In re Mary Jane Safar, petitioner, Respondent, vs. Jack Warren Safar, Appellant.

In re Mary Jane Safar, petitioner, Respondent, vs. Jack Warren Safar, Appellant. A04-974, Court of Appeals Unpublished, April 19, 2005.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2004).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-974

 

In re Mary Jane Safar, petitioner,

Respondent,

 

vs.

 

Jack Warren Safar,

Appellant.

 

Filed April 19, 2005

Affirmed Willis, Judge

 

Hennepin County District Court

File No. DW 244338

 

 

Raymond M. Lazar, Judy S. Engel, Fredrikson & Byron, P.A., Suite 4000, 200 South Sixth Street, Minneapolis, MN  55402 (for respondent)

 

Kay Nord Hunt, Lommen, Nelson, Cole & Stageberg, P.A., 2000 IDS Center, 80 South Eighth Street, Minneapolis, MN  55402 (for appellant)

 

            Considered and decided by Lansing, Presiding Judge; Willis, Judge; and Stoneburner, Judge.

U N P U B L I S H E D   O P I N I O N

WILLIS, Judge

            In this marital-dissolution proceeding, appellant argues that the district court abused its discretion by awarding respondent excessive permanent spousal maintenance, by unjustly and inequitably distributing certain marital assets, and by awarding specific assets rather than the stipulated value of those assets.  Because we find that the district court did not abuse its discretion, we affirm.

FACTS

            Appellant Jack Safar and respondent Mary Safar married in 1974.  During the parties' marriage, appellant had a career in real-estate development and management, and respondent was a homemaker.  In 1998, respondent filed for dissolution of the marriage.

Appellant and a business partner began developing apartment buildings before the parties married.  Appellant and his business partner established Dominium Management Services, Inc. (DMS) to manage the apartment buildings that they developed.  DMS's primary source of income is management-service fees.  It manages more than 15,000 housing units across the country, most of which are owned by appellant's other companies and partnership interests.  The parties retained an appraiser to value appellant's interest in his businesses and stipulated that appellant's interest in DMS as of December 31, 2002, had a value of $2,060,000.  Appellant draws $20,000 per month in income from DMS.

            Appellant also owns 25% of Dominium Development & Acquisition, LLC (DDA), which locates and evaluates real-estate-development opportunities.  DMS pays DDA $300,000 per year to secure exclusive rights to manage the properties that DDA develops.  The parties stipulated that as of December 31, 2002, appellant's interest in DDA was worth $1,358,000.

Appellant also owns a partial interest in numerous real-estate-development entities (the partnerships) as a member, shareholder, general partner, or limited partner.  Together, the partnerships own interests in more than 125 multifamily housing projects throughout the United States.  The parties stipulated that as of September 30, 2002, appellant's interest in the partnerships was worth $13,686,000. 

On April 29, 2003, the district court issued its judgment, and both parties moved for amended findings or, in the alternative, a new trial.  The district court amended certain findings, and, on December 12, 2003, it issued an amended judgment, which awarded respondent permanent spousal maintenance of $7,438 per month.  Respondent's property award included the marital homestead and neighboring lot, personal property, and various bank and investment accounts, of which $3,168,402 was available for investment purposes.  Appellant's property award included several parcels of real estate, two country-club memberships, personal property, various bank and investment accounts, and his interest in DMS.  Because of the sizable difference in the values of the property awards, the district court ordered appellant to pay respondent a cash equalizer of $747,541. 

Appellant's nonliquid business interests in DDA and the partnerships have a total value of $15,044,000 and are in appellant's name only.  But his interests are marital property, and the district court determined that respondent therefore has an equitable interest in DDA and the partnerships.  Because partnership law prevented the district court from transferring direct partnership rights to respondent, the district court ordered a constructive trust on future distributions to appellant from DDA and the partnerships and imposed a fiduciary duty on appellant to pay respondent "an amount in cash equal to the value of any distribution, dividend, cash, instrument or other property, or other economic value that is the subject of [a] Payment Triggering Event" until respondent's equitable interest of $7,522,000 is satisfied.  The district court defined a "payment-triggering event" as any event whereby appellant directly or indirectly receives, or has the right to receive, from DDA or the partnerships any "economic value" other than his $20,000 monthly income. 

Certain bank and investment accounts awarded to respondent increased in value by $133,358 between the December 2002 valuation date and the date of the original judgment.  Appellant unilaterally reduced his cash-equalizer payment accordingly.  In the amended judgment, the district court ordered that respondent was entitled to the accounts and any increase in their values, and it entered judgment for respondent against appellant for $133,358.  This appeal follows.

D E C I S I O N

I.

Appellant first challenges the award of permanent spousal maintenance to respondent, arguing that the district court underestimated the amount of income respondent's investible assets will generate and overstated her reasonable monthly expenses.  We review a district court's spousal-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 by awarding spousal maintenance if its findings of fact are unsupported by the record or if it improperly applies the law.  Id. at 202 & n.3 (quoting Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988)).  "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); see Minn. R. Civ. P. 52.01.

            A district court may grant maintenance to either spouse in a dissolution proceeding if it finds that he or she "lacks sufficient property, including marital property apportioned to the spouse, to provide for reasonable needs of the spouse . . . or is unable to provide adequate self-support, after considering the standard of living established during the marriage and all relevant circumstances."  Minn. Stat. § 518.552, subd. 1(a), (b) (2002).  After determining that spousal maintenance is appropriate, the district court must calculate the amount and duration of the maintenance.  In doing so, the court should consider, among other factors, "the financial resources of the party seeking maintenance, including marital property apportioned to the party, . . . the party's ability to meet needs independently, . . . [and] the standard of living established during the marriage."  Minn. Stat. § 518.552, subd. 2(a)(h) (2002). 

            The testimony of both parties establishes that they enjoyed an affluent marital standard of living.  Respondent submitted a budget showing monthly expenses of $19,537.  After hearing the testimony of the parties and respondent's expert witness, the district court reduced respondent's computation of necessary monthly expenses to $12,467 to reflect the marital standard of living.  The district court determined that respondent would need gross income of $19,531 per month to meet those expenses.  Respondent's expert witness testified that respondent could reasonably expect a 4.58% rate of return on her investible assets, and the district court determined that at 4.58%, respondent's $3,168,402 in investible assets would yield $12,093 of pretax income each month.  To make up the difference, the district court awarded respondent spousal maintenance of $7,438 monthly.

            Appellant argues that the district court should have used a higher rate of return to calculate the amount of money that respondent's assets could generate.  He points to the testimony of one of his business partners that 30-year A-rated tax-free municipal bonds had a 4.82% rate of return at the time of the trial, which would produce $12,725 per month of tax-free income for respondent.  But the district court noted that this "testimony offered so little value" that it chose to rely on respondent's expert and calculated respondent's monthly income using the 4.58% rate of return.  The district court considered the testimony of both parties' witnesses, and we defer to the district court's decisions concerning the weight and credibility of evidence presented at trial.  Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).  We conclude that a determination regarding the projected generation of income on investments, like the determination of an asset's value, should be considered an approximation that "need only fall within a reasonable range of figures."  See Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001) (quotation omitted).  Because the rate of return used by the district court to calculate the amount of income that respondent's assets would generate is reasonable and supported by the record, we find that the district court did not abuse its discretion.

            Appellant also argues that the record does not support the district court's finding of respondent's monthly expenses and that the district court thereby abused its discretion by awarding $7,438 in monthly spousal maintenance.  Appellant testified that during their marriage, the parties' yearly expenses were usually approximately $60,000, or $5,000 per month.  But respondent testified that, during their marriage, the parties lived in a custom-designed house; traveled extensively; purchased expensive clothing, jewelry, and gifts; and belonged to three country clubs.  Respondent also provided evidence that in the three years before the parties separated, the parties' inflation-adjusted spending from just two of several checking accounts averaged $27,888 per month.  We defer to the district court's determinations of credibility.  Sefkow, 427 N.W.2d at 210.  The record supports the district court's finding that respondent's reasonable monthly expenses are $12,467.  To meet these expenses, the district court determined that respondent needs $7,438 per month in permanent spousal maintenance.  Because the record supports the district court's finding of respondent's reasonable monthly expenses, we conclude that district court did not abuse its discretion by awarding respondent permanent spousal maintenance of $7,438 per month.

II.

Appellant next argues that the district court abused its discretion by imposing a constructive trust on his distributions from DDA and the partnerships and by requiring appellant to pay respondent an amount equal to those distributions until her equitable interest in DDA and the partnerships is satisfied.  He argues that this distribution method is unjust and inequitable.

            District courts have broad discretion when dividing marital property, and we will not alter a district court's marital-property distribution absent a clear abuse of discretion or an erroneous application of the law.  Chamberlain v. Chamberlain, 615 N.W.2d 405, 412 (Minn. App. 2000) (clear abuse of discretion), review denied (Minn. Oct. 25, 2000); Ebnet v. Ebnet, 347 N.W.2d 840, 842 (Minn. App. 1984) (misapplication of the law).  We will affirm the district court's marital-property division if it has "an acceptable basis in fact and principle even though we might have taken a different approach."  Antone v. Antone,645 N.W.2d 96, 100 (Minn. 2002).

            In a dissolution proceeding, "the court shall make a just and equitable division of the marital property of the parties."  Minn. Stat. § 518.58, subd. 1 (2002).  The property division need not be mathematically equal.  Thomas v. Thomas, 383 N.W.2d 727, 728 (Minn. App. 1986).

            Appellant argues that the district court's distribution method prevents him from meeting his contractual business obligations.  The DDA Membership Control Agreement requires appellant to reinvest his distributions from the partnerships in DDA.  But the district court's method imposes a fiduciary duty on appellant to use those distributions to pay respondent until he retires her equitable interests in DDA and the partnerships.  The method, however, specifically allows appellant to use his distributions to satisfy his contractual business obligations if he pays respondent equivalent amounts. 

The district court based its division on the stipulated values of the business interests and an equitable balancing of the parties' interests.  Respondent argued that the district court should award her a lump sum or scheduled installment payments, so that she would minimize her involvement in appellant's business affairs.  Appellant claimed that his cash flow would not support such payments and that respondent's suggestion would unfairly burden appellant with all of the risk inherent in the real-estate market.  Appellant argued that respondent should be a "beneficial owner" of half of his interests in DDA and the partnerships.  The parties would then share the "benefits, burdens, liabilities, and obligations" of appellant's business interests.  The district court found neither of the parties' solutions equitable and crafted a division method that steered a middle course and both minimizes respondent's involvement in appellant's business affairs and places business risk on both parties by requiring appellant to pay respondent only when his business interests distribute something of economic value.  

Appellant argued alternatively to the district court, and argues on appeal, that rather than requiring him to pay to respondent the full value of his distributions, it would be equitable to require him to pay only 50% of each distribution, leaving him with the remaining 50% to use toward his obligation to reinvest in DDA.  Although this suggestion also balances the parties' interests, we will not reverse the district court's property division simply because an alternative equitable division exists.  See Antone, 645 N.W.2d at 100.

The district court's method for distributing the marital interest in DDA and the partnerships has an acceptable basis in fact and principle.  We find that the district court did not abuse its discretion by imposing a constructive trust on appellant's future distributions for the purpose of satisfying respondent's equitable interest in DDA and the partnerships. 

III.

Finally, appellant argues that the district court erred by allocating specific assets of the marital estate to the parties rather than awarding the parties the stipulated value of those assets.  Because certain accounts awarded to respondent increased in value by $133,358 between the December 2002 valuation date and the date of the original judgment, respondent's non-business marital property award was worth $4,287,531, while appellant's award was worth $4,154,174.  Appellant concedes that the stipulation of facts does not reflect an agreement of the parties that the district court should award the value of the assets rather than the individual assets themselves, but he argues that it also does not stipulate that the accounts themselves were to be awarded to the parties.  Nonetheless, appellant argues that because the district court awarded the specific assets rather than the value of the assets, the district court's judgment does not "reflect the parties' stipulation."  But the only way that the district court could award the value of the assets to the parties, rather than the assets themselves, would be to liquidate all of the assets and divide the proceeds.  This the parties clearly did not agree to do.

            The stipulation of facts includes a spreadsheet entitled "Non-Business Personal Property," which lists the parties' assets, in whose name each asset is held, and the value of each asset as of December 31, 2002.  The spreadsheet also distinguishes between marital and nonmarital property.  But the stipulation of facts is not an agreement between the parties regarding how the assets are to be divided, nor does it direct the district court to award specific dollar amounts.  The stipulation of facts is nothing more than an agreement as to what the parties' assets are and how much they are worth, and we conclude that the district court did not err by awarding the assets themselves to the parties.

            Appellant further argues that the district court abused its discretion by allocating to respondent the entire $133,358 increase in the value of the bank and investment accounts awarded to respondent.  He contends that he is entitled to half of the increased value.  Minnesota law requires "a just and equitable division of the marital property of the parties."  Minn. Stat. § 518.58, subd. 1.  "If there is a substantial change in value of an asset between the date of valuation and the final distribution, the court may adjust the valuation of that asset as necessary to effect an equitable distribution."  Id.  But, again, a marital-propertydivision must be equitable; it need not be equal.  Thomas, 383 N.W.2d at 728.

            The increase in value of respondent's assets resulted in an award 3.21% greater than the value of appellant's marital-property award.  But the district court noted that assets awarded to appellant had also increased in value.  We have held that marital-property divisions were equitable when the awards differed in value by more than 18%.  See Crosby v. Crosby, 587 N.W.2d 292, 296-97 (Minn. App. 1998) (concluding that the district court did not err even though one party received $78,000 and the other only $66,000), review denied (Minn. Feb 18, 1999); see also Prahl v. Prahl, 627 N.W.2d 698, 705 (Minn. App. 2001) (finding that a marital-property distribution favoring one party by more than 12% is equitable).  Here, although the marital-property division is not equal, we do not find it to be inequitable.  We conclude that the district court did not abuse its discretion by allocating to respondent the entire increase in the value of the accounts in question.

Affirmed.