In re the Marriage of: Steven John Stoltman, petitioner, Appellant, vs. Marilyn Jane Stoltman, Respondent.
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Minn. Stat. § 480 A. 08, subd. 3 (2006).
STATE OF MINNESOTA
IN COURT OF APPEALS
A06-1829
In re the Marriage of:
Steven John Stoltman, petitioner,
Appellant,
vs.
Marilyn Jane Stoltman,
Respondent.
Filed August 14, 2007
Affirmed in part and reversed in part;
motion to strike granted in part;
motion to dismiss denied
Stoneburner, Judge
Hennepin County District Court
File No. 27FA276241
Mark J. Kallenbach, Suite 13, 2260 Ridge Drive, Minneapolis, MN 55416 (for appellant)
Susan M. Lach, Messerli & Kramer, P.A., 1800 Fifth Street Towers, 150 South Fifth Street, Minneapolis, MN 55402-4218 (for respondent)
Considered and decided by Stoneburner, Presiding Judge; Kalitowski, Judge; and Dietzen, Judge.
U N P U B L I S H E D O P I N I O N
STONEBURNER, Judge
In this appeal from post-dissolution orders, appellant challenges the district court's award of attorney fees to respondent, argues that the district court erred in calculating his disposable income, and erred by ordering him to pay more for child support and maintenance from his long-term disability benefits than is permitted by state and federal law. Appellant also argues that the order finding him in contempt of court for failing to pay attorney fees should be vacated. Respondent moves to strike portions of appellant's brief and to dismiss the appeal. We deny respondent's motion to dismiss the appeal but grant in part the motion to strike. We reverse the attorney fee awards and vacate the finding of contempt. We affirm the district court's calculation of husband's net income from private long-term disability because husband failed to demonstrate that the calculation is clearly erroneous.
FACTS
The district court dissolved the 13-year marriage of appellant Steven Stoltman (husband) and respondent Marilyn Stoltman (wife) by a stipulated judgment in October 2003. Under the judgment, the parties share joint legal custody of their two minor children, and wife has sole physical custody subject to husband's parenting time. At the time of the judgment, husband had a net monthly income of $4,842 and monthly expenses of $3,631, and wife had a net monthly income of $1,578 and monthly expenses of $3,865. The judgment provided for satisfaction of over $60,000 of non-mortgage debt from tax-return refunds, the sale of the homestead, and liquidation of retirement accounts and life insurance policies.
To obtain favorable tax consequences, the parties agreed, with the district court's approval, to "blended-support" that delineated a portion of husband's child support as maintenance. The judgment requires husband to pay wife $200 per month in child support and $2,280 per month in maintenance, with a provision that if husband's annual income exceeds $125,000 for three consecutive or non-consecutive years before the 18th birthday of the eldest child, husband will pay $20,000 as additional support. The parties waived future modification of maintenance, and the district court divested itself of jurisdiction over maintenance but provided that in the event either party "becomes permanently disabled under the Social Security Act, the party shall be relieved of the Karon waiver and the spousal maintenance terms shall be reviewed de novo."
In November 2005, wife moved for an increase in child support to then-existing guideline levels. Husband filed cross-motions, including a motion to set aside the blended-support provision of the judgment for "fraud" based on wife's assertion that the child-support guidelines, rather than the judgment's blended-support provision, control the amount of husband's child-support obligation. The first hearing on these issues was held on November 15, 2005, resulting in the first of the series of orders that are the subject of this appeal. Both parties had requested substantial attorney fees in connection with the motions heard on November 15, 2005. On the record, the district court, in part, (1) denied wife's motion for an increase in child support through the date of the motion, but reserved a decision on post-hearing date increases; (2) ordered husband to pay $1,000 immediately upon receipt of any discovery request from wife "[i]n order to permit [wife's attorney] to pursue the discovery she might pursue," but otherwise reserved the issue of attorney fees; and (3) ordered husband to provide tax returns that disclosed his new spouse's income. A written order incorporating these rulings was issued on December 29, 2005.
Two days after the November 15 hearing, wife's attorney served additional discovery on husband, triggering his obligation to immediately pay $1,000 in attorney fees. Husband largely complied with the discovery requests but notified wife that he could not afford to pay the attorney-fee award.
On January 3, 2006, husband took a medical leave of absence from his employment at the direction of his physician and psychologist. On January 19, 2006, the parties and counsel had an in-chambers conference with the district court. As a result of this unreported conference, the district court issued an order dated January 31, 2006, sua sponte finding that "an additional award of $500 towards [wife's] attorney's fees is appropriate." The order designates the $1,500 in outstanding attorney fees awarded to wife as child support in order to avoid husband discharging the obligation in bankruptcy. The district court also ordered husband to provide more documentation concerning his financial situation. Husband, who had remained current with his support obligation through February 2006, filed for bankruptcy in February 2006 and stopped paying support.
In April 2006, wife moved for an order finding husband in constructive-civil contempt for failing to pay the $1,500 in attorney fees now designated as child support. Wife also moved for additional attorney fees, supported by an affidavit showing that she had incurred attorney fees in the amount of $11,291 since November 2005. Each page of the timesheets which were attached to the affidavit contains the notation: "CHILD SUPPORT AND VISITATION," but the timesheet entries did not indicate which entries were for child support and which were for visitation.
The contempt motion was heard on April 20, 2006. In a written order dated May 19, 2006, the district court found husband in contempt of court for failing to provide previously ordered financial information until the date of the hearing, failing to advise anyone that he had opened a new account in December 2005, failing to pay the $1,500 award by the date set, and failing to pay regular monthly support in the amount ordered from March through April 5, 2006. The district court found that husband had the ability to pay, noting that he had earned $139,746 in 2005, including a bonus he received in February 2006, but "chose to send $13,000 to the IRS for taxes rather than paying the maintenance and child support as ordered." The district court reserved wife's request for additional attorney fees, set conditions for husband to purge the contempt, and scheduled a review hearing for May to review husband's ability to pay support arrearages and the purge conditions.
On May 19, 2006, the district court held an evidentiary hearing to determine husband's ability to pay the purge conditions set out in the prior order. Based on the order from this hearing, it appears that the only purge condition that husband failed to meet was payment of the outstanding $1,500. The district court found that husband had failed to prove that he was disabled from working, implying that husband's ability to care for his one-year-old child demonstrated that he was able to work. Based on an implicit finding of husband's ability to pay, the district court concluded that husband remained in contempt and ordered him to pay $1,500 by May 31, 2006.
On July 17, 2006, the district court held another hearing on the contempt issue. At that hearing, husband's attorney disclosed that husband was now receiving long-term disability payments from ING, his disability insurer, in the gross amount of $5,700 per month and that he was eligible to receive such payments for up to 24 months. There was some discussion about husband's net monthly income from long-term disability payments. Husband asserted that his net income was approximately $2,900 but the district court, on the record using the tax-table rate for married, filing separately, calculated his net income to be $4,503. The district court again found that husband had had the ability to pay the $1,500 and the full amount of support, suggesting that he could have borrowed money to meet his obligations.
Husband's attorney attempted to argue that husband had complied with all discovery requests and that the first $1,000 in attorney fees was inappropriately awarded. The district court said:
Look, . . . the basic facts of this case . . . [are] a bunch of money went through [husband's] hands and he didn't pay [wife] when he could have. He paid the government instead. He benefited himself, without taking care of his kids. That's the short form. The rest of this is all play. It's all tinkering on the edges.
The district court denied wife's pending motion to increase child support but awarded wife an additional $11,299 in attorney fees, ordered husband to pay the previously awarded $1,500 immediately, and ordered husband to pay the full gross amount of his first-month of long-term disability to wife or her attorney. Husband's attorney argued that under federal law, husband could not be compelled to pay more than 50% of his monthly income, whereupon the district court stated:
This is a contempt proceeding, . . . I guess I don't have to tell where the money comes from . . . If he wants to stay out of the jail he has to pay the $1,500, and he has to pay an additional $4,000 in support, and the total of it must be paid in the next 21 days. . . . He is to report to the workhouse at 9 a.m. 21 days from today if he's not paid the $5,500 sum.
The district court also ordered that the $11,299 attorney-fee awarded would be "additional child support," and ordered husband, to avoid ongoing contempt, to pay ongoing support ordered plus 20% of that amount "until the arrears and attorney's fees are satisfied." Of the 20%, half was to go to attorney fees and half to support arrearages. Husband paid support arrearages, but did not pay the $1,500 in attorney fees. The district court issued a commitment order for husband to serve 90-days jail time because he failed to meet the purge conditions. Husband sought a writ of prohibition from this court seeking to preclude enforcement of the jail time, which was denied. Husband appealed the orders for attorney fees, support, and contempt. Husband moved the district court to stay the commitment order pending appeal and requested the court to modify amounts that can be withheld from his disability checks. The district court directed husband to post a $1,500 bond to avoid incarceration pending appeal and noted that husband was "free to bring a motion regarding the long-term disability attachment."
This appeal follows. Wife has moved to strike a portion of the appendix to husband's brief and to dismiss the appeal on several grounds, including the inadequacy of the record to ensure proper review.
D E C I S I O N
I. Attorney fees
Husband argues that the district court abused its discretion by ordering him to pay attorney fees to wife in its orders of December 29, 2005 ($1,000), January 31, 2006 ($500), and July 26, 2006 ($11,299). A district court in a dissolution-related action "shall" grant attorney fees when necessary for the good-faith assertion of a party's rights if the party seeking fees lacks the ability to pay the fees and the party from whom the fees are sought has the ability for payment. Minn. Stat. § 518.14, subd. 1 (2006). The district court may also order attorney fees if a party unreasonably contributes to the length or expense of the proceeding. Id. This court reviews a determination on attorney fees for abuse of discretion. Gully v. Gully, 599 N.W.2d 814, 825 (Minn. 1999). When awarding fees in a dissolution case under section 518.14, the district court must indicate whether the award is based on need or conduct and address the statutory factors for the kind of award involved. Geske v. Marcolina, 624 N.W.2d 813, 816 (Minn. App. 2001).
a. Order of December 29, 2005
Wife argues that because she was served with the notice of filing of the December 29, 2005, order on January 17, 2006, and the notice of appeal was not filed until September 28, 2006, husband's appeal of that order is untimely. See Minn. R. Civ. App. P. 104.01, subd. 1 (stating that an appeal may be taken from an appealable order within 60 days after service of written notice of filing of the order). But this court "may review any order affecting the order from which the appeal is taken," and may take any action that the interests of justice require. Minn. R. Civ. App. P. 103.04. The December 29, 2005, order directly affects the January 31, 2006, order, which husband is timely appealing, because the January 31 order is based on husband's failure to complete discovery and pay attorney fees ordered in the December 29 order. We will therefore review the December 29 order.
The December 29, 2005 order directs husband to "immediately pay $1,000 of [wife's] attorney fees if and when [wife] serves [husband] with discovery requests," and otherwise reserves the issue of attorney fees. The order appears to be for need-based fees, because it was made immediately following a comment by wife's attorney that wife had moved for need-based attorney fees and that the district court "has now directed me to do three more things, including going to Carver County[1] and do a lot more discovery.[2] I'll probably have to take his deposition." The district court, however, did not make findings or statements on the record concerning the basis for the award or the amount of the award, or address the statutory factors necessary for either a need-based or conduct-based award. A lack of specific findings is not fatal to a need-based award when this court is able to infer that the district court considered the statutory factors, was familiar with the case, and had access to the parties' financial records. Geske, 624 N.W.2d at 817.
In this case, the record shows that, at the time of the November 15, 2005 hearing, husband earned more income than wife. But under the stipulated judgment, husband's $4,842 net monthly income was reduced by support payments of $2,480, while wife's $1,578 net monthly income was augmented in the same amount, leaving husband with $2,362 to meet monthly living expenses of $3,631, and giving wife $4,058 to meet her monthly expenses of $3,865. Nothing in the record explains how husband, who faced a monthly shortfall of $1,269 between income and reasonable expenses, could be found to have the ability to pay wife's attorney fees. Nor is there any explanation of wife's need. Because on this record we cannot infer wife's need or husband's ability to pay, and because there is no indication or support in the record for an award of conduct-based attorney fees at that time, we reverse this award of attorney fees.
b. Order of January 31, 2006
In the order following the unreported chambers meeting, the district court sua sponte awarded an additional $500 in attorney fees to wife without making any findings on the basis for such an award. The district court also sua sponte designated the attorney fees awarded as child support in order to keep husband from having this debt discharged in bankruptcy. As noted above, even if wife established a need for these additional fees that she had not requested, we are unable to infer that husband had the ability to pay, especially in light of the fact that he was, by this time, on medical leave from his job. The only possible basis for an award of conduct-based fees appearing on the record is husband's failure to pay the first $1,000, which we have determined to have been improperly awarded. We therefore reverse the award of the additional $500 as unsupported in the record. Because we are reversing these awards, we do not reach the issue of whether the district court properly designated the amount as child support.
c. Order of July 26, 2006
At the July 17 hearing to determine husband's ability to pay contempt-purge conditions, the district court learned that husband was now receiving long-term disability benefits. But the district court again made conclusory findings that husband had the ability to pay all previously ordered attorney fees and ongoing support, and it awarded wife an additional $11,299 in attorney fees, finding that the fees were fair and reasonable, that wife had no capacity to pay the fees, and that husbands' conduct was "the reason this litigation has been prolonged." The court stated:
[Husband] had income in 2005 of $139,756.00, including a bonus received in February 2006. Had he paid at least some of that money to comply with the Court's attorney fees [o]rder in January, 2006, the remainder of these attorney fees may not have been necessary. His failure to pay child support and maintenance, and previously to provide discovery, caused [wife] to incur fees far beyond what would have been necessary had [husband] complied with the Court's Orders. The bulk of those fees were incurred to collect child support and maintenance.
The district court did not delineate what portion of this fee award was need-based and what portion was conduct-based.
Husband argues that the district court abused its discretion in ordering these attorney fees because he had remained current in his child-support payments through February 2006 by withholding less than was necessary to meet his legitimate tax obligation, requiring him to use his bonus money to pay the IRS. Husband argues that he did not have the ability to meet his support obligations after he went on medical leave and had no ability to pay wife's attorney fees.
To the extent that the award of $11,299 in attorney fees was based on husband's failure to pay the $1,500 in fees which we have now reversed, this further award of fees constitutes an abuse of discretion. Furthermore, the affidavit supporting the request for fees shows that only $4,357 of the requested fees was incurred after husband began to incur support arrearages, and the record does not support that the additional fees incurred related to support collection.[3]
Additionally, the district court's finding on husband's ability to pay need-based fees is unsupported by the record. The district court appears to have considered only husband's income and to have ignored his legitimate expenses, to conclude that husband was able to pay wife's attorney fees. The district court's only finding that would support a conduct-based award is a conclusory statement that husband's conduct has "prolonged the litigation" without specifying what conduct by husband has forced wife to incur the asserted fees. Furthermore, because wife's motions contained requests for relief unrelated to support, the designation of the entire amount as child support or maintenance-related is not supported by the record. Because the record does not support the award of either conduct-based or need-based fees in the amount awarded or that the amount awarded was primarily incurred in child-support enforcement efforts, we reverse this $11,299 award. See Kronick v. Kronick, 482 N.W.2d 533, 536 (Minn. App. 1992) (stating that district court must make findings regarding the basis for conduct-based attorney fees in order to "permit meaningful appellate review").
Because we have reversed all of the attorney fee awards, we do not reach the issue of the effect of husband's bankruptcy on those awards.
II. Calculation of husband's net monthly income from long-term disability payments
On the record at the July 17, 2006, hearing, the district court determined that husband's net monthly income from his ING disability benefits was $4,503 per month. Husband asserts that this finding is clearly erroneous because the court based the calculation on an incorrect tax-filing status for husband, rather than husband's actual filing status (which is not entirely clear from the record before the court).
Wife argues that because the district court had denied both parties' motions for modification of husband's child-support obligation, the calculation of husband's net income from disability payments under the child-support guidelines is irrelevant, and any error in calculation was not prejudicial to husband. But wife requested arrearages and continuing support during the period husband was receiving long-term disability benefits, and husband continued to assert an inability to pay, so the calculation was not moot at the time of this appeal. But on the record before this court, we cannot determine that the district court's calculation of net income from husband's ING disability benefits is clearly erroneous.
III. Effect of consumer credit protection laws on amounts that can be withheld from husband's disability checks
Husband maintains that the district court erred by requiring amounts to be withheld from his disability check exceeding the amounts permissible under the federal Consumer Credit Protection Act, 15 U.S.C. § 1673 (b)(2) (2000), and its state counterpart, Minn. Stat. § 571.922 (2006). The federal statute prohibits garnishment over certain limits of a support-obligor's aggregate disposable earnings for any workweek. See 15 U.S.C. § 1673 (b)(2)(A). The state statute contains similar restrictions. See Minn. Stat. § 571.922. Husband points to language in both statutes restricting the powers of the courts to "make, execute, or enforce any order or process" that violates these limitations. See id.; see also LaFreniere-Nietz v. Nietz, 547 N.W.2d 895, 898 (Minn. App. 1996) (stating that language in the state statute "prohibits a court from permitting a creditor to garnish a judgment in an amount that exceeds the stated limitation").
Wife maintains that husband failed to raise this issue in the district court, so this court need not consider it. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that this court generally will not consider matters not argued and considered in the district court). Husband's attorney argued at the July 2006 hearing that under federal law, no more than 50% of husband's disability check could be garnished, but the district court, in its October 26, 2006, order, stated that husband had not properly brought the issue before it. Because husband never formally requested a ruling on this issue and the district court has not addressed this issue, we decline to address it.
IV. Contempt
To support an order of confinement for contempt, the district court must find that the contemnor had the ability to satisfy the purge conditions set by the district court at the time of the confinement. Schubel v. Schubel, 584 N.W.2d 434, 436 (Minn. App. 1998). The district court found that husband "clearly has the capacity to continue his comfortable lifestyle." But this finding is based on the income of husband's current spouse, rather than husband's income. Husband correctly argues that his current spouse is not responsible for his support obligation to wife. Although the district court implies that if husband is able to care for the child of his current marriage, he is able to work, the record does not support this determination. Wife has not produced evidence that husband's disability is a sham or that he is intentionally unemployed in an effort to avoid his support obligation. We conclude that there is insufficient evidence in the record to show that husband has had the ability to satisfy the financial purge conditions, and we therefore reverse the finding that he is in contempt of court.
V. Respondent's motion to strike and motion to dismiss
Wife moved to strike certain portions of husband's appendix on the ground that they are not part of the record on appeal, and to dismiss the appeal, inter alia, because transcripts were not filed and the remaining record is inadequate for review. This court at special term deferred both motions to the panel. Since that order, husband has supplied transcripts of the hearings pertaining to the December 29, 2006, January 31, 2006, and October 26, 2006, orders. These transcripts are sufficient to allow appellate review. See Minn. R. Civ. App. P. 110.02 (addressing transcripts for appeal purposes). We therefore deny wife's motion to dismiss for lack of an adequate record.
The record on appeal consists of "[t]he papers filed in the trial court, the exhibits, and the transcript of the proceedings." Minn. R. Civ. App. P. 110.01. Husband admits that certain exhibits in his appendix, namely, Exhibit 9 (ING employee-benefits specialist's letter to husband), Exhibit 19 (Landscape Alternatives' letter to husband), Exhibit 30 (analysis of husband's income), and Exhibit 33 (analysis of wife's attorney fees) should be stricken. We agree and grant the motion as to those documents. Because this court did not rely on any of the additional exhibits wife objected to, we conclude that wife's motion as to those documents is moot.
Affirmed in part and reversed in part; motion to strike granted in part; motion to dismiss denied.
[1] Husband and his new spouse had obtained a restraining order against wife to prevent her harassment over parenting time. At the November 15, 2005 hearing, the parties disputed whether there had been an agreement concerning that order, and the district court ordered the parties to clarify that issue with the issuing court in Carver County.
[2] The district court had not ordered additional discovery, but had denied, in part, wife's request for an increase in child support due to wife's failure to meet her burden to support an increase.
[3] See Minn. Stat. § 518.14, subd. 2(a), (b) (2004) (providing that a child-support oblige is entitled to recover reasonable attorney fees and other collection costs incurred to enforce a child-support judgment under certain conditions, and that attorney fees obtained under this subdivision are considered child support).
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