In re the Marriage of: Carmen Lillian Chappelear, petitioner, Appellant, vs. Robert Louis Chappelear, Respondent.

In re the Marriage of: Carmen Lillian Chappelear, petitioner, Appellant, vs. Robert Louis Chappelear, Respondent. A06-1705, Court of Appeals Unpublished Decision, November 27, 2007.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2006).

 

STATE OF MINNESOTA

IN COURT OF APPEALS
A06-1705
 
 
In re the Marriage of:
 
Carmen Lillian Chappelear, petitioner,
Appellant,
 
vs.
 
Robert Louis Chappelear,
Respondent.

 

 

Filed November 27, 2007

Affirmed

Randall, Judge

 

Dakota County District Court

File No. F7-97-12017

Andrew J. Laufers, Dudley and Smith, P.A., 2602 U.S. Bank Center, 101 East Fifth Street, St. Paul, MN  55101 (for appellant)

 

Sharon H. Ysebaert, Eastlund, Solstad, Cade & Hutchinson, Ltd., 4200 County Road 42 West, Savage, MN  55378 (for respondent)

 

 

            Considered and decided by Dietzen, Presiding Judge; Randall, Judge; and Halbrooks, Judge.

 

U N P U B L I S H E D   O P I N I O N

RANDALL, Judge

In this maintenance-modification dispute, appellant-wife argues that the district court (a) erred by finding that respondent-husband retired in good faith; (b) failed to make adequate findings to support its grant of husband's motion to modify his maintenance obligation to wife; and (c) improperly modified a portion of the property settlement when it reduced the amount of insurance husband had to carry to secure his maintenance obligation to wife.  We affirm on all issues.

FACTS

The parties to this matter were divorced in 1997.  As part of the judgment and decree, appellant Carmen Lillian Chappelear was granted sole physical custody of the couple's two minor children.  In addition to child support, respondent Robert Louis Chappelear was ordered to pay permanent spousal maintenance, which became fixed at $1,000 per month when both children had reached the age of majority in 2002.  Respondent was also ordered to maintain a minimum of $134,000 in life insurance insuring his life and naming respondent as sole beneficiary until his spousal maintenance and child support obligations ceased.  Respondent complied with the court order by maintaining an insurance policy that was funded, in large part, by his employer. 

            In the spring of 2005, respondent suffered a stroke.  Due to physical limitations resulting from the stroke and other medical conditions, and based on the recommendation of his physician, respondent retired at the age of 62.  Because respondent retired, his employer terminated the life insurance policy, and respondent was unable to obtain similar coverage.  After retiring, respondent's monthly income decreased $900 to $4,018 per month, while his monthly expenses doubled to $6,642.92.  Respondent subsequently moved for modification of his maintenance obligation and an order permitting him to restructure his life insurance obligation from the $134,000 coverage previously ordered to a $50,000 policy he presently held with his current wife as beneficiary. 

            The district court found that respondent (1) retired in good faith; (2) met his burden of demonstrating a substantial decrease in earnings; and (3) made numerous good faith attempts to obtain additional life insurance, but was unsuccessful.  Consequently, the district court reduced respondent's maintenance obligation to $600 per month.  The district court also held that if respondent continued to be unable to secure adequate insurance coverage under the previous order, he could fulfill his life insurance obligation by naming appellant as the sole beneficiary of his $50,000 policy.  This appeal followed.           

D E C I S I O N

I.

 

Appellant claims that the district court, in modifying spousal maintenance, improperly found that respondent retired in good faith without making necessary findings.  The district court has discretion to modify the terms of a spousal maintenance order.  Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).  This court reviews a modification of a spousal maintenance order to determine whether the district court abused its discretion.  Dobrin v. Dobrin, 569 N.W.2d 199, 202 (Minn. 1997).  The district court abuses its discretion if it reaches a clearly erroneous conclusion that is against logic and the facts on record.  Maeder v. Maeder, 480 N.W.2d 677, 679 (Minn. App. 1992) (quotation omitted), review denied (Minn. Mar. 19, 1992).  The district court's findings are reviewed for clear error.  Minn. R. Civ. P. 52.01.

Here, respondent's inability to maintain current maintenance levels stems from his medical decision to retire.  When an obligor voluntarily creates a change in circumstances the district court should consider the obligor's motives.  In re Marriage of Richards, 472 N.W.2d 162, 164 (Minn. App. 1991).  If the change was made in good faith, an obligee should share in the hardship as she would have had the parties remained together.  Giesner v. Giesner, 319 N.W.2d 718, 720 (Minn. 1982).  But when an obligee raises a colorable bad faith claim, an obligor must show, by a preponderance of the evidence, that a decision to retire early was not primarily influenced by a specific intent to decrease or terminate maintenance.  Richards, 472 N.W.2d at 165.  In determining bad faith, the district court "should consider the obligor's health and employment history, the availability of and expectations regarding early retirement at the time of the divorce, and the prevailing managerial policies and economic conditions at the time of the retirement, together with whatever subjective reasons the obligor may offer."  Id.

At the hearing on the motion to modify, appellant questioned whether respondent's retirement was motivated by an interest in avoiding maintenance.  The district court easily found that respondent retired in good faith.  Appellant claims that explicit findings under the Richards factors were necessary.  Although the district court did not make findings for each factor, the order modifying maintenance demonstrates that these factors were considered.  In holding that respondent retired in good faith, the district court found that respondent "intended to work until he was 65," but his physician recommended that he retire.  The district court considered the severity of respondent's medical condition and the credibility of his physician's advice and found that he was unfit to continue any employment. 

            Respondent's lack of expectations for early retirement at the time of divorce was also factored into the analysis.  The district court found that, had he not suffered from various medical conditions, respondent intended to continue working.  Finally, although the district court did not issue findings pertaining to the prevailing managerial policies and economic conditions at the time, appellant does not claim that respondent's decision to retire was motivated by these considerations.  The district court made sufficient findings under Richards.  The record clearly supports these findings.

            Appellant also contends that the evidence does not support a finding that respondent retired in good faith.  Appellant's argument concentrates on the language of the physician's letter.  In the October 2005 letter, respondent's physician states:

[Respondent] still has some residual right-sided numbness related to this stroke.  He also suffers from type 2 diabetes, hypertension and hyperlipidemia.  He has had some ongoing problems related to residual from his stroke.  It would be advantageous to his health for him to retire within the next year due to some of his disability related to his medical problems. 

 

Appellant claims that, in order for respondent to satisfy his burden of demonstrating good faith retirement, the letter should have specifically articulated that respondent "should not work, or cannot work, or must not work."  There is no merit to appellant's argument.  The language chosen by the physician offers strong support for appellant's argument.  Further evidence also bolsters the finding of good faith.  The fact that respondent was unable to obtain life insurance in an amount required by the court order supports the severity of his medical problems.  In his affidavit in support of maintenance modification, respondent points out that early retirement required him to forego an additional $1,400 to $1,600 a month in retirement benefits.  The district court properly modified respondent's obligation.

II.

            Appellant argues that the district court failed to make sufficient findings to support modification of spousal maintenance.  Spousal maintenance may be modified for a variety of reasons including "substantially increased or decreased earnings of a party" that have caused the terms of maintenance to become "unreasonable and unfair."  Minn. Stat. § 518.64, subd. 2(a) (2004).  In deciding whether modification is appropriate, the district court must also consider factors set forth in Minn. Stat. § 518.552 (2006).  Minn. Stat. § 518.64, subd. 2(c) (2004).  Factors relevant to this case include:

(a)              the financial resources of the party seeking maintenance . . . ;

. . . .

(c)       the standard of living established during the marriage;

(d)       the duration of the marriage . . . ;

(e)       the loss of earnings, seniority, retirement benefits, and other employment opportunities forgone by the spouse seeking maintenance;

(f)        the age and the physical and emotional condition of the spouse seeking maintenance;

(g)       the ability of the spouse from whom maintenance is sought to meet needs while meeting those of the spouse seeking maintenance; and

(h)       the contribution of each party [to] . . .

            marital property . . . .

 

Minn. Stat. § 518.552, subd. 2.  To modify maintenance obligations, a district court must make particularized findings to show that the relevant statutory factors have been considered.  Tuthill v. Tuthill, 399 N.W.2d 230, 232 (Minn. App. 1987).  But the district court is not required to make specific findings for every statutory factor if the findings that were made reflect that the district court adequately considered the relevant factors.  Peterka v. Peterka, 675 N.W.2d 353, 360 (Minn. App. 2004).  

            Appellant claims that the district court did not consider respondent's current ability to work or obtain income.  Underlying this argument is the assertion that respondent acted in bad faith by retiring and not seeking further employment.  As discussed above, the district court did not clearly err by finding that respondent had retired in good faith.  When a party has acted in good faith by retiring and not seeking further employment, the district court need not consider the party's current earning capacity.  Walker v. Walker, 553 N.W.2d 90, 95-96 (Minn. App. 1996). 

            Appellant further asserts that the district court failed to evaluate her ability to provide for herself.  After reviewing the order, we conclude that relevant findings were made.  In reducing respondent's maintenance obligation, the district court considered appellant's income, military pension, retirement benefits, and her spending habits.  The district court found that while respondent's income had decreased significantly since the divorce, appellant's income had "increased."  The findings are sufficient for purposes of modifying maintenance because they demonstrate that the district court considered appellant's financial circumstances before finding that respondent's change in earnings had rendered the current maintenance obligation unfair. 

III.

 

            Appellant claims that the district court abused its discretion by modifying the amount of life insurance coverage required under the original judgment and decree.  The district court found that, should respondent be unable to obtain further coverage, he may fulfill his life insurance obligation through a $50,000 policy he currently holds. 

            In general, property division in dissolution proceedings is final and not subject to modification.  Dabrowski v. Dabrowski, 477 N.W.2d 761, 766 (Minn. App. 1991).  But, provisions in the nature of maintenance or support are modifiable.  Life insurance does not fit neatly into either of these categories.  It may be awarded as part of a property division or ordered as security for an obligee's right to spousal maintenance payments.  See Lynch v. Lynch, 411 N.W.2d 263, 265 (Minn. App. 1987) (awarding life insurance as part of a property division), review denied (Minn. Oct. 30, 1987); See also Minn. Stat. § 518 A. 71 (2006) (authorizing courts to order security for payment of spousal maintenance).  Thus, whether the life insurance amount may be modified depends on the district court's purpose in imposing the insurance obligation.  See Dabrowski, 477 N.W.2d at 766; Kerr v. Kerr, 309 Minn. 124, 126-28, 243 N.W.2d 313, 314-15 (1976) (considering whether a real property lien was intended as security for support payments or an outright property award).  The inclusion of conditional language or language connecting the award to a support or maintenance obligation tends to indicate that the award is modifiable.  See Dabrowski, 477 N.W.2d at 766.

            In arguing that the life insurance is a nonmodifiable property award, appellant points to the language of the original judgment and decree, which states that respondent must

continue to provide as part of the property settlement a minimum of $134,000 life insurance coverage insuring his life and naming as sole beneficiary thereon the [appellant].  Respondent shall continue to maintain said $134,000 life insurance coverage naming [appellant] as sole beneficiary until all of [respondent's] child support and spousal maintenance obligations cease.

 

(Emphasis added.)  The language identifying the life insurance as part of the property settlement lends support to appellant's argument.  But had the district court intended for the insurance policy to become part of appellant's property award, as opposed to security for spousal maintenance, it would not have conditioned respondent's obligation to maintain insurance on his continued responsibility to pay spousal maintenance and child support.  See Dabrowski, 477 N.W.2d at 766. 

            Appellant further asserts that the decision in Kerr supports her argument.  As part of the dissolution in Kerr, the wife, who was awarded custody of the parties' children, received the marital homestead subject to a lien of $5,000 in favor of the husband.  309 Minn. at 125, 243 N.W.2d at 314.  By agreement of the parties, the amount of the lien was to be offset by any arrearages in child support.  Id.  The lien was subject to foreclosure "upon [the wife's] death, sale of the homestead, or the 18th birthday, marriage, or other emancipation of the youngest minor child."  Id.  Prior to the occurrence of any of these conditions, the wife and children moved from the home and rented it to a third party.  Id.  The husband subsequently moved to amend the decree to allow the lien to be foreclosed four months after the wife and children ceased to use the home as their principal residence.  Id.  The county court granted the motion.  Id. 

            In affirming the county court, the supreme court held that the portion of the decree awarding the wife a fee interest in the property and the husband a lien interest was a division of property not subject to modification.  Id. at 126-27, 243 N.W.2d at 314-315.  But the court further concluded that the postponed realization of the amount secured by the lien, as well as the child support offset, which operated as security for support payments, were in the nature of child support, and thus, modifiable.  Id. at 128, 243 N.W.2d at 315.  The court reasoned that the postponed realization of the lien was in the nature of child support because it afforded the children the benefit of remaining in the home.  Id. 

            Here, appellant claims that the $134,000 life insurance award, like the real property award in Kerr, is comprised of two components:  the order to maintain the policy until respondent's spousal maintenance obligation ceases is modifiable, while the policy itself is a separate, nonmodifiable property award. 

            Appellant's reliance on Kerr is misplaced.  In fact, Kerr supports the district court's decision to modify the portion of the order pertaining to respondent's life insurance obligation.  Like the conditions placed on the lien in Kerr that operated as security for child support and allowed the children to remain in the home, the life insurance policy is in the nature of support because it was intended as security for child support and spousal maintenance payments.  On the narrow facts of this case, we conclude that the district court properly modified the life insurance. 

            Affirmed.