Opinion
No. C0-97-458.
Filed October 14, 1997.
Appeal from the District Court, Anoka County, File No. F69511276.
Jennifer Wellner, (for respondent).
Thomas R. Hughes, (for appellant).
Considered and decided by Parker, Presiding Judge, Crippen, Judge, and Short, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).
UNPUBLISHED OPINION
Appellant David K. Pattinson challenges the trial court's (1) award of permanent spousal maintenance, (2) valuation of a marital asset, and (3) award of attorney fees to respondent Kim T. Pattinson. We affirm.
FACTS
The parties were married in 1984. Mr. Pattinson had finished high school and an apprenticeship and was working as a journeyman carpet installer for Pink Companies. Ms. Pattinson had not finished high school, had received no subsequent education, and was working doing data entry.
In 1987, the parties had their first child. The child was born with serious medical difficulties necessitating continuous care. The parties' second child was born in 1991. Ms. Pattinson stopped working outside the home while pregnant with their first child and remained at home caring for the children until August 1991.
In 1988, Mr. Pattinson, with a co-worker, began a carpet installation company named Carpet Concepts. He continued working for the Pink Companies and spent nights and weekends building his business. In 1993 he and the co-worker quit the Pink Companies and began working 65 hours per week for their business while paying themselves for only 32 hours per week. In 1993, the business had a gross profit of 40 percent. Carpet Concepts hired two additional employees.
In 1994, Mr. Pattinson's partner decided to leave the business. The corporation balance sheet indicated it was worth $71,812.46. Mr. Pattinson bought out his partner for $35,906.23 and continued to operate Carpet Concepts, hiring two additional employees. In 1994 the gross profit was 24 percent. In 1995, Carpet Concepts purchased a truck that Mr. Pattinson also used for personal use. Carpet Concepts paid for Mr. Pattinson's gas and insurance. Through April 1995 the profitability percentage was 25.14 percent. However, the annual profitability for 1995 dropped to 16.18 percent. Mr. Pattinson owned and was working for Carpet Concepts at the time of trial.
Mr. Pattinson notes in a footnote that "Carpet Concepts, Inc. was wound up after posting a $30,000 loss for 1996 and [he] once again works as an installer for a large carpet company." Both parties also noted at oral argument that facts had arisen since the trial that altered each party's income. However, this court must decline to address issues outside the record before the trial court. See Thiele v. Stich , 425 N.W.2d 580, 582 (Minn. 1988) (quoting Thayer v. American Financial Advisers, Inc. , 322 N.W.2d 599, 604 (Minn. 1982)) (holding reviewing court will consider "only those issues that the record shows were presented and considered by the trial court in deciding the matter before it").
Ms. Pattinson began working in 1991 approximately 15 hours per week selling pull tabs in the evenings and on weekends. She testified that in April 1993 she quit that job because Mr. Pattinson did not want her to work in a restaurant/bar. She also testified that she wanted to start school again but did not because Mr. Pattinson "did not want [her] to." In September 1993, Ms. Pattinson obtained a job with Minnesota Plastics doing invoicing, billing, and some accounts payable. She began working part-time and gradually increased her work hours to approximately 32 hours per week.
The parties separated on June 15, 1995. The trial court dissolved the marriage and awarded Ms. Pattinson $600 per month permanent spousal maintenance and $2,500 in attorney fees. To determine spousal maintenance, the court valued Mr. Pattinson's business at $35,000. After the denial of his motion for a new trial, Mr. Pattinson appealed.
DECISION
1. To determine spousal maintenance, a trial court essentially balances the recipient's financial needs and ability to meet those needs against the financial condition of the spouse providing the maintenance. Krick v. Krick , 349 N.W.2d 350, 352 (Minn.App. 1984) (citing Erlandson v. Erlandson , 318 N.W.2d 36, 39 (Minn. 1982)). This court will affirm a trial court's findings of fact unless they are clearly erroneous. Minn.R.Civ.P. 52.01; Reif v. Reif , 426 N.W.2d 227, 230 (Minn.App. 1988) (citing Garcia v. Garcia , 415 N.W.2d 702, 704 (Minn.App. 1987)). This court reviews a trial court's determination in a maintenance award for abuse of discretion. Erlandson , 318 N.W.2d at 38.
Mr. Pattinson asserts the trial court abused discretion by awarding Ms. Pattinson permanent spousal maintenance in light of a recent Supreme Court decision, Gales v. Gales , 553 N.W.2d 416 (Minn. 1996). Mr. Pattinson argues that Gales provides that permanent spousal maintenance is not appropriate for a marriage of this length, when the maintenance recipient has no more than a high school education and when the maintenance recipient has worked during the marriage.
Whenever one spouse petitions for spousal maintenance, the court must analyze whether maintenance is appropriate under the statutory factors provided in Minn. Stat. § 518.552. Minn. Stat. § 518.552, subd. 3 (1996) provides:
Nothing in this section shall be construed to favor a temporary award of maintenance over a permanent award, where the factors under subdivision 2 justify a permanent award.
Where there is some uncertainty as to the necessity of a permanent award, the court shall order a permanent award, leaving its order open for later modification.
The Gales court observed that "the legislature has established with unmistakable clarity a presumption in favor of awarding permanent maintenance." Gales , 553 N.W.2d at 419. "Doubts with respect to duration are to be resolved in favor of permanency." Nardini v. Nardini , 414 N.W.2d 184, 196 (Minn. 1987). However, the Gales court determined that under the facts presented there, permanent maintenance was inappropriate.
It was suggested in oral argument that Gales does not apply Minn. Stat. § 518.552. We disagree. Gales represents the type of case in which the last sentence of Minn. Stat. § 518.552, subd. 3, need not apply. The parties in that case were childless and both were fully employed, with nearly equal incomes before and after the marriage. There seemed little, if any, "uncertainty" that a permanent award was unnecessary.
The trial court here found that the last sentence of Minn. Stat. § 518.552, subd. 3, should apply, stating that "while permanen[t] spousal maintenance should be awarded to [Ms. Pattinson], a review * * * is appropriate." The court scheduled a review in five years. We conclude the district court did not abuse his discretion.
In Gales , although the potential maintenance recipient had no formal education beyond high school, she had maintained a job as a bank teller throughout the marriage and was unable to increase her salary only because she preferred not to learn about loans, which were "more stressful than [she] want[ed] to deal with[.]" Gales , 553 N.W.2d at 417. Further, the parties had a childless marriage, and the spouses had nearly equal incomes.
Our understanding of Gales seems reinforced by the supreme court's guidance in Dobrin v. Dobrin , ___ N.W.2d ___, No. C6-96-1054, slip op. at 4 (Minn. Sept. 25, 1997).
In this case, the parties had a 12-year marriage, but the dissolution decree gave physical custody of the two children, ages six and nine at the time of the trial, to Ms. Pattinson, and she assumed the responsibility of establishing a household for them. Child support was awarded, but Ms. Pattinson's income was severely limited at the time; her former husband made at least $25 per hour either through his business or as an independent carpet installer, and her new job paid only about $9 per hour. Ms. Pattinson did not work full time because of their children's school schedule.
The parties lived comfortably during the marriage. Yet, there was record evidence that after the separation Ms. Pattinson was "not able to take the minor children out for recreational activities as in the past" or buy clothing and other basic items without incurring credit card debt and debt to her mother. The need for maintenance was clear.
Further, we conclude that the court's determination regarding the permanence of maintenance was entirely appropriate and in full compliance with the statutory requirement. Minn. Stat. § 518.552 provides that when uncertainty exists as to the necessity of a permanent award, the court shall award permanent maintenance, leaving its order open for later modification. By awarding permanent maintenance and scheduling a maintenance review five years from the date of the order, the court specifically followed the framework provided by the last sentence of Minn. Stat. § 518.552. A permanent maintenance award left open for modification was not an abuse of discretion.
2. Mr. Pattinson claims that several of the court's findings on the statutory factors to be analyzed in determining spousal maintenance under Minn. Stat. § 518.552 were clearly erroneous. He claims these clearly erroneous findings resulted in an abuse of discretion in the ultimate determination that permanent spousal maintenance was necessary.
First, Mr. Pattinson alleges the court erred in finding that "it [was] reasonable for [Ms. Pattinson] to seek to improve her skill level and job potential and [her] proposed [educational] program [was] not unreasonable in cost or duration." He asserts Ms. Pattinson did not conduct sufficient research regarding schooling or the availability of jobs or increased earning potential for the court to find her proposed course of study reasonable.
However, the parties agree that Ms. Pattinson did not have marketable skills without additional schooling and the accounting program in which she desired to enroll would improve the skills she was using in her employment at Minnesota Plastics. Furthermore, Ms. Pattinson testified that there were Minnesota Plastics employees utilizing the skills she sought to acquire and earning approximately $2 per hour more than she did. The trial court's finding was not clearly erroneous.
Second, Mr. Pattinson contends the trial court did not have sufficient evidence to find that the parties' standard of living was "comfortable." Yet, there was evidence before the court regarding the parties' $94,000 homestead, their half-interest in an $82,000 cabin, and their other assets and debts. Ms. Pattinson testified that during the marriage her husband took vacations such as fishing trips, trips to "Canada a couple of times," and to Arkansas. The court had sufficient evidence before it to determine that the Pattinsons' standard of living was "comfortable."
Third, Mr. Pattinson asserts the trial court's finding that Ms. Pattinson lost seniority retirement benefits and other employment opportunities due to the marriage was clearly erroneous. He claims Ms. Pattinson's loss of opportunities and retirement benefits resulted from her failure to finish high school or pursue her education during the marriage and her choice to work 32 instead of 40 hours per week once she re-entered the labor market.
Ms. Pattinson testified that Mr. Pattinson did not want her to re-enter school during their marriage. She also testified that she chose to work only 32 hours at Minnesota Plastics because she had to get the children on the bus at 9:00 a.m. before going to work. It appears that the trial court found Ms. Pattinson's testimony credible. See Minn.R.Civ.P. 52.01 (due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses). The trial court's finding was not clearly erroneous.
Fourth, Mr. Pattinson claims there was insufficient record evidence for the trial court's finding that it would "be more difficult for [Ms. Pattinson] to enter the job market after obtaining skill training than an individual of younger years" because of her age. There was no testimony regarding this factor. However, the Minnesota Supreme Court has noted that the prospects of an older worker reentering the job market are not enhanced by a hiatus from employment, particularly if the worker is relatively unskilled and inexperienced. Nardini , 414 N.W.2d at 197. Mr. Pattinson did not establish that the trial court's finding was clearly erroneous.
Sixth, Mr. Pattinson contends the court's finding that he was "capable of providing spousal maintenance to [Ms. Pattinson]" was clearly erroneous. He argues the court erred by calculating his net income to include as in-kind income the monthly truck payments, insurance, gas, and maintenance for the truck, health insurance, pension contributions, and union dues paid from Carpet Concepts company funds.
The trial court found Mr. Pattinson's net monthly income from his W-2 was $2,113.68 and "the total of respondent's net monthly W-2 wages, and not taxed benefits would be" $3,669.03. The court acknowledged that Mr. Pattinson claimed monthly living expenses of $1,363. The court found Mr. Pattinson "has substantially more in available income and in-kind provision of benefits for his employment and ownership of the business Carpet Concepts to provide spousal maintenance."
It appears the court not only calculated Mr. Pattinson's wage income, but also looked at his expenses relative to Ms. Pattinson's. The court offset his decrease in certain expenses compared to her expenses by considering his business benefits as additional income. There was also evidence before the court that Mr. Pattinson may have been receiving additional in-kind cash payments from his business. Thus, the court may have chosen to credit him with additional income as offset for the benefits because of a conclusion that he was actually receiving more income than his documentation revealed. We conclude the trial court's finding that Mr. Pattinson had the ability to pay spousal maintenance was supported by the evidence and was not clearly erroneous.
Finally, Mr. Pattinson claims the court's finding that Ms. Pattinson was in need of spousal maintenance was clearly erroneous. He asserts that the court miscalculated her income by ignoring her $4,000 tax refund. However, even if the tax refund were included in the court's calculation, it appears Ms. Pattinson would still be in need of maintenance in order to provide her with a standard of living similar to that established during the marriage. The court's finding that Ms. Pattinson was in need of spousal maintenance was not clearly erroneous. The trial court's award of maintenance based upon its findings was not an abuse of discretion.
3. Mr. Pattinson alleges the trial court's finding that the fair market value of his business was $35,000 was clearly erroneous. He asserts Ms. Pattinson's expert valued his business lower than the court in that the expert stated (1) the business had a book value of $20,000; (2) no one would purchase a carpet company because it would be easier to start up a new company; and (3) instead of selling the business, Mr. Pattinson would have to liquidate it at a net liquidation value of $ 5,000 ($23,000 — $19,000 in notes owed to the company by the Pattinsons). Further, he contends his expert (his sister, a certified public accountant who acted as the company accountant) valued the business between $500-$600 liquidated, with a net "negative current position of $251." Thus, Mr. Pattinson claims, the court's valuation of the business was outside the range provided by the experts.
Ms. Pattinson replies that her expert relied on a "recognized authoritative book in evaluating the balance sheets of the company" and from that "found that the company had a value of $50,000 which included $30,000 of assets which should have been in the company if it performed pursuant to its history and industry average." Further, she argues that until April 1995, the business performed consistently with the national norm as it had in years prior. She notes that her expert's valuation is not unreasonable because the company's profitability plunge (shortly more than a month before the parties separated) was not indicative of the company's earning potential at the time of valuation.
A trial court has broad discretion in marital property valuation, and an appellate court will not overturn the trial court's valuation unless it is clearly erroneous. Petterson v. Petterson , 366 N.W.2d 685, 687 (Minn.App. 1985).
When conflicting opinions of expert witnesses have a reasonable basis in fact, the trier of fact must decide who is right. The trial court is not bound by the opinion of any witness concerning values.
Thomas v. Thomas , 407 N.W.2d 124, 126 (Minn.App. 1987) (citations omitted).
The trial court found that the fair market value of Carpet Concepts, Inc., was approximately $35,000, including the value of equipment. The court valued the equipment at approximately $14,000. The court sensibly treated valuation of the notes receivable by the corporation of approximately $19,000, explaining that "essentially these [were] debts of the parties to themselves and the court [did] not include these amounts as encumbrances against other assets of the parties."
Ms. Pattinson's expert testified that he compared three years of balance sheets in order to gain a historical view of the business's earning potential. He then added the $20,000 book value to the "anticipated sales" of $30,000 based on "prior year sales per employee hour." He derived a fair market value for Carpet Concepts of $50,000. Although the expert testified that this type of business may not ordinarily sell because of the ease in starting a new carpet installation business, he acknowledged that a purchaser might acquire certain benefits from the reputation, proven market sales, and experience of an established business. The expert's testimony that Carpet Concepts' profitability was above average to average until shortly before the parties separated may reasonably have led the trial court to believe that the "anticipated sales" estimate was credible despite the recent profitability downturn. Moreover, Mr. Pattinson testified that in 1994 when he bought out his partner, he thought he paid his partner "a little bit less than one-half the book value of the business at that time[.]" The trial court's valuation is within the range of the expert's valuations. We conclude the court's finding was not clearly erroneous.
4. Mr. Pattinson challenges the trial court's award of attorney fees, alleging that the court failed to consider the statutory factors. He asserts that he has neither liquid assets nor discretionary income after the payment of his expenses and child support. Additionally, he contends Ms. Pattinson has $5,700 in liquid assets ($4,200 in tax refund and $1,500 in three silver bars) from which she may pay her legal fees.
[T]he court shall award attorney fees, costs, and disbursements in an amount necessary to enable a party to carry on or contest the proceeding, provided it finds:
(1) that the fees are necessary for the good-faith assertion of the party's rights in the proceeding and will not contribute unnecessarily to the length and expense of the proceeding;
(2) that the party from whom fees, costs, and disbursements are sought has the means to pay them; and
(3) that the party to whom fees, costs, and disbursements are awarded does not have the means to pay them.
Minn. Stat. § 518.14 (1996).
The trial court found Ms. Pattinson's attorney fees totaled $4,700 and ordered that Mr. Pattinson "shall pay towards [Ms. Pattinson's] attorney's fees the sum of $2,500." The trial court found that Ms. Pattinson earned a net average monthly income of approximately $961.02 based on working an average of 30 hours per week at $9.25 per hour, whereas Mr. Pattinson earned approximately $25 per hour. Moreover, the court found that the monthly difference in resources available to the parties was $1,398.98. Thus, we conclude that, according to the statutory factors, the court's decision to award partial attorney fees was not an abuse of discretion. However, this court declines to award attorney fees on appeal.