Opinion
No. C1-00-1971.
Filed July 24, 2001.
Appeal from the District Court, Rice County, File No. F7951570.
James R. Korman, and Valerie Arnold Downing, (for respondent)
Jeffrey R. Arrigoni, Louis M. Reidenberg, (for appellant)
Considered and decided by Klaphake, Presiding Judge, Crippen, Judge, and Stoneburner, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant Thomas Pumper disputes the trial court's supporting findings and its ultimate conclusion to deny his motion to reduce the permanent maintenance award to respondent Judy Pumper. Because the findings are adequate to support the trial court's decision, reasonable evidence supports those findings, and the trial court did not abuse its discretion in its ultimate conclusion, we affirm. We reverse and remand for the trial court to review its attorney-fee award to respondent.
FACTS
The parties were divorced in 1997, and appellant moved to terminate the permanent maintenance award two years later because respondent started working full time and entered into a live-in relationship with another man. In September 2000, the trial court issued its final decision denying appellant's motion. The court also awarded respondent attorney fees.
DECISION 1. Maintenance Award
Where a trial court weighs statutory criteria in light of its findings of fact, its conclusions include mixed issues of fact and law. Maxfield v. Maxfield, 452 N.W.2d 219, 221 (Minn. 1990). In such a case, this court may correct the trial court's erroneous application of the law, but we review the trial court's ultimate conclusions under an abuse of discretion standard. Id. We will not set aside a trial court's factual findings unless clearly erroneous. Minn.R.Civ.P. 52.01; In re Conservatorship of Lundgaard, 453 N.W.2d 58, 60-61 (Minn.App. 1990).
[F]indings of fact are clearly erroneous only if the reviewing court is left with the definite and firm conviction that a mistake has been made. If there is reasonable evidence to support the district court's findings, we will not disturb them.
Rogers v. Moore, 603 N.W.2d 650, 656 (Minn. 1999) (citations and quotations omitted). Appellant challenges the trial court's findings and conclusions about respondent's expenses, income, and the value of her assets.
a. Expenses
In 1997, the trial court found that respondent had reasonable monthly expenses of $2,136, but anticipated that those expenses would increase to $2,749. In September 2000, the trial court found that respondent has reasonable monthly expenses of $2,421.29, and that respondent's live-in companion contributes $500 towards this budget. It is initially evident that respondent has decreased monthly expenses of approximately $800 compared with what the trial court originally anticipated her expenses could be. But as the trial court noted, it is significant that (1) respondent's current budget does not include her attorney-fee debt; (2) respondent has not bettered her standard of living; and (3) the standard for modifying a permanent maintenance award requires not only a substantial change in circumstances but also a change that renders the award unreasonable and unfair. Because of these considerations, and because the evidence of respondent's spending suggests that she has experienced a decreased standard of living, the trial court did not err in finding that the award has not become unfair and unjust.
Based on the 1997 and 2000 court findings, respondent's budgets were as follows:
1997 2000
Mortgage 0 — 400 865.38 Homeowner's insurance 56 — 59 Real Estate taxes 146 — 155 Telephone 100 236.93 Electric 185 — 200 Heat 28 25 Food 323 371.67 Clothing 125 20 Laundry/dry cleaning 75 Medical dental 75 60.36 (28 expenses + 32.36 insur.) Transportation 180 150 Car insurance (truck only) 53 — 64 56.50 Recreation, entertainment, travel 200 100 Personal allowances/incidentals 75 100 Home maintenance 105 75 Garbage disposal 39 Norwest Bank loan 171 Attorney Fees 200 Horses 150 (possible increase) Insurance on snowmobile trailer 25 (possible increase) Insurance on snowmobile and Harley 27.08 Harley Davidson 123.37 Visa 50 Visa 50 Green Tree 100 Sears 10
Total 2,136 + 613 = 2,749 2,421.29 — 500 contribution = 1,921.29
For example, respondent's monthly budget for clothing has changed from $125 to $20, her dry-cleaning budget has changed from $75 to $0, and her budget for recreation, entertainment, and travel has decreased from $200 to $100.
Appellant argues that the trial court unfairly considered respondent's attorney fees because he has similar expenses. The trial court took into account, as it may, respondent's attorney-fee debt from the original decree and not the fees to defend this motion, as appellant contends. Appellant's reference to his own attorney-fee obligation must be read in light of his failure to make a claim of inability to pay and his insistence in confining the proceedings to scrutiny of respondent's income and expenses.
At the May 2000 hearing on this motion, he noted that "the basis of the motion was not predicated on [his] ability to pay." And appellant repeatedly refused to disclose any financial information. In answering and objecting to respondent's interrogatories about his financial circumstances, he stated 34 times: "Respondent objects to this [request/interrogatory] because it is overly-broad and not likely to lead to the discovery of relevant evidence." In his memorandum in opposition to respondent's motion to compel discovery, he stated that "his ability to pay is not relevant to the issues before the court." In his affidavit in support of the memorandum, he stated that he did not base his motion on his own inability to pay, there was no need to seek his deposition, and all information related to his finances and employment "is completely irrelevant." The trial court did not err by disregarding appellant's attorney fees.
Appellant also contends that the trial court did not closely evaluate respondent's budget because some expenses in respondent's budget benefit her son and live-in companion or, alternatively, her total expenses are offset by some of their contributions. The residents in respondent's household bear no duties to support one another, and the existence of respondent's live-in companions is relevant only if it improves respondent's well-being as a matter of fact. Mertens v. Mertens, 285 N.W.2d 490, 491 (Minn. 1979); Sieber v. Sieber, 258 N.W.2d 754, 758 (Minn. 1977). Of particular concern to appellant is respondent's mortgage payment, which increased because she refinanced her loan in order to have money to pay off her debts and to loan money to her son and her companion. He also notes that the trial court considered the companion's contribution to payment of the obligation but failed to include her son's $200/month loan repayment when evaluating respondent's needs. We did find evidence in the record that the other residents in respondent's home occasionally furnish food or contribute to a heating bill, and that some of respondent's food expenses may benefit them.
Respondent claimed total expenses of $2,421.29, a sum less than the court imagined she would incur three years ago. Her budget for food has increased by only $50/month and her utilities have decreased by about $70/month. These changes indicate that appellant's maintenance needs are not materially affected by any benefits enjoyed by two additional adults in the household. Although the trial court might have more particularly scrutinized the dollar amount of respondent's current budget and needs and the contribution her son occasionally makes, appellant has failed to demonstrate that the maintenance award is unreasonable and unfair. We are mindful in this respect that a maintenance award is not necessarily invalid simply because it exceeds the recipient's monthly expenses. Walker v. Walker, 553 N.W.2d 90, 96 n. 2 (Minn.App. 1996). The trial court's denial of appellant's motion in this case harmonizes with decisions stating the purpose of an award of permanent maintenance. Permanent maintenance is compensatory in nature and recipients of permanent maintenance "are not automatically penalized by loss of their permanent maintenance if * * * their earnings increase through the years." Borchert v. Borchert, 391 N.W.2d 74, 76 (Minn.App. 1986). The trial court did not abuse its discretion by concluding that respondent's decreased needs have not rendered the award unreasonable and unfair.
b. Increased Income
Appellant also contends that the trial court erred in failing to find a substantial change in circumstances because respondent now has a full-time job and did not work at the time of the original decree. The trial court did not abuse its discretion in finding that respondent's current employment did not establish a substantial change in circumstances because events specifically anticipated at the time of the original decree cannot form the basis for a finding of a substantial change in circumstances. Abbott v. Abbott, 282 N.W.2d 561, 564 (Minn. 1979) (finding that son's emancipation could not form the basis for terminating alimony because the original stipulation contemplated his emancipation and provided for a decrease in the monthly support payment). In awarding respondent monthly, permanent maintenance of $1,000, when it determined her reasonable monthly expenses were $2,100-$2,700, the court anticipated her employment. In fact, in the original divorce decree, the court noted that respondent worked for appellant's business during the marriage and found there was no reason to prevent her from working, and that she could obtain full-time employment with hourly earnings between $4.75 and $8. As anticipated, respondent now works full time with an hourly wage of $8.50.
Respondent also claims error because the court did not make a specific finding about her current net income. But the court found respondent's gross income from a previous job that paid more than her current job and answers to interrogatories indicate her net income from that job; and the record indicates that respondent would likely receive a raise equaling her former salary. Moreover, there is no dispute over the court's finding of respondent's gross income.
c. Assets
Appellant claims that the trial court erred when it stated the value of the homestead, where respondent still lives, as $177,000 because the value of the home has increased since 1997. Appellant fails to show how the home's value relates to the maintenance award. Perhaps in the future any increase in the home's value may show a change in circumstances if respondent sells it and substantially decreases her living expenses. But for now, the homestead provides shelter and it does not need to be sold to provide respondent with sufficient, monthly income. Flynn v. Flynn, 402 N.W.2d 111, 114 (Minn.App. 1987), review denied (Minn. Nov. 24, 1987). Moreover, the figure used by the court conforms to the taxable market value of the property, which was $164,700 in 1999. See Thompson v. Thompson, 385 N.W.2d 55, 56-57 (Minn.App. 1986) (noting that "courts have taken judicial notice that property tax assessments are 91.5% of actual value.").
2. Attorney Fee Award
When awarding attorney fees, the trial court must identify the statute or authority under which it awards the fees, and for need-based fees, the court must make specific findings about the parties' incomes and expenses. Geske v. Marcolina, 624 N.W.2d 813, 816-17, (Minn.App. 2001). A court "shall award attorney fees, costs, and disbursements in an amount necessary to enable a party to carry on or contest the proceeding" if it finds (a) the fees are necessary for a "good-faith assertion" of rights; (b) the payor has the ability to pay the award; and (c) the recipient does not have the means to pay his or her own fees. Minn. Stat. § 518.14, subd. 1 (2000). Thus, the findings of a need-based award must show that the recipient's financial circumstances limited her ability to assert her rights. Mize v. Kendall, 621 N.W.2d 804, 809-10 (Minn.App. 2001), review denied (Minn. Mar. 27, 2001).
Appellant disputes the award of attorney fees to respondent. The court did not state the statute or other authority under which it awarded fees, but evidently based the award on the needs of the party. The court found that respondent asserted her rights in good faith and the fees were necessary to defend the motion but made no ultimate findings about respondent's ability to assert her rights absent an award of fees. We reverse and remand for the trial court to review the attorney-fee award. If ratified, the court must make the appropriate findings to support the award and confirm the basis for it.
Affirmed in part, reversed in part, and remanded.
Because of the lack of findings supporting the attorney fee award, I concur with the majority's remand of the attorney fee question. Because the record does not support the district court's findings on respondent's income or expenses and because the district court did not adequately consider respondent's meretricious relationship, I respectfully dissent from the majority's handling of the maintenance issue.
Facts
The record shows: (1) respondent lives in the marital home with Thomas Kodada and with the parties' adult son; (2) respondent, Kodada, and the parties' son are each gainfully employed; (3) respondent and Kodada have no intent to marry, but live together, travel together, and are co-signers on an $85,000 post-dissolution mortgage on the marital home, despite the fact that Kodada lacks an interest in the home; (4) respondent used part of the proceeds of the mortgage to pay off debts incurred before Kodada moved into the home; (5) respondent "loaned" Kodada $26,918.36 of the mortgage proceeds; (6) respondent "loaned" the parties' son $10,000 of the mortgage proceeds; (7) Kodada pays respondent $500 per month on his "loan," but he and respondent have no written agreement requiring him to do so or written records of his payments; (8) payments by the parties' son on his "loan" are sporadic; (9) neither Kodada nor the parties' son pay respondent to live in the home or contribute to its utility expenses; (10) Kodada and the son each periodically bring home groceries for the household, but the frequency with which this happens is unclear, as is the value of the groceries; and (11) most of the financial relationship between respondent and Kodada involves transfers of cash or in-kind services, and there is virtually no documentation of those transfers.
Findings
In denying appellant's motion to reduce or terminate his permanent maintenance obligation, the district court stated: (1) since the dissolution, respondent's budget "has not changed substantially," considering her debt to her attorney; (2) respondent's earnings have not "substantially increased * * * from the date of the dissolution to the present * * * so as to make the terms of the original decree unreasonable and unfair"; and (3) respondent's needs have not "substantially decreased * * * so as to make the terms of the original decree unreasonable and unfair." These findings are defective because they do not distinguish between the questions of whether a substantial change in circumstances occurred and whether any such change in circumstances renders appellant's existing maintenance obligation unreasonable and unfair. See, e.g., Beck v. Kaplan, 566 N.W.2d 723, 726 (Minn. 1997) (accepting district court's finding of substantially changed circumstances, but rejecting finding that changed circumstances rendered existing maintenance award unreasonable and unfair); Santillan v. Martine, 560 N.W.2d 749, 752 (Minn.App. 1997) (noting district court "made no finding as to whether this change in circumstances rendered the existing temporary maintenance award unreasonable or unfair"). See generally, Stich v. Stich, 435 N.W.2d 52, 53 (Minn. 1989) (requiring maintenance determinations to be supported by findings adequate to allow judicial review). Additionally, to the extent these determinations constitute findings that respondent's income and expenses have not substantially changed, they are clearly erroneous because they are contrary to the evidence on the record.
At the time of the dissolution, respondent was unemployed. The district court found that respondent now earns $8.50 per hour, which may be raised to $9.50 per hour, but earns "a similar amount" to what she made at her prior job where she "grossed as high as $20,450.09." Full-time employment at $8.50 or $9.50 per hour would produce a gross annual income of $17,680 or $19,760. These figures, however, ignore any income that should be imputed to respondent because (1) she took a job at a lower wage, thus self-limiting her income, and (2) she allows Kodada and her adult son, both of whom were found to be "gainfully employed," to live in her home free of charge. See Carrick v. Carrick, 560 N.W.2d 407, 410 (Minn.App. 1997) (addressing imputation of income to maintenance recipient).
Even assuming that respondent's income is and should be limited to income from her current job, the district court failed to calculate respondent's net monthly income from that job. Absent a finding on net monthly income, the district court could not properly consider respondent's need for maintenance. See Lyon v. Lyon, 439 N.W.2d 18, 22 (Minn. 1989) ("maintenance depends on a showing of need"); Robinson v. Robinson, 355 N.W.2d 737, 741 (Minn.App. 1984) (when considering whether spouse can provide self-support, "the court generally compares monthly expenses to net take-home pay"), review denied (Minn. Jan. 4, 1985). Additionally, the lack of a finding of respondent's current net monthly income will unnecessarily complicate future modification motions involving allegations that respondent's net monthly income has substantially changed. Regardless of what respondent's current net monthly income is, however, because she was unemployed at the time of the dissolution, her current net monthly income substantially exceeds the amount she "made" when the dissolution judgment was entered. Any district court finding to the contrary is clearly erroneous. I would remand for specific findings of respondent's net monthly income, whether the changes in her income render her existing maintenance award unreasonable and unfair, and why.
Regarding expenses, the dissolution court found respondent's monthly expenses were $2,749. In the current proceeding, the district court found respondent's monthly expenses were $2,421.29. This lesser current amount includes an $865.38 payment on the post-dissolution mortgage. Thus, even accepting the assertions that the funds transferred to Kodada and the parties' son were actually loans, the district court's finding of respondent's monthly expenses includes the principal and interest payments on almost $37,000 borrowed by persons other than respondent. The inclusion of these amounts when considering respondent's need for maintenance is clear error. See Minn. Stat. § 518.552, subd. 1 (2000) (maintenance may be awarded if district court finds " spouse" seeking maintenance lacks adequate property "to provide for reasonable needs of the spouse" or "is unable to provide adequate " self-support") (emphasis added); Musielewicz v. Musielewicz, 400 N.W.2d 100, 103 (Minn.App. 1987) (rejecting maintenance obligor's argument that his contributions to adult children should be considered in determining his ability to pay maintenance, and noting that district court "must fairly determine maintenance without considering the needs of the adult children in setting the amount of maintenance"), review denied (Minn. Mar. 25, 1987). The finding on respondent's expenses also appears to include amounts for utilities, food, or home maintenance attributable to the parties' adult son and to Kodada. Thus, while the district court found respondent's current monthly expenses are $327.71 less than her expenses at the time of the dissolution, the record irrefutably shows that the district court significantly overstated respondent's current expenses and that that overstatement was a result of its failure to follow the relevant law. I would remand for a finding on respondent's expenses, which excludes the expenses attributable to Kodada and the parties' adult son.
Meretricious Relationship
In Minnesota, motions to modify maintenance received by a person engaged in a meretricious relationship involve three propositions of maintenance law which, when combined, can render the maintenance modification process fundamentally unfair to a maintenance obligor at both the trial and appellate levels. First, the moving party has the burden to show both a substantial change in circumstances and that the change renders the existing award unreasonable and unfair. Minn. Stat. § 518.64, subd. 2 (2000); Hecker v. Hecker, 568 N.W.2d 705, 709 (Minn. 1997). Second, when a maintenance recipient is involved in a meretricious relationship, that relationship is relevant only to the extent that it is shown to impact the recipient's ability to support him or herself. Abbott v. Abbott, 282 N.W.2d 561, 566 (Minn. 1979). Lastly, maintenance-related findings of fact are not set aside unless clearly erroneous. McCulloch v. McCulloch, 435 N.W.2d 564, 566 (Minn.App. 1989); Minn.R.Civ.P. 52.01.
By its nature, a maintenance obligor's motion to reduce or terminate maintenance based on a recipient's meretricious relationship will require the obligor to show changes in the recipient's financial circumstances. To put the burden of proof on the moving party to show changes in the nonmoving party's circumstances, is, and always has been, awkward. This awkwardness is exacerbated in the context of a meretricious relationship because in those cases, the moving party must prove whether and to what extent the meretricious relationship impacts the maintenance recipient. For this reason, the moving party must conduct extensive discovery regarding the finances of the recipient and of the person with whom the recipient is engaged in a meretricious relationship. Under such circumstances, documentation of day-to-day expenses is critical to determining the existence and extent of any financial impact of the meretricious relationship on the maintenance recipient. Where, as here, the parties to the meretricious relationship seem to have made a point of avoiding the creation of any financial documentation, the moving party is put at a great disadvantage. The result is that maintenance modification is denied, not because the meretricious relationship does not impact the maintenance recipient's ability to support him or herself, but because the existence of the impact cannot be documented.
While a party seeking to modify maintenance may conduct extensive depositions and other non-document-dependent discovery to marshal evidence relevant to a maintenance modification motion, that option is often not a practically viable alternative to obtaining the relevant financial documentation. Among other things, it is extraordinarily expensive and, for that reason, can put the moving party in the position of deciding whether to pursue a motion to modify maintenance based not on the true facts of the matter but on whether it is more economically feasible to overpay maintenance than to incur substantial attorney fees. Moreover, if the motion is pursued, the information produced in a deposition is often less specific than that which would be produced in documentary discovery.
Additionally, to the extent financial documentation is nonexistent, the district court must base its decision on oral testimony. Such determinations are credibility determinations to which appellate courts defer. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988). Thus, even if all relevant issues are adequately preserved for appeal, a party seeking to appeal the denial of a motion to modify maintenance, based on the existence of a meretricious relationship, has a limited probability of success on appeal. Not only will the appellate court defer to the district court's credibility determinations, but it is presented with a limited record (i.e., one lacking the documents critical to showing changed circumstances) to review. Based on that limited record, the appealing party must show that the district court's findings are "clearly erroneous." Minn.R.Civ.P. 52.01; see Vangsness v. Vangsness, 607 N.W.2d 468, 472 (Minn.App. 2000) (appellate court reviews record in light most favorable to district court's findings). Therefore, absent documentary evidence on the critical financial issues, there is virtually no point in appealing such a determination.
Under such circumstances, the judicial system has an inherent, structural bias which implicitly encourages cohabitation outside of marriage, while enunciating policy "in favor of the institution of marriage." State by Cooper v. French, 460 N.W.2d 2, 6 (Minn. 1990). Apparently aware of such inconsistencies and other problems related to the question of maintenance in the context of meretricious relationships, a number of states have enacted statutes addressing the question. Many of those statutes create presumptions favoring the moving party when a modification in maintenance is sought based on the recipient's participation in a meretricious relationship. In Minnesota, the supreme court not only recognized that we lack a statute governing maintenance in the context of a meretricious relationship, but has also stated that "[a]ny change in the definition of marriage or attachment of marital obligations" to a non-marital relationship "clearly involve[s] issues to be resolved by the legislature, not the judiciary." Abbott, 282 N.W.2d at 566. For this reason, the judiciary, and this court in particular, has a limited ability to address the problems inherent in the current state of Minnesota's maintenance law as it addresses meretricious relationships.
See Ala. Code § 30-2-55 (1998) (allowing termination of alimony if recipient is "living openly or cohabiting with a member of the opposite sex"); Cal. Fam. Code § 4323(a)(1) (West 1994) (creating "rebuttable presumption * * * of decreased need for spousal support if the supported party is cohabiting with a person of the opposite sex"); Ga. Code Ann. § 19-6-19(b) (1999) (existence of meretricious relationship "shall also be grounds to modify provisions made for periodic payments of permanent alimony for the support of the former spouse"); 750 Ill. Comp. Stat. Ann. 5/510(c) (West 1999) (unless otherwise agreed by parties in writing, "the obligation to pay future maintenance is terminated * * * if the party receiving maintenance cohabits with another person on a resident, continuing conjugal basis"); La. Civ. Code Ann. art. 115 (West 1999) ("obligation of spousal support is extinguished upon * * * a judicial determination that the obligee has cohabited with another person of either sex in the manner of married persons"); N.Y. Dom. Rel. Law § 248 (1999) (allowing court, in its discretion, to terminate wife's support if it finds she is "habitually living with another man and holding herself out as his wife" without being married to him); Utah Code Ann. § 30-3-5(9) (Supp. 2000) ("[a]ny order of the court that a party pay alimony to a former spouse terminates upon establishment by the party paying alimony that the former spouse is cohabiting with another person").
Because this record shows that respondent's income has substantially increased and that her expenses have significantly decreased and because the documentary evidence addressing the day-to-day financial relationship of respondent and Kodada is very limited, I would remand for the district court to make specific findings on respondent's income and expenses and to fully explain those findings.