Opinion
No. C2-98-1475.
Filed April 13, 1999.
Appeal from the District Court, Hennepin County, File No. 217447.
Donovan D. Larson, (for respondent)
Jeffrey R. Arrigoni, (for appellant)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat § 480A.08, subd. 3 (1998)
UNPUBLISHED OPINION
On appeal from judgment in a marital dissolution action, Lloyd Lenarz challenges the division of property and the requirement that he maintain an insurance policy as security for his support obligation under the judgment. Because the district court properly applied the law and did not abuse its discretion, we affirm.
FACTS
Lloyd and Susan Lenarz were married for 30 years and have three children, one emancipated. Following a 1998 contested dissolution hearing, the district court ordered child support for the two dependent children in the custody of Susan Lenarz, reserved maintenance, required Lloyd Lenarz to secure his obligation with a $300,000 life insurance policy, found that Lloyd Lenarz failed to establish a nonmarital interest in the parties' investments, alternatively found that allocating a nonmarital interest in the property division would create a hardship for Susan Lenarz, and did not credit against the property division assets liquidated to allow Susan Lenarz to meet her monthly expenses during the proceedings.
Lloyd Lenarz appeals that part of the district court's decision (1) denying a nonmarital interest in the investments; (2) requiring that he maintain a $300,000 life insurance policy to secure his obligations; and (3) declining to credit against the property division assets liquidated during the proceedings to allow Susan Lenarz to pay her monthly expenses. Susan Lenarz requests attorneys' fees for the appeal.
DECISION I
Property acquired during a marriage is presumptively marital, and to rebut that presumption a party must show the property to be nonmarital as defined by Minn. Stat. § 518.54, subd. 5 (1998). Olsen v. Olsen , 562 N.W.2d 797, 800 (Minn. 1997). For nonmarital property to retain its nonmarital character, "it must either be kept separate from marital property or, if commingled with marital property, be readily traceable." Id .
Lloyd Lenarz does not dispute that his nonmarital funds were commingled when the assets were in the parties' investment "business." But he argues that the "business" was a complex asset and thus the funds need not be traced beyond their use in the "business." See Nardini v. Nardini , 414 N.W.2d 184, 194 (Minn. 1987) (general rules for apportioning marital and nonmarital interests do not readily apply to complex combination of real and personal property).
This argument against the tracing requirement is not persuasive, however, because the Lenarzes did not own an investment "business." The disputed income was obtained through making their own investments. The bulk of the assets in question are stocks and equities. Any increase in value generated by such assets is readily traceable because it does not require valuation of the efforts of one of the parties, as would income generated by a complex business. Moreover, Nardini specifically recognizes that the general rule for marital property division can be applied to gains resulting from publicly traded stock or investments. Id. at 192-94.
The evidence supports the district court's finding that Lloyd Lenarz did not rebut the presumption that the investment assets are marital, and the district court did not abuse its discretion by dividing the assets as marital property. Because the district court properly treated the parties' investments as marital, we need not address Lloyd Lenarz's arguments on the valuation amounts under the "complex-asset approach" or his challenge to the district court's alternative finding that deducting a nonmarital interest would impose an unfair hardship on Susan Lenarz.
II
Whether to order security for maintenance or support is discretionary with the district court. See Minn. Stat. § 518.24 (1998) (when maintenance or support is ordered, court "may" require security); Walker v. Walker , 553 N.W.2d 90, 96 (Minn.App. 1996) (spousal maintenance); Riley v. Riley , 369 N.W.2d 40, 44 (Minn.App. 1985) (child support), review denied (Minn. Aug. 29, 1985).
Lloyd Lenarz's monthly income roughly equals his monthly support obligation and expenses. The monthly premium on the insurance policy, required to be maintained until September 1, 2001, exceeds $1,000. Taking child support into account, Susan Lenarz still has a monthly deficit exceeding $270. Imposing a similar deficit on Lloyd Lenarz, combined with his use of the policy's loan value, will pay the policy premiums through late 2000 or early 2001. Given the fairly substantial size of the marital estate, requiring Lloyd Lenarz to liquidate a small portion of his property award to finance the premiums does not represent an abuse of the district court's discretion. See Minn. Stat. § 518.58, subd. 1 (1998) (requiring property division be equitable). Providing security for the support obligation is appropriate in these circumstances because the children would continue to need support in the event of their father's death. Laumann v. Laumann , 400 N.W.2d 355, 360 (Minn.App. 1987) (decision to require security of obligation within discretion of court), review denied (Minn. Nov. 24, 1987).
Lloyd Lenarz also argues that, even if security is required, a $75,000 insurance policy is adequate. His argument, however, ignores the facts that in the future he may have a maintenance obligation to secure in addition to his support obligation; that his death would require Susan Lenarz to insure herself and the children in her custody, which would be expensive because Susan Lenarz is not in good health; and one of the children in her custody has special needs requiring a substantial amount of full-time care. Lloyd Lenarz has not shown that the insurance obligation or the amount is an abuse of the district court's discretion. Cf. O'Brien v. O'Brien , 343 N.W.2d 850, 853 (Minn. 1984) (remanding for insurance when recipient of maintenance and support was entitled to permanent maintenance, was a child custodian, and had few financial prospects).
III
In fashioning a property division, the district court is statutorily required to compensate a party to a dissolution for assets the other party liquidates during the proceedings, unless the disposition is "in the usual course of business or for the necessities of life." Minn. Stat. § 518.58, subd. 1(a) (1998) (emphasis supplied). The assets at issue were liquidated to allow Susan Lenarz to meet her monthly expenses. Because the refusal to credit the liquidated assets against Susan Lenarz's property award is consistent with the statute, it was not an abuse of the district court's discretion.
IV
The court "shall" award need-based attorney fees if they are necessary for the recipient's good-faith assertion of rights, the payor can pay the fees, and the recipient cannot. Minn. Stat. § 518.14, subd. 1. Both parties have monthly deficits. After considering the relative income, expenses and assets, we decline to award need-based attorney fees. Attorney fees may also be awarded against a party who "unreasonably contributes to the length or expense of the proceeding." Id. Although Lloyd Lenarz did not prevail on appeal, the evidence does not demonstrate that his actions were intended to unreasonably contribute to the length or expense of this proceeding, and we decline to award conduct-based attorney fees.