In re the Marriage of: Lynne Singer Grossman, petitioner, Appellant, vs. Andrew Charles Grossman, Respondent.

In re the Marriage of: Lynne Singer Grossman, petitioner, Appellant, vs. Andrew Charles Grossman, Respondent. A05-2045, Court of Appeals Unpublished, July 3, 2006.

This opinion will be unpublished and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

A05-2045

 

In re the Marriage of:

 

Lynne Singer Grossman, petitioner,

Appellant,

 

vs.

 

Andrew Charles Grossman,

Respondent.

 

Filed July 3, 2006

Affirmed

Kalitowski, Judge

 

Hennepin County District Court

File No. DC 278758

 

M. Sue Wilson, Amy Yanik Meisel, J. Lee Novelli, M. Sue Wilson Law Offices, P.A., Two Carlson Parkway, Suite 150, Minneapolis, MN 55447 (for appellant)

 

Edward L. Winer, Ben M. Henschel, Moss & Barnett, P.A., 4800 Wells Fargo Center, 90 South Seventh Street, Minneapolis, MN 55402-4129 (for respondent)

 

            Considered and decided by Hudson, Presiding Judge; Kalitowski, Judge; and Worke, Judge.

U N P U B L I S H E D   O P I N I O N

KALITOWSKI, Judge

            Appellant Lynne Singer Grossman challenges the consensual special magistrate's orders regarding the parties' dissolution, arguing that the consensual special magistrate (1) erred in enforcing the parties' premarital agreement; (2) erred in determining that respondent's nonmarital property includes certain personal property items; (3) abused its discretion by failing to deviate upward from the child support guidelines when awarding appellant child support; (4) abused its discretion in ordering the parties to pay for their own work-related daycare expenses; and (5) abused its discretion by declining to award appellant need-based attorney fees.  We affirm.

D E C I S I O N

 

I.

            Whether a premarital agreement (PMA) is valid and enforceable is a question of law, which this court reviews de novo.  Pollock-Halvarson v. McGuire, 576 N.W.2d 451, 454 (Minn. App. 1998), review denied (Minn. May 28, 1998).  The party contesting the PMA's validity has the burden of proof.  Minn. Stat. § 519.11, subd. 5 (2004).

            Minnesota law generally favors PMAs.  Hafner v. Hafner, 295 N.W.2d 567, 571 (Minn. 1980).  But a statutorily valid PMA must satisfy procedural and substantive fairness requirements.  Pollock-Halvarson, 576 N.W.2d at 455.  "The procedural review focuses on determining whether at the inception the agreement was fairly procured."  McKee-Johnson v. Johnson, 444 N.W.2d 259, 265 (Minn. 1989).  The parties meet the procedural fairness requirement when "(a) there is a full and fair disclosure of the earnings and property of each party, and (b) the parties have had an opportunity to consult with legal counsel of their own choice."  Minn. Stat. § 519.11, subd. 1 (2004); see also McKee-Johnson, 444 N.W.2d at 265-66 (addressing the statutory requirements for PMAs). 

            Courts decide substantive fairness on a case-by-case basis.  In re Aspenson, 470 N.W.2d 692, 696 (Minn. App. 1991).  First, the court must review the PMA at the time of execution and assess the potential for overreaching by one party over the other due to the parties' existing relationship.  Id.  Second, the court must scrutinize the PMA at the time of enforcement "to determine if the premises upon which the agreement was originally based ‘have so drastically changed that enforcement would not comport with the reasonable expectations of the parties at the inception [so] that to validate them at the time of enforcement would be unconscionable.'"  Id. (alteration in original) (quoting McKee-Johnson, 444 N.W.2d at 267).  "[T]he court should review the substantive fairness of the agreement in the light of circumstances existing at the inception."  McKee-Johnson, 444 N.W.2d at 267.  In addition, the district court must "strike a balance between the law's policy favoring freedom of contract between informed consenting adults, and substantive fairness."  Id. at 267-68.

            Here, appellant and respondent executed a PMA two days before they married on September 8, 1996.  On August 22, 2002, appellant filed for divorce.  By stipulated findings and order, the district court appointed a consensual special magistrate (CSM) to resolve all issues including the validity of the PMA.  In October 2003, the CSM determined that the PMA was valid and enforceable.  Appellant now challenges the substantive fairness of the PMA at the time of enforcement and argues that the CSM erred in enforcing the parties' premarital agreement. 

            First, appellant argues that the CSM erred by not assessing the parties' reasonable expectations at the agreement's inception to determine if a change of circumstances had occurred to make enforcement unconscionable.  Appellant contends that the CSM instead assessed whether the changes in circumstances were foreseeable.  But appellant has not presented any caselaw that distinguishes reasonable expectations from foreseeability at the time the parties executed their PMA.  Rather, in McKee-Johnson, the Minnesota Supreme Court followed other jurisdictions that had "limited invalidation of contract provision[s] to those which could not have reasonably been foreseen," and it determined that substantive fairness review applies at the time of enforcement.  444 N.W.2d at 267.  And in Pollock-Halvarson, this court determined that an antenuptial agreement was substantively fair because the change in appellant's statutory rights was "fully foreseeable."  576 N.W.2d at 456.  Thus, we conclude that there is no distinction between reasonable expectations and foreseeability at the time the parties executed their PMA.

            Appellant also contends that several changes in circumstances render the PMA unconscionable and unenforceable.  Specifically, appellant argues that she and respondent did not reasonably expect that appellant would stay at home because of the birth of two children in one year and that the parties' standard of living would increase.  We disagree.

            The CSM found that "[t]he parties discussed the possibility of having at least one child."  (Emphasis added.)  We conclude that this finding is not clearly erroneous.  While negotiating the terms of the PMA, the parties agreed that the possibility of children should not impact the property award after the third year of marriage.  And the executed PMA provides that respondent would pay appellant a lump sum property settlement based in part on whether the parties had children within the first two years of marriage.  That agreement also states that the parties have considered that they "may or may not have a child in the future."  Furthermore, before getting married, the parties agreed that appellant would return to work six months after having a child.  And we reject appellant's argument that because the parties only expected one child, the birth of two children is a change of circumstance that renders the PMA unconscionable.

            The record indicates that appellant chose to stay home after her second child was born even though respondent encouraged her to continue her career.  Appellant was in good health and fully capable of returning to work.  The parties hired a full-time nanny and respondent continued to pay for the nanny during the litigation proceedings as required by a temporary court order.  Moreover, even if respondent had encouraged appellant to stay at home, the PMA contemplates that one or both of the parties may or may not be gainfully employed in the future.  Thus, appellant's choice to stay home after the birth of two children is not a change of circumstances that renders the PMA invalid.

            We also conclude that the parties could reasonably expect that their standard of living might increase.  The parties lived a comfortable lifestyle together before their wedding.  They frequently traveled together, including trips to Colorado, Europe, and New York City and a $25,000 honeymoon trip to Africa.  Respondent bought appellant many expensive gifts, including a $16,000 engagement ring.  And respondent spent between $250,000 and $300,000 remodeling his home while appellant was living with him.

            Furthermore, before getting married, the parties frequently discussed respondent's financial situation.  Appellant knew that respondent owned considerable premarital assets including a home valued at $700,000 to $800,000, millions of dollars in cash or investments, and several apartment buildings.  Appellant was aware that respondent's real estate had significantly increased in value.  For example, appellant knew that respondent received a $17,000,000 offer on property that he had purchased a few years earlier for $7,000,000.

            Although respondent's net worth fluctuated between $8,830,000 and $26,000,000 during the parties' marriage, the record suggests that the fluctuation may have corresponded with the rise and fall of real estate and financial markets.  Thus, we conclude that the parties could reasonably expect that they would continue to live comfortably after the wedding and that respondent's property might significantly increase in value.

            Finally, appellant contends that the spousal maintenance and attorney fee waiver provisions of the PMA were not substantively fair at the time of enforcement.  But this case involves a short-term marriage where appellant left the marriage in good health and with several years of experience as an attorney.  In addition, appellant had a higher net worth at the end of the marriage than she did before the wedding.  Appellant's net worth was approximately $30,000 when appellant signed the PMA, and her net worth increased to approximately $1,000,000 by the time of the divorce.

            Thus, the parties' circumstances did not so drastically change during their short-term marriage to render the PMA unconscionable and unenforceable.  We therefore conclude that the CSM did not err in determining that the PMA was substantively fair at the time of enforcement.

II.

 

            "Whether property is marital or nonmarital is a question of law, but a reviewing court must defer to the trial court's underlying findings of fact."  Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997).  Appellant argues that the CSM should have awarded her all household goods in her possession, the Porsche 911, and the Audi All Road because she received those items as gifts from respondent.  Therefore, she contends, the items are not part of respondent's nonmarital property.  We disagree.

            Here, the parties' PMA controls the distribution of personal property and treats all property as nonmarital property.  The PMA allows each party to transfer property to the other party, but requires that the parties make irrevocable gifts in writing.  The record shows that respondent paid for the household goods, the Porsche 911, and all but one of the monthly payments for the Audi.  Appellant now argues that respondent gifted the items to her.  But appellant concedes that respondent did not issue a writing identifying the items as irrevocable gifts.  Thus, we conclude that the CSM did not err in determining that the items are respondent's nonmarital property.

III.

 

            The district court has broad discretion to provide for the support of the parties' children.  Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).  When parents have joint physical custody, the Hortis/Valento formula is the presumptive method for setting support.  Schlichting v. Paulus, 632 N.W.2d 790, 792 (Minn. App. 2001).  "Under that formula, the guideline child support amount is the amount indicated by the guidelines, but only for the periods of time that the other parent has actual custody of the children."  Id.  In addition to the child support guidelines, the court shall consider the following factors when setting child support or when determining whether to deviate from the guidelines:

(1) all earnings, income, and resources of the parents, including real and personal property . . . ;

 

(2) the financial needs and resources, physical and emotional condition, and educational needs of the child or children to be supported; [and]

 

(3) the standard of living the child would have enjoyed had the marriage not been dissolved, but recognizing that the parents now have separate households.

 

Minn. Stat. § 518.551, subd. 5(c) (2004). 

            Courts, however, should not use child support as a means of equalizing income between parents who share physical custody of the children.  Hortis v. Hortis, 367 N.W.2d 633, 635-36 (Minn. App. 1985).  Rather, "[d]isparity in income must be related to the needs of the children.  Absent a showing that the children's needs require a higher level of support from the parent with the higher income, . . . the guidelines should be straightforwardly applied."  Id. at 636.  For example, in State v. Hall, 418 N.W.2d 187, 188, 190 (Minn. App. 1988), review denied (Minn. May 4, 1988), this court concluded that the district court did not abuse its discretion in declining to deviate upward from the child support guidelines even though the father made approximately $116,000 per month.  This court noted that "[t]he maximum appropriate award under the guidelines effectively suggests a normal ‘cap' on the use of support to upgrade a child's standard of living."  Id. at 190.  This court then determined that the evidence and the district court findings showed that the guidelines amount would adequately meet the child's needs.  Id. 

            Here, the CSM awarded appellant $411 a month in child support after determining that respondent's income meets the child support cap and that the parties agreed that respondent would have custody of the children 57% of the time and that appellant would have custody 43% of the time.  Appellant now argues that the CSM abused its discretion in declining to deviate upward from the child support guidelines because (1) respondent has significant earnings, income, and resources; (2) appellant has limited resources to support the children; and (3) the children's needs require a higher level of support.  We disagree.

            First, the record shows that the CSM at least implicitly deviated upward from the child support guidelines.  The CSM ordered respondent to pay $411 a month according to the child support guidelines.  But respondent also agreed to pay the cost of private school tuition for both children and to maintain the children's health insurance premiums.  Those additional costs represent a $3,016.67 monthly upward departure in child support.

            Second, the evidence in the record does not indicate that the children's needs require additional child support.  The record shows that the children do not have special needs and that the children's standard of living will be similar with each parent.  While living with each parent, the children will have their own bedrooms, eat similar quality food, wear similar quality clothing, attend the same school, live in the same neighborhood, and ride in similar quality vehicles.

            Appellant argues that the CSM should have awarded her additional child support because respondent has significantly more resources than she does.  But a large disparity in income and resources is not sufficient to warrant an upward deviation in child support.  Hortis, 367 N.W.2d at 635-36; see also Hall, 418 N.W.2d at 190.  Rather, the children's needs also must require a higher level of support.  Hortis, 367 N.W.2d at 636.

            Appellant further contends that she is unable to maintain her children's lifestyle without additional child support.  At trial, she testified that she and her children have a monthly budget of approximately $15,000.  But the CSM did not find appellant's budget credible because it "failed to meaningfully detail the expenses she has on behalf of the children."  The CSM instead found that the children's needs cost $975.83 a month while in appellant's care.  On this record, we conclude that this finding is not clearly erroneous.

            Because the CSM properly considered the parties' ability to support their children and the children's needs, the CSM did not abuse its discretion when it declined to deviate upward from the child support guidelines.

IV.

 

            District courts have broad discretion to award child support, which includes child care expenses.  Rutten, 347 N.W.2d at 50; see also Minn. Stat. § 518.551, subd. 5 (2004) ("The amount allocated for child care expenses is considered child support . . . .").  Under Minn. Stat. § 518.551, subd. 5, the district court "shall review the work-related . . . child care costs paid and shall allocate the costs to each parent in proportion to each parent's net income . . . after the transfer of child support and spousal maintenance, unless the allocation would be substantially unfair to either parent."

            Here, the CSM ordered the parties to pay their own work-related daycare costs because neither party presented evidence of his or her work-related child care expenses.  Respondent did not disclose any of his child care expenses.  And appellant disclosed her child care expenses but failed to produce evidence of when she plans to begin working, her work hours, or her work-related expenses.  Thus, in its August 9, 2005 order, the CSM stated that the parties may return to court to request work-related daycare reimbursement.

            Because the parties failed to submit any evidence of their work-related child care costs, we conclude that the CSM did not abuse its discretion by ordering the parties to pay their own child care costs until they submit evidence supporting reimbursement.

V.

 

            An award of attorney fees under Minn. Stat. § 518.14, subd. 1 (2004), "rests almost entirely within the discretion of the trial court and will not be disturbed absent a clear abuse of discretion."  Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn. App. 1998) (quotation omitted), review denied (Minn. Feb. 18, 1999).  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.

 

Minn. Stat. § 518.14, subd. 1.  Thus, if a party acts in bad faith, resulting in unnecessary litigation, the party is not entitled to need-based attorney fees.  Peterka v. Peterka, 675 N.W.2d 353, 360 (Minn. App. 2004).

            Here, the CSM determined that "[b]ased solely on a need based analysis, [appellant] should receive an award of attorneys fees (for custody and child support litigation)."  But the CSM then ordered the parties to pay their own attorney fees and costs because it found that "[appellant's] approach to this litigation has significantly and unnecessarily increased the cost of this litigation" and "to award her fees would reward her for her bad faith behavior."

            Appellant argues that she asserted her rights in good faith; therefore, she contends, the CSM abused its discretion by denying her request for need-based attorney fees.  We disagree.  The record shows that several of appellant's actions have unnecessarily increased the cost and length of the litigation.

            First, appellant sought and received an order to prevent respondent from exposing the children to followers of Swami Rama.  The district court eventually vacated the order after appellant failed to produce any evidence that respondent or his friends were part of a religious cult.

            Second, the parties stipulated to hiring Dr. Michael Shea as their neutral custody evaluator.  But after Dr. Shea recommended that respondent should have sole legal and physical custody of the children, appellant filed a motion in which she questioned Dr. Shea's credibility and raised a "conflict of interest" issue for the first time.

            Third, although the parties stipulated that the CSM would decide the custody issue, appellant brought a motion to have the district court retain jurisdiction on the issue of custody.  The district court denied appellant's motion.

            Finally, the parties stipulated that the children's therapist could not testify and that her records would not be admissible into evidence, but appellant later argued that the therapist should be allowed to testify.  The court denied appellant's request.  Appellant then sought an extraordinary writ of prohibition with this court.

            Because the record supports the CSM's finding that appellant unnecessarily increased the cost and length of the litigation, we conclude that the CSM did not abuse its discretion in denying appellant need-based attorney fees.

            Affirmed.