In re the Marriage of: Kari Lynn Fahey, petitioner, Appellant, vs. Kenneth Martin Fahey, Respondent.

In re the Marriage of: Kari Lynn Fahey, petitioner, Appellant, vs. Kenneth Martin Fahey, Respondent. A04-1927, Court of Appeals Unpublished, August 2, 2005.

This opinion will be unpublished and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

A04-1927

 

In re the Marriage of:

Kari Lynn Fahey, petitioner,

Appellant,

 

vs.

 

Kenneth Martin Fahey,

Respondent.

 

Filed August 2, 2005

Affirmed in part, reversed in part, and remanded

Halbrooks, Judge

 

 

Carver County District Court

File No. F0-02-616

 

R. Kathleen Morris, Morris & Wolf, 404 First Avenue East, Shakopee, MN 55379 (for appellant)

 

Anne Heimkes Tuttle, 1275 Ramsey Street, Suite 300, Shakopee, MN 55379 (for respondent)

 

            Considered and decided by Halbrooks, Presiding Judge; Lansing, Judge; and Minge, Judge.

U N P U B L I S H E D   O P I N I O N

HALBROOKS, Judge

            Appellant challenges the district court's property distribution in a marital-dissolution action, arguing that (1) the district court erred by determining that respondent has an interest in a lake cabin that is titled in appellant's name and that appellant has no interest in one of the parties' life-insurance policies; and (2) the district court misvalued the home purchased by respondent before the parties' marriage.  Because the district court erred in its division of the parties' property, we reverse the district court's property award and remand.  But because the district court's valuation of the home was not clearly erroneous, we affirm the value assigned to the home by the district court. 

FACTS

            Appellant Kari Lynn Fahey and respondent Kenneth Martin Fahey began living together in August 1990 and were married on August 26, 1995.  They have one child together.  The parties separated on July 27, 2002, and sought a dissolution.

            The parties stipulated to custody of their child but submitted the issues of child support and property distribution to the district court.  The district court did not conduct a hearing, but decided the issues following both parties' submission of affidavits and exhibits.

            One of the property issues to be resolved concerns a lake cabin that is titled in appellant's name only.  The district court determined that the lake cabin was purchased by both parties for $45,000 on August 22, 1990, when the parties began living together, but was placed solely in appellant's name so that the parties could homestead the cabin and, as a result, pay less property tax.  In reaching its decision, the district court noted that appellant used child-support payments that she received for her child from a prior relationship to make the mortgage payments for the cabin, while respondent paid other household expenses and provided financial support for appellant and her child.  The district court characterized the purchase of the cabin as a joint venture because respondent used funds that he would have used to pay for the cabin if appellant had used her child-support payments for her child's expenses.  Based on its determination that the purchase of the cabin was a joint venture, the district court concluded that the cabin is a marital asset and found its fair market value to be $150,500.  Title to the cabin was awarded to appellant.

            A second property issue involves the home in which the parties lived during the marriage.  Respondent purchased the home for $111,000 on April 17, 1987, before the parties lived together or married.  Both parties provided evidence to the district court regarding the mortgage balance and the fair market value of the home at three points in timewhen the home was purchased in 1987, in 1995 when the parties married, and at the time of the dissolution hearing.  The district court found that appellant acquired a marital interest in the home on August 22, 1990, when the parties began to live together.  "By extrapolation," the district court found that the home's value at that time was $139,000, that the mortgage balance was $92,000, and that respondent's nonmarital interest was $47,000.  At the time of trial, the district court determined that the home's fair market value had increased to $255,000 and concluded that respondent's nonmarital interest was then $66,955.  Title to the home was awarded to respondent.

The district court's initial judgment also dealt with three life-insurance policies.  The district court determined that one policy, Catholic Aid Association #14745200, valued at $20,164, was respondent's nonmarital property and awarded it to him.  The district court awarded the two other policies, valued at $732 and $1,822, to appellant. 

Appellant moved for a new trial, or in the alternative, for an amended order.  Appellant contended, among other things, that the district court erred in determining that respondent has a marital interest in the cabin.  Appellant also argued that the district court did not use a credible method to determine the value of the home and that, if respondent has a marital interest in the cabin, appellant should have a greater marital interest in the home. 

The district court filed an amended order on August 12, 2004, in which it reiterated its conclusion that the purchase of the cabin was a joint venture and did not alter its previous determination of the parties' respective property interests.  But the district court recalculated the value of the parties' home.  The district court again determined the fair market value of the home and the mortgage balance at various points in timethe time of respondent's purchase in 1987, in 1990 when the parties began living together, in 1995 when the parties married, and at the time of the dissolution hearing.  The district court concluded that respondent's then-current nonmarital interest was $73,950 and the marital interest was $137,213.  The mortgage balance as of the hearing was $36,337.  The district court again awarded title to the cabin to appellant and title to the home to respondent. 

In its amended order, the district court noted that the parties owned four, rather than three, life-insurance policies.  The court awarded respondent the policy that was in his name that it had previously awarded him and awarded the other three policies to appellant.  This appeal follows.

D E C I S I O N

I.

            Because the district court treated both the cabin and the house as marital property, except for the interest in the house that respondent acquired before the parties started cohabiting in August 1990, the district court implicitly ruled that the parties acquired marital interests in those assets while cohabiting before their marriage.  Whether property is marital or nonmarital is a legal question reviewed de novo, but one on which appellate courts defer to the district court's underlying findings of fact.  Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002); Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997).  If an appellate court is "left with the definite and firm conviction that a mistake has been made," however, the appellate court may find the underlying facts "to be clearly erroneous, notwithstanding the existence of evidence to support such findings."  Olsen,562 N.W.2d at 800 (quotation omitted). 

            By statute, "marital property" is

property, real or personal . . . acquired by the parties, or either of them . . . at any time during the existence of the marriage relation between them . . . but prior to the date of valuation under section 518.58, subdivision 1.  All property acquired by either spouse subsequent to the marriage and before the valuation date is presumed to be marital property regardless of whether title is held individually or by the spouses in a form of co-ownership such as joint tenancy, tenancy in common, tenancy by the entirety, or community property. . . . The presumption of marital property is overcome by a showing that the property is nonmarital property.

 

Minn. Stat. § 518.54, subd. 5 (2004).  Because marital property is property acquired during a marriage, the district court erred in treating as marital the interests acquired in the cabin and house during the parties' premarital cohabitation. 

            That the parties' marital interests in the cabin and house are limited to the interests they acquired during their marriage, however, does not mean that the parties are precluded from acquiring nonmarital interests in those assets during their cohabitation.  Nonmarital property is

property real or personal, acquired by either spouse before, during, or after the existence of their marriage, which

 

            (a) is acquired as a gift, bequest, devise or inheritance made by a third party to one but not to the other spouse;

 

            (b) is acquired before the marriage;

 

            (c) is acquired in exchange for or is the increase in value of property which is described in clauses (a), (b), (d), and (e);

 

            (d) is acquired by a spouse after the valuation date;  or

 

            (e) is excluded by a valid antenuptial contract.

 

Id.  Because respondent bought the house before the parties' marriage, the district court correctly determined that he has a nonmarital interest in the house.  But because marital interests are statutorily limited to interests acquired during a marriage, the district court's calculation of the extent of the marital interests in the cabin and the house as if those interests had come into existence when the parties started their premarital cohabitation is erroneous.  Therefore, we reverse the district court's determinations of the parties' marital and nonmarital interests in the cabin and house to the extent that the district court's calculation treats interests the parties acquired in those assets during their premarital cohabitation as marital.[1]

II.

            Addressing its treatment of the parties' interests in the cabin and house, the district court stated:

To the extent that an appellate [c]ourt should find that [appellant] is entitled to a non-marital interest in the cabin property, or the [r]espondent is entitled to a non-marital interest in the homestead from August 24, 1990 to the date of the marriage, it is this [c]ourt's intention to award a portion of these non-marital interests in a manner consistent with the final outcome in this [j]udgment and [d]ecree to avoid unfair hardship pursuant to Minn. Stat. [§] 518.58, [s]ubd. 2 [2004] and unjust enrichment consistent with In re Estate of Palmen, 588 N.W.2d 493 (Minn. 1999). 

 

A.        Unfair Hardship

            If, in a dissolution, a district court finds that either spouse's resources, including marital property awarded to that spouse, are "so inadequate as to work an unfair hardship," the district court may apportion to that spouse up to half of the other spouse's nonmarital property "to prevent the unfair hardship."  Minn. Stat. § 518.58, subd. 2 (2004).  A district court apportioning a spouse's nonmarital property to avoid an unfair hardship "shall" make findings addressing certain statutorily listed factors.  Id.; see Minn. Stat. § 645.44, subd. 16 (2004) (stating "‘[s]hall' is mandatory"); see also Reynolds v. Reynolds, 498 N.W.2d 266, 272 (Minn. App. 1993) (stating findings on parties' nonmartial assets "[are] necessary to comply with Minn. Stat. § 518.58, subd. 2").  Here, the district court did not make findings detailing the extent of the hardship present or whether that hardship is sufficient to support an apportionment of nonmarital property.  See Ward v. Ward, 453 N.W.2d 729, 733 (Minn. App. 1990) (noting that "[a] very severe disparity between the parties is required to sustain a finding of unfair hardship necessary to apportion nonmarital property"), review denied (Minn. June 6, 1990).  Nor did the district court make the other statutory findings required by Minn. Stat. § 518.58, subd. 2, to support the apportionment of nonmarital property.  Therefore, on this record, we cannot affirm the district court's treatment of nonmarital interests in the cabin and house based on the alternative rationale of unfair hardship under Minn. Stat. § 518.58, subd. 2. 

B.        Unjust Enrichment

            The Palmen case cited by the district court involved an unmarried cohabitant's claim against the estate of the claimant's deceased cohabitant for the claimant's contributions to a cabin titled solely in the name of the deceased cohabitant.  588 N.W.2d at 494.  The district court ruled that, under Minnesota's anti-palimony statutes, it lacked jurisdiction to address the claim.  This court affirmed; but the supreme court reversed, holding that the anti-palimony statutes did not apply and that the claimant was "in the same position as any other individual seeking to recover on the theory of unjust enrichment."  Id. at 496-97.  The supreme court remanded for the district court to address the merits of the claim.  Id. at 497.  While the district court in this case failed to explicitly address the anti-palimony statutes, it did attempt to divide the property under Palmen.  We, therefore, infer that the district court concluded that the jurisdictional bar of the anti-palimony statutes does not apply here. 

            Appellant argues that the anti-palimony statutes prohibit respondent from receiving any interest in the cabin, which is titled in her name.  Minnesota's anti-palimony statute provides:

If sexual relations between the parties are contemplated, a contract between a man and a woman who are living together in this state out of wedlock, or who are about to commence living together in this state out of wedlock, is enforceable as to terms concerning the property and financial relations of the parties only if:

(1) the contract is written and signed by the parties, and

                        (2) enforcement is sought after termination of the relationship.

 

Minn. Stat. § 513.075 (2004).  Minn. Stat. § 513.076 (2004) states that, unless the individuals have a written contract as described in Minn. Stat. § 513.075, the courts lack jurisdiction to hear any claim by an individual to the property of another individual "if the claim is based on the fact that the individuals lived together in contemplation of sexual relations and out of wedlock within or without this state."  Regarding these statutes, the supreme court has stated that this jurisdictional bar applies "only when the sole consideration for a contract between cohabiting parties is their contemplation of sexual relations . . . out of wedlock" and that "a claim by an individual to recover, preserve, or protect his or her own property, which he or she acquired independent of any service contract related to cohabitation is enforceable in this state."  Palmen, 588 N.W.2d at 495 (quotations omitted).

            Here, the district court found that there was consideration other than contemplation of sexual relations out of wedlock; it found that the parties purchased the cabin together so that they could both benefit from owning it.  While the record is unclear as to the amount that respondent contributed to support appellant and pay her expenses, the district court found that respondent took care of other living expenses for appellant and her child while she paid the cabin's mortgage.  

The district court characterized the cabin purchase as a joint venture of the parties.  A joint venture has four elements.  See Powell v. Trans Global Tours, Inc., 594 N.W.2d 252, 256 (Minn. App. 1999) (listing elements of joint venture).  The four-part joint-venture test, however, is not always strictly applied in the context of the anti-palimony statutes.  See In re Estate of Eriksen, 337 N.W.2d 671, 674 (Minn. 1983) (noting, in addressing applicability of anti-palimony statutes' jurisdictional bar, that cohabitant's claim was "similar to the claim made by a joint venturer or partner," and hence that jurisdictional bar was inapplicable, but not addressing elements of a joint venture).  What is required is either "an agreement supported by consideration independent of the couple's living together in contemplation of sexual relations . . . out of wedlock or that [the claimant] is seeking to protect [his or] her own property and is not seek[ing] to assert any rights in the property of a cohabitant."  Palmen, 588 N.W.2d at 496 (internal quotation marks omitted) (second and third alteration in original).  Here, the district court did not detail the existence or terms of any agreement that may have existed between the parties.  Further, the district court both failed to address the extent of any premarital interest that appellant may have in the cabin or the house and understated the extent of respondent's premarital interest in the house.  Thus, we cannot address whether either party was trying to protect any such interests.  Hence we cannot review the district court's determination that the jurisdictional bar of the anti-palimony statutes does not apply here. 

III.

            Appellant challenges the district court's valuation of the home.  We will reverse a district court's asset valuation only if the valuation is clearly erroneous.  Prahl v. Prahl, 627 N.W.2d 698, 704 (Minn. App. 2001).  Because valuation is often an approximation, deference to the district court is proper, so long as the valuation falls within a reasonable range.  Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001).  If the value that the district court assigns to an asset falls within the range of credible estimates provided by witnesses, the district court's value need not exactly match the value assigned by any of the witnesses.  Hertz v. Hertz, 304 Minn. 144, 145, 229 N.W.2d 42, 44 (1975).

Here, both parties submitted appraisals of the home.  Appellant asserted that the fair market value at the time of the marriage in 1995 was $125,000 and submitted a report from a certified appraiser to support her claim.  Respondent submitted a report from a real-estate agency that estimated the value of the home in 1995 as $165,000.  Respondent's expert stated that the fair market value of the home at the time of trial was $240,000, while appellant's expert valued the home at $255,000.  The district court found that the fair market value of the home at the time of trial was $247,500, splitting the difference between the two appraisals.  Because this valuation is within the range of credible estimates supplied to the court, we affirm that valuation.  See Maurer, 623 N.W.2d at 606.  Similarly, the district court found that the fair market value of the home at the time of the marriage was $165,000.  Because there is credible evidence in the record supporting the district court's finding, we affirm that valuation. 

The court then found "[b]y extrapolation" that the fair market value of the home when the parties started living together in 1990 was $132,600 and the mortgage balance was $93,693.  The district court then concluded that, based on these values, respondent's nonmarital interest in 1990 was $38,907, or 29% of the home's value.  Because the district court's estimate of the fair market value in 1990 is reasonable, we defer to the district court's finding.  See Maurer, 623 N.W.2d at 606. 

            In summary, we reverse the district court's division of the cabin, home, and insurance policy, and we remand for the district court to redetermine the extent of the parties' marital and nonmarital interests in those assets, and, to the extent necessary, to address the applicability of the anti-palimony statutes and whether to apportion one party's nonmarital property.  Because the district court's valuations of the home are supported by the record, we affirm the values assigned to the home.  On remand, it is within the district court's discretion to reopen the record to consider additional evidence.  See Keilley v. Keilley, 674 N.W.2d 770, 779 (Minn. App. 2004).

            Affirmed in part, reversed in part, and remanded.

[1] A similar analysis addresses appellant's argument that the district court erred in awarding respondent an insurance policy as his nonmarital property.  While it is undisputed that the policy was acquired before the parties' marriage, the record shows that policy-premium payments were made during the marriage.  Therefore, at least part of the value of that policy is presumptively marital under Minn. Stat. § 518.54, subd. 5.  Here, the district court's findings do not explain why that presumption was rejected.