In re the Marriage of: Deanna B. Luger, petitioner, Respondent, vs. Ross O. Luger, Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

C2-03-259

 

In re the Marriage of:
 
Deanna B. Luger, petitioner,
Respondent,
 
vs.
 
Ross O. Luger,
Appellant.

 

Filed October 14, 2003

Affirmed in part, reversed in part, and remanded

Wright, Judge

 

Chisago County District Court

File No. F5011423

 

 

Sherri D. Hawley, 1398 Myrtle Street North, St. Paul, MN  55119 (for appellant)

 

Steven A. Sicheneder, 20 North Lake Street, Suite 302, Forest Lake, MN  55025 (for respondent)

 

 

            Considered and decided by Harten, Presiding Judge, Anderson, Judge, and Wright, Judge.

U N P U B L I S H E D  O P I N I O N

 

WRIGHT, Judge

 

In this marital-dissolution appeal, appellant husband argues that the district court abused its discretion when it (1) determined the marital interest in the parties' homestead and (2) denied his motion for a new trial based on newly discovered evidence.  We affirm in part, reverse in part, and remand.

FACTS

 

            Appellant Ross Luger and respondent Deanna Luger were married on July 10, 1993.  Approximately eight years prior to the marriage, appellant purchased a home on a contract for deed.  The parties' marriage was dissolved on July 2, 2002.

Appellant sought the homestead as a part of the property division.  At the time of the marriage, appellant had an outstanding debt of $86,850 on the homestead.  This debt had been reduced to $64,000 on the date of the dissolution.  At trial, respondent presented appraisal evidence setting the homestead's fair-market value at $780,000 on the date of the dissolution.[1]  Also admitted into evidence were records from the Chisago County Assessor's Office setting the value of the homestead at $145,700 in 1993, when the parties were married, and $498,600 on the date of the dissolution.  Using the criteria set forth in Schmitz v. Schmitz, 309 N.W.2d 748, 750 (Minn. 1981), the district court computed the parties' marital and nonmarital interests in the homestead.  Because neither party presented evidence of the homestead's fair-market value on the date of their marriage, the district court used the homestead's tax-assessed value at marriage and   fair-market value at dissolution and determined the value of the parties' marital interest in the homestead to be $401,000. 

            After trial, appellant obtained an appraisal valuing the home's fair-market value on the date of their marriage at $280,000 and moved for a new trial based on newly discovered evidence.  The district court denied appellant's motion because the appraisal could have been obtained prior to trial.  This appeal followed.

D E C I S I O N

 

            In a dissolution action, the district court is required to "make a just and equitable division of the marital property."  Minn. Stat. § 518.58, subd. 1 (2002).  The district court has broad discretion in dividing marital property in a marriage-dissolution action.  Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001); Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).  The district court, however, may not speculate in valuing marital property.  Fastner v. Fastner, 427 N.W.2d 691, 697 (Minn. App. 1988).  We will affirm the district court's property division "if it ha[s] an acceptable basis in fact and principleeven though we might have taken a different approach."  Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002). 

            To ascertain the value of the marital interest in the homestead, the value of the property at the time of the marriage and at the time of the dissolution must be obtained.  Antone, 645 N.W.2d at 102.  

The present value of a nonmarital interest in property acquired before the marriage is the proportion the net equity at the time of the marriage bore to the value of the property at the time of the marriage multiplied by the value of the property at the time of separation.  The remainder of equity increase is characterized as marital property.

 

 Id.; see Schmitz v. Schmitz, 309 N.W.2d 748, 750 (1981).  This formula is commonly referred to as the Schmitz formula.  Antone, 645 N.W.2d at 101-02.  Here, the only evidence received by the district court regarding the homestead's value was the           fair-market value appraisal on the date of the dissolution and the records from the Chisago County tax assessor.  The appraised fair-market value of the homestead at dissolution was $780,000.  In contrast, the homestead's tax-assessed value at dissolution was $498,600.  The home's tax-assessed value at marriage was $145,700.  In the absence of any other evidence regarding the value of the home on the date of the parties' marriage, the district court accepted the tax-assessed value of $145,700 for the value of the property on the date of the marriage.  The district court then applied the following formula to calculate the parties' marital interest in the homestead, using the fair-market value at the date of dissolution:

1. Value of the property at marriage                        $145,700

2. Outstanding obligation at marriage                     ($86,654)

3. Net equity                                                              ($59,046)

4. Nonmarital percent                                                    40.5%

5. Current value of the property                                $780,000

6. Nonmarital position (40.5%)                            ($315,000)

7. Percent encumbrance                                           ($64,000)

8. Marital equity                                                        $401,000[2]

 

Appellant, who did not introduce evidence of the homestead's fair-market value at the date of the marriage, argues that the district court abused its discretion in applying the Schmitz formula by relying on the homestead's tax-assessed value on the date of the marriage and fair-market value on the date of the dissolution because these are dissimilar values.  Appellant contends that, in the absence of comparable evidence, such as the   fair-market value for the marriage and dissolution dates, the district court should have estimated the fair-market value of the homestead on the date of the marriage by dividing the fair-market value on the dissolution date by the rate of increase during the marriage or by multiplying the tax-assessed value on the date of the marriage by 156 percent (the percentage difference between the fair-market value and tax-assessed value on the date of dissolution).

We agree that the Schmitz formula requires comparable values for calculating marital and nonmarital interests in property.  Using dissimilar values in applying the Schmitz formula distorts the parties' marital and nonmarital property interests, which, in turn, affects the property division.  Here, the district court had two comparable valuesthe home's tax-assessed values at marriage ($145,700) and at dissolution ($498,600).  Applying the Schmitz formula using only the homestead's tax-assessed values illustrates the disparity created by a calculation, such as the district court's, that uses incomparable values: 

1. Value of the property at marriage                        $145,700

2. Outstanding obligation at marriage                     ($86,654)

3. Net equity                                                              ($59,046)

4. Nonmarital percent                                                    40.5%

5. Current value of the property                                $498,600

6. Nonmarital position (40.5%)                            ($201,933)

7. Percent encumbrance                                           ($64,000)

8. Marital equity                                                        $232,667

The nonmarital percent is identical (40.5 percent) because both calculations rely on the tax-assessed value at marriage.  But the district court's use of the fair-market value at dissolution, rather than the tax-assessed value at dissolution, resulted in a difference of $168,333 in marital equity.  Given the sizable difference in marital equity that exists when using incomparable valuations, we cannot conclude that the district court's calculation had a reasonable basis in principle.  We, therefore, conclude that the district court abused its discretion in its application of the Schmitz formula to determine the marital equity in the homestead.  Accordingly, we reverse and remand for application of the Schmitz formula using comparable property values.[3] 

II.

 

            A new trial may be granted if the moving party produces "[m]aterial evidence, newly discovered, which with reasonable diligence could not have been found and produced at the trial."  Minn. R. Civ. P. 59.01(4).  Where the decision whether to grant a new trial turns on a claim of newly discovered evidence, we will not disturb the district court's denial of a new trial absent an abuse of discretion.  Hertz v. Hertz, 304 Minn. 144, 146, 229 N.W.2d 42, 44 (Minn. 1975).  To qualify as newly discovered evidence, the evidence must have been in existence at the time of trial and cannot be expert testimony procured after the trial.  Swanson v. Williams, 303 Minn. 433, 436, 228 N.W.2d 860, 862 (1975).

Appellant argues that he is entitled to a new trial based on newly discovered evidencenamely, a property appraisal obtained after trial.  Given the nature of these proceedings, the need for appraisal evidence was clearly anticipated by the parties.  Appelant's posttrial appraisal was not newly discovered evidence because it was not in existence at the time of trial.  Moreover, reasonable diligence by appellant would have enabled the production and use of this evidence at trial.  Accordingly, we conclude that the district court did not abuse its discretion in denying appellant's motion for a new trial.

Affirmed in part, reversed in part, and remanded.

 

 

 

[1] Appellant did not object to the admission of the appraisal evidence or contest the appraised fair-market value of the homestead.

[2] The district court made a mathematical error when it calculated the parties' nonmarital position.  The current value of the property ($780,000) multiplied by the nonmarital percent (40.5%) equals $315,900, not $315,000.  Consequently, the parties' marital equity as calculated by the district court should be $400,100. 

[3]  Our calculation is used for illustrative purposes only.  On remand, the district court is not bound by our use of tax-assessed values in applying the Schmitz formula.  In its discretion, the district court may reopen the record to receive additional evidence regarding the value of the homestead.