From Casetext: Smarter Legal Research

In re Marriage of Greco v. Albrecht-Greco

Minnesota Court of Appeals
Jun 28, 2005
No. A04-1580 (Minn. Ct. App. Jun. 28, 2005)

Opinion

No. A04-1580.

Filed June 28, 2005.

Appeal from the District Court, Dakota County, File No. F3036709.

Merlyn L. Meinerts, (for respondent).

John R. Hill, Larkin, Hoffman, Daly Lindgren, Ltd., (for appellant).

Considered and decided by Schumacher, Presiding Judge; Peterson, Judge; and Wright, Judge.


This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).


UNPUBLISHED OPINION


In this appeal from a marital-dissolution judgment, wife argues that the district court abused its discretion by ordering her to pay husband (1) $24,964 for credit-card debts that were paid with proceeds from a mortgage loan obtained during the marriage; and (2) $25,340.57 for interest, late fees, and taxes incurred because of delinquent mortgage payments. We affirm in part and reverse in part.

FACTS

Appellant-wife Leslie J. Albrecht-Greco and respondent-husband Edward E. Greco were married in May 2000, and divorced in April 2004. The parties stipulated to the resolution of child-custody and support issues, and issues related to the division of property and debts were tried.

In April 1998, husband bought a home for $270,000. He made a $54,000 cash down payment and obtained a mortgage loan for $216,000. In the summer of 1999, husband obtained a second mortgage loan for $40,000, and in November 1999, he obtained a third mortgage loan for approximately $26,300. The proceeds of the third mortgage loan were used to finish basement space in the home and make other improvements. The improvements were completed during the first quarter of 2000. The parties married on May 25, 2000. Husband testified that the home was worth $400,000 at the time of the marriage.

In November 2000, wife obtained a loan for $170,000 that was secured by a mortgage on the home. Part of the loan proceeds were used to pay off the third mortgage on the home, and part were used to pay off wife's $24,964 credit-card debt.

The parties adopted a son from the Ukraine in September 2002. To pay for the adoption, the parties obtained $35,000 in additional mortgage financing. Husband became concerned about the parties' financial situation and sought help from a financial counselor, who advised him to sell the house. Wife would not agree to sell the house.

Husband commenced the divorce proceeding and sought temporary relief, including a request for an order to immediately sell the house. Wife opposed the request and told the court that she could continue making the house payments with her salary. In a March 2003 order for temporary relief, the district court denied husband's request to sell the house, granted wife temporary and exclusive use and possession of the house, ordered wife to pay the mortgage, taxes, and insurance for the house, and ordered husband to move out of the house and pay child support and a portion of day-care expenses. Despite the order for temporary relief, husband remained in the house while the parties attempted to reconcile.

While attempting to reconcile, husband rented alternative housing. Husband moved out of the home in November 2003. Husband brought a second motion to compel the immediate sale of the home, the parties agreed to sell the home, and the home was sold for $448,000. As a result of the sale, all but the last mortgage were satisfied. The parties agreed to be equally responsible for the outstanding amount of the last mortgage loan. Because wife had not made all of the mortgage and tax payments when due, there were amounts due at closing for interest, late fees, foreclosure fees, and taxes totaling $25,340.57.

In the dissolution judgment, the district court ordered wife to pay husband (1) $24,946 for wife's non-marital credit-card debt that was paid from the proceeds of the $170,000 mortgage loan; and (2) $25,340.57 for interest and other fees incurred because of delinquent mortgage payments. The district court denied wife's motion for amended findings or a new trial, and this appeal followed.

DECISION

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. Chamberlain v. Chamberlain, 615 N.W.2d 405, 412 (Minn.App. 2000) (clear abuse of discretion), review denied (Minn. Oct. 25, 2000); Ebnet v. Ebnet, 347 N.W.2d 840, 842 (Minn.App. 1984) (misapplication of the law). A district court abuses its discretion regarding a property division if its findings of fact are against logic and the facts on the record. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984). Appellate courts "will affirm the [district] court's division of property if it had an acceptable basis in fact and principle even though [the appellate court] might have taken a different approach." Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002). "We defer to the [district] court's findings of fact and will not set them aside unless they are clearly erroneous." Id.

Whether property is marital or nonmarital is a question of law, and this court exercises independent judgment when reviewing the district court's classifications. Id. But this court defers to the district court's findings on underlying facts, such as the resources used to acquire property. Rosenberg v. Rosenberg, 379 N.W.2d 580, 583 (Minn.App. 1985), review denied (Minn. Feb. 19, 1986). "All property acquired by either spouse subsequent to the marriage and before the valuation date is presumed to be marital property." Minn. Stat. § 518.54, subd. 5 (2004). To overcome the presumption of marital property, a party must show by a preponderance of the evidence that the property meets one of the definitions of nonmarital property provided in section 518.54, subdivision 5. Gottsacker v. Gottsacker, 664 N.W.2d 848, 853 (Minn. 2003) (method of overcoming presumption); Crosby v. Crosby, 587 N.W.2d 292, 296 (Minn.App. 1998) (requiring showing by a preponderance of the evidence), review denied (Minn. Feb. 18, 1999). Nonmarital property includes real or personal property that is acquired by either spouse before the marriage. Minn. Stat. § 518.54, subd. 5(b) (2004).

1. Credit-Card Debt

Wife argues that the district court abused its discretion by ordering her to pay husband $24,964 for the credit-card debts that were paid with proceeds from the $170,000 mortgage loan obtained after the parties married. The district court found that "$24,964 of [husband's] pre-marital home equity was used to `buy' [wife's] pre-marital credit card debt" when the mortgage-loan proceeds were used to pay the credit-card debts. Wife contends that the district court erred in determining the amount of husband's home equity at the time of the marriage and that husband did not meet his burden of proving that her credit-card debts were nonmarital debts.

Wife argues that the district court erroneously valued the home at $400,000 at the time of marriage. Wife contends that the district court should have valued the home using an equal monthly appreciation amount from the time husband purchased the home for $270,000 until it was sold 69 months later for $448,000, which would produce a $331,913 value at the time of marriage. Wife claims that if this value is used, the amount of equity in the home is less than wife's credit-card debt, and the equity could not have been used to "buy" her credit-card debt.

But even if the home's value was $331,913 at the time of the marriage, husband's equity exceeded wife's credit-card debt. At the time of the marriage, the home was subject to three mortgages. The first mortgage loan was for $216,000; the second was for $40,000; and the third was for $26,300. This produces a total mortgage debt of $282,300, which leaves $49,613 of equity if the home was worth $331,913. Therefore, wife is not correct that the equity could not have been used to "buy" her credit-card debt.

It appears that in calculating husband's equity at the time of the marriage, wife made the same error that the district court made in finding of fact number 18 when calculating husband's equity based on a $400,000 value. The district court calculated total mortgage debt using a first-mortgage amount of $270,000. But $270,000 was the purchase price; the amount of the first mortgage was $216,000.

Wife also argues that the district court erred in determining that her credit-card debts were nonmarital debts. In the memorandum accompanying the order denying wife's motion for amended findings or a new trial, the district court acknowledged that there was no affirmative evidence demonstrating the amount of wife's credit-card debts at the time of the marriage. But the court noted that at her pretrial deposition, wife said that she would be able to produce documentation regarding the disputed credit-card debt. However, wife did not produce such documentation at trial, and she did not provide a credible explanation for her failure to produce it. The district court found it telling that despite the large amount of the debt, wife did not produce any credit-card billing statement or any correspondence from any credit-card company. Because wife did not produce any of the documentation that a credit-card holder would ordinarily be able to produce, the district court drew the negative inference that the credit-card debt existed before the marriage, and, therefore, it was nonmarital debt.

Wife contends that this negative inference is not sufficient to meet husband's burden of proving that the credit-card debt is nonmarital. But wife does not argue that the inference is impermissible. Essentially, wife argues that the inference should not be given more weight than her testimony that the credit-card debt was incurred paying marital expenses. But "[t]he finder of fact is not required to accept even uncontradicted testimony if the surrounding facts and circumstances afford reasonable grounds for doubting its credibility." Varner v. Varner, 400 N.W.2d 117, 121 (Minn.App. 1987). The fact that wife could not produce any of the usual credit-card-account documents to corroborate her testimony afforded reasonable grounds for the district court to doubt wife's credibility. The district court did not clearly err when it found that wife's credit-card debt was pre-marital debt and that husband's pre-marital home equity was used to "buy" wife's pre-marital credit-card debt. But the record does not support the district court's conclusion that "[wife] owes [husband] $24,946 for [wife's] pre-marital credit card debt."

"Upon a dissolution of a marriage, . . . the court shall make a just and equitable division of the marital property of the parties without regard to marital misconduct, after making findings regarding the division of the property." Minn. Stat. § 518.58, subd. 1 (2004) (emphasis added). Debts are treated the same as assets for purposes of property division. Korf v. Korf, 553 N.W.2d 706, 712 (Minn.App. 1996). Black's Law Dictionary 410 (7th ed. 1999), defines "debt" as "[l]iability on a claim; a specific sum of money due by agreement or otherwise." See Westchester Fire Ins. Co. v. Hasbargen, 632 N.W.2d 754, 757 (Minn.App. 2001) (using Black's definition of "debt").

There is no evidence in the record that indicates that when the parties used husband's equity to buy wife's credit-card debt, they intended the transaction to be a loan from husband to wife. There was no loan agreement, and there is no evidence that wife made any payments to husband or that any kind of loan records were kept. When the credit-card debt was paid, wife's debt ceased to exist; it was not replaced by a debt to husband. Consequently, the marital estate did not include a $24,964 debt, and there was no $24,964 debt for the district court to divide in the dissolution. In effect, the district court resurrected a transaction that the parties entered into more than three years before the dissolution and treated the transaction in a manner that it had not been treated by the parties. In doing so, the district court created a debt, rather than dividing a marital debt. Because the record would not support a finding that the parties intended to enter into a loan arrangement when wife's credit-card debt was paid, and we are not aware of any authority the district court has to treat the transaction as a loan when the parties did not treat it as a loan, we conclude that the district court erred when it ordered wife to pay husband $24,964 for her credit-card debt. Therefore, we reverse that part of the judgment.

2. Delinquent Mortgage Payments

Wife argues that the district court erred in ordering her to pay husband $25,340.57 for interest and other fees incurred because of delinquent mortgage payments. Wife contends that because the district court found that the parties lived as a family unit during the attempt to reconcile, their expenses should have been treated as family expenses, and she should "only be responsible for the interest and fees that are attributable for the period after November 19, 2003, when the parties finally separated."

Under Minn. Stat. § 518.131, subd. 5 (2004), "[a] temporary order shall continue in full force and effect until the earlier of its amendment or vacation, dismissal of the main action or entry of a final decree of dissolution or legal separation." The temporary order required wife to make all "payments of principal, interest, taxes and insurance relative to the homestead" and required husband to pay monthly child support of $787.50 and a percentage of child-care costs. The district court found that while the parties attempted to reconcile, husband made payments in excess of $11,000 per month from a checking account and a stock account and that the great bulk of these expenditures were attributable to family expenses. The district court also found that the amounts husband paid substantially exceeded the parties' housing expenses and that husband "contributed more than his share towards the family unit's expenses."

Husband claimed that monthly housing expenses totaled $4,690, and wife claimed that monthly housing expenses totaled $4,126.

During the hearing on husband's request for temporary relief, wife opposed husband's request for an order to immediately sell the house and told the court that she could continue making the house payments with her salary. The district court denied husband's request for an immediate sale, but ordered wife to pay the mortgage, taxes, and insurance for the house. In the dissolution judgment, the district court found that $25,340.57 in interest, late fees, and taxes "would not have been due and payable had the mortgage and property taxes been paid in a timely manner by [wife] as ordered in the Order for Temporary relief." Because wife failed to make the payments as required by the temporary order, and husband contributed more than his share towards the family unit's expenses during the attempt to reconcile, we conclude that the district court did not abuse its discretion in ordering wife to pay the $25,340.57 in interest, late fees, and taxes.

Affirmed in part, reversed in part.


Summaries of

In re Marriage of Greco v. Albrecht-Greco

Minnesota Court of Appeals
Jun 28, 2005
No. A04-1580 (Minn. Ct. App. Jun. 28, 2005)
Case details for

In re Marriage of Greco v. Albrecht-Greco

Case Details

Full title:In re the Marriage of: Edward E. Greco, petitioner, Respondent, v. Leslie…

Court:Minnesota Court of Appeals

Date published: Jun 28, 2005

Citations

No. A04-1580 (Minn. Ct. App. Jun. 28, 2005)

Citing Cases

In re Matter of Dukowitz v. Dukowitz

In addressing respondent's financial needs, the district court concluded that even with her employment and…