In re the Marriage of: Wayne Charles Sing, petitioner, Respondent, vs. Peggy Sue Sing, Appellant.

In re the Marriage of: Wayne Charles Sing, petitioner, Respondent, vs. Peggy Sue Sing, Appellant. A05-2525, Court of Appeals Unpublished, February 6, 2007.

This opinion will be unpublished and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

A05-2525

 

In re the Marriage of:

Wayne Charles Sing, petitioner,
Respondent,
 
vs.
 
Peggy Sue Sing,
Appellant.

 

Filed February 6, 2007

Affirmed

Peterson, Judge

 

Kandiyohi County District Court

File No. 34-F7-04-001284

 

Gregory R. Anderson, Anderson, Larson, Hanson & Saunders, P.L.L.P., 331 Southwest Third Street, Willmar, MN  56201 (for respondent)

 

John E. Mack, Mack & Daby, P.A., 26 Main Street, P.O. Box 302, New London, MN  56273 (for appellant)

 

            Considered and decided by Willis, Presiding Judge; Peterson, Judge; and Crippen, Judge.*

U N P U B L I S H E D   O P I N I O N

PETERSON, Judge

            On appeal in this dissolution dispute, appellant-wife argues that the district court erred in (1) concluding that respondent-husband had a nonmarital interest in property that he bought before the marriage; (2) valuing the property and awarding it to husband; and (3) declining to award wife maintenance and conduct-based attorney fees.  We affirm.

FACTS           Appellant-wife Peggy Sue Sing and respondent-husband Wayne Charles Sing were married in February 2000, separated in about May 2004, and divorced by judgment and decree entered in July 2005.  Both parties were age 54 at the time of the divorce. 

            Before the parties married, husband bought a parcel of land with two buildings on it:  a seven-unit apartment building and a house.  Husband paid the $75,000 purchase price by borrowing $30,000 against a certificate of deposit (CD) that he held at a bank and borrowing an additional $45,000 from a bank.  When the parties got married, the $30,000 borrowed against husband's CD had not been paid back, and during the marriage, wife made no payments to reduce that amount.  The district court found that the apartments were in poor condition and in need of significant repair at the time of purchase and when the parties got married and that the value of the property remained $75,000 at the time of the marriage.  The district court found that husband's nonmarital equity in the apartments at the time of the marriage was $46,339, the $30,000 borrowed against his CD plus $16,339 in principal paid on the mortgage, which equaled 62% of the property's total value. 

            In March 2003, the parties refinanced the apartment property by borrowing additional money from the bank and obtaining loans from the Willmar Housing and Redevelopment Authority (HRA) and the Minnesota Housing Finance Agency (MHFA).  After refinancing, the indebtedness, excluding the amount borrowed against husband's CD, totaled $163,525. 

            The district court found:

            19.  Neither party presented an independent appraisal of the current value of the apartments, but no rational lender would lend an amount greater than the value of the apartments.  Therefore, the court deems the value of the apartments to be $163,525.

 

            20.  If the apartments are renovated in accordance with HRA standards and other conditions are also met, the MHFA loan will be forgiven in full in March 2008.  It is unknown whether those conditions will be met and the loan forgiven; the apartments do not currently meet HRA standards.  Given the present record, forgiveness of the loan cannot be presumed.

 

            21.  As of the valuation date, the apartments were encumbered by a debt to MHFA in the amount of $82,229, to Atwater State Bank in the amount of $49,997, and to HRA in the amount of $24,147, for a total of $156,373.

 

            22.  The apartments have a value of $163,524, subject to a debt of $156,373, leaving a total equity of $7,152.

 

            23.  The husband's nonmarital equity [in the apartments] is 62%, or $4,434.

 

            24.  The marital equity in the apartments is $2,718.

 

            25.  Since the parties' separation, the husband has been the sole manager of the apartments.  The husband occupies the separate house on the parcel.  The seven apartments are not currently leased to paying tenants, but that is attributable to the husband's management of the property, not external forces in the local rental market.  When occupied, gross income from the apartments was approximately $2800 per month.

 

            The parties also owned a parcel of property with a trailer on it, purchased during the marriage, and valued at $24,800 at the time of the divorce.  The property was subject to a mortgage in the amount of $15,052, resulting in marital equity in the amount of $9,748, and produced a rental income of $400 per month.  

            The district court awarded husband the apartment property, subject to all encumbrances, and wife the trailer property, subject to all encumbrances. 

            Husband earned interest income of $2,623 per year, workers'-compensation disability benefits of $23,280 per year, and $400 per month in rental income from the trailer.  Wife worked 12 hours per week, earning $5.15 per hour, resulting in an annual income of $3,214.  The district court found that wife also received pension payments from a previous divorce but did not determine the amount of those benefits.  The district court found that during the marriage, both parties managed the apartments as their primary occupation and that each party made a substantially equal contribution to management, repair, maintenance, and debt payments and other costs incurred in purchasing and managing the property.  The district court declined to award wife maintenance, finding that she had failed to show "that her claimed disability prevents her from working more than she currently does" and that she also failed to show that she could not provide for her reasonable needs. 

            The district court declined to award wife attorney fees and denied her motion for a new trial or amended findings.  This appeal followed.

D E C I S I O N

1.         Wife argues that the district court erred in concluding that husband had a nonmarital interest in the apartment property and in valuing the property and awarding it to husband.

            Nonmarital interest

            Whether property is marital or nonmarital is a question of law, but a reviewing court must defer to the district court's underlying findings of fact.  Pekarek v. Pekarek, 384 N.W.2d 493, 498 (Minn. App. 1986).  We review a district court's factual determinations for clear error and will uphold those findings unless the record does not support its findings.  Minn. R. Civ. P. 52.01; Vangsness v. Vangsness, 607 N.W.2d 468, 472 (Minn. App. 2000).  "That the record might support findings other than those made by the [district] court does not show that the court's findings are defective."  Id. at 474.  Nonmarital property includes property acquired before the marriage, property acquired in exchange for nonmarital property, and property that is the increase in value of nonmarital property.  Minn. Stat. §  518.003, subd. 3b (2006).

            Citing Schmitz v. Schmitz, 309 N.W.2d 748 (Minn. 1981), and Antone v. Antone, 645 N.W.2d 96 (Minn. 2002), wife argues that because husband's CD was used as collateral to borrow money for a down payment, husband is not entitled to a nonmarital interest in the apartment property.  Under Schmitz,

[t]he present value of a nonmarital asset used in the acquisition of marital property is the proportion the net equity or contribution at the time of acquisition bore to the value of the property at the time of purchase multiplied by the value of the property at the time of separation.

 

Antone, 645 N.W.2d at 102 (quotation omitted).

For property acquired before the marriage, the formula uses the time of the marriage instead of the time of the purchase.  Thus, "[t]he 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. . . ."

 

Id. (quoting Brown v. Brown, 316 N.W.2d 552, 553 (Minn. 1982).

            Wife contends that the $30,000 borrowed against husband's CD should be treated just like the $45,000 mortgage loan that husband also needed to buy the property.  We disagree.  Before buying the apartment property, husband owned a $30,000 CD, which was nonmarital property.  To buy the property, he used the CD as collateral to borrow $30,000, which he used as a down payment.  Therefore, when the purchase of the property closed, husband owned a $75,000 building that was subject to a $45,000 mortgage and a $30,000 CD that was subject to a $30,000 security interest.  In effect, husband exchanged the $30,000 CD, which was nonmarital property, for a $30,000 interest in the apartment property, which was nonmarital property because it was obtained in exchange for nonmarital property.  The district court properly concluded that using the CD as collateral for a loan for a down payment created a nonmarital interest in the apartment property and properly applied the Schmitz formula to calculate the present value of husband's nonmarital interest.

            Valuation and distribution

            When dividing marital property, the district court is required to "make a just and equitable division."  Minn. Stat. § 518.58, subd. 1 (2006).  "[T]he property division need not be mathematically equal to be just and equitable."  Justis v. Justis, 384 N.W.2d 885, 888 (Minn. App. 1986), review denied (Minn. May 29, 1986).  A district court's valuation of an item of property is a finding of fact that will not be set aside unless it is clearly erroneous on the record as a whole.  Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001).  An appellate court does not require the district court to be exact in its valuation of assets; "it is only necessary that the value arrived at lies within a reasonable range of figures."  Johnson v. Johnson, 277 N.W.2d 208, 211 (Minn. 1979).

            Wife argues that the district court should have valued the apartment property at $200,000 based on her testimony.    Parties are presumptively competent to testify to the value of their assets.  Bury v. Bury, 416 N.W.2d 133, 136 (Minn. App. 1987).  But we defer to the district court's credibility determinations.  Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).  Wife's testimony on value was speculative.  We defer to the district court's decision to not accept it.  In light of the lack of other evidence presented on value, the district court's valuation of the apartment property at $163,525 was reasonable and not clearly erroneous based on the record as a whole.

            Wife argues that the district court should have ordered the property to be sold because it is an income-generating asset, and she should have been compensated for the loss of her principal livelihood source.  But at the time of the divorce, the apartments were unoccupied and not generating any income, and given the apartments' poor condition at the time of divorce, there was no basis to conclude that this situation was likely to change.

            The marital equity in the apartment property at the time of divorce was $2,718.  While husband was awarded the apartment property, including the marital equity, wife was awarded the trailer property, which had marital equity of $9,748 and was generating $400 per month in income.  Wife has not shown that the district court's division of property was not just and equitable.

2.         To reverse a district court's determination on maintenance, this court must conclude that the district court abused its discretion by resolving that issue in a manner "that is against logic and the facts on record."  Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).  A district court may order maintenance if a party lacks sufficient property to provide for the party's reasonable needs or if a party is unable to provide self-support through adequate employment.  Minn. Stat. § 518.552, subd. 1 (2006); see Minn. Stat. § 518.552, subd. 2 (2006) (listing factors to consider in determining amount and duration of maintenance).  The party seeking maintenance has the burden to produce evidence on the statutory factors at trial.  See Dobrin v. Dobrin, 569 N.W.2d 199, 202 (Minn. 1997) (stating that statute implicitly places burden on spouse seeking maintenance to prove need for it).

            Wife argues that the district court did not assign sufficient weight to the evidence about her health problems.  But wife's own testimony about her work as an apartment manager, which continued until the parties separated, supports the district court's finding that she failed to show "that her claimed disability prevents her from working more than she currently does."  Wife testified:

            Q.  Now, during the course of the marriage, what did you do for work?  At the apartments, for example.

 

            A.  I painted the house, I painted the garage, I painted all the stucco surrounding the seven-unit apartment building; I cleaned and painted every seven units; I painted every one of them apartments.  That was my job.  People moved in, people moved out, we got stuck with the mess, and I cleaned it up.  Because [husband] had his back injury and on Workmen's Comp.  I did it.  I did my full share and then some.

 

            Q.  And during the time you were doing this work, did you also do any management with respect to the apartments?

 

            A.  Yes.  I showed the apartments, took the phone calls, collected rent, gave receipts, just plain managed them. 

 

            Wife also argues that the district court failed to consider that it will cost her about $12,000 per year for health insurance and that her net income from the trailer rent is only about $100 per month.  Wife cites no evidence in the record supporting her claims that health insurance will cost about $12,000 and that her net rental income is $100.  Wife argues that the district court erred in not including apartment rental income in husband's income.  But at the time of dissolution, the apartments were unoccupied and not generating income.

            Wife argues that when the district court declined to award maintenance, it ignored the fact that the parties lived together and worked together for their mutual benefit for five years before the marriage.  The district court found that the brevity of the marriage, which lasted a little more than five years[1], weighed against an award of permanent maintenance.  But the district court also found that wife failed to show "that her claimed disability prevents her from working more than she currently does" and that she "has not demonstrated that she cannot provide for her reasonable needs."  Wife had the burden of proving her need for maintenance, and she has not explained how the fact that the parties lived and worked together before the marriage demonstrates that the district court erred in determining that she did not meet her burden of proving that she cannot now provide for her reasonable needs.

            Wife has not shown that the district court abused its discretion in declining to award maintenance.  

3.         A district court may impose attorney fees when a litigant unreasonably contributes to the length or expense of the proceeding.  Minn. Stat. § 518.14, subd. 1 (2006).  To award conduct-based fees, the court must identify the offending conduct, the conduct must have occurred during litigation, and it must be found to have unreasonably contributed to the length or expense of the proceeding.  Geske v. Marcolina, 624 N.W.2d 813, 818-19 (Minn. App. 2001).  An award of attorney fees under Minn. Stat. § 518.14, subd. 1, "rests almost entirely within the discretion of the trial 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).

            Although wife refers to need-based attorney fees in her brief, her argument addresses only conduct-based attorney fees.  Accordingly, we will address only conduct-based fees.  See Balder v. Haley, 399 N.W.2d 77, 80 (Minn. 1987) (stating that an assignment of error based on mere assertion but unsupported by argument or authority is waived unless error is obvious on mere inspection).  Wife cites husband's lack of cooperation in discovery.  The district court awarded wife $500 in attorney fees in its April 1, 2005 order, finding husband in contempt for failing to pay temporary maintenance and directing him to comply with discovery.  The district court was in the best position to consider the effect of husband's conduct on this proceeding, and we find no abuse of discretion.

            Affirmed.

*   Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.

[1] The parties were married for a little more than five years, but they separated after being married for a little more than four years.