In re the Marriage of: Jason Scott Luedtke, petitioner, Respondent, vs. Kimberly Noelle Luedtke, f/k/a Kimberly Noelle Bemis, Appellant.
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Minn. Stat. § 480 A. 08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
A04-2347
In re the Marriage of:
Jason Scott Luedtke, petitioner,
Respondent,
vs.
Kimberly Noelle Luedtke, f/k/a Kimberly Noelle Bemis,
Appellant.
Filed December 6, 2005
Affirmed
Kalitowski, Judge
Wright County District Court
File No. FX-03-0931
Jason Scott Luedtke, 21601 Linden Way, Rogers, MN 55347 (pro se respondent)
Karim El-Ghazzawy, El-Ghazzawy Law Offices, LLC, 701 Fourth Avenue South, Suite 300, Minneapolis, MN 55415 (for appellant)
Considered and decided by Minge, Presiding Judge; Kalitowski, Judge; and Shumaker, Judge.
U N P U B L I S H E D O P I N I O N
KALITOWSKI, Judge
In this appeal from a marital-dissolution judgment, appellant Kimberly Noelle Luedtke argues that the district court: (1) abused its discretion by awarding respondent sole physical custody of the parties' children; (2) abused its discretion by not allowing appellant more time to cross-examine the custody evaluator; (3) abused its discretion by prohibiting appellant's expert from testifying at trial; (4) clearly erred in determining the marital value of respondent's business; (5) abused its discretion by misallocating the parties' debt; (6) clearly erred by finding that respondent satisfied the May 2003 mortgage payment in accordance with the order for protection; (7) abused its discretion by denying appellant spousal maintenance; and (8) abused its discretion by denying appellant's request for need- and conduct-based attorney fees. We affirm.
D E C I S I O N
I.
A district court has broad discretion in determining custody of the parties' children. Durkin v. Hinich, 442 N.W.2d 148, 151 (Minn. 1989); Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). This court's review of custody decisions is narrow and "limited to whether the [district] court abused its discretion by making findings unsupported by the evidence or by improperly applying the law." Silbaugh v. Silbaugh, 543 N.W.2d 639, 641 (Minn. 1996) (citation omitted). This court will sustain a district court's findings unless they are clearly erroneous. Pikula v. Pikula, 374 N.W.2d 705, 710 (Minn. 1985). When there is conflicting evidence, appellate courts defer to the district court's determinations of credibility. Sefkow v. Sefkow, 427 N.W.2d 203, 211 (Minn. 1988).
District courts make custody determinations based on the best interests of the child, and balance the 13 factors enumerated in Minn. Stat. § 518.17, subd. 1 (2004). The law "leaves scant if any room for an appellate court to question the trial court's balancing of best-interest considerations." Vangsness v. Vangsness, 607 N.W.2d 468, 477 (Minn. App. 2000).
Appellant contends that the district court abused its discretion by awarding respondent sole physical custody of the children because the court's findings of fact were clearly erroneous. Specifically, appellant challenges the district court's findings regarding: (1) the mental and physical health of the parties; (2) the effect domestic abuse had on the children; and (3) the interaction and interrelationship of the children with their siblings. In addition, appellant challenges the court's reliance on the custody evaluation. We conclude that the record supports the district court's findings.
1. Mental and physical health
The district court determined that appellant's methamphetamine use and dependency endangers her children, but that respondent does not have health issues that affect his parenting ability. The record shows that appellant (1) admitted using methamphetamine on a daily basis for many months; (2) was arrested for possessing the drug; (3) denied ever having a problem or needing treatment; and (4) denied that her use affected her parenting ability. In contrast, the parties presented conflicting testimony about respondent's methamphetamine use. The district court found that respondent only experimented with methamphetamine in the past, and, therefore, ruled that his past use did not affect his ability to parent. We defer to the district court's credibility determinations where the parties present conflicting evidence. Sefkow, 427 N.W.2d at 211. On this record, we conclude that it was not clearly erroneous for the district court to find that appellant's methamphetamine use poses a threat to the children's safety.
2. Effect of domestic abuse on the children
At trial, appellant presented evidence that respondent assaulted her on several occasions. The district court determined that any acts of abuse that may have occurred between the parties did not affect the children, and, therefore, the acts did not control the custody decision. In considering the incidents, the court found that the children were not, for the most part, present or involved. Additionally, the court emphasized that no one, including appellant or the children, has alleged that respondent ever abused the children. Based on this record, we cannot say it was clearly erroneous for the district court to find that the acts of abuse did not affect the children.
We reject appellant's argument that there must be a presumption against awarding sole physical custody to the parent who has a history of abusing the other parent. Appellant cites Minn. Stat. § 518.17, subd. 2(d) (2004), which provides that "the court shall use a rebuttable presumption that joint legal or physical custody is not in the best interests of the child if domestic abuse, as defined in section 518B.01, has occurred between the parents." But the statute does not state, as a matter of law, that the court must give custody to a parent with a history of methamphetamine use rather than a parent with an abusive history. In addition, findings of abuse do not necessarily require a district court to deny a parent's request for child custody. See, e.g., Holmberg v. Holmberg, 529 N.W.2d 456, 460-61 (Minn. App. 1995) (affirming district court's decision that the father was the most appropriate custodial parent even though he had sexually abused his niece ten years earlier), review denied (Minn. May 31, 1995); Uhl v. Uhl, 413 N.W.2d 213, 217 (Minn. App. 1987) (upholding custody award where reported abuse appeared to be non-repetitive and a response to great stress). We conclude that the district court did not abuse its discretion in determining that the alleged acts of abuse do not necessarily control the custody determination.
3. Sibling relationship
We also reject appellant's argument that the children should live with appellant and her son because the district court made erroneous findings regarding the relationship between the children and their half-siblings. The court found that both parties' children from previous relationships "have developed an important bond with the [children] and it is important that these relationships be maintained." Appellant challenges these findings and argues that the children are closer to appellant's son because they have lived with him their entire lives. But the children's previous living arrangement does not negate the district court's finding that the children have close relationships with both appellant's and respondent's other children. Thus, we conclude that the district court's findings were not clearly erroneous.
4. Custody evaluation
Finally, we reject appellant's argument that the district court should not have relied on the custody evaluation report. This court must give deference to the district court's assessment of witness credibility. Minn. R. Civ. P. 52.01; Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988). Here, the district court gave both parties an opportunity to examine the custody evaluation at trial. Thus, we conclude that it was not clearly erroneous for the court to find the evaluator's testimony and report credible.
In conclusion, the district court balanced the 13 factors listed in Minn. Stat. § 518.17, subd. 1, and determined that appellant's drug use poses a greater risk to the children than do respondent's alleged acts of domestic abuse. Because we defer to the district court's credibility determinations, we conclude that the district court did not abuse its discretion by deciding that it would serve the children's best interests to award respondent sole physical custody.
II.
Minnesota law provides that a party to the proceeding may call the custody investigator for cross-examination at the hearing. Minn. Stat. § 518.167, subd. 3 (2004). "[T]he manner and scope of cross-examination is left to the discretion of the [district] court" and this court will reverse the determination only if the district court abused its discretion. Murray v. Walter, 269 N.W.2d 47, 49 (Minn. 1978); see also Minn. R. Evid. 611(a) (stating that the district court exercises "reasonable control over the mode and order of interrogating witnesses and presenting evidence"). The circumstances of each case determine the proper limits of cross-examination. Murray, 269 N.W.2d at 49. Here, we reject appellant's argument that the district court did not allow her sufficient time to cross-examine the custody evaluator.
The record shows that during cross-examination, appellant's counsel asked the evaluator about a range of topics including: the evaluator's education and background, the evaluation and methodology that the evaluator used, and the parties' behaviors. Appellant does not explain why she needed more time to cross-examine the custody evaluator or what testimony she expected to elicit. We conclude that the district court did not abuse its discretion by limiting appellant's cross-examination of the custody evaluator.
III.
The district court has discretion in determining whether to exclude expert witness testimony and its decision may not be reversed unless there is a clear abuse of discretion. Dunshee v. Douglas, 255 N.W.2d 42, 47 (Minn. 1977). Here, the district court did not allow appellant to call her expert witness to testify regarding the deficiencies of the custody evaluation. The court based its decision on its findings that appellant did not properly disclose the witness by the discovery deadline and that appellant failed to provide adequate foundation for the testimony of the witness. Specifically, the court found that because the expert's testimony did not relate to the specific facts of this case, the expert was not qualified to question the custody study's conclusions, opinions, or factual findings.
Decisions regarding sufficiency of foundation for expert testimony are within the district court's discretion, and this court will not reverse unless the district court clearly abused its discretion. Sorensen v. Maski, 361 N.W.2d 498, 500 (Minn. App. 1985). Although there is some ambiguity in the court's order setting the deadline for disclosure, we conclude that even if appellant's witness disclosure was timely, the district court did not abuse its discretion by excluding the testimony of appellant's expert.
IV.
A district court's determination of the specific value of an asset is a finding of fact that this court should not set aside unless it is clearly erroneous on the record as a whole. Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001). "[V]aluation is necessarily an approximation in many cases" and, therefore, the value that the district court determines only needs to fall "within a reasonable range of figures." Id. (citation omitted). The court may begin its valuation analysis with the business's book value, but should also consider the following factors:
1. The nature of the business and the history of the enterprise from its inception.
2. The economic outlook in general and the condition and outlook of the specific industry in particular.
3. The book value of the stock and the financial condition of the business.
4. The earning capacity of the company.
5. The dividend-paying capacity.
6. Whether or not the enterprise has goodwill or other intangible value.
7. Sales of the stock and the size of the block of the stock to be valued.
8. The market price of stocks of corporations engaged in the same or a similar line of business having their stocks traded in a free and open market.
Nardini v. Nardini, 414 N.W.2d 184, 190 (Minn. 1987) (citation omitted). "[A] sound valuation requires not only the consideration of all relevant facts but also the application of common sense, sound and informed judgment, and reasonableness to the process of weighing those facts and determining their aggregate significance." Id. (quotation omitted). Here, appellant contends that the court's determination of the marital value of respondent's business was clearly erroneous. We disagree.
Where a court values a closely held business or sole proprietorship, the court must exclude from its determination "the value of personal services rendered by the owner." Roberson v. Roberson, 296 Minn. 476, 477, 206 N.W.2d 347, 348 (1973); see also Rogers v. Rogers, 296 N.W.2d 849, 853 (Minn. 1980); Bateman v. Bateman, 382 N.W.2d 240, 245-46 (Minn. App. 1986), review denied (Minn. Apr. 24, 1986). Here, the district court found that respondent's business "is entirely a personal service business" that "relies heavily on the sole owner's services for any value." Consequently, the court excluded the value of respondent's personal services and determined that the business's marital value only included the value of the business's physical assets. Based on respondent's testimony, the court concluded that the marital value was $1,000.
We reject appellant's contention that the district court erred by refusing to adopt parts of her expert's valuation report. The district court found that appellant's expert provided a severely flawed analysis, and therefore, was not credible. The court stated that "[appellant's] expert merely took the information given to her by [appellant] at its word and did no further investigation into the records, clients, operations, or any other aspect of the business." Additionally, the district court found that the expert did not give adequate weight to the nature of the business, specifically, that respondent's business is entirely a personal service business. The record supports these findings.
Further, we reject appellant's argument that the district court erroneously ignored appellant's contributions to the business and the business's goodwill value. Although appellant worked as an office manager for the business during the parties' marriage, the business existed only because of the services that respondent provided. Additionally, the court considered the Nardini factors, which include goodwill value, but concluded that the nature of respondent's business was the most significant factor. Based on this record, we conclude that it was not clearly erroneous for the district court to find that the business had a marital value of $1,000.
V.
Courts apportion debt as part of the marital property settlement and treat the division of marital debts in the same manner as the division of assets. Justis v. Justis, 384 N.W.2d 885, 889 (Minn. App. 1986), review denied (Minn. May 29, 1986). The district court has broad discretion in apportioning the parties' debt, but abuses its discretion if the findings of fact are against the logic and the facts on the record. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984); Dahlberg v. Dahlberg, 358 N.W.2d 76, 80 (Minn. App. 1984). Although apportionment must be just and equitable, it need not be mathematically equal. Ruzic v. Ruzic, 281 N.W.2d 502, 505 (Minn. 1979); see also Minn. Stat. § 518.58 (2004). Therefore, a court may hold a party liable for marital debts even though the other party received the benefit of payment. Lynch v. Lynch, 411 N.W.2d 263, 266 (Minn. App. 1987), review denied (Minn. Oct. 30, 1987).
In determining a just and equitable property division, the district court should consider "the length of the marriage, any prior marriage of a party, the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, needs, opportunity for future acquisition of capital assets, and income of each party." Minn. Stat. § 518.58, subd. 1.
Here, the district court ordered an approximately equal allocation of the marital debts. The district court directed the sale of the parties' homestead and ordered the parties to use the proceeds to pay most of their debt, including: expenses of the sale of the homestead, the first and second mortgages, the parties' 2002 tax liability, respondent's 2003 tax liability, and several credit card debts. Additionally, the court ordered appellant to pay the debts on four credit card accounts that were not otherwise paid by the sale proceeds and ordered respondent to pay any remaining marital debts. We reject appellant's argument the district court abused its discretion by ordering this debt allocation.
First, the record does not support appellant's assertion that respondent's income exceeds his expenses by $1,200 each month. The district court found that respondent's net monthly income is approximately $4,238 while his expenses, for himself alone, are approximately $3,000 per month. The court did not make any findings regarding what his children's expenses would be in his care. Considering that the court awarded respondent sole physical custody of the children, respondent's expenses will certainly exceed $3,000 per month.
Second, although the record reflects that respondent earns more than appellant, that difference is not sufficient for appellant to avoid responsibility for marital debt. The parties were married only for a short time and they accumulated considerable debt. We therefore conclude that the district court did not abuse its discretion in apportioning the debts in an approximately equal manner.
VI.
Appellant contends that it was clearly erroneous for the district court to find that respondent satisfied the May 2003 mortgage payment in accordance with the May 9, 2003 order for protection. That order directed respondent to make the May 2003 mortgage payment. The parties presented conflicting testimony regarding who actually made the payment, but the district court found respondent's testimony more credible. This court defers to district court determinations of credibility and therefore, we conclude that the court's finding of fact was not clearly erroneous.
VII.
This court reviews a district court's 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 if the record does not support its findings of fact or if the court improperly applies the law. Id. (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 also Minn. R. Civ. P. 52.01.
A court may grant maintenance if it finds that the spouse seeking maintenance:
(a) lacks sufficient property, including marital property apportioned to the spouse, to provide for reasonable needs of the spouse considering the standard of living established during the marriage, especially, but not limited to, a period of training or education, or
(b) is unable to provide adequate self-support, after considering the standard of living established during the marriage and all relevant circumstances, through appropriate employment, or is the custodian of a child whose condition or circumstances make it appropriate that the custodian not be required to seek employment outside the home.
Minn. Stat. § 518.552, subd. 1 (2004). Appellant challenges the court's findings, claiming that the district court abused its discretion by denying her spousal maintenance. We disagree.
Minn. Stat. § 518.552 requires an initial determination that the party seeking maintenance demonstrates a need for maintenance. Prahl v. Prahl, 627 N.W.2d 698, 703 (Minn. App. 2001) (holding that because appellant did not currently need maintenance, the district court was not required to calculate respondent's ability to pay). But here the district court determined that appellant is capable of supporting herself because the parties were married only for a short period of time, appellant worked full time during the marriage, and appellant has marketable skills that could readily lead her to finding better paying employment. The record supports these findings.
The parties were married for less than six years. During this time, appellant worked full time as an office manager for respondent's business, developing skills that she can use in her future employment. Additionally, appellant testified that she has the ability to work as an office manager and make an annual salary of $45,000. Thus, we conclude that the district court was not required to consider respondent's ability to pay maintenance.
We reject appellant's argument that the district court erred by not awarding her temporary maintenance to start her own business. Spousal maintenance is appropriate where a party needs support to gain education or training to become self-sufficient. See Strauch v. Strauch, 401 N.W.2d 444, 448-49 (Minn. App. 1987); Fernandez v. Fernandez, 373 N.W.2d 636, 638 (Minn. App. 1985). Here, the district court found that it could not determine appellant's exact goals and that it would be unfair to require respondent to fund appellant's project while appellant already possesses skills that could lead to gainful employment. We agree.
Appellant testified that she wanted to start a business that bought and sold real estate, but that she did not have any experience in that field and that she has done little to further her goal. She also testified that she looked into becoming licensed as a realtor but then decided against it. Based on this record, we conclude that the district court did not abuse its discretion by denying appellant spousal maintenance.
VIII.
The district court has discretion to decide whether to award fees under Minn. Stat. § 518.14, subd. 1 (2004), and we will not disturb its decision unless there is a clear abuse of discretion. Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn. App. 1998), review denied (Minn. Feb. 18, 1999). Minn. Stat. § 518.14, subd. 1, provides that a court "shall" award need-based attorney fees to a party if it finds
(1) that the fees are necessary for the good-faith assertion of the party's rights in the proceeding and will not contribute unnecessarily to the length and expense of the proceeding;
(2) that the party from whom fees, costs, and disbursements are sought has the means to pay them; and
(3) that the party to whom fees, costs, and disbursements are awarded does not have the means to pay them.
A court may also award fees "against a party who unreasonably contributes to the length or expense of the proceeding." Id. Appellant contends that the district court abused its discretion by failing to award need-based attorney fees and by awarding insufficient conduct-based attorney fees. We disagree.
Here, the record shows that both parties have considerable debt and that neither has the ability to pay his or her attorney fees. When the party from whom need-based attorney fees are sought lacks the ability to pay the fees, a district court's refusal to award need-based fees is "not improper." See Peterka v. Peterka, 675 N.W.2d 353, 360 (Minn. App. 2004). Thus, we conclude that the district court did not abuse its discretion by denying appellant need-based attorney fees.
We also reject appellant's argument that the district court awarded her an insufficient amount of conduct-based attorney fees. The district court ordered respondent to pay appellant $275 for failing to fully comply with appellant's discovery requests. The court explained that it did not award more because respondent's discovery responses were not as incomplete as appellant had alleged. Based on these findings, we cannot say the district court abused its discretion in awarding appellant $275 in conduct-based attorney fees.
Affirmed.
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