Susan F. Morter, n/k/a Susan F. Ablan, petitioner, Respondent, vs. David M. Morter, Appellant.

Susan F. Morter, n/k/a Susan F. Ablan, petitioner, Respondent, vs. David M. Morter, Appellant. A05-2476, Court of Appeals Unpublished, September 19, 2006.

This opinion will be unpublished and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

A05-2476

 

In re the Marriage of:

 

Susan F. Morter,

n/k/a Susan F. Ablan, petitioner,

Respondent,

 

vs.

 

David M. Morter,

Appellant.

 

 

Filed September 19, 2006

Affirmed in part, reversed in part, and remanded

Lansing, Judge

 

Ramsey County District Court

File No. F4-91-1272

 

Susan M. Lach, Vija Brookshire, Messerli & Kramer P.A., 1800 Fifth Street Towers, 150 South Fifth Street, Minneapolis, MN 55402 (for respondent)

 

A. Larry Katz, Susan A. Daudelin, Katz, Manka, Teplinsky, Due & Sobol, Ltd., 225 South Sixth Street, Suite 4150, Minneapolis, MN 55402(for appellant)

 

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

U N P U B L I S H E D   O P I N I O N

LANSING, Judge

            In this appeal from an order and judgment in a child-support proceeding, David Morter challenges the district court's findings on the amount of his child-support obligation and the computation of attorneys' fees.  Because the district court did not abuse its discretion in determining the child-support obligation, we affirm that part of the order.  But because the findings on attorneys' fees do not provide a sufficient basis for the attorneys' fees judgment, we reverse and remand for additional findings.

F A C T S

            David Morter and Susan Ablan are the parents of three children.  Morter and Ablan's 1991 marital-dissolution judgment, which incorporated their marital termination agreement, granted Susan Ablan physical custody of all three children.  Ablan retained physical custody until July 2000 when a stipulated order transferred physical custody of the two older children to Morter.  In November 2000 another stipulated order transferred physical custody of the third child to Morter.  In July 2003 Ablan filed a motion for the return of physical custody of two of the children who had moved back to Ablan's home.  In August 2003 the district court granted the change in physical custody, reserved child support with an effective date of July 2003, and continued the case for review to February 13, 2004.

            At the February 13, 2004 review hearing, Morter and Ablan stipulated that they would retain the current custodial arrangement of two children living with Ablan and one with Morter, that Morter would provide child support to Ablan, that the child support would be reserved with an effective date of July 2003, and, if they were unable to agree on the amount of child support, they would submit the issue to the district court for determination.  Morter and Ablan were unable to agree on the amount of child support, and, after extensive written submissions, the district court decided this issue in July 2004.

In the July 2004 order, the district court found that Ablan's 2003 net monthly income was $1,349.65, and that amount is not disputed.  To determine Morter's income, the district court relied on a previous order determining that Morter had a gross monthly income of $11,922.  The district court explained that it arrived at this amount because of "a lack of credible evidence to support a finding of fact that [Morter's] income or earning capacity had changed."  This income exceeded the monthly income cap of $6,751, and therefore, the district court computed child support using the capped amount with a set-off for Ablan's obligation for support of the child in Morter's custody and ordered Morter to pay Ablan $1,687.89 a month in ongoing child support. 

The December 2000 order, which had previously determined Morter had a gross monthly income of $11,922, was the result of Ramsey County's motion to increase Morter's child-support obligation.  The county had provided public assistance to Ablan and intervened in the child-support proceedings.  The contested proceedings extended from February 2000 to February 2001 when the court denied, in major part, Morter's motion for review and to correct clerical errors.  The proceedings centered on whether the income of a telecommunications consulting corporation operated in the name of Morter's current wife was truly attributable to her efforts.  Following an evidentiary hearing and the submission of multiple exhibits, the district court, in detailed and well-supported findings, determined that, in fact, David Morter operated the business and generated the corporation's income.  Based on the corporation's 1999 gross receipts of $220,571, the court allowed Morter his claimed expenses of $77,507 (including a salary for his current wife), and found that Morter had gross annual income of $143,064 and monthly gross income of $11,922.  The court specifically found that Morter was not credible and that he was masking his true income by running the business in his wife's name.  That order, with an exception not relevant to the current issues, remains unaltered by the February 2001 review order.  Morter did not appeal this income determination.  

In its July 2004 order, the district court reaffirmed the 1999 factual determination of Morter's gross monthly income of $11,922, noting that Morter had not appealed that determination of his income and that Morter had offered no credible evidence that his 2003 income had significantly changed.  The district court found that, although Morter claimed personal income of only $47,764, his claim lacked credibility and that the purported 2003 corporate and personal income-tax returns that he submitted were unsigned and undated.  The district court imposed a monthly support obligation of $1,687.89, but provided in the order that Morter would have an opportunity to submit additional evidence or testimony at or before a September 2004 review hearing.

Morter failed to pay the child support imposed by the July 2004 order, and, in August 2004, Ablan initiated a contempt proceeding.  The district court consolidated the child-support review hearing with the hearing on the motion for contempt and attorneys' fees, and these issues were heard in January 2005.

At the January 2005 hearing, the court heard testimony from both Morter and Ablan and received a number of documents.  After reviewing the record, the court issued an order in April 2005.  In this order, the court determined that Morter was not credible, that he made inconsistent claims about his assets, that Morter's lifestyle could not be reconciled with his claimed income, and that Morter, as a self-employed individual, had the opportunity to conceal his income.  The court stated that Morter had failed to comply with the July 2004 support order and that he "failed to meet his burden of showing a justification for his non-compliance."  The district court reaffirmed the previously set monthly support obligation of $1,687.89 effective July 1, 2003, noting that the emancipation of the two older children would reduce the obligation to $1,238.91 a month starting June 1, 2005.  The district court also ordered Morter to pay $12,500 in attorneys' fees and directed the order for attorneys' fees be reduced to judgment if, within sixty days, Morter had not paid the fees.  A judgment was later entered on the attorneys' fees. 

Morter filed an alternative motion for amended findings or a new trial.  The district court amended one finding but denied the rest of the motion.  Morter appeals from the April 2005 order, the August 2005 order, which denied, in major part, his motion for amended findings or a new trial, and the July 2005 judgment for attorneys' fees.

D E C I S I O N

I

A district court has broad discretion in deciding issues relating to child support.  Putz v. Putz, 645 N.W.2d 343, 347 (Minn. 2002).  In our review of a district court's order setting child support, we will reverse the determination only if it is based on an error of law or on an abuse of discretion that results in a conclusion that is against logic and the facts on record.  Rutten v. Rutten, 347 N.W.2d 47, 50-51 (Minn. 1984).  We defer to the district court's assessment of the credibility of witnesses and apply a clear-error review standard to findings of fact.  Minn. R. Civ. P. 52.01.  In determining whether factual findings are clearly erroneous, we view the record in the light most favorable to the district court's findings.  Ayers v. Ayers, 508 N.W.2d 515, 521 (Minn. 1993).

Morter argues that the district court's order does not contain adequate findings to warrant a modification of child support and that the district court abused its discretion by not basing its support order on his actual earnings.  These arguments significantly misinterpret the procedural posture of the issues in this appeal. 

The current proceeding does not involve a motion to modify child support.  The last motion for modification of child support was brought by Ramsey County in 2000.  That determination was not appealed.  The current proceeding relates to the establishment of child support as a result of the 2003 transfer of physical custody of two of the children from Morter to Ablan.  At the time the district court granted the change in custody, it reserved child support, effective as of the July 2003 custodial transfer, and, in the July 2004 order, the district court set Morter's child-support obligation, effective as of July 1, 2003.  See Anderson v. Anderson, 470 N.W.2d 719, 721 (Minn. App. 1991) (stating that "subsequent establishment of a support obligation is treated as an initial [support order] rather than a modification of a prior support order"); Mulroy v. Mulroy, 354 N.W.2d 66, 69 (Minn. App. 1984) (stating that court may establish amount of child support following reservation of support without finding changed circumstances).  Because Morter contended that his true income in July 2003 was substantially different from the amount found by the court in July 2004, and because the finding was based, in part, on Morter's failure to supply evidence of his earnings, the district court allowed Morter the opportunity to submit additional testimony and evidence that could be considered at the January 2005 review hearing. 

The review hearing was consolidated with the hearing on the motion for contempt.  At the hearing, the district court considered Morter's additional testimony and evidence, submitted in an attempt to show a reduction in income, but determined it was simply not credible.  A district court's credibility determinations are anchored in the court's opportunity to personally observe the witnesses and to gauge their candor and demeanor.  For this reason, appellate courts defer to the district court's assessments of credibility and do not reassess them on appeal. 

In addition to its credibility determination, the district court specifically pointed to evidence in the record that conflicted with Morter's testimony on his income.  The record shows that, in 2003, Morter was able to make an unspecified down payment on a newly constructed home in Texas and to assume a monthly mortgage payment of approximately $3,000.  Taking into account Morter's mortgage payment on his second house, he was able to make mortgage payments totaling more than $6,000 a month.  His income tax return from 2003 shows that he made charitable contributions of approximately $7,500.  The 2003 income tax returns from the business show that the business's gross income was over $100,000.

On this record the district court did not abuse its discretion when it found that Morter did not provide credible evidence at the review hearing that his income in 2003 was different from that determined by the July 2004 order.  In the order denying, in major part, Morter's alternative motion for amended findings or a new trial, the district court pointed out that Morter was "afforded full opportunity to present his evidence at the evidentiary hearing," and "[h]e did not meet his burden of proof." 

Morter also claims that the income determination is invalid because the district court did not use his actual income but relied on stale evidence.  This argument fails for two reasons.  First, the point of allowing supplemental evidence at the review hearing was to give Morter another chance to provide concrete and credible evidence that his 2003 income was less than the amount that the court determined it to be in the July 2004 order.  Although this is not the usual procedure, the district court extended this opportunity to Morter to allow him more time to gather information for the court's review.  Morter now challenges the court's focus on the 2003 time frame.  This argument is without merit. 

Second, Morter's argument that the court must rely on his "actual" income assumes the district court relied on something else and overlooks the district court's specific findings on Morter's testimony and evidence.  The district court referee who conducted the evidentiary hearing considered what Morter presented as his "actual income" and found, as two previous fact-finders had found, that Morter's "testimony and assertions regarding his financial situation are not credible."  Morter cannot successfully argue that an appellate court should reject the district court's findings and accept, instead, Morter's testimony, which the district court found to be "vague[,] evasive, and lacking in credibility." 

Morter asserts in his reply brief that the district court's findings were affected by an ex parte communication with opposing counsel.  This issue was not raised in Morter's primary brief and is not responsive to any submission in respondent's brief.  Consequently, we do not address this belated argument.  See Minn. R. Civ. App. P. 128.02, subd. 3 (confining reply brief to "new matter raised in the brief of the respondent"); see also McIntire v. State, 458 N.W.2d 714, 717 n.2 (Minn. App. 1990) (noting that arguments not made in primary appeal brief may not be revived in reply brief), review denied (Minn. Sept. 28, 1990). 

II

            The April 2005 order requires Morter to pay $12,500 toward Ablan's attorneys' fees.  The order states that Ablan "incurred these fees in order to enforce the child support order."  Attorneys' fees are permitted under Minn. Stat. § 518.14, subd. 2 (2004), for the enforcement of a child-support judgment.  But the fees were reduced to judgment following the hearing and were incurred in the proceedings leading up to the judgment, not for the enforcement of the judgment.  

The district court "shall" order need-based attorneys' fees when necessary for the good-faith assertion of a party's rights if the party seeking fees lacks the ability to pay them and the party from whom fees are sought has the ability to pay.  Id., subd. 1 (2004).  The district court may also order conduct-based attorneys' fees when a litigant unreasonably contributes to the length or expense of the proceeding.  Id. The district court must identify offending conduct that occurred during the proceeding to justify imposition of conduct-based attorneys' fees.  Geske v. Marcolina, 624 N.W.2d 813, 818-19 (Minn. App. 2001).  And conclusory findings on the statutory factors to establish need-based fees will not justify an order for attorneys' fees.  Id. at 817 (remanding for specific findings clarifying parties' abilities to pay attorneys' fees).

The district court, in its findings, did not identify any specific conduct or provide findings to justify need-based fees.  We recognize that the court had access to the parties' financial records and was knowledgeable about the history of the case.  Nonetheless, we note that the court's order for $12,500 exceeded Ablan's request for $8,873.64.  In these circumstances, it is necessary to provide specific findings to justify the order for fees and the ensuing judgment.  We therefore reverse the district court's imposition of attorneys' fees and remand for more detailed findings on the basis for their imposition. 

            Affirmed in part, reversed in part, and remanded.