, petitioner,

Respondent,

vs.

David Francis Serino,

Appellant.

Filed June 27, 2000

Affirmed in part, reversed in part, and remanded
Klaphake, Judge

Ramsey County District Court

File No. F2-97-313

Roger A. Christianson, 386 North Wabasha Street, Suite 600, St. Paul, MN 55102 (for respondent)

Thomas William Tuft, Valerie A. Downing, Thomas Tuft Law Offices, 1417 Arcade Street, St. Paul, MN 55106 (for appellant)

            Considered and decided by Kalitowski, Presiding Judge, Schumacher, Judge, and Klaphake, Judge.

KLAPHAKE, Judge

            David Francis Serino appeals from a judgment dissolving his marriage to respondent Sherri Marie Serino and the denial of his motion for amended findings or a new trial.  He challenges a number of the trial court's decisions, including its (1) grant of sole physical custody of the parties' son to respondent instead of jointly to both parties; (2) setting of his child support obligation; (3) characterization of the appreciation of his nonmarital 401(k) plan as marital property; and (4) award to respondent of a 401(k) interest in certain property purchased in Afton during the marriage.

            Because the trial court improperly concluded that the parties had agreed to a set amount of child support, we reverse and remand for recalculation of that obligation.  Because the trial court erred by identifying the appreciation of appellant's 401(k) as marital property, we reverse that determination.  With respect to the other issues, we affirm because the trial court did not abuse its discretion or otherwise misapply the law.

            1.         Trial courts have broad discretion to determine custody of the parties' children.  Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).  This court will not reverse a custody determination unless the district 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).  When determining whether joint physical custody is in a child's best interests, the trial court must consider whether the parties have the ability to cooperate.  Minn. Stat. § 518.17, subd. 2(a) (1998).

            In this case, the trial court found that the parties did not have the ability to cooperate and awarded respondent sole physical custody.  The evidence supports the court's decision.  Although the parties have been able to follow the established parenting plan, the court services officer reported that the parties continue to require the assistance of a neutral third party.  In addition, respondent testified that she often acquiesces to appellant's demands, but that she rarely interferes with appellant's parenting decisions.  She further testified that, although she has made compromises on the visitation schedule, appellant is not willing to do so.  Her testimony is confirmed by other evidence in the record and is not effectively refuted by appellant.  Under these circumstances, we cannot conclude that the trial court abused its discretion by awarding respondent sole physical custody and in continuing the current liberal visitation schedule.

            2.         The trial court refused to amend its decision to set appellant's child support obligation at $650 per month, which represents a downward deviation, and found that the parties had agreed to that amount.  Appellant claims that no agreement existed between the parties and argues that the court should have deviated even further downward; respondent admits that there was no agreement.

            Because the evidence fails to establish any agreement on the part of the parties on the amount of child support, the trial court's findings on this issue are clearly erroneous and must be reversed.  See Rutten, 347 N.W.2d at 50-51 (Minn. 1984) (appellate court will reverse child support decision only if clearly erroneous).  On remand, the trial court is directed either to apply the child support guidelines or, if appropriate, to calculate child support according to recent case law from this court.  See Rumney v. Rumney,     N.W.2d    ___,     (Minn. App. June 6, 2000) (where parents do not share joint physical custody, Hortis/Valento formula is guidelines application only when physical custody is nearly equally shared).

            Appellant also raises two issues that might affect a recalculation of child support if modification of, or deviation from, the guidelines is appropriate.  First, he argues that the trial court abused its discretion by failing to consider respondent's annual profit-sharing bonus in determining her annual income.  We agree.  Respondent's profit-sharing bonus is not speculative and should be included in any calculation of her net income; although she testified that her profit-sharing bonus is not guaranteed and that the amount varies, she acknowledged that she has received a bonus each year for the last five years and that there is no indication this will cease.  See Desrosier v. Desrosier, 551 N.W.2d 507, 509 (Minn. App. 1996) (regular, but not guaranteed annual bonuses, expected to continue, considered income for purposes of child support).  Next, appellant challenges the trial court's findings that respondent's living expenses, set at $3,500 per month, were reasonable.  Based on our review of the record, we cannot conclude that the trial court's findings were unsupported by the record or clearly erroneous.  See Minn. R. Civ. P. 52.01 (findings of fact "shall not be set aside unless clearly erroneous").

            The issue of child support is therefore remanded for application of the appropriate standard.

            3.         Appellant challenges the trial court's award of the tax dependency exemption to respondent.  Although a trial court has discretion to assign the exemption to a noncustodial parent and require the custodial parent to waive the exemption contingent on receiving child support for the year, we cannot conclude that the trial court abused its discretion in awarding her the exemption.  See State, ex rel. Rimolde v. Tinker, 601 N.W.2d 468, 472 (Minn. App. 1999). 

            4.         Appellant argues the trial court erred in determining that the growth of his 401(k) account was marital property.  The account increased in value during the parties' marriage, although appellant did not make any contributions during that time. Appellant's tax returns indicate that the interest on the 401(k) was not taxed annually, and the evidence established that the funds in the account were not available to the parties during their marriage without heavy penalties.

            Because the evidence shows the increase in value of appellant's 401(k) was more similar to appreciation than to interest, the trial court clearly erred in finding the increase was marital property.  See White v. White, 521 N.W.2d 874, 878-79 (Minn. App. 1994) (appreciation in retirement account was not marital asset when it was merely unrealized gain, was not available or liquid during marriage, and was not derived from marital partnership); Minn. Stat. § 518.54, subd. 5 (1998) (defining marital and nonmarital property).  We therefore reverse the trial court's finding that the 401(k) had nonmarital aspects.  On remand, the trial court must recalculate the property distribution in light of appellant's nonmarital interest in this asset.  The court should ensure that its findings regarding the apportionment of property awarded to each party are accurate and may modify those findings accordingly.  See Minn. Stat. § 518.58, subd. 1 (1998) (court shall make just and equitable division of marital property, after making findings regarding division of property).

            5.         Appellant argues that the trial court erred in determining that a piece of property in Afton was respondent's nonmarital property because it was purchased with money she received in settlement of a personal injury claim.  Appellant concedes that respondent's personal injury settlement was nonmarital, but claims that the trial court erred in determining that respondent adequately traced her nonmarital funds.  See Kottke v. Kottke, 353 N.W.2d 633, 636 (Minn. App. 1984) (requiring party to show by preponderance of evidence that assets were "acquired in exchange for" nonmarital property); Minn. Stat. § 518.54, subd. 5 (defining nonmarital property).

            Respondent testified that her settlement proceeds were deposited in a joint account for the purpose of making a down payment on the Afton property and that $11,500 of that money was used as part of that down payment.  See id. (nonmarital inheritance readily traceable, even though deposited in joint checking account and used to pay marital debts and purchase items for homestead);  see also Nash v. Nash, 388 N.W.2d 777, 781 (Minn. App. 1986) ("Tracing does not require a party to produce the serial numbers of the dollar bills used."), review denied (Minn.  Aug. 20, 1986).  The evidence further shows that this $11,500 represented a large portion of the settlement proceeds and that only a short period of time transpired between deposit of the proceeds and withdrawal of the funds for the down payment.  This evidence, taken with respondent's testimony, was sufficient to trace respondent's nonmarital interest in the Afton property.  The trial court therefore properly determined that a portion of the property was nonmarital.[1]

            Further, appellant challenges the trial court's denial of his request that respondent reimburse him for the mortgage payments he has made on the Afton property since October 1997, when respondent moved out.  The record shows that both parties made financial contributions towards the property and that respondent had been solely responsible for the mortgage payment for several years prior to the parties' separation.  The trial court therefore properly characterized the remaining portions of the property as marital.  See Minn. Stat. § 518.54, subd. 5 (defining marital property as property acquired by parties at any time during marriage).

            6.         Appellant claims that the trial court abused its discretion in finding that respondent did not dissipate marital assets by retaining the balance of the funds provided for her house down payment and by cashing a $4,500 certificate of deposit. Respondent testified that she used the money to furnish her home and to pay joint expenses.  It is clear from the trial court's amended findings that it found respondent's explanation credible.  See Minn. R. Civ. P. 52.01 (trial court entitled to weigh credibility of witnesses).  Because there is evidence in the record that respondent used the money for marital expenses, the trial court did not clearly abuse its discretion in finding respondent did not dissipate the marital estate.  See Volesky v. Volesky, 412 N.W.2d 750, 752 (Minn. App. 1987).

            7.         Appellant claims that the trial court abused its discretion in refusing to grant a new trial or allow him to engage in post-trial discovery.  Based on our review of the record, we conclude that the trial court did not abuse its discretion in either decision.  See Sucher v. Sucher, 416 N.W.2d 182, 186 (Minn. App. 1987), review denied (Minn. Mar. 18, 1988); Haaland v. Haaland, 392 N.W.2d 268, 273 (Minn. App. 1986); Minn. R. Civ. P. 59.01 (setting forth grounds on which court "may" grant new trial).

            Affirmed in part, reversed in part, and remanded.

[1] In her brief, respondent argues that the trial court erred by not applying the formula set out in Schmitz v. Schmitz, 309 N.W.2d 748 (Minn. 1981).  Because respondent did not raise the issue below and did not file a notice of review, this issue is not properly before this court.  Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (court generally will not decide issues not considered below).