Opinion
No. C5-01-2020
Filed July 16, 2002.
Appeal from the District Court, Scott County, File No. F0016815.
John T. Burns, Jr., (for appellant)
Dennis Patrick Moriarty, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant-wife challenges the district court's denial of her motion for amended findings, arguing that the court erred in characterizing marital and nonmarital assets and in distributing the parties' property. Because we find that the district court did not err in characterizing the parties' marital and nonmarital assets and did not abuse its discretion in distributing the parties' property, we affirm in part. We conclude, however, that the court did not have jurisdiction to award respondent a truck owned by appellant's mother, and therefore we vacate this award.
FACTS
On August 6, 2001, appellant Esther Tikalsky and respondent Eugene Tikalsky dissolved their forty-year marriage. The parties have no children. The district court distributed the parties' marital estate, which was valued in excess of $500,000, and which included real property, investment accounts, vehicles, antiques, and collectibles. According to appellant's calculations, the court awarded her $279,102.85 in marital property and awarded respondent $261,852.30 in marital property. Appellant moved for amended findings claiming that the court erred in its distribution of the parties' marital and nonmarital assets, including (a) misclassifying as nonmarital property the parties' lake home, Ford pickup truck, and Franklin Templeton account; and (b) ordering a private sale of the household goods and collectibles. Respondent filed a countermotion seeking an award of appellant's health insurance benefits and an interest in appellant's mother's farm. The district court ordered respondent to sell his Allianz life insurance policy and divide the proceeds equally, and it ordered the parties to divide their Comparator stock evenly. The court denied the parties' other motions to amend the judgment and decree. This appeal followed.
Appellant also calculated the parties' nonmarital assets at $746,325.57 for appellant and $146,389.95 for respondent.
DECISION I.
Appellant claims that the district court erred (1) in concluding that the parties' lake home, the truck, and the Franklin Templeton account were gifts to respondent alone and thus constituted nonmarital property; and (2) in failing to credit appellant with her marital interest in the lake home.
Generally, property acquired during a marriage is presumed to be marital. Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997); see Minn. Stat. § 518.54, subd. 5 (2000) (defining "marital property"). Whether property is marital or nonmarital is a legal question, but we defer to the district court's underlying findings of fact unless they are clearly erroneous. Prahl v. Prahl, 627 N.W.2d 698, 705 (Minn.App. 2001). A party asserting property to be nonmarital must show it to be so by a preponderance of the evidence. Olsen, 562 N.W.2d at 800.
"When marital and nonmarital property are commingled, the nonmarital asset may lose that status unless the party can trace it to a nonmarital source." Prahl, 627 N.W.2d at 705 (quotation omitted). To trace a nonmarital asset, a party need only do so by a preponderance of the evidence; strict tracing is not required. Doering v. Doering, 385 N.W.2d 387, 390 (Minn.App. 1986). If believed, oral testimony is sufficient to trace a nonmarital interest. Id at 391 (deferring to district court's ability to judge credibility and affirming finding that nonmarital interest in assets had been traced where evidence of tracing was party's testimony).
When dividing marital property, the district court is required to divide property equitably. Nonetheless, the court has broad discretion to accomplish such a division and will be affirmed if its division "has an acceptable basis in fact and principle even though [the appellate court] might have made a different disposition of the problem." Rohling v. Rohling, 379 N.W.2d 519, 522 (Minn. 1986). The district court does not have to make an equal division of property but, rather, a "just and equitable" division. Minn. Stat. § 518.58, subd. 1 (2000); White v. White, 521 N.W.2d 874, 878 (Minn.App. 1994).
A. Lake Home
In 1978, the parties and Wayne and Treone Larson bought a lake home in Sherwood Forest on Gull Lake. In 1980, the parties sold this lake home and with the proceeds purchased another lake home on Gull Lake. The parties gave conflicting testimony regarding whether the lake home was a marital or nonmarital asset. Appellant testified that the first lake home cost $60,000: "[appellant and respondent] went together with [the] Larsons on a mortgage of $30,000," and "then each couple had to come up with another $15,000, and we borrowed money from Gene's brother, Ernest Tilkalsky, for the rest of our share." Respondent testified that the Larson's $30,000 for the lake home came from a mortgage that he and appellant cosigned, and that he used a $23,000 cash gift from his father and $7,000 from the parties' savings account for his and appellant's half. The court accepted respondent's testimony and awarded respondent the lake home, finding that respondent had a 77% nonmarital interest in the parties' undivided one-half interest in the lake home and that the remaining 23% was marital interest. Thus, the court found that respondent's total interest in the parties' interest in the lake home was 88.5%.
Appellant argues that the court erred in finding respondent had a 77% nonmarital interest in the parties' interest in the lake home because respondent did not prove that the $23,000 was a gift to him alone. Appellant alternatively argues that, if respondent proved this was a gift, then he failed to trace this money to the lake home. The judge, however, explained that he believed both parties' testimony regarding nonmarital property.
So I took both of you at your word on all the non-marital. I took both of you at your word. And if your're going to appeal, wisdom is your option. The Court of Appeals should consider that I believed both of you.
Because strict tracing is not required, and because the court believed respondent's oral testimony — that he put his $23,000 gift from his father toward the purchase of the first lake home and that he used the proceeds of the first lake home to buy the second — his testimony is sufficient to show that he has a 77% nonmarital interest in the parties' undivided one-half interest in the lake home. See Doering, 385 N.W.2d at 391 (deferring to district court's ability to judge credibility and affirming finding that nonmarital interest in assets had been traced based on party's testimony).
Appellant next argues that the court erred by (a) undervaluing the lake home; (b) failing to credit her with the 11.5% marital interest in the lake home (half of 23% marital interest in the lake home); and (c) justifying this failure through improper means. Appellant argues that the court concluded "without evidentiary basis, that the cabin was worth less than its appraised value ($271,000) because it is jointly owned with another couple."
Market value is controlling for purposes of valuing an asset for marital dissolution. Prahl, 627 N.W.2d 704. The district court need not be exact in its valuation of assets; "it is only necessary that the value arrived at lies within a reasonable range of figures." Carrick v. Carrick, 560 N.W.2d 407, 413 (Minn.App. 1997) (quotation omitted). An appellate court will not reverse a district court's valuation of an asset unless it is "clearly erroneous on the record as a whole." Hertz v. Hertz, 304 Minn. 144, 145, 229 N.W.2d 42, 44 (1975) (citations omitted).
Appellant hired an appraiser who testified that the value of the lake home was $271,000, but admitted that the value would drop if all four owners could not agree on whether to sell the property. Appellant admitted that since the divorce her relationship with the Larsons was strained and that they had been avoiding her. The court considered the nature of the parties' ownership interest when it valued the lake home:
Due to the nature of the parties' ownership interest (undivided one-half) its fair market value is considerably less than its appraised value of $271,000. Given this fact, [appellant's] interest is worth much less than $15,582 ($271,000/2 = $135,500 x .115).
Both the appraiser's and appellant's testimony support the court's conclusion that the market value was less than the appraised value; thus the court's valuation is not clearly erroneous. See Hertz, 304 Minn. at 145, 229 N.W.2d at 44 (stating that a district court's value of assets will not be reversed on appeal unless it is clearly erroneous on the record as a whole).
Appellant contends that, even if respondent has a 77% nonmarital interest of the parties' interest in the lake home, the court should have awarded her half of the 23% marital interest. The court awarded respondent the lake home and concluded that, "[f]or the reasons set forth in paragraph 26 * * * , Petitioner shall receive no credit in the overall division of property herein for any interest she might have in said property." Finding 26 states:
The parties claim sole ownership of a number of non-marital gifts received by each from family and friends over the years. [Appellant's] list contains over 60 items; Respondent's list contains only 8. * * * * The simplest way to divide these items is to award each the items they claim. The inequity created in awarding Petitioner much more property than Respondent will be remedied by awarding Respondent all right, title and interest in the lake home. Respondent has a non-marital interest in the lake home equal to 77% of its fair market value. The remaining 23% is marital. Respondent therefore has an 88.5% interest in the property. Due to the nature of the parties' ownership interest (undivided one-half) its fair market value is considerably less than its appraised value of $271,000. Given this fact, Petitioner's interest is worth much less than $15,582 ($271,000/2 = $135,500 x .115).
As we have noted, even according to appellant's calculations, the court divided the marital estate by awarding her $279,102.85, while awarding respondent $261,852.30. In light of the overall distribution, we cannot say that the district court's refusal to credit appellant her with her 11.5% interest in the lake home was an abuse of discretion.
B. Household Goods
Appellant argues that the court's order to conduct a private sale of the parties' household goods and collectibles enables a "potentially unfair property division." The parties collected a large number of antiques during their marriage, and appellant proposed that each party receive the items each had purchased. Respondent did not agree with appellant's division of the goods and suggested the court order a private sale. Because appellant's list of items was greater than respondent's, the court ordered a private sale of the items, determining that this would be a more equitable distribution. If the parties could not cooperate in a private sale, the court ordered these items to be sold at a public sale and the proceeds would be divided equally.
Appellant alleges that (a) respondent, as a salesman with receipt of liquid assets, is in a superior position to bid for items at the private sale; and (b) these items are not appropriate for a private sale because they have special nonmonetary value. There is no evidence that respondent has more liquid assets than appellant, and the mere fact that respondent is a salesman does not place him in a superior position to bid for their households goods in a private sale. Furthermore, appellant fails to cite any caselaw for the proposition that ordering a private sale is an abuse of the court's discretion. Because there are a significant number of household items with uncertain values, and because these items carry sentimental value to the parties, a private sale presents a just and equitable way to divide the property. See White, 521 N.W.2d at 878 (stating that the district court does not have to make an equal division of marital property, but an equitable one). A private sale ensures that if the parties can cooperate the items will go to the parties themselves, rather than to the public.
C. Truck
Appellant argues that because her mother owns the F-100 Ford pickup truck, the court abused its discretion by awarding the truck to respondent. Respondent concedes that appellant's mother still retains title to the truck, but argues that as between respondent and appellant, the court properly awarded the truck to him because he received it as a gift from appellant's father. Because appellant's mother's name appears on the title to the truck she is the prima facie owner. See Minn. Stat. § 168A.05, subd. 6 (2000) (title certificate is prima facie evidence of all facts appearing on it). The district court does not have jurisdiction to enter a judgment adversely affecting a nonparty's right. Sammons v. Sammons, 642N.W.2d 450, 455 (Minn.App. 2002); In re Ferlitto, 565 N.W.2d 35, 37 (Minn.App. 1997) (holding that district court did not have jurisdiction to order a nonparty, in that case the wife's attorney, to pay husband $5,000 that wife had taken from parties' home and used to pay attorney fees). Because appellant's mother is the prima facie owner, and the court lacks jurisdiction to enter a judgment affecting her rights, it was improper for the district court to award respondent the truck. Therefore, we vacate the court's award of the F-100 Ford pickup truck to respondent.
D. Franklin Templeton Account
Appellant argues that the court abused its discretion by awarding respondent the Franklin Templeton account as nonmarital property. Respondent testified that this account was created from funds his father gave him. Respondent explained that these funds came from the sale of his father's farm and his father instructed him to give his mother money from this account if she should need it. Again, the court believed respondent's testimony, which is sufficient to trace a nonmarital property. See Doering, 385 N.W.2d at 391 (deferring to the district court's ability to judge credibility and affirming finding that nonmarital interest in assets had been traced where evidence of tracing was party's testimony).
Appellant also argues that respondent dissipated this "marital" asset by transferring $50,000 from the account to his mother's account during the pendency of the marriage dissolution. Because the court properly awarded the Franklin Templeton account to respondent as a nonmarital asset, we need not address this issue.
II.
Appellant argues that the district court abused its discretion by denying her bad-faith attorney fees for respondent's delay in allowing appellant to appraise the parties' lake home and for his failure to comply with discovery requests. A district court has discretion to award attorney fees "against a party who unreasonably contributes to the length or expense" of a dissolution proceeding. Minn. Stat. section 518.14, subdivision 1 (2000). An award of attorney fees under Minn. Stat. § 518.14, subd. 1, "rests almost entirely within the discretion of the trial court and will not be disturbed absent a clear abuse of discretion." Crosby v. Crosby, 587 N.W.2d 292, 298 (Minn.App. 1998), review denied (Minn. Feb. 18, 1999) (quotation omitted).
The court found that "[n]either party has acted in bad faith and neither in need of an award of attorney's fees from the other." Appellant argues that respondent unreasonably contributed to the length and expense of the dissolution proceeding by (a) refusing to allow appellant to appraise the parties' lake home, even after she obtained a court order directing him to give her access to the lake home for the appraisal; and (b) failing to respond to her discovery requests and thus "forcing her to speculate as to his income and assets prior to trial." Although failure to comply with discovery requests and court orders can be the basis for attorney fees, it is a rare case where an appellate court would award fees not awarded by the district court. See Nemmers v. Nemmers, 409 N.W.2d 225, 228 (Minn.App. 1987) (stating it is a rare case where an attorney fee award would be increased on appeal).
Appellant also contends that the court failed to award attorney fees because respondent's attorney prejudiced the court against appellant by making her appear as a "controlling, greedy woman who should not be allowed to get her own way." During the hearing for appellant's motion for amended findings, the court did express concerns that appellant wanted everything, but these concerns stemmed from appellant's conduct, not from the statements made by respondent's attorney.
Because Ms. Tikalsky, you can't take it with you. You wanted everything. I looked at your initial proposal. It's no wonder that the case went to trial, because you basically asked me to ignore the fact that you were married to this man for 40 years. You wanted everything you had ever purchased or thought about purchasing. And frankly, if I had adopted all your proposals, [it] would have left him with very little.
We conclude the court did not abuse its discretion in denying appellant's motion for attorney fees.