In re the Marriage of: James Edwin Robbins, petitioner, Appellant, vs. Deborah Jane Robbins, n/k/a Deborah Jane Blowers, Respondent.

In re the Marriage of: James Edwin Robbins, petitioner, Appellant, vs. Deborah Jane Robbins, n/k/a Deborah Jane Blowers, Respondent. A06-2124 Court of Appeals Unpublished Decision, November 27, 2007.

This opinion will be unpublished and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
A06-2124
 
In re the Marriage of:
 
James Edwin Robbins, petitioner,
Appellant,
 
vs.
 
Deborah Jane Robbins,
n/k/a Deborah Jane Blowers,
Respondent.

Filed November 27, 2007

Affirmed

Randall, Judge

 

Pine County District Court

File No. 58-F4-05-000090

 

Steven A. Sicheneder, 20 North Lake Street, Town Square Building, Suite 302, Forest Lake, MN 55025 (for appellant)

 

Deborah J. Blowers, 20-G Kenwood Terrace, Mora, MN 55051 (pro se 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 dissolution appeal appellant-husband argues (a) the record does not support the district court's determination that the homestead and business assets are items of marital property; (b) the record does not support the finding of respondent-wife's income; (c) the district court abused its discretion by forgiving certain pre-judgment child support arrears; and (d) appellant should have been awarded retroactive child support.  We affirm.

FACTS

In January 2005, appellant James Edwin Robbins filed for dissolution of his 20-year marriage to respondent Deborah Jane Robbins.  The district court issued a temporary order in August 2005, awarding appellant temporary physical custody of the parties' two minor children and temporary child support.  Appellant's request for retroactive child support was reserved for trial.

In December 2005, the district court issued the dissolution judgment and decree.  The district court awarded sole physical custody of the parties' two minor children to appellant and ordered respondent to pay monthly child support.  Appellant's requests for payment of alleged child support arrearages and retroactive child support were denied.  In dividing the parties' property, the district court determined that the homestead real estate parcel (homestead) and appellant's business purchases, which were funded by proceeds from a mortgage against the homestead, constituted marital property.  Each party received a one-half interest in the equity of the homestead and an equal share in the value of appellant's recent business purchases.  Appellant retained ownership of the homestead and business purchases.  To provide respondent with her share of these assets, the district court awarded her a lien interest of $47,237 in the homestead.   

            Shortly thereafter, appellant moved for amended findings, or in the alternative, a new trial.  The district court made amended findings that provided further clarification of the previous order, but denied a new trial.  This appeal followed.

D E C I S I O N

I.

 

A.     Marital vs. Nonmarital

 

            Appellant disputes the district court's characterization of the homestead as a marital asset.  Appellant argues that the district court based its decision on an erroneous application of law and disregarded evidence that the homestead was a non-marital gift from his parents.  We agree, but affirm the division of property on other grounds.  Following a marriage dissolution, all marital property is subject to an equitable division between the former spouses.  Minn. Stat. § 518.58, subd. 1 (2004).  Property acquired during a marriage is presumptively marital.  Minn. Stat. § 518.54, subd. 5 (2004).[1]  Nonmarital property includes real or personal property that "is acquired as a gift . . . made by a third party to one but not the other spouse . . . ."  Id.  In order to maintain its nonmarital character, nonmarital property must be kept separate from marital property or, if commingled, must be readily traceable."  Wopata v. Wopata, 498 N.W.2d 478, 484 (Minn. App. 1993).  And "a spouse claiming a nonmarital interest must prove that interest by a preponderance of the evidence."  Fitzgerald v. Fitzgerald, 629 N.W.2d 115, 119 (Minn. App. 2001) (quoting Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997)). 

            Whether an asset is marital or nonmarital property is a question of law reviewed de novo.  Gottsacker v. Gottsacker, 664 N.W.2d 848, 852 (Minn. 2003).  We defer to the district court's findings of fact unless they are clearly erroneous such that we are "left with the definite and firm conviction that a mistake has been made."  Olsen, 562 N.W.2d at 800 (quotation omitted).  We will affirm the district court's property division if it has an acceptable basis in fact and principle even if this court might have taken a different approach.  Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002).

            Shortly after their marriage, in 1984 the parties began to live in their homestead on an 80-acre parcel of land owned by appellant's parents.  In October 2002, appellant's parents executed a quit claim deed transferring their unencumbered interest in the homestead to appellant.  After obtaining title, appellant encumbered the homestead with a $130,000 mortgage note signed by both him and respondent.  Appellant utilized the proceeds to cover the initial costs of starting a truck repair business and to construct a workshop on the property.  In determining that the homestead is marital property, the district court did not articulate whether the transfer of the homestead constituted a gift to

appellant.[2]  Instead, the district court determined that the act of signing the mortgage note by respondent, coupled with her labor contributions to the business and the use of marital assets for expenses related to maintenance of the workshop caused the homestead to become marital property. 

            We conclude that the district court rested its decision on an erroneous application of law.  By signing the note, respondent became legally responsible for the debt secured by the parcel.  This act had no bearing on the marital/nonmarital characterization of the homestead.  Further, there is no evidence that respondent was deeded an interest in the property or that marital funds or efforts were used to obtain the property from appellant's parents.  See Campion v. Campion, 385 N.W.2d 1, 3 (Minn. App. 1986) (finding that a parcel of property was marital, in part, on the fact that the deed included the names of both spouses); Ziemer v. Ziemer, 386 N.W.2d 348, 351 (Minn. App. 1986), review denied (Minn. July 16, 1986) (noting that purchases made with marital funds are marital property). 

            Even if the district court found that the property was converted to marital property by respondent's labor efforts this conclusion would be erroneous because general maintenance and labor contributions do not transmute nonmarital property to marital property unless the property increased in value during the marriage.  See Swick v. Swick, 467 N.W.2d 328, 331 (Minn. App. 1991) (holding that the appreciation in nonmarital property becomes a divisible marital asset when a spouse has "participated in the maintenance, improvement or management of the property," but the property itself retains its marital or nonmarital characteristics), review denied (Minn. May 16, 1991).  The district court did not find that the property had appreciated.  Accordingly, the district court erred by determining that the homestead was marital property. 

            Appellant further argues that the business purchases, which included a sand blast truck, paint booth, car hoist, air compressor, and plow truck, are solely nonmarital property.  We agree.  The district court granted a one-half interest in the business purchases to respondent because appellant was awarded ownership of the assets and would be reimbursed for the purchases through business depreciation deductions.  This finding has no basis in law.  Whether appellant may be entitled to reimbursement through tax deductions is irrelevant to the characterization of these purchases.  Because the district court's determination is not supported by law, we conclude that its characterization of the purchases as marital property was erroneous.

            B.  Undue Hardship

            While the district court's characterization of the homestead and business purchases as marital assets is erroneous, we conclude that its alternative theory for the division of the parties' property on the basis of undue hardship is sound.  In the amended findings, the district court noted that

had a determination been made that this property was nonmarital the Court would have found it necessary to nonetheless apportion [the property in the same manner].  Any other determination would have resulted in an undue hardship to Respondent.  She would have received property of nominal value and more than $10,000 in debt . . . . Respondent contributed 20 years of her life to the marriage, and had forgone all other economic opportunities available to her.  She has no retirement funds.  She leaves the marriage with no assets of any value, significant debt, and limited economic opportunity.  She gave the care to the children necessary to allow [appellant] the opportunity to acquire the skills and experience that he has been able to utilize for the establishment and operations of his business.

 

            Under Minnesota law, a district court is allowed to grant a party up to one-half the value of the other party's nonmarital assets if one party's resources or property, "including the spouse's portion of the marital property[,] . . . are so inadequate as to work an unfair hardship, considering all relevant circumstances."  Minn. Stat. § 518.58, subd. 2 (2004).  Relevant circumstances include "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, and opportunity for future acquisition of capital assets and income of each party."  Id.  Awards of nonmarital property will be upheld unless the district court abused its discretion.  Wiegers v. Wiegers, 467 N.W.2d 342, 345 (Minn. App. 1991). 

            Here, the district court determined that even if the homestead and business purchases are nonmarital property, the court would still reach the same result on the basis of undue hardship.  After reviewing the record, we conclude that the district court properly analyzed the factors under Minn. Stat. § 518.58, subd. 2, and its analysis is supported by the evidence presented at trial.  From the language of the order it is apparent that the district court considered factors such as the length of the marriage, respondent's age, employability, and dearth of assets, and determined that denying respondent a portion of the homestead and business purchases would cause her undue hardship.  Overall, the district court did not abuse its discretion in awarding respondent a portion of these nonmarital assets on the basis of undue hardship.

II.

 

            Appellant disputes the district court's determination of respondent's net income for purposes of calculating her child support obligation.  To calculate child support, a district court must determine an obligor's current net income.  Thomas v. Thomas, 407 N.W.2d 124, 127 (Minn. App. 1987).  A determination of the amount of an obligor's income is a finding of fact and will not be altered on appeal unless clearly erroneous.  Ludwigson v. Ludwigson, 642 N.W.2d 441, 446 (Minn. App. 2002). 

            Here, appellant claims that the district court improperly found that respondent's work time, for purposes of calculating net income, had decreased from 40 to 36 hours without requiring respondent to produce any documentary support.  Appellant relies on Minn. Stat. § 518.551 subd. 5b(a) (2004),[3] claiming that the statute required respondent to present documentation of her reduction in work hours.  The statute provides that in any case where the parties have joint children for which a child support order must be determined, "[t]he parties shall serve and file with their initial pleadings or motion documents, a financial affidavit," including "pay stubs for the most recent three months, employer statements" and "recent federal tax returns."  Minn. Stat. § 518A.28(a) (2006).

            Appellant's reliance on the statute is misplaced.  Respondent filed and served financial documentation with her July 2005 application for temporary relief that disclosed her employers and current earnings, and also included copies of recent pay stubs and tax returns.  Therefore, respondent complied with the statutory disclosure requirements. 

            In November 2005, four months after respondent served and filed the financial documentation, she testified at trial that her work time would soon be reduced from 40 to 36 hours per week, but did not present any written verification to support her claim.  Because respondent's work schedule had not yet changed at the time of trial, it is unclear whether pay stubs or wage reports were available that would have substantiated her claimed reduction in hours.  Regardless, Minn. Stat. § 518A.28(a), did not require respondent to supplement her financial disclosures with new documentation before trial.  The number of hours respondent worked is a question of fact, and the district court found respondent's testimony credible.  Appellant did not produce any evidence to refute this testimony.  With evidentiary support for this factual finding in the record, the district court's decision was not clearly erroneous.

 

 

III.

 

            Appellant contends that the district court erred by sua sponte forgiving child support arrearages owed by respondent.  We disagree.  The district court has broad discretion in deciding whether to forgive child support arrearages and "will not be reversed but for an abuse of discretion in the sense that the order is arbitrary or unreasonable or without evidentiary support."  Stangel v. Stangel, 366 N.W.2d 747, 749 (Minn. App. 1985) (quotation omitted).  Forgiveness of child support arrearages that have accrued before the party has brought a motion to modify child support is a retroactive modification governed by Minn. Stat. § 518.64, subd. 2(d) (2004).[4] Long v. Creighton, 670 N.W.2d 621, 627 (Minn. App. 2003).  Subject to a small number of exceptions inapplicable to this case, modification of child support may be retroactively awarded "only with respect to any period during which the petitioning party has pending a motion for modification but only from the date of service of notice of the motion."  Minn. Stat. § 518 A. 39, subd. 2(e) (2006). 

            As part of the order for temporary relief, the district court required respondent to pay $385 per month in child support starting September 2005.  At trial in November 2005, appellant testified that he had received only $200 of the child support owed.  Conversely, respondent testified that she was a total of $185 in arrears and that any additional amounts she owed appellant were due to delays in processing by the Minnesota Child Support Center.  The district court found respondent's testimony more credible and forgave any arrears respondent might owe because appellant failed to comply with the order for temporary relief, which required him to share the costs of appraising two of the parties' real estate parcels. 

            We conclude that the district court acted within its discretion in forgiving the child support arrearages.  Strictly construed, the statute prohibited the district court from forgiving the arrearages because respondent had not moved to modify her support obligation.  But the facts of this case are unique.  The record reflects that this is not a typical situation involving a motion for forgiveness of arrearages due to an alleged change in circumstances or hardship.  See Minn. Stat. § 518 A. 39, subd. 2(a) (2006) (permitting a modification of child support due to a party's reliance on public assistance or upon a finding of substantial change in gross income, need, cost of living, medical expenses, or child care expenses).  Instead, the district court's forgiveness of the child support was intended as an offset of appellant's unpaid obligation to share the costs of the real estate appraisals with respondent.  Given the reciprocal outstanding debts of the parties, the district court's decision is well-reasoned and supported by the facts in the record.

IV.

 

            Appellant claims that the district court abused its discretion by denying him child support retroactive to October 8, 2004, the date the parties separated.  A district court has broad discretion in setting a child support obligation.  Davis v. Davis, 631 N.W.2d 822, 825 (Minn. App. 2001).  Generally, a district court "may not order retroactive child support for dates prior to the commencement of an action under chapter 518."  Korf v. Korf, 553 N.W.2d 706, 710 (Minn. App. 1996).  However, the district court has inherent authority to "do so as part of the final decree."  Id. 

            In support of his contention, appellant claims that the district court's denial of retroactive child support is contradictory to the following language and authority cited in the order:

The Court is not indicating any approval of any parent who fails to provide support for his or her child.  Because of the failure of the absent parent to fulfill this duty many parents become the recipients of public assistance.  The Court adopts the view presented in Korf v. Korf, 553 N.W.2d 706, 710 (Minn. App. 1996):  ‘The obligation of all parents, men and women, to love and support their children begins at birth.'  The Court finds that, whenever able, the absent parent is personally responsible to provide financial assistance throughout the pre-dissolution separation period.

 

            Appellant claims that this language indicates that the district court believed respondent had the ability to pay retroactive child support.  Appellant also contends that the holding in Korf supports his argument for retroactive support.  After reviewing the record, we conclude that the portion of the order cited by appellant is dictum and is taken out of context.  The district court further found that

the facts of this case, which include respondent having no funds with which to establish a post-separation household, having a significant personal debt load which included payment of expenses of the parties' children and being required to increase her post[-]separation debt load because of [appellant's] overdrafts on a joint account [do not support an award of retroactive support.] . . . [I]n comparison, [appellant's] apparent financial situation has remained stable and he alone has assets of value in his possession or control[.] . . .  [The situation here] do[es] not present the unique facts mandat[ing] a retroactive child support obligation.  [Appellant] alone received the proceeds of the IRA liquidation.  Also, the Court notes that [r]espondent has, on occasion, provided financial assistance directly to her teenage daughters.

 

The district court appropriately weighed whether to grant retroactive support and determined that, due to respondent's limited means and appellant's more stable financial situation, appellant was not entitled to such an award.  In Korf, this court ultimately upheld the district court's decision to deny retroactive support.  553 N.W.2d at 711.  We conclude the district court did not abuse its discretion in declining to award retroactive support.

            Affirmed.

 

 

[1] Renumbered as Minn. Stat. § 518.003, Subd. 3b in 2006.

[2] Although the district court did not reach whether the homestead was a gift to appellant from his parents, the testimony at trial tends to support appellant's contention that it was a gift.  The key factor in determining whether a gift is nonmarital is the donor's intent, which is demonstrated by the surrounding circumstances, including the form of the transfer.  Olsen, 562 N.W.2d at 800.  Appellant and his parents testified that the transfer of the homestead was intended as a gift, and respondent agreed that the transfer constituted a gift "[w]ith the stipulation that if anything happened [respondent] was to get absolutely nothing."  In addition, the transfer of the homestead to appellant was performed by quit-claim deed and did not involve an exchange of assets or services.  No evidence was offered to contradict appellant's claim.     

[3] Minn. Stat. § 518.551, subd. 5b(a), cited in appellant's brief, was renumbered as Minn. Stat. § 518A.28(a) in 2006.  Because no substantive changes were made we will refer to the current version.

[4] Renumbered as Minn. Stat. § 518 A. 39 in 2006.  Because no substantive changes were made we will refer to the current version.