In re the Marriage of: Virginia E. Westland, petitioner, Appellant, vs. Stanley K. Westland, Respondent.
Annotate this CaseThis opinion will be unpublished and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
A05-2500
In re the Marriage of:
Virginia E. Westland, petitioner,
Appellant,
vs.
Stanley K. Westland,
Respondent.
Filed July 18, 2006
Affirmed in part, reversed in part, and remanded Hudson, Judge
Freeborn County District Court
File No. F3-98-1210
Jill I. Frieders, O'Brien & Wolf, L.L.P., 206 South Broadway, Suite 611, P.O. Box 968, Rochester, Minnesota 55903-0968 (for appellant)
Craig M. Byram, Hoversten, Johnson, Beckmann & Hovey, LLP, 807 West Oakland Avenue, Austin, Minnesota 55912 (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
HUDSON, Judge
Appellant-wife challenges the district court's order reducing her spousal-maintenance award and its denial of need-based attorney fees. By notice of review, respondent-husband argues that the district court clearly erred in its finding of husband's income. Husband also argues that the district court abused its discretion by denying his various motions challenging the 2005 order and in setting the effective date of the modification of spousal maintenance. With respect to wife's claims, the district court's findings and conclusion of law that there was no substantial change in circumstances are inconsistent with its simultaneous conclusion and order reducing spousal maintenance. Similarly, the district court's findings that wife was entitled to need-based attorney fees lack sufficient specificity and are inconsistent with its order denying attorney fees. Accordingly, we reverse and remand for the district court's reconsideration of these two issues. With respect to husband's claims, because husband failed to provide the district court with information necessary for it to properly assess his income, we affirm on this issue. Because the district court properly applied the law and properly exercised its discretion, we likewise affirm the district court's denial of husband's motions challenging its 2005 order. Because we are remanding the spousal-maintenance issue, we do not reach the propriety of the effective date of the modification of spousal maintenance.
FACTS
Before the dissolution of their marriage in 2000, wife and husband had been married for nearly 27 years. Husband is a certified public accountant. During the dissolution of marriage, husband left his accounting partnership, where his average income from the accounting practice was approximately $105,000 per year, to set up his own business and "maximize" his earnings. At the time the district court set the original spousal-maintenance amount, it found that husband had an "earning capacity of $85,000 from his new accounting practice." In addition to income from his accounting practice, husband has income from substantial business distributions. The district court found that husband's net worth at the time of the dissolution of marriage was $481,624, and approximately $606,494 at the time of his motion to modify.
Wife is employed as a teacher. At the time of the dissolution, she worked as a substitute teacher making $6,582 per year, but she has since been employed full-time and earns $23,214 per year. In addition, wife has investment income from her share of the property distribution.
1. That [wife] has had an increase, but not a substantial increase in earnings.
2. That [wife]'s needs have stayed the same since the time of the dissolution.
3. That [husband]'s earnings have stayed the same since the time of the dissolution.
4. That [wife] continues to need permanent spousal maintenance.
5. That [wife]'s needs for spousal maintenance can be met with spousal maintenance at the rate of $2,000 per month.
The district court then ordered husband's maintenance obligation to be reduced from $3,279 to $2,000 per month, retroactive to September 1, 2005. The district court also found that wife had incurred substantial attorney fees and costs totaling $28,079 defending against husband's motion and that husband had the resources to contribute to her fees. Then, the district court denied "[t]he request by each of the parties for attorney's fees." Wife filed this appeal, and husband filed a notice of review.
ANALYSISA district court has broad discretion over issues of spousal maintenance, and its decisions will not be reversed absent a clear abuse of that discretion. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). A district court abuses its discretion if it makes findings unsupported by the evidence or improperly applies the law. Pikula v. Pikula, 374 N.W.2d 705, 710 (Minn. 1985).
I
Wife argues that the district court properly determined that there was "no substantial change in circumstances," but erred when it nevertheless reduced her spousal maintenance from $3,279 to $2,000 per month. Husband contends that the district court's determination that there was no substantial increase in wife's earnings should not be construed as a finding of "no substantial change in circumstances." Rather, husband argues that it was wife's alleged reduction in need that constituted the substantial change in circumstances rendering the original order unfair.
A district court should exercise its discretion to modify "with great caution and only upon clear proof of facts showing that the circumstances of the parties are markedly different from those in which they were when the decree was rendered." Rubenstein v. Rubenstein, 295 Minn. 29, 32, 202 N.W.2d 662, 664 (1972). A party seeking modification of a spousal-maintenance award has the burden to show (1) that there has been a substantial change in circumstances since the original or previous award; and (2) that change has made the existing award unreasonable and unfair. Minn. Stat. § 518.64, subd. 2 (2004); Nardini v. Nardini, 414 N.W.2d 184, 198 (Minn. 1987). Under the relevant part of the applicable statute, a party may satisfy the burden of demonstrating a substantial change in circumstances sufficient to justify a modification of a spousal-maintenance award by proving (1) a substantial increase or decrease in a party's earnings; (2) a substantial increase or decrease in a party's needs; (3) the receipt of public assistance by a party; or (4) a change in a party's cost of living, "any of which makes [the existing award] unreasonable and unfair." Minn. Stat. § 518.64, subd. 2(a) (2004).
Here, husband based his modification request "upon [wife]'s substantial change in earnings and [husband]'s substantial change in financial resources." The district court found that while wife did have an increase in earnings, from $6,582 to $23,214 per year, this was "not a substantial increase in earnings." It also found that husband's earnings had stayed the same. Plainly, the district court's findings that there was no substantial increase or decrease in either party's earnings are inconsistent with the district court's modification of the original maintenance award based on a change in earnings.
Husband also argues that the district court's modification was "clearly" based on a finding of wife's decreased need. But it is not at all clear that this was the basis for district court's decision. First, as previously mentioned, this was not the stated basis for husband's motion. Second, even husband acknowledges that the reduction in spousal maintenance appears to be internally inconsistent with the district court's finding that "[t]he reasonable budget for each party continues to be $4,000 per month, essentially the same as at the time of the dissolution" and its conclusion that "[wife]'s needs have stayed the same since the time of the dissolution." Accordingly, the district court's findings are inconsistent with, and do not support, a modification based on a change in wife's maintenance needs. Because the parties agree that the remaining factors in Minn. Stat. § 518.64, subd. 2(a), are inapplicable, the district court's order modifying spousal maintenance lacks sufficient findings on any of the circumstances set forth in Minn. Stat. § 518.64, subd. 2(a).
In addition, the record does not reflect that the district court considered the factors required by Minn. Stat. § 518.552, subd. 2 (2004). See Minn. Stat. § 518.64, subd. 2(c) (2004) (requiring the district court to apply the factors for an award of maintenance under Minn. Stat. § 518.552 to a modification of maintenance as they existed at the time of the motion); see, e.g., Moylan v. Moylan, 384 N.W.2d 859, 865 (Minn. 1986) (remanding when, as here, it is unclear whether the trial court considered factors expressly mandated by the legislature). Findings of fact are reviewed for clear error. Minn. R. Civ. P. 52.01. Because the district court modified spousal maintenance without considering the statutory requirements in Minn. Stat. § 518.552, subd. 2, the district court misapplied the law.
Further, a party moving to modify spousal maintenance must not only demonstrate the existence of a substantial change in circumstances, but must also show that the change rendered the original maintenance award both unreasonable and unfair. Nardini, 414 N.W.2d at 198. The district court did not indicate that the original maintenance amount was now unreasonable and unfair. In addition, the district court did not indicate how it calculated the new maintenance amount, nor was the reasoning for the reduction apparent from the district court's order. Assuming, as the district court found, that wife's need was still $4,000 per month,[1] and using the figures in finding of fact number 14, the district court's reduction of spousal maintenance by $1,279 per month appears to result in wife being short by several hundred dollars each month.[2]
We recognize that the district court here was faced with a difficult task given the confusing and, at times, contradictory and incomplete evidence before it. Nevertheless, we are unable to reconcile the district court's findings of fact with its conclusions of law and order. Accordingly, we reverse and remand for the district court to reconsider the issue of modification of spousal maintenance. On remand, the district court's order should reflect that it considered all of the required statutory factors. The district court, in its discretion, may reopen the record to obtain additional information on the parties' current circumstances, including their respective financial status.
II
Wife challenges the district court's denial of her motion for need-based attorney fees. Wife argues that the district court abused its discretion by concluding that each party must pay his or her own attorney fees and expenses even after finding that wife had incurred substantial attorney fees, wife continued to need spousal maintenance, and husband had the ability to contribute to her fees.
Generally, an award of attorney fees "rests almost entirely within the discretion of the [district] 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). An award of attorney fees in a maintenance modification request is governed by Minn. Stat. § 518.14 (2004). Minn. Stat. § 518.64, subd. 2(g) (2004). Under Minn. Stat. § 518.14, subd. 1 (2004), an award of need-based attorney fees is premised upon findings on three separate factors: (1) that the fees are necessary for the good-faith assertion of the party's rights; (2) that the party from whom fees, costs, and disbursements are sought has the ability to pay them; and (3) that the party to whom fees, costs, and disbursements are awarded does not have the means to pay them. If the district court finds these three factors, it "shall award attorney fees, costs, and disbursements in an amount necessary to enable a party to carry on or contest the proceeding." Minn. Stat. § 518.14, subd. 1.
In regard to the first factor, the district court found that the matter was before the court "on [husband]'s motion to reduce or eliminate his spousal maintenance obligation." It also found that "[wife] [had] incurred substantial attorney's fees and costs defending against [husband]'s motion. Her attorney fees and costs total $28,078.66. This includes her expert fees of $18,218.85." While the district court's findings indicate the amount of fees incurred to defend wife's right to spousal maintenance, they do not indicate whether the district court considered all of the fees to be necessary. In satisfaction of the second factor, the district court specifically found that husband had the ability to "contribute to [wife's] fees." As to the third factor, the district court found that "[wife] continues to need permanent spousal maintenance." It may be logical to infer that a spouse whose annual after-tax cash flow is $57,000 and who requires maintenance to maintain her standard of living does not have the means to pay $28,000 of attorney fees and expenses, but the district court made no specific finding that wife lacked the ability to pay her own fees. The district court's failure to make this statutory finding was an abuse of discretion.
Because the district court failed to make sufficient findings under Minn. Stat. § 518.14, subd. 1, we reverse and remand for a determination regarding the necessity of wife's attorney fees and ability to pay her attorney fees.
III
By notice of review, husband argues that it was clear error for the district court to find that wife's increase in earnings from $6,582 to $23,214 per year was not a substantial increase in earnings.
A district court has broad discretion over issues of spousal maintenance but will be ruled to have abused that discretion when it resolves a maintenance question in a manner that is against logic and unsupported by the facts on the record. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).
Here, the district court found that while wife did have an increase in earnings, from $6,582 as a substitute teacher to $23,214 per year as a full-time teacher, this was "not a substantial increase in earnings." While $16,632 per year is not an insignificant sum, the increase did not provide wife with the standard of living she enjoyed during the marriage. Further, wife accurately notes that while her wages and salary increased, her income from interest, dividends, and business-holding distributions decreased. Indeed, the district court found a reduction in wife's total monthly cash flow from $5,730 to $4,794.
Lastly, husband's only support for the proposition that wife's increased earnings were a "substantial change" is a statutory provision applying a presumption of substantial change in child support cases where a 20 percent and $50 per month change occurs. See Minn. Stat. § 518.64, subd. 2(b) (2004). We do not find this argument persuasive. Because wife's reduction in monthly cash flow offsets her increase in earnings, it was not clear error for the district court to find that wife's income had not increased substantially.
IV
Husband also contends that the district court clearly erred in finding that husband's sale of business assets was "income" for the purposes of determining his ability to pay spousal maintenance. Generally, "income" for the purposes of maintenance determinations includes, "any form of periodic payment to an individual including, but not limited to, wages, salaries [and] annuities." Minn. Stat. § 518.54, subd. 6 (2004). Dissolution caselaw is clear regarding a party's affirmative duty to make a full and fair disclosure of information. See Doering v. Doering, 629 N.W.2d 124, 131 (Minn. App. 2001), review denied (Minn. Sept. 11, 2001).
Here, the district court found that husbandby not providing his 2004 or 2005 income-tax returnshad chosen not to provide the district court with a clear picture of his actual cash flow. Further, husband immediately reinvested his business-sale proceeds to avoided paying tax on his profits. In addition, the record indicates that husband's net worth has steadily increased. On this record, we conclude that the district court did not abuse its discretion by considering husband's business profits as an indication of his ability to pay spousal maintenance. Cf. Tuthill v. Tuthill, 399 N.W.2d 230, 232 (Minn. App. 1987) (stating that, on appeal, a party cannot complain about the district court's failure to rule in his favor when one reason it did not rule in his favor was party's failure to produce the evidence that would allow the district court to fully address the question).
V
Husband argues that the district court abused its discretion by denying his various motions challenging the 2005 order. Specifically, husband challenges the district court's findings regarding his actual earnings from his accounting practice and its findings regarding his lack of candor with the court and opposing party.
Husband incorrectly cites N. States Power Co. v. Williams, 343 N.W.2d 627, 630 (Minn. 1984), to argue that this court may review the district court's findings of fact de novo because they were based on affidavit evidence. The proposition for which appellant cites Northern States Power is no longer the law; "[t]hat case was decided before the change in Minn. R. Civ. P. 52.01, which now provides, in part, [f]indings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous.'" City of Lake Elmo vs. City of Oakdale, 468 N.W.2d 575, 578 (Minn. App. 1991).
Here, the record supports the district court's finding that husband's testimony was not credible. Husband claims that he works an average of 78 hours per week from December through April of each year and keeps traditional office hours the remainder of the year. He also claims that his accounting practice produces an annual income of approximately $30,000. If husband's claims were true, then he voluntarily left an accounting firm where he made more than $100 per hour to open an office where he now makes approximately $9.75 per hour. Moreover, at the same time that husband's income allegedly shrank, the record reflects that his net worth continued to grow. The district court did not clearly err in finding that husband's claims regarding his earnings were not credible.
VI
Finally, husband argues that the district court abused its discretion by not retroactively applying the spousal-maintenance modification to the date of service of the motion. Because we are remanding the modification of spousal maintenance, we do not reach the propriety of the effective date of the modification. On remand, it is possible that the district court will deny husband's motion for modification, making the effective-date issue irrelevant. If the district court does modify maintenance on remand, the district court should reconsider the effective-date issue at that time.
Affirmed in part, reversed in part, and remanded.
[1] Ignoring the cost-of-living adjustment of $279 per month that had previously been made to the maintenance amount.
[2] On remand, if the district court's findings support a modification of maintenance, then the district court must consider the tax consequences of the change in maintenance when recalculating wife's monthly cash flow.
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