Opinion
No. A06-1035.
Filed July 3, 2007.
Appeal from the District Court, Ramsey County District Court, File No. F1-99-3076.
Ben M. Henschel, Moss Barnett, Minneapolis, MN, (for respondent).
Marilyn J. Michales, Lisa M. Meier, Honsa Michales, P.A., Minneapolis, MN, (for appellant).
Considered and decided by Stoneburner, Presiding Judge; Dietzen, Judge; and Worke, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2006).
UNPUBLISHED OPINION
In this post-dissolution proceeding, appellant challenges the district court's denial of his motion to reduce or terminate his maintenance obligation and its award of conduct-based attorney fees to respondent, arguing that his medical condition limits his ability to pay spousal maintenance and that the award of attorney fees is not supported by the record. Respondent moves to strike portions of appellant's brief and appendix. We affirm the maintenance ruling, reverse the fee award, and grant the motion to strike.
FACTS
Appellant David Boxall and respondent Joan Ellen Boxall were married in December 1969 and have four children as a result of their marriage, one of whom was a minor at the time of their dissolution in 2001.
In the dissolution judgment, the court divided the parties' marital estate of approximately $5.3 million, awarded permanent spousal maintenance to respondent, and awarded child support for the parties' minor child. The district court found that the appellant was gainfully employed as an orthopedic surgeon and had average annual earnings of over $888,000 and claimed monthly living expenses of $17,492; and it found that respondent was not employed outside the home and had monthly living expenses of $10,369. The judgment awarded respondent $14,622 in permanent monthly spousal maintenance. This court affirmed the maintenance award, but reversed and remanded aspects of the property division. Boxall v. Boxall, No. C1-02-1599 (Minn.App. Jun. 17, 2003). On remand, appellant moved to decrease his maintenance obligation. The district court reduced his monthly obligation to $10,103, starting November 1, 2003.
In October 2004, appellant moved to terminate or reduce maintenance, arguing that his recent diagnosis with incurable cancer limited his ability to work, and hence to pay maintenance. A December 2004 order recognized that appellant was, at least temporarily, not working, suspended his maintenance obligations for December 2004 through March 2005, and ordered the parties to agree on an April 2005 date for a maintenance hearing. For reasons that are not clear, no hearing occurred in April 2005.
In February 2005, appellant returned to part-time work, but did not resume paying maintenance. When respondent learned appellant had returned to work, she obtained a hearing date for August 2005, after which the district court ordered appellant to pay maintenance for March through August 2005, and continued the matter for further hearing in September to consider appellant's updated financial information.
At the September hearing, affidavits from appellant's experts alleged that his annual income was less than $200,000, an amount insufficient to pay his $12,600 in monthly living expenses and $10,103 in monthly maintenance expenses. Appellant also argued that respondent's monthly expenses had decreased to between $7,197 and $7,712. Extrapolating from earnings information and an income estimate appellant sent to his disability insurer, respondent's experts testified that appellant's annual income was at least $354,000. Respondent also argued that appellant's expenses were overstated, noting that his reported monthly mortgage expense of $6,000 actually was $3,460, and that his reported monthly life insurance payment of $1,756 was inconsistent with his discovery responses which did not mention a life insurance expense. Respondent further argued that her monthly living expenses were $11,849, not including amounts she provided the parties' adult son.
After the hearing, the district court denied appellant's motion to reduce or terminate maintenance and awarded respondent $10,000 in conduct-based attorney fees. In doing so, the district court found that appellant had "artificially deflated his net income[,]" that the letter to his disability insurer constituted an admission that he was able to earn at least $354,000 per year, that appellant's monthly expenses should exclude the life insurance payment that was not disclosed in discovery responses, that appellant's mortgage payment was $3,460, and that appellant's reasonable monthly expenses were about $7,000 per month. The district court further found that, not including support respondent provides to the parties' adult son, respondent's monthly expenses were $11,849.
After denial of his motion for amended findings or a new trial, appellant appeals.
DECISION I.
Appellant argues that the district court's order improperly used language proposed by respondent. A court's adoption of proposed findings raises questions of whether the district court independently evaluated the evidence, but is not reversible error. Pederson v. State, 649 N.W.2d 161, 163 (Minn. 2002). But when the district court adopts proposed findings of fact and conclusions of law verbatim, a "careful and searching review of the record" is required. Dukes v. State, 621 N.W.2d 246, 258 (Minn. 2001). Having carefully and searchingly reviewed this record, we conclude that the district court independently evaluated the testimony and other evidence. The district court did not adopt respondent's final argument verbatim. It made numerous and significant changes including, but not limited to, the critical findings addressing appellant's health. Therefore, we reject appellant's argument.
II.
Appellant challenges the denial of his motion to modify maintenance. Maintenance can be modified if a party shows both a substantial change in circumstances and that the change renders the existing maintenance amount unreasonable and unfair. Minn. Stat. § 518.64, subd. 2 (2004); Hecker v. Hecker, 568 N.W.2d 705, 709 (Minn. 1997). Changed circumstances under Minn. Stat. § 518.64, subd. 2 include a change in the income or expenses of either or both parties. Whether to modify maintenance is discretionary with the district court. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). A district court abuses its discretion if its findings of fact are unsupported by the record or if it improperly applies the law. Dobrin v. Dobrin, 569 N.W.2d 199, 202 (Minn. 1997). Maintenance-related findings of fact are upheld unless clearly erroneous. Gessner v. Gessner, 487 N.W.2d 921, 923 (Minn.App. 1992).
The 2004 version of Minn. Stat. § 518.64 governed modification of both child support and spousal maintenance. In the 2006 revision of the child-support statutes that became effective January 1, 2007, Minn. Stat. § 518.64, subd. 2 (2004) was amended and renumbered as Minn. Stat. § 518A.39 (2006). Because this maintenance appeal does not involve child support, we cite the unamended 2004 version of the statute.
A. Appellant's Income
First, appellant argues that the district court clearly erred by finding that his disclosure to his disability insurer that he no longer qualified for disability payments as of September 2005 was an admission that he could earn $354,000 per year. Appellant argues that the basis for discontinuing disability insurance benefits is not the same as for modification of spousal maintenance. But the district court did not rely on the insurer's discontinuation of benefits; rather, the finding was based on appellant's notification to the disability insurer that he was able to earn more than 50% of his previous income. The insurer's letter states:
Thank you for submitting verification of your income and expenses for July 2005 and notifying us that your medical condition is no longer of such severity to limit you from earning greater than 50% of your prior average earned income from your regular occupation as of September 1, 2005.
The letter further states, "[w]e understand that your medical condition no longer limits you from earning greater than 50% of your prior average earned income from your regular occupation as of September 1, 2005," and that, therefore, appellant was no longer eligible for disability benefits.
Based on appellant's previous earning history, appellant's statement to his disability insurance company that he was no longer prevented from earning greater than 50% of his average previous income, and an extrapolation of his gross billings following his return to work, the district court found that appellant would earn $354,000.
Appellant argues that the district court should not have relied on his gross monthly billings, rather than the "actual income information" provided by his accountant, on the grounds his gross monthly billings are subject to substantial discounts and do not equate to income. Appellant's "actual income information" is limited to the months immediately following his cancer treatment and does not include later months that show a steady increase in his gross monthly billings. The steady increase in gross billings generated since his return to work corroborates appellant's statement to his disability insurer that he is able to earn at least half of his prior income.
Appellant also challenges the district court's finding that he "artificially deflated his net income" by "accelerating his pension and profit sharing contributions." While neither appellant nor his business partner made contributions to the profit sharing plan in April, and both made similar payments in May, only appellant made contributions in June and July. Viewed in the light most favorable to the finding, the record supports the district court's finding. See Ayers v. Ayers, 508 N.W.2d 515, 521 (Minn. 1993) (noting that appellate courts view the record in the light most favorable to the district court's findings). Similarly, appellant argues that there is no support for a finding that he overinflated his employee's pay. But the district court made no finding on this issue and appellant's argument is not relevant.
Appellant argues that a portion of the payments were required to be made on behalf of his employees and that the amounts of the 2005 payments are consistent with those for prior years. But because the payments required by the employees' retirement plan and the amounts of appellant's prior payments were not presented to the district court, they cannot be considered on appeal. See Minn. R. Civ. App. P. 110.01 (defining record on appeal).
On this record, the district court's finding that appellant's annual income was reduced to $354,00 is not clearly erroneous.
B. Appellant's Expenses
Appellant argues that the district court clearly erred in determining his monthly expenses. He argues the district court should have given more weight to the original dissolution judgment that found his monthly expenses were $17,492. But the 2001 dissolution judgment finding that he "claimed" reasonable monthly expenses of $17,492 is not evidence of his current monthly expenses. Further, at different points in this modification proceeding, appellant has proposed three different budgets claiming monthly expenses ranging from $11,292.17 to $30,030.17. The district court's finding uses the lowest proposed figure, after it subtracted excess mortgage payments and an insurance expense that was not included in discovery. Cf. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988) (noting that an appellate court defers to the district court's credibility determinations).
Essentially, appellant makes three arguments to support his contention that the finding on monthly expense is erroneous. First, appellant challenges the district court's finding that he overstated his mortgage. Appellant argues that his mortgage expenses should include not only the required minimum payment but also the additional principal-reduction payments he made each month. Here, the district court found that only the minimum payments of $3,460 were necessary. Although appellant argues that his additional payments are "a legitimate financial plan in anticipation of [his] inevitable complete incapacitation," the court did not abuse its discretion in finding that the additional overpayments were not "necessities." Thus, the reduction is supported by the record and is not clearly erroneous.
Second, appellant argues that the district court's decision to exclude his $1,756 monthly life insurance payment was an abuse of discretion. The district court held that, "[h]aving failed to disclose any life insurance policy in his Answers to Interrogatories, [he] cannot now be heard to claim a life insurance expense at this level as a `necessity.'" Appellant acknowledges that he failed to list the insurance policy in response to a discovery interrogatory, but argues that it was a minor oversight and that respondent already knew about the policy despite his failure to specifically disclose it. But a decision to exclude information from consideration for failure to comply with discovery is within a district court's discretion. See, e.g., In re Conservatorship of Smith, 655 N.W.2d 814, 821 (Minn.App. 2003) (affirming the district court's exclusion of three witnesses for failure to adhere to the rules of discovery). Thus, the court acted within its discretion by excluding the insurance policy from appellant's reasonable monthly expenses.
Finally, appellant argues that the district court improperly reduced certain of his monthly expenses by 50% to reflect what the district court believed appellant's cohabitant should contribute toward the household's monthly expenses. But the district court did not reduce appellant's budget in this manner; the only subtractions from his claimed expenses involved his mortgage and insurance payments. Therefore, the district court's findings on appellant's reasonable monthly expenses are not clearly erroneous.
C. Respondent's Expenses
Appellant argues that respondent's reasonable monthly expenses have decreased because her prior expenses include amounts for the parties' now-adult son and mortgage and real estate tax amounts that are higher than the current amounts. But the judgment allocated the son's expenses to separate child support payments, which have been discontinued. And a party's monthly expenses for maintenance purposes are not measured by actual expenditures, but by the marital standard of living. Minn. Stat. § 518.552, subds. 1, 2(c) (2004); see Chamberlain v. Chamberlain, 615 N.W.2d 405, 409-12 (Minn.App. 2000) (discussing importance of the marital standard of living in addressing maintenance recipient's reasonable monthly expenses), review denied (Minn. Oct. 25, 2000). Thus, the district court's consideration of the prior finding of respondent's reasonable monthly expenses was not improper.
Appellant also argues that the district court, when considering respondent's ability to meet her own needs, failed to consider that respondent's investments could earn $3,460 per month. But the district court explicitly stated that respondent's investment income was considered in addressing her need for maintenance. Also, respondent's expenses, ability to support herself, and maintenance award do not show a monthly surplus. Cf. Lyon v. Lyon, 439 N.W.2d 18, 22 (Minn. 1989) (stating, "maintenance depends on a showing of need").
D. Unreasonable and Unfair
Appellant argues that the district court erred in finding that although his income has decreased, his maintenance obligation is, nonetheless, not unreasonable and unfair. The district court found that after paying monthly maintenance of $10,103.36, appellant has annual gross employment income of $232,759.68, or $19,396.64 per month, exclusive of investment income. Because the district court's findings of appellant's monthly income is not clearly erroneous, appellant has failed to establish that his maintenance obligation is unreasonable and unfair.
Appellant alludes to his right to retire, and argues that the district court failed to adequately consider his "unusual emotional, medical and financial needs" and penalized him for changing his position on retirement during the proceedings. But appellant has not argued that he currently wishes to retire, and retirement can be addressed when it happens. See Richards v. Richards, 472 N.W.2d 162, 164-65 (Minn.App. 1991) (addressing impact of retirement on maintenance obligation). We are mindful of appellant's diagnosis and treatment for cancer. But the record before us indicates that appellant returned to work in his chosen profession, albeit at a reduced level. Thus, we see no abuse of discretion.
Here, the district court suspended maintenance while appellant was unable to work and considered that appellant's income has been reduced to about half of his prior earnings. While this is a significant decrease in appellant's income, he continues to earn sufficient income to pay maintenance and meet his own expenses.
III.
Appellant challenges the district court's denial of his motion for amended findings or a new trial. New-trial motions are not authorized in post-judgment modification proceedings. Huso v. Huso, 465 N.W.2d 719, 721 (Minn.App. 1991); see Erickson v. Erickson, 430 N.W.2d 499, 500 n. 1 (Minn.App. 1988) (noting few post-judgment modification proceedings constitute a trial and that if a trial did not occur, a motion for a new trial is "an anomaly"). The district court properly denied the motion for a new trial.
Whether to amend findings of fact is discretionary with the district court. See Stroh v. Stroh, 383 N.W.2d 402, 407 (Minn.App. 1986) (stating that the purpose of a motion to amend findings is to allow the district court to review its own exercise of discretion). Here, in denying appellant's motion, the district court declined to alter its findings that although appellant's income had decreased, his income still gave him "the ability to pay spousal maintenance at the amount set in 2003." Appellant argues that in denying his motion, the district court improperly rejected the idea that the record required closer scrutiny. But, as noted above, the financial findings challenged by appellant are not clearly erroneous and do not show his current maintenance obligation to be unreasonable and unfair. The district court was within its discretion to deny appellant's motion.
IV.
A district court has discretion to award conduct-based attorney fees against a party who "unreasonably contributes to the length or expense of the proceeding." Minn. Stat. § 518.14, subd. 1 (2004). Here, the district court based its award of conduct-based attorney fees on findings that appellant (a) did not provide candid and timely information about his return to work; (b) failed to pay maintenance after expiration of the suspension of his obligation; (c) made statements that were "less than forthcoming, requiring [respondent] to do considerable work to identify misstatements;" (d) took a position in his motion regarding insurance payments that had no support in law or fact; (e) made an "outrageous and unsupportable" claim that his monthly living expenses exceed $30,000; and (f) asked to eliminate his maintenance obligation a year after it was set. Appellant argues that these findings are unsupported.
Appellant moved to modify maintenance after being diagnosed with an incurable illness that affected his ability to work and earn an income; an illness that does not follow a schedule and which could provide a basis to modify maintenance, even shortly after the award was established. Therefore, the timing of appellant's motion does not support the district court's finding of bad faith.
Appellant's monthly expenses likewise do not support a finding of bad faith. While the court was within its discretion to conclude that expenses of $30,000 per month are not reasonable, appellant provided documentation supporting this level of spending. On this record, appellant's submission of his actual expenses does not justify an award of attorney fees to respondent.
Further, the other bases are also inadequate to show that appellant acted in bad faith. He responded to discovery requests in a timely manner, resumed payment of support obligations when ordered to do so by the court, and conducted himself in a manner that, while it did not result in a grant of his motion, was not unreasonable under the circumstances. Thus, he did not unreasonably contribute to the length or expense of the proceeding, and we reverse the fee award.
V.
Respondent moves to strike portions of appellant's brief and appendix, noting that they involve material outside the record on appeal. Appellant moves for acceptance of the material as a supplemental record. Generally, appellate courts cannot base a decision on material outside the record on appeal, and may not consider material not produced and received in evidence below. Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988); see Minn. R. Civ. App. P. 110.01 (defining record on appeal). Also, extra-record material is typically stricken from a party's brief, as are references to such material in the brief. Fabio v. Bellomo, 489 N.W.2d 241, 246 (Minn.App. 1992), aff'd, 504 N.W.2d 758 (Minn. 1993). The material in question is not part of the record on appeal and appellant identifies no exception to the general rule that would allow its consideration here. We grant the motion to strike.