Sylvester Devereaux Holmes, petitioner, Appellant, vs. Elaine Marie Holmes, Respondent.

Sylvester Devereaux Holmes, petitioner, Appellant, vs. Elaine Marie Holmes, Respondent. A06-1897, Court of Appeals Unpublished Decision, December 24, 2007.

This opinion will be unpublished and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

A06-1897

Sylvester Devereaux Holmes, petitioner,
Appellant,
 
v.
 
Elaine Marie Holmes,
Respondent.

Filed December 24, 2007

Affirmed as modified

Huspeni, Judge*

 

 

Hennepin County District Court

File No. 27-FA-06-916

 

 

Sylvester Holmes, 6080 Annapolis Lane North, Plymouth, MN 55446 (pro se appellant)
 
William A. Fehn, Fehn Family Law, 13355 George Weber Drive, Suite J, Rogers, MN 55374 (for respondent)

 

 

            Considered and decided by Klaphake, Presiding Judge; Shumaker, Judge; and Huspeni, Judge.

 

U N P U B L I S H E D   O P I N I O N

HUSPENI, Judge

            In seeking review of several decisions of the trial court in a dissolution judgment, appellant challenges (a) the custody award, claiming that the court erred in adopting a written stipulation between the parties; (b) the classification of certain intra-family transactions as loans rather than gifts; (c) the division of marital property and debts; (d) the allocation of retirement accounts; (e) the trial court's order for the parties to file separate tax returns for the years 2004 and 2005; (f) the requirement that appellant maintain adequate life insurance to cover any future maintenance or child-support obligations; and (g) the court's failure to address respondent's alleged squandering of marital assets.  Because we conclude that the trial court did not err in accepting the written custody stipulation between the parties, because evidence in the record supports each of the contested decisions of the trial court, and because there was no abuse of discretion in those decisions, we affirm.

FACTS

            Appellant Sylvester Holmes and respondent Elaine Holmes were married in July 1988.  Two children were born during the marriage, N.H. in May 1989, and S.H. in December 1995.  Appellant has a law degree and a master's degree in taxation.  Throughout the parties' marriage he was employed as a tax attorney and a corporate compensation executive.  Between 2000 and 2004 his income was over $530,000.  He was, however, unemployed prior to the dissolution of the marriage, and had since lost over $100,000 trading on the stock market.  Respondent has a degree in accounting, but last worked outside the home in 1998.  Her highest annual salary level while employed was $45,000. 

            In February 2006, appellant filed for dissolution.  Prior to trial, the parties entered into a written stipulation agreeing to grant legal and physical custody of the two minor children to respondent.  On the morning of the trial, appellant initially attempted to withdraw the stipulation, but ultimately conceded the custody issue on the record.  As a result, the only contested issues at trial were parenting time and the division of marital property, debts, and pensions.  Appellant also opposed any attempt to separate the parties' tax liabilities. 

Following a one-day trial, the trial court accepted the parties' stipulation and granted sole permanent legal and physical custody to respondent.  The court awarded the homestead to respondent, divided the parties' marital debts, awarded each party 50% of the other's pension, found the parties equally responsible for debt owed to respondent's parents in the amount of $64,437, and directed the parties to file separate tax returns for the years 2004 and 2005.  Appellant was ordered to "obtain or keep and maintain" a life insurance policy naming respondent as the beneficiary in an amount not less than appellant's projected future child-support and spousal-maintenance obligations.  The court reserved the issues of parenting time, child support, and spousal maintenance because the parties were living together and appellant was unemployed at the time of the dissolution.  This appeal followed.

D E C I S I O N

I.

 

Appellant contends that the trial court erred in accepting the parties' written custody stipulation, and argues that the court should instead have conducted a best interests of the child analysis pursuant to Minn. Stat. § 518.17 (2006).  Our review of the record discloses that the trial court not only found that the parties agreed to grant legal and physical custody of the parties' children to respondent, but also found that it was in the best interests of the children to adopt this agreement. 

A district court has broad discretion to provide for the custody of the parties' children, Durkin v. Hinich, 442 N.W.2d 148, 151 (Minn. 1989), and the court's determination must be primarily based on the best interests of the child.  Pikula v. Pikula, 374 N.W.2d 705, 711 (Minn. 1985).  Courts have favored stipulations in dissolution cases as a means of simplifying litigation and bringing resolution to what frequently has become an acrimonious relationship between the parties.  Shirk v. Shirk, 561 N.W.2d 519, 521 (Minn. 1997).  As a result, stipulations are accorded the sanctity of binding contracts.  Id.  Stipulations cannot ordinarily be "repudiated or withdrawn by one party without the consent of the other, except by leave of the court for cause shown."  Gran v. City of St. Paul, 274 Minn. 220, 223, 143 N.W.2d 246, 249 (1966).  Courts may set aside stipulations for fraud, duress or mistake, and on appeal, a court's determination will not be disturbed in the absence of an abuse of discretion.  Pekarek v. Wilking, 380 N.W.2d 161, 163 (Minn. App. 1986). 

We see no error in the trial court's determination of the custody issue.  Appellant acknowledged at trial that he had agreed to grant custody to respondent at the initial case management conference.  Furthermore, respondent provided a handwritten document signed by the parties on June 23, 2006 (four days before the trial), stating the following: "Mr. Holmes stipulates that Mrs. Holmes may have legal and physical custody of the children." 

On the morning of the trial, appellant attempted to rescind the custody stipulation, and when the trial court questioned appellant's reasons, he indicated that he agreed to the stipulation in terms of an overall settlement of all the issues.  Appellant also stated that he did not fully understand the distinction between parenting time versus legal and physical custody.  But appellant ultimately stated on the record that he would "concede the custody issue," and appellant nodded assent when the court confirmed that parenting time was the only issue regarding the minor children remaining for trial.

Appellant now asks this court to find that the trial court abused its discretion in adopting a custody agreement appellant agreed to on three separate occasions: first at the case management conference, second in a written and signed stipulation, and third on the record in open court.  Respondent did not agree to release appellant from the custody agreement.  And appellant makes no showing of fraud, duress, or mistake that would lead this court to set aside the binding stipulation.  The failure of the parties to stipulate as to all issues prior to trial is insufficient to warrant rescinding the agreement as it addressed custody of the minor children.  Furthermore, the trial court found that it was in the best interests of the children to accept the stipulation, and the court was presented with evidence supporting that finding when the parties addressed the issue of parenting time.  Clearly, the trial court acted within its broad discretion in accepting the parties' custody agreement.

II.

We next consider appellant's claim that the trial court clearly erred in finding that the parties owed respondent's parents approximately $64,000 for loans made during the marriage.  Appellant argues that these intra-family transactions were gifts rather than loans.

Apportionment of marital debts is within a district court's discretion.  O'Donnell v. O'Donnell, 412 N.W.2d 394, 396 (Minn. App. 1987).  This discretion extends to deciding whether intra-family transactions were gifts or loans.  See Novick v. Novick, 366 N.W.2d 330, 332 (Minn. App. 1985).  Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.  Minn. R. Civ. P. 52.01. 

The trial court heard extensive testimony from appellant, respondent, and respondent's mother regarding the claim that respondent's parents loaned nearly $88,000 to the parties during their marriage.  Appellant testified that the loans were never memorialized through the use of promissory notes and that respondent's parents never communicated to him the existence of a debt; respondent and her mother testified that appellant was repeatedly reminded that the parties owed money to respondent's parents, and that the intra-family transactions were never intended as gifts. 

In addition to testimony presented by the parties, respondent introduced exhibits consisting of checks written on a joint account held by respondent and her mother, and evidence of auto insurance and mortgage payments made on behalf of the parties by respondent's parents.  The trial court found the testimony of respondent and her mother to be more credible than the testimony of appellant.

Upon review of all the exhibits, the trial court determined that checks and deposits totaling $67,989 could be traced to respondent's parents, that respondent transferred $25,000 to her mother during the pendency of the dissolution proceedings, and that $21,448 was later transferred back to the parties to help defray living expenses.  These calculations led the court to deduct $3,552 from the $67,989, and to its conclusion that the parties were indebted to respondent's parents in the amount of $64,437.  Both written and oral evidence support the conclusion of the trial court and the court did not abuse its discretion in holding each party responsible for half of the money loaned by respondent's parents.

III.

            Appellant next challenges the trial court's division of marital debts and assets, whereby half of each party's pension was allocated to the other, the parties were directed to file separate tax returns for the years 2004 and 2005, and appellant was directed to obtain or maintain a life insurance policy with respondent named as the primary beneficiary.  We address each of these issues in turn.

A.        Division of Marital Property, Debts, and Assets

The trial court found that a $2,000 Baccarat vase, purchased by the parties on their honeymoon, was given to respondent's parents as a gift.  Appellant challenges that determination, and also claims that the court abused its discretion by directing the parties to submit any unresolved personal property issues to binding arbitration. 

Upon dissolution of a marriage,

the court shall make a just and equitable division of the marital property . . . after making findings . . . [based] on all relevant factors including the length of the marriage . . . the age, health, station, occupation, amount and sources of income, vocational skills, employability, estate, liabilities, needs, opportunity for future acquisition of capital assets, and income of each party.

 

Minn. Stat. § 518.58, subd. 1 (2006).  "District courts have broad discretion over the division of marital property and appellate courts will not alter a district court's property division absent a clear abuse of discretion or an erroneous application of the law."  Sirek v. Sirek, 693 N.W.2d 896, 898 (Minn. App. 2005).  Furthermore, appellate courts defer to a fact-finder's determinations of witness credibility.  Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).

The trial court heard extensive testimony about whether the vase was marital property or a gift to respondent's parents.  Appellant testified that he never gave the vase as a gift; respondent and her mother stated otherwise.  The trial court found the testimony of respondent and her mother to be more credible, and the record provides no justification for this court to second-guess the trial court's judgment.

Regarding the parties' household goods and furnishings, the trial court divided a significant amount of that property before directing the parties to (1) equitably divide remaining miscellaneous items; and (2) submit any unresolved personal property issues to binding arbitration.  Appellant challenges the trial court's refusal to itself divide the parties' personal property, and specifically objects to the directive that the parties engage in binding arbitration.

We note initially that in order to effect an equitable division of property pursuant to Minn. Stat. § 518.58 (2006), personal property may be partitioned or sold in the manner directed by the court.  Minn. Stat. § 518.65 (2006).  The statute does not give the court specific authority to order binding arbitration.  Our review of the record indicates, however, that appellant recognized and acquiesced in the proposition that binding arbitration was an appropriate method through which to resolve any issues regarding personal property that the parties were unable to resolve between themselves. 

Before trial, appellant withdrew his agreement that he would avoid claiming certain personal property, such as clothes transferred to his mother-in-law's home.  The court stated at trial that it declined to divide this previously agreed-upon personal property, and directed the parties to binding arbitration in the event they could not agree between themselves regarding the disputed items.  Appellant failed to raise any objection following the trial court's statement, thus depriving the court of an opportunity to reconsider its decision.  We see no abuse of discretion in the trial court's decision on this issue.

B.        Separation of the Parties' Tax Returns

Appellant challenges the trial court's order that the parties file separate tax returns for the years 2004 and 2005.  Appellant claims that the trial court's order runs contrary to federal law.  Whether to consider the tax consequences of a property distribution is discretionary with the trial court.  Maurer v. Maurer, 623 N.W.2d 604, 607-08 (Minn. 2001). 

Through cross-examination and exhibits, respondent presented evidence that appellant lost significant amounts of money day-trading on the stock market, including $105,000 in losses in 2004.  Respondent's attorney argued that appellant made invalid deductions related to the trading losses and asserted that respondent, who was unemployed throughout 2004 and 2005, could be subjected to significant tax penalties and interest charges.  At trial, appellant defended the correctness of the filings and stated that he would accept all additional liability beyond the amount stated in the returns.  Appellant now requests that any future tax liability be apportioned between the parties like other marital debts (60% to appellant, 40% to respondent). 

While, as already noted, the trial court has the discretion to consider the tax consequences related to the division of property in a dissolution proceeding, appellant argues that here that discretion was abused, because the Internal Revenue Service (IRS) will not allow the parties to file separate returns now that the joint returns have been filed.  We decline appellant's invitation to review, interpret, and apply IRS rules and opinions.  This court has no authority to influence any determination the IRS may reach related to the parties' respective tax liabilities.  But neither can we conclude that the trial court, in its effort to reach an equitable resolution of the issues presented to it, abused its discretion by directing the parties to file separate returns for the years in question.[1]

C.        Life Insurance Obligations

Appellant challenges the trial court's requirement that he keep or obtain life insurance, listing respondent as beneficiary, in an amount not less than his projected future child-support and spousal-maintenance obligations.  The trial court reserved the issues of maintenance and support because the parties were still living together. 

"In all cases when maintenance or support payments are ordered, the court may require sufficient security to be given for the payment of them according to the terms of the order."  Minn. Stat. § 518 A. 71 (2006).  This court reviews orders requiring child-support obligors to maintain life insurance under an abuse-of-discretion standard.  Riley v. Riley, 369 N.W.2d 40, 44 (Minn. App. 1985), review denied (Minn. Aug. 29, 1985).

Prior to trial, appellant had a $1,000,000 life insurance policy.  It appears from our review of the record that respondent and her mother were paying the bulk of the premiums.  Appellant requested that the policy be transferred to him, but the court's final order required appellant to obtain or keep and maintain a life insurance policy, and that respondent continue as the primary beneficiary.  We note that a serious question of prematurity might be raised if appellant was required to actually obtain insurance coverage prior to the establishment of an award of support or maintenance.  Given that a policy was already in effect with respondent listed as the beneficiary, however, we conclude that requiring appellant continue that coverage maintains the status quo established during the marriage regarding that item.  Thus, the trial court did not abuse its discretion in requiring that appellant maintain existing coverage.    

D.        Division of the Party's Pensions

Appellant argues that the trial court erred in awarding respondent half of his pension from his prior employment.  Appellant contends that part of this pension was nonmarital property earned between September 15, 1986, and July 2, 1988, the date of the parties' marriage.  Appellant also argues that the trial court failed to award him half of respondent's pension from Pitney Bowes.  Respondent states that the trial court did award appellant half of respondent's pension, but notes that the court mislabeled the pension as an IRA. 

Pension division is generally discretionary with the trial court.  Faus v. Faus, 319 N.W.2d 408, 413 (Minn. 1982); Johnson v. Johnson, 627 N.W.2d 359, 362 (Minn. App. 2001), review denied (Minn. Aug. 15, 2001).  Furthermore, this court will generally not consider matters not argued and considered in the district court.  Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988). 

Appellant was responsible for presenting evidence that a certain portion of his pension should be considered nonmarital property.  The only evidence presented to the trial court relative to this issue was introduced by respondent in the form of appellant's resume, which showed that appellant's employment was commenced in late 1986.  Because the trial court was not presented with an opportunity to consider whether a certain portion of appellant's pension should be considered nonmarital property, there was no abuse of discretion in awarding respondent half the value of the pension.  

We do, however, address the trial court's description of respondent's pension as an IRA.  Neither of the parties challenge appellant's entitlement to half of respondent's Pitney Bowes pension.  The trial court, however, awarded appellant 50% of respondent's IRA.  It appears that the trial court simply mislabeled respondent's pension as an IRA, and we modify the judgment to reflect the agreement between the parties that appellant receive half of respondent's Pitney Bowes pension and remove the reference to respondent's IRA.[2]

We find that the trial court's equitable distribution of the parties' pensions did not constitute an abuse of discretion, but we modify the court's judgment and decree to the extent that it refers to respondent's IRA rather than her pension.

IV.

            The final issue is whether the trial court abused its discretion in failing to address respondent's alleged squandering of marital assets during the pendency of dissolution proceedings. 

If a court finds that a party has, during the pendency of a dissolution proceeding, "transferred . . . or disposed of marital assets except in the usual course of business or for the necessities of life, the court shall compensate the other party by placing both parties in the same position that they would have been in had the transfer . . . not occurred."  Minn. Stat. § 518.58, subd. 1a.  The burden of proof rests with the party claiming that the other party transferred the marital assets.  Id. 

Here, respondent conceded that she transferred $25,000 to her parents after acknowledging receipt of the dissolution summons.  However, the trial court found that $21,448 had been returned by respondent's parents to assist the parties with their living expenses; this left a difference of $3,552 that was not returned.  The trial court subsequently found that the parties owed respondents parents $67,989 for loans made during the marriage, but the court subtracted the unreturned $3,552 from the total amount of the obligation.  As a result, the trial court placed the parties in the same position they would have been in without the transfer, Minn. Stat. § 518.58, subd. 1a, and we conclude that the trial court committed no error in declining to address the matter further.

            Affirmed as modified.

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

[1] We recognize that joint returns have apparently been filed for years 2004 and 2005 and amended returns may be required. 

[2] We also note the clerical error in the trial court's order that added three unnecessary zeros at the end of the amount listed as representing respondent's IRA.  We find it sufficient, however, to simply modify the judgment as discussed above.