Julie Ann Johnson, petitioner, Respondent, vs. Thomas Gerald Johnson, Appellant.

Julie Ann Johnson, petitioner, Respondent, vs. Thomas Gerald Johnson, Appellant. A06-1075, Court of Appeals Unpublished, June 19, 2007.

This opinion will be unpublished and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

A06-1075

 

In the Marriage of:

Julie Ann Johnson, petitioner,

Respondent,

 

vs.

 

Thomas Gerald Johnson,

Appellant.

 

Filed June 19, 2007

Affirmed in part, reversed in part, and remanded

Collins, Judge*

 

Chisago County District Court

File No. 13-FA-05-321

 

 

Timothy T. Ryan, Laura M. Johnson, Berry Law Offices, 10646 Railroad Avenue, P.O. Box 284, Chisago City, MN  55013 (for respondent)

 

Alex W. Russell, Evening & Weekend Law Offices, 464 Hamline Avenue South, St. Paul, MN  55105 (for appellant)

            Considered and decided by Dietzen, Presiding Judge; Hudson, Judge; and Collins, Judge.

U N P U B L I S H E D   O P I N I O N

COLLINS, Judge

On appeal in this dissolution matter, appellant-husband argues that the district court (a) failed to fully adopt a personal-property stipulation; (b) improperly admitted hearsay evidence of real-property value; (c) miscalculated the value of certain real property; and (d) failed to recognize his nonmarital interest in homestead property.  We affirm in part, reverse in part, and remand.

FACTS

Appellant Thomas Gerald Johnson and respondent Julie Ann Johnson were married on July 12, 1979; they separated in March 2005; and the trial on respondent's petition for dissolution of the marriage was concluded in March 2006.

A record was made at the outset of the trial to distinguish the resolved and contested issues.  The parties acknowledged their agreement as to the division of personal property, excepting only any undisclosed items.  Appellant disputes the district court's determination that the stipulation went only to possession and not to value.  

In November 2000, at her request, respondent's father purchased 20 acres of land near Harris, in Chisago County ("Harris property") for $50,000.  In January 2002 respondent and her father entered a contract for deed to transfer the Harris property to respondent for $40,000.  Before they separated, the parties made payments to respondent's father reducing the principal balance of the contract.  By September 2004, respondent had decided to move from the homestead, and she obtained a construction loan to place a home on the Harris property.  As respondent's spouse, appellant was required to sign the loan documents, and he did so.  Appellant challenges the district court's valuation of the Harris property and the denial of his claim of marital interest.

            The parties owned the homestead where they resided in St. Paul.  The district court denied appellant's claim of a nonmarital interest in the homestead.

            The district court issued findings and conclusions and ordered entry of judgment.  Appellant's motion for amended findings and conclusions was in all pertinent parts denied.  This appeal followed.

D E C I S I O N

I.        

Appellant argues that the district court abused its discretion by failing to fully adopt the parties' agreement allocating personal property.  "In a dissolution proceeding, a district court has ‘a duty to protect the interests of both parties and all the citizens of the state to ensure that the stipulation is fair and reasonable to all.'"  In re Marriage of Rettke, 696 N.W.2d 846, 850 (Minn. App. 2005) (quotation omitted).  Therefore, in deciding whether to approve a stipulation, the district court must exercise its independent judgment to determine whether a stipulation is, on the facts of the case, appropriate.  Id. at 850-51.  The district court has the authority to refuse to accept the terms of a stipulation "in part or in toto."  Id. at 851 (emphasis omitted); see Toughill v. Toughill, 609 N.W.2d 634, 639 n.1 (Minn. App. 2000) (noting that "while a district court may reject all or part of a stipulation, generally, it cannot, by judicial fiat, impose conditions on the parties to which they did not stipulate and thereby deprive the parties of their ‘day in court'"). 

            Appellant argues that despite acknowledging the parties' agreement at the commencement of trial, the district court, in its order, not only allocated the items of personal property as agreed but also, contrary to the agreement, calculated and took into account their values in arriving at the amount owed by appellant to respondent "to balance out the division of marital property."  Respondent agrees with the finding, arguing that the parties released their claims to the division of possession but not to the claims of value of their personal property. 

At the outset of trial, the district court reviewed with the parties all issues, resolved and unresolved.  When identifying the resolved issues, neither the district court nor either party distinguished between a division of possession of personal property and a division of value.  The court and the parties simply acknowledged that "personal property will  remain as currently divided."  Respondent claims that the agreement to "divide the personal property as presently divided" did not pertain to the value but only to possession.  However, no one expressed this value-versus-possession distinction.  Indeed, when the court distinguished the resolved and unresolved issues, neither the court nor respondent identified the value of personal property as unresolved. 

A stipulation in a dissolution action is treated as a binding contract that cannot be repudiated without the parties' consent.  Angier v. Angier, 415 N.W.2d 53, 56 (Minn. App. 1987).  The general rules of contract construction apply to dissolution stipulations and agreements.  Blonigen v. Blonigen, 621 N.W.2d 276, 281 (Minn. App. 2001), review denied (Minn. Mar. 13, 2001).  In order to have a binding settlement, the parties must agree and have a "meeting of the minds."  See Ryan v. Ryan, 292 Minn. 52, 55, 193 N.W.2d 295, 297 (1971) (noting settlement requires "a meeting of minds on the essential terms of the agreement").  It is apparent that the parties here did not achieve the required meeting of the minds as to the scope of their agreement on personal property.

Because appellant thought the parties had resolved the issue of personal property, he did not present property values.  "[T]o the extent that the district court does not accept the stipulation, the parties should not, absent unusual circumstances, be precluded from litigating their claims."  Toughill, 609 N.W.2d at 639 n.1.  Because appellant reasonably believed he was bound by the stipulation, appellant was effectively precluded from presenting evidence of valuation of the personal property.  We reverse and remand this issue for further hearing to afford appellant his day in court.

II. 

Appellant next argues that the district court abused its discretion in admitting, over appellant's hearsay and foundation objections, certificates of real-estate value (CRVs) offered in relation to the valuation of the Harris property.  Absent an erroneous interpretation of the law, whether to admit or exclude evidence is a question within the district court's broad discretion.  Kroning v. State Farm Auto. Ins. Co., 567 N.W.2d 42, 45-46 (Minn. 1997).  A new trial will be granted because of an improper evidentiary ruling only if the complaining party demonstrates prejudicial error.  Id. at 46.  Although appellant fails to show that any error was prejudicial, he maintains that the district court improperly admitted the CRVs.  We disagree.

Three CRVs were offered by respondent as evidence of the value of the Harris property as of the date of the transfer to respondent from her father, in order to establish the amount of the gift and respondent's nonmarital interest.  Respondent testified that she obtained the CRVs directly from the Chisago County Assessor's Office and that she was "somewhat selective" with her choices, using only land tracts in the same area as and similar to her property.  Appellant objected on hearsay and foundation grounds.  The court sustained the foundation objection but allowed respondent time, over a lunch recess, to obtain certified copies or arrange for a qualified witness to provide foundation.  During the recess, respondent obtained certified copies of the CRVs, which the court subsequently admitted over appellant's hearsay objection.

Appellant asserts that throughout discovery and the first day of trial respondent claimed a $10,000 nonmarital interest in the Harris property; the difference between the $50,000 purchase price paid by her father and the $40,000 contract for deed.  Ultimately, the CRVs were used to support the district court's determinations that the gift and respondent's nonmarital interest amounted to $40,000 because the fair market value of the Harris property when transferred to respondent was at least $80,000.  Appellant contends that respondent disclosed the CRVs late, but on the record appellant's counsel stated that he received the documents one or two days ahead of time and immediately responded.

Appellant argues that the claimed appreciation of the value of the Harris property over just 14 months is unsupported by qualified appraisal or other competent evidence.  Consequently, appellant speculates that the CRVs may be unfairly prejudicial because those selected may have pertained to dissimilar or unusual properties.  Such points would have been more appropriately developed through cross-examination of respondent or rebuttal.

Appellant next argues that the CRVs were inadmissible hearsay statements to which the public-records exception is inapplicable.  Although generally inadmissible, hearsay statements may be admissible under one of several exceptions to the general rule, one of which is the public-records exception.  Minn. R. Evid. 802 (general rule), 803(8) (public-records exception to hearsay rule).  Official records or reports are admissible under the public-records exception to the hearsay rule unless "the sources of information or other circumstances indicate lack of trustworthiness."  Minn. R. Evid. 803(8). 

The district court specifically overruled appellant's hearsay objection because the CRVs were government documents, produced by a public office.  The district court ensured the integrity of the CRV evidence by requiring certified copies and therefore did not abuse its discretion in admitting them.  See Johnson v. Washington County, 518 N.W.2d 594, 601 (Minn. 1994) ("Evidentiary rulings concerning materiality, foundation, remoteness, relevancy, or the cumulative nature of the evidence are within the trial court's sound discretion and will only be reversed when that discretion has been clearly abused." (quotation omitted)).  We affirm this issue.

III. 

Following a marriage dissolution, all marital property is subject to an equitable division between the former spouses.  Minn. Stat. § 518.58, subd. 1 (2006).  Property acquired during a marriage is presumptively marital.  Minn. Stat. § 518.003, subd. 3b (2006).  "Nonmarital property" is property acquired by one spouse either before the marriage, after the valuation date, in exchange for nonmarital property, or by gift, bequest, devise, or inheritance.  Id., subd. 3b(a)-(d).  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).  "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) (citation omitted).

Whether an asset is marital or nonmarital property is a question of law, which this court reviews de novo.  Gottsacker v. Gottsacker, 664 N.W.2d 848, 852 (Minn. 2003). But this court defers to the district court's findings of fact unless they are clearly erroneous such that this court is "left with the definite and firm conviction that a mistake has been made."  Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997) (quotation omitted).
We will affirm the district court's property division if it has an acceptable basis in fact and principle even if we might have taken a different approach.  Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002). 

A.

Appellant argues that the district court abused its discretion by finding that there was no marital equity in the Harris property.  Supported by the district court's finding that "[t]he parties made payments to [respondent's father] for several months, paying down the principal amount due and owing under the contract by $8,852," appellant contends that at least this amount of equity should be classified as a marital asset and divided equally between the parties.[1]  The district court is required to make an equitable division of marital property but a property division is not required to 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).

Appellant recognizes that the Harris property was acquired largely by gift to respondent, and does not claim an interest in the entire value.  But appellant argues that he signed the loan documents and contributed to the reduction of the principal amount owed to respondent's father on the contract for deed and is thus entitled to something or a clear determination of why he is not.  We agree.

Part of the Harris property's value is respondent's nonmarital asset traceable through gift from her father.  However, the district court's findings with respect to the Harris property valuation lack clarity.  For instance, to arrive at the property's fair market value, the district court started at $290,000, the reasonable fair market value derived from evidence submitted by both parties, and inexplicably subtracted $18,247 attributed to additional improvements completed on the land and home.  The improvements included installation of air conditioning, additional cement floors, sidewalks, and steps, finishing the excavation for the basement egress window, and adding a wall to the garage.[2]  The district court also applied an incorrect loan-balance amount.  Respondent obtained the construction loan in September 2004, and presumably has made payments since then.  The outstanding debt obligation should be factored against the property's fair market value.  See Korf v. Korf, 553 N.W.2d 706, 712 (Minn. App. 1996) (stating that in dissolution proceedings, debts are apportioned as part of the property settlement and are divided in the same way as assets).  No findings were made regarding the outstanding balance on the construction loan. 

Additional findings are required to properly determine the parties' respective marital and nonmarital interests in the Harris property.  The court should clearly establish a valuation date and calculate from that point forward.  We reverse and remand this issue for complete findings of fact.  In its discretion, the district court may modify the findings of fact on this issue either with or without further hearing. 

B.

            Appellant argues that the district court erred by classifying the full value of the parties' St. Paul homestead as martial property.  Appellant argues that the district court erred by failing to recognize payments he made, using nonmarital assets, to reduce the mortgage-loan principal.  We disagree.

As of the date of dissolution, the parties owned their homestead free and clear of any mortgage or lien.  Appellant testified that he applied the proceeds from the sale of his nonmarital motorcycle and inheritance funds received from his grandmother to pay down the previous mortgage loan.[3]  Other than his own testimony, no evidence was offered to support appellant's nonmarital interest claim in the homestead.  It is a province of the district court as fact-finder to decide on the credibility of witnesses and the weight of the evidence because "it has the advantage of hearing the testimony, assessing relative credibility of witnesses and acquiring a thorough understanding of the circumstances unique to the matter before it."  Hasnudeen v. Onan Corp., 552 N.W.2d 555, 557 (Minn. 1996).

Appellant contends that nonmarital claims are not required to be proved with certainty.  And since the district court did not explicitly impugn his credibility and there was no contradictory evidence presented, appellant argues that his claims should be recognized.  The district court stated that "[appellant] failed to meet his burden of proof as to this claimed interest.  The [appellant] was unable to provide the [c]ourt with any evidence to support his claim, even though such evidence should have been readily available."  The record supports the district court's finding that appellant did not meet his burden to prove a nonmarital interest in the homestead.  See Varner v. Varner, 400 N.W.2d 117, 121 (Minn. App. 1987) ("The finder of fact is not required to accept even uncontradicted testimony if the surrounding facts and circumstances afford reasonable grounds for doubting its credibility.").  We affirm this issue.

In summary, we reverse and remand on issues I and III.A; we affirm on issues II and III.B.

            Affirmed in part, reversed in part, and remanded.

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

 

[1] Respondent concedes in her brief that appellant contributed to the payment of the Harris property.  Respondent acknowledged that together, the parties paid down the principal amount due by $8,852.

 

 

[2] The district court found that "[t]he estimated fair market value of the completed project, with the modular home and land, was estimated at $290,000."  This appears to be the property's estimated fair market value at the time the bank approved the construction loan.  Presumably then, the $18,247 of improvements was factored into the $290,000 estimated fair market value and should therefore have no effect on the property's fair market value for purposes of calculating the parties' marital interest in the property. 

[3] During this line of questioning, appellant's counsel stated, "We will be able to check on [the amount of the inheritance]," but supporting evidence was never offered.