In re the Marriage of: Barbara Jean Jucick, f/k/a Barbara Jean Jucick-Kleinman, petitioner, Respondent, vs. James Michael Kleinman, Appellant.

In re the Marriage of: Barbara Jean Jucick, f/k/a Barbara Jean Jucick-Kleinman, petitioner, Respondent, vs. James Michael Kleinman, Appellant. A06-1209, Court of Appeals Unpublished, May 15, 2007.

This opinion will be unpublished and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

A06-1209

 

 

In re the Marriage of:

Barbara Jean Jucick,

f/k/a Barbara Jean Jucick-Kleinman,

petitioner,

Respondent,

 

vs.

 

James Michael Kleinman,

Appellant.

 

 

Filed May 15, 2007

Affirmed; motion granted
Crippen, Judge*

 

Hennepin County District Court

File No. DC 291106

 

Becky Toevs Rooney, 700 Rand Tower, 527 Marquette Avenue, Minneapolis, MN 55402 (for respondent)

 

Michael L. Perlman, Perlman Law Office, 10520 Wayzata Boulevard, Minnetonka, MN 55305 (for appellant)

 

            Considered and decided by Lansing, 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

CRIPPEN, Judge

Appellant argues that the district court erred in its finding on his income for child-support guideline purposes, in deviating from the Hortis/Valento formula, and in finding that the parties' eldest child, who has spinal muscular atrophy, is an eligible object for a child support award.  He also disputes the court's designation of marital property, its award of attorney fees to respondent, and its findings on need that underlie the court's permanent maintenance award.  We affirm.

FACTS

            Appellant James Kleinman and respondent Barbara Jucick were married in 1984 and are the parents of three children.  Appellant is employed by Kleinman Realty, Inc.; however, he mainly manages his mother's assets.  Respondent has not worked outside of the home since the birth of the parties' eldest child in 1986.   

            The district court's 2005 divorce judgment includes a child-support-eligible finding on the eldest child, now 19, who suffers a chronic degenerative illness that affects her muscles for basic activities.  The court's permanent maintenance award is premised on a finding that respondent is not capable of supporting herself.  Categorizing the homestead as marital property, despite appellant's purchase of the property before the marriage, the court cited significant improvements to the property during the marriage.  The court also found that other assets, mainly investments, were marital property because appellant failed to successfully trace the property to a nonmarital asset.  Finally, the court awarded respondent $10,000 in attorney fees, finding that appellant was able to contribute to respondent's fees because he received significantly more property than respondent, and also that appellant unreasonably contributed to the length and expense of the proceeding. 

            Following a district court referee's disposition, premised on extensive findings, the matter was reviewed and affirmed by a district court judge, who provided a detailed memorandum to explain his decision.

D E C I S I O N

1.  Child Support[1]

            The district court has broad discretion to make determinations regarding child support.  Putz v. Putz, 645 N.W.2d 343, 347 (Minn. 2002).  The court abuses its discretion when it sets support in a manner that is against logic and the facts on record or when it misapplies the law.  Id.; Ver Kuilen v. Ver Kuilen, 578 N.W.2d 790, 792 (Minn. App. 1998).  Determination of an obligor's income for purposes of child support will not be altered on appeal unless clearly erroneous.  Ludwigson v. Ludwigson, 642 N.W.2d 441, 446 (Minn. App. 2002).  Minn. Stat. § 518.551, subd. 5(b) (2004) defines net income for purposes of calculating child support. 

            Pertinent both to the district court's child support and maintenance decisions, appellant challenges the court's finding that his monthly income was approximately $10,500.[2]  This figure includes the income appellant receives from managing his mother's assets (approximately $7,000 per month), the amount he receives in tax-free gift money from his mother ($1,000 per month), and the amount appellant receives in investment income.  Appellant contends that he earns $54,000 per year, but it was conceded at trial that the amount appellant's mother pays for his services did not correlate to the W-2 wages that appellant claimed to receive.  The district court's income finding is not clearly erroneous.[3]

            Appellant also asserts that the district court abused its discretion in deviating from the Hortis/Valento formula for calculating child support when the parties stipulated to joint custodya deviation resulting in ordinary application of the statutory child support guidelines.  Under the Hortis/Valento formula, "separate support obligations are set for each parent, but only for the periods of time that the other parent has physical custody of the children, and a single net payment is determined by offsetting the two obligations against each other."  Bender v. Bender, 671 N.W.2d 602, 608 (Minn. App. 2003) (citing Schlichting v. Paulus, 632 N.W.2d 790, 792 (Minn. App. 2001)).  Absent a deviation, the Hortis/Valento formula should be used in all joint physical custody cases.  Davis v. Davis, 631 N.W.2d 822, 828 (Minn. App. 2001).  The court may deviate from the Hortis/Valento formula if it makes the requisite findings.  See Minn. Stat. § 518.551, subd. 5(i) (2004) ("If the court deviates from the guidelines, the court shall make written findings giving the amount of support calculated under the guidelines, the reasons for the deviation, and shall specifically address the [statutory deviation factors] and how the deviation serves the best interests of the child."); see also Rogers v. Rogers, 606 N.W.2d 724, 727 (Minn. App. 2000) (stating the district court can deviate from the Hortis/Valento formula only if it makes appropriate findings), aff'd in part, rev'd in part, 622 N.W.2d 813 (Minn. 2001).                                                     

            Although the parties entered into a joint-physical-custody agreement in October 2004, the district court noted that it was deviating from the Hortis/Valento formula in ordering appellant to pay child support as if respondent had sole physical custody.  The court found that, notwithstanding the custody agreement, appellant had not spent any appreciable time with the children, rarely exercised parenting time, and with the exception of one vacation, had not taken the children overnight.  The court determined that the deviation would serve the best interests of the children because respondent had been exclusively responsible for meeting the needs of the children.  The court considered the parties' earnings and income resources, financial needs and resources of the children, the unique needs of the parties' eldest daughter, and the standard of living that the children would have enjoyed had the marriage not dissolved.  The court did not abuse its discretion by deviating from the Hortis/Valento formula.  

            Finally, appellant argues that the district court erred in determining that the parties' eldest child was a proper object for a child support award.[4]  For the purposes of establishing child support, child is defined as "an individual under 18 years of age, an individual under age 20 who is still attending secondary school, or an individual who, by reason of physical or mental condition, is incapable of self-support."  Minn. Stat. § 518.54, subd. 2 (2004).  The district court has authority to require continuing child support even after a child has attained the age of 18 when that child is unable to support herself due to a mental or physical deficiency.  McCarthy v. McCarthy, 301 Minn. 270, 274, 222 N.W.2d 331, 334 (1974).

            The district court determined that even though the parties' eldest child had attained the age of 18 and had graduated from high school, she would be deemed a child for purposes of preserving her continuing eligibility for child support.  This decision was properly premised on findings that the child's illness required her to be in a wheelchair since she was a toddler, and that she required extensive personal assistance to handle her most basic needs.  The district court found that the child will be dependent on others and will require a personal care attendant when she is living away from home.  Although the court heard evidence as to the praiseworthy skills of the parties, its findings were not clearly erroneous in the child's present circumstances as a college student.

2.  Spousal Maintenance

            Appellant argues that the district court clearly erred in its finding that respondent was not capable of supporting herself.  Appellate courts review a district court's spousal-maintenance award for an abuse of discretion.  Dobrin v. Dobrin, 569 N.W.2d 199, 202 (Minn. 1997).  The court's findings must stand unless they are clearly erroneous.  Peterka v. Peterka, 675 N.W.2d 353, 357 (Minn. App. 2004).

            Spousal maintenance may be granted when the district court finds, in consideration of the standard of living established during the marriage, that the spouse seeking maintenance lacks the ability to provide for that spouse's reasonable needs or is unable to provide adequate self support.  Minn. Stat. § 518.552, subd. 1 (2006).  The district court essentially balances the recipient's needs against the obligor's ability to pay.  Prahl v. Prahl, 627 N.W.2d 698, 702 (Minn. App. 2001).  In establishing a spousal-maintenance award, the district court must consider the factors set forth in Minn. Stat. § 518.552, subd. 2 (2006), including the financial resources of the spouse seeking maintenance.  Reinke v. Reinke, 464 N.W.2d 513, 514-15 (Minn. App. 1990).

            The district court found that respondent had the capability of generating approximately $10,000 per year in income.  The court considered that respondent recently had been workinghousecleaning, interior painting, and staging of homes for saleand that she earned only $7,713 in 2003, $2,458.50 in 2004, and $5,037.50 in 2005. 

            The court also considered that respondent had been out of the workforce for approximately 17 years, has no formal education, and before having children worked in fields that required no formal training, licensing, or certification and never earned above minimum wage.  The court also considered respondent's age and that shesuffered from back and shoulder problems as a result of the physical demands of caring for the parties' eldest daughter.  Although appellant contends that the vocational expert that he hired to assess respondent's ability to rejoin the workforce and become self sufficient opined that respondent could earn a living, the district court found that this expert offered no opinion as to the availability of jobs for a person with respondent's strengths. The record supports the court's findings regarding respondent's need for spousal maintenance.   

            Appellant also argues that the district court clearly erred in finding that respondent will need at least $4,000 per month in order to establish a separate household for herself.  Appellant suggests that the court should have relied on the monthly budget he created for respondent, but the district court found that this budget was unbelievable and unreasonable.  The court found that appellant underestimated respondent's mortgage, utility expenses, automobile repair for respondent's 14-year-old vehicle, medical-insurance premium, and gift expenses; failed to include home-maintenance costs, replacement cost for a new vehicle, counseling and chiropractic expensesalthough those expenses had historically been incurred,and discretionary expenses; and budgeted $250 per month for food for respondent and the children, despite budgeting $920 per month for food for himself.  The record supports the district court's findings regarding respondent's reasonable budget.

3.  Property Division

            Appellant contends that the district court abused its discretion by awarding respondent nonmarital property.  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 them.  Minn. R. Civ. P. 52.01; see also Vangsness v. Vangsness, 607 N.W.2d 468, 474-75 (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.").

There is a presumption that property acquired during the marriage is marital property.  Minn. Stat. § 518.003, subd. 3b (2006).  "To overcome the presumption that property is marital, a party must demonstrate by a preponderance of the evidence that the property is nonmarital."  Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997).  "Nonmarital property" is property acquired before, during, or after the marriage, which is a gift to only one spouse, is in exchange for or is the increase in the value of nonmarital property, or is excluded by contract.  Minn. Stat. § 518.003, subd. 3b.  In order for nonmarital property to maintain its status, it must either be kept separate, or if commingled with marital property, be readily traceable.  Olsen, 562 N.W.2d at 800.  A party must show by a preponderance of the evidence the tracing of a nonmarital asset.  Id.

Appellant contends that the district court erred in finding that the homestead, although acquired by appellant prior to the marriage, became marital property due to improvements made during the marriage.  Appellant argues that because he did all of the improvement himself or paid for them with nonmarital assets, the homestead remained nonmarital. 

            In Nardini v. Nardini, the court stated that an increase in value of nonmarital property attributable to the efforts of one or both spouses during the marriage is marital property and conversely an increase in value of nonmarital property attributable to inflation or market forces, retains its nonmarital character.  414 N.W.2d 184, 192 (Minn. 1987).  Therefore, because appellant's effort in remodeling the homestead and increasing its value occurred during the marriage, that increase in value is marital. 

            Appellant also argues that he provided evidence to show that he paid for   improvements with nonmarital assets, including gifts from his family.  Nonmarital property includes a gift from a third party to one spouse.  Minn. Stat. § 518.003, subd. 3b. 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.                                     

            The district court found that appellant failed to provide any evidence to show the source of funding for the home improvements, other than for the three-story addition.  And the court found that appellant's documentary evidence was not explained and his tracing was not evident from the documents he submitted.  Finally, the court also found that it was impossible to perform a Schmitz calculation because appellant failed to provide evidence of the fair market value of the homestead at the time of the marriage or any evidence relative to the component of current value attributable to any of the improvements.    The district court's findings are supported by the record.  The documents that appellant submitted do not show how he kept commingled assets separate, and he failed to show that any gift he received was intended only for his use.  

            Appellant also argues that the district court erred in finding that certain investments were marital.  He contends that he traced his nonmarital interest in these assets.  The court found that appellant established that some stock was gifted to him, but that appellant failed to trace other investments to a nonmarital interest.  The court stated that appellant's exhibits were "so complicated and reflected so many transactions from so many different sources over so many years, that it [was] impossible for the Court to understand the nature and extent of [appellant's] claim."

            Regarding one particular account, the district court found that the evidence showed that the investment generated money dividends, which were reinvested, and that the account was set up to provide for an automatic reinvestment of dividend income.  The district court concluded that the reinvestment of dividends was marital property and that appellant failed to distinguish between shares that were acquired from a nonmarital source and those shares acquired from the use of the generated income.  Regarding a second account, the district court found that the evidence showed that the growth in the original gift was the result of stock dividends, rather than the purchase of stock from money dividends issued by the company, and, therefore, the asset was nonmarital; but because appellant received two separate distributions of cash dividends in 2004, that amount was a marital asset.  Appellant claims that he used that money to pay respondent's attorney fees and spousal maintenance, but he failed to support this claim with any evidence.  Regarding a life-insurance policy that appellant claimed was nonmarital because it was taken out for him by his father when he was a child, the district court found that appellant provided no testimony regarding that policy other than the year in which it was obtained.  

            The record supports the district court's findings.  The exhibits that appellant claims demonstrate his tracing of the assets fail to establish an adequate tracing to nonmarital sources.  Additionally, the record shows that appellant commingled marital and nonmarital property and then claims to have only increased value of nonmarital assets, but appellant fails to show how this is possible when the funds were all in one account.  Because the district court did not clearly err in its findings underlying its identification of marital and nonmarital property, it did not err in its resulting determination of whether various assets were marital.

4.  Attorney Fees

Appellant argues that the district court abused its discretion in awarding respondent attorney fees.  The court "shall" award need-based attorney fees when it finds that the party requesting fees does not have the means to pay them and that the party from whom fees are sought has the means to pay them.  Minn. Stat. § 518.14, subd. 1.  To award conduct-based fees, the court must identify the offending litigation conduct that unreasonably contributed to the length or expense of the proceeding.  Id.; Geske v. Marcolina, 624 N.W.2d 813, 818-19 (Minn. App. 2001). 

The district court awarded $10,000 in need-based attorney fees to respondent, finding that appellant was able to contribute to her fees because he received significantly more property than respondent in the dissolution.  This finding is supported by the record; appellant received $1,013,490.72 in assets and respondent received $662,504.84 in assets. 

The court also found that respondent was entitled to conduct-based attorney fees.  The district court identified appellant's offending conduct that occurred during litigation that unreasonably contributed to the length and expense of the proceeding, including conduct resulting in respondent's inability to use accounts for basic expenses, discovery failures, and lack of good faith in claims related to spousal maintenance and nonmarital property.  The court did not abuse its discretion in awarding fees.

Respondent moves this court for an award of attorney fees under the cited statute.  To prevent dilution of the district court's fee award, appellant shall pay to respondent the sum of $6,000 for her fees on appeal.  See Anderson v. Hunter, Keith, Marshall & Co., 401 N.W.2d 75, 83 (Minn. App. 1987), aff'd in part, rev'd in part on other grounds, 417 N.W.2d 619 (Minn. 1988) (stating when district court fees are authorized, a party is also entitled to appellate fees to avoid dilution of the district court award). 

5.  Findings

            Finally, appellant argues that the district court erred by adopting respondent's proposed findings of fact and conclusions of law.  "A district court's verbatim adoption of a party's proposed findings and conclusions of law is not reversible error per se."  Schallinger v. Schallinger, 699 N.W.2d 15, 23 (Minn. App. 2005), review denied (Minn. Sept. 28, 2005).  However, "adoption of one party's findings and conclusions raises the question of whether the [district] court independently evaluated each party's testimony and evidence."  Bliss v. Bliss, 493 N.W.2d 583, 590 (Minn. App. 1992), review denied (Minn. Feb. 12, 1993).  When a party challenges the district court's verbatim adoption of a party's proposed findings, this court carefully reviews the district court's findings to determine whether they are "detailed, specific and sufficient enough to enable meaningful review by this court."  Id. 

            Although the court's order is similar to respondent's proposed findings, this is not error per se.  The district court conducted a lengthy trial and received numerous exhibits to review.  The district court's order is 73 pages long, detailed, and thorough.  The order is specific and sufficient enough to enable this court to review the order.  Even more important, the district court conducted an independent review, included extensive comments upon review, and affirmed the order.  Thus, the court did not err in adopting respondent's findings of fact and conclusions of law. 

            Affirmed; motion for fees granted as provided.

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

[1] Statutory citations relating to child support are to 2004, due to the major revisions to the child support statutes in 2006.

[2] Appellant also asserts, solely in the context of child support, that the court erred in reciting only his gross, not his net, income.  But he points to no evidence to suggest either the amount of his net income or its significance in this case.  Under the statutory child support guidelines, $1,500 of the district court's $1,750 child support award for two children would be appropriate for a net income of $5,000 per month, half of the sum recited by the district court.  Minn. Stat. § 518.551, subd. 5(b).  Similarly, appellant asserts, for child support purposes, the absence of a finding of respondent's net income; the district court found that she was "capable of generating approximately $10,000 per year income," without stating if this amount was a gross or a net determination.  The determination of respondent's income is not material to the district court's application of statutory guidelines, which are premised on the income of the obligor.  Id.

[3] Appellant does not raise questions of law as to which sources of funds constitute income for child support purposes.  Whether a source of funds is income for support purposes is a legal question reviewed de novo.  Sherburne County Soc. Servs. v. Riedle, 481 N.W.2d 111, 112 (Minn. App. 1992).

[4] Although the court determined that the eldest child would be a candidate for child support, it presently awarded support only for the two younger children.  The court explained that its findings about the child were "for the purposes of preserving her continuing eligibility for child support," and the court "reserved" the topic of an award "at this time."