Opinion
No. C2-02-2003.
Filed July 15, 2003.
Appeal from the District Court, Freeborn County, File No. F389230.
Catherine Brown Furness, (for appellant)
Jason C. Kohlmeyer, Manahan, Manahan, Bluth Kohlmeyer, (for respondent)
Considered and decided by Shumaker, Presiding Judge, Schumacher, Judge, and Halbrooks, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
Appellant challenges the district court's rulings regarding respondent's income, a cost-of-living adjustment (COLA), and attorney fees, and contends the court abused its discretion by reducing spousal maintenance and in its disposition after finding respondent in contempt. Because the district court did not abuse its discretion in modifying maintenance or in its contempt order, we affirm. But because the district court failed to make sufficient findings as to respondent's income or attorney fees and failed to apply the COLA, we reverse and remand for further findings and proper application of the COLA.
FACTS
Appellant Joldine Marie Yocum and respondent Ronald Paul Yocum dissolved their 30-year marriage in 1990. The district court ordered respondent to pay appellant permanent spousal maintenance of $1,250 per month. Although the judgment incorporated a COLA provision by reference, the incorporated COLA exhibit was not attached.
In 1995, the court denied respondent's motion for maintenance modification and neither granted nor denied appellant's motion to attach the COLA exhibit to the judgment. On March 20, 1996 appellant properly served on respondent a COLA calculation notice effective May 1, 1996. Respondent did not request a hearing.
On November 29, 2001, respondent turned 65 and became eligible for retirement. Because of his retirement and reduction in his income, respondent again moved the court to reduce his maintenance obligation. Based on the 41% reduction of respondent's income, the district court ordered a correlating 41% reduction of his maintenance obligation to $512.50 each month.
The district court then ruled that the COLA issue was not properly before it, denied appellant's request for attorney fees, and found respondent in contempt for canceling the life insurance policy required to secure respondent's spousal maintenance obligation, but imposed no sanction for the contempt.
Appellant argues that the district court abused its discretion by not making proper findings to support the reduction in maintenance, not comparing income amounts appropriately, not including as income respondent's 401K income, not including the COLA, not awarding attorney fees, and not sanctioning respondent for contempt of court.
DECISION
Maintenance awards are not altered on appeal unless the district court abused its wide discretion. Prange v. Prange, 437 N.W.2d 69, 70 (Minn.App. 1989), review denied (Minn. May 12, 1989). For this court to conclude that the district court abused its wide discretion respecting an award of spousal maintenance, the district court's factual findings must be against logic and unsupported by the record. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).
A district court may modify spousal maintenance on a showing of any of the factors listed in Minn. Stat. § 518.64, subd. 2(a) (2002). A party seeking modification of spousal maintenance has the burden of showing not only that a substantial change in circumstances occurred, but also that the substantial change makes the previous spousal maintenance order unreasonable and unfair. Hecker v. Hecker, 568 N.W.2d 705, 709 (Minn. 1997).
Minn. Stat. § 518.64, subd. 2(a) (2002), provides in relevant part that
[t]he terms of an order respecting maintenance or support may be modified upon a showing of one or more of the following: (1) substantially increased or decreased earnings of a party; (2) substantially increased or decreased need of a party.
Furthermore, on a motion for modification, the court
shall apply, in addition to all other relevant factors, the factors for an award of maintenance under section 518.552 that exist at the time of the motion.
Minn. Stat. 518.64, subd. 2(c).
If a stipulation fixing the parties' respective rights and obligations is central to the original judgment, the district court, when considering a motion to modify spousal maintenance, should view the original judgment as an important element because it represents the parties' "voluntary acquiescence in an equitable settlement." Claybaugh v. Claybaugh, 312 N.W.2d 447, 449 (Minn. 1981) (citation omitted).
Here, the original decree states that the permanent spousal maintenance "will be subject to future modification upon the retirement of the [r]espondent." The district court found that the original judgment and decree contemplated respondent's retirement and required modification at that time, that respondent's reason for "retirement age and legitimate health concerns are credible," that respondent's "gross income prior to retirement was $5,366.01 per month" and his income following retirement "will be $2,281 per month," and that respondent's expenses appear to be reasonable.
Based on respondent's retirement, the district court concluded that respondent's earnings have substantially decreased, and that it is "more likely than not that Respondent's retirement would have occurred even if the parties' marriage had not terminated" and that the appellant "should share in the hardship as if the parties had remained together." The court correctly determined that a reduction of spousal maintenance was appropriate. The district court also correctly determined that a substantial change in respondent's circumstances had occurred and that the change made the previous award unfair.
The next consideration is what is an appropriate amount of maintenance. For maintenance determinations, "[f]indings are not required on each factor considered." Justis v. Justis, 384 N.W.2d 885, 891 (Minn.App. 1986) review denied (Minn. May 29, 1986). Here, however, the district court reduced the maintenance award in direct proportion to the decrease in respondent's earnings after his retirement, and the findings do not reflect that the court considered other income and assets.
Calculation of Maintenance, 401K Income
Minnesota law provides that a district court shall consider all relevant factors including "the financial resources of the party seeking maintenance," Minn. Stat. § 518.552, subd. 2(a) (2002), and "the ability of the spouse from whom maintenance is sought to meet needs while meeting those of the spouse seeking maintenance." Minn. Stat. § 518.552, subd. 2(g) (2002).
Appellant argues that the district court abused its discretion when it failed to consider respondent's 401K account, financial accounts, and other financial resources when ruling the previous maintenance order unfair and unreasonable.
Appellant also argues that she should not be required to deplete her pension accounts, which were marital assets awarded to her, to meet her monthly expense. She relies on Walker v. Walker, 553 N.W.2d 90 (Minn.App. 1996) (holding that assets counted in the property settlement cannot also be included as income). Appellant claims that her portion of the ABF Freight System, Inc. retirement account should be excluded from her monthly income or it will be impermissibly double-counted.
Pension benefits awarded as property in dissolution cannot be included in the income of a party when determining that party's maintenance obligation. * * * [T]his court [has] held that a district court could not order an obligor to pay maintenance out of his pension payments until he "received from the pension an amount equivalent to its value as determined in the original property distribution." Once the obligor has received that amount, a court may properly consider his subsequent pension benefits as "income" for maintenance purposes.
Id. at 94 (quoting Kruschel v. Kruschel, 419 N.W.2d 119, 123 (Minn.App. 1988)) (citations omitted). Kruschel supported the argument that a pension should be "viewed as property or income, but not both." 419 N.W.2d at 122.
The record shows that both parties received pensions as property awards, including a 401K account, a Shearson- Lehman-Hutton IRA account, Railroad Retirement Benefits, and the ABF Freight System, Inc. retirement benefits. The court ordered the reduction of spousal maintenance "in light of all of the evidence presented," but did not make specific findings as to what constitutes income for purposes of setting the amount of the maintenance obligation. Without findings, we are unable to determine whether the district court considered the parties' property awards; if so, how, or whether the award is supported by the evidence.
Cost-Of-Living Adjustment
Minn. Stat. § 518.641, subd. 2 (2002), provides that a COLA may not be made unless the order requires it and unless notice requirements are met before the effective date of the adjustment. If the order provides for a COLA, proper service and notice of adjustment occur prior to the effective date provided, and the obligor does not request a hearing to contest a COLA, then an adjustment is made. See id. There is no requirement that any further action is required to receive the COLA.
The COLA provision was incorporated by reference in the dissolution judgment. No subsequent orders negated the inclusion of the COLA provision. Appellant properly served notice of a COLA adjustment, and the respondent did not request a hearing, thus the district court must enforce the COLA increase effective May 1, 1996, and appellant is entitled to a retroactive COLA award from that date. This issue is remanded for further appropriate proceedings.
Attorney Fees
Appellant argues that the district court abused its discretion by denying her motion for attorney fees without adequate findings under Minn. Stat. § 518.14, subd. 1 (2002). Appellant claims that the district court should have found that the fees incurred on her behalf were necessary to defend against respondent's motion to reduce maintenance, that the fees were not incurred for the purpose of causing delay, and that because she had to cash in an annuity that was part of her property settlement, she lacks the means to pay those fees. Appellant relies on Karg v. Karg for the proposition that a party should not have to "effectively eliminate" a property award to pay attorney fees. Karg v. Karg, 418 N.W.2d 198, 202 (Minn.App. 1988).
An order respecting attorney fees under Minn. Stat. § 518.14, subd., will not be reversed absent a clear abuse of discretion. Bogen v. Bogen, 261 N.W.2d 606, 611 (Minn. 1977). We will rarely reverse the district court on this issue. Rosenberg v. Rosenberg, 379 N.W.2d 580, 587 (Minn.App. 1985), review denied (Minn. Feb 19, 1986). Because of the mandatory language of the statute, the district court must make specific findings as to the factors on which an award of attorney fees was made or denied. Richards v. Richards, 472 N.W.2d 162, 166 (Minn.App. 1991).
A district court shall award a party attorney fees, costs, and disbursements needed to continue proceedings if the court finds:
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; that the party from whom fees, costs, and disbursements are sought has the means to pay them; and that the party to whom fees, costs, and disbursements are awarded does not have the means to pay them.
Minn. Stat. § 518.14, subd. 1.
This court has also held that a lack of specific findings on the statutory factors is not fatal to an award where review of the order reasonably implies that the district court considered the relevant factors and was familiar with the history of the case and had access to the parties' financial records. Geske v. Marcolina, 624 N.W.2d 813, 817 (Minn.App. 2001).
Here, the district court did not make specific findings as to the attorney-fees issue. Rather, the district court found that appellant "has not been forthcoming about the nature of her housing arrangement"; that the court was disturbed by appellant's statements and questioned appellant's credibility on her claimed expenses; and that the court was unable to find appellant's "expense total to be sufficiently credible to outweigh Respondent's legitimate retirement-related decrease in income." These findings do not appear to address the requisite factors under section 518.14.
As to appellant's argument under Karg, in that case we held that when one party is forced to "effectively eliminate" a property-settlement award and the other party has the means to pay attorney fees, that an award of attorney fees is appropriate. Karg, 418 N.W.2d at 202. Because of the lack of findings, we cannot properly determine from the record whether appellant's liquidation of an annuity would "effectively eliminate" her property award to pay attorney fees. The issue of attorney fees is remanded for appropriate findings.
Contempt
Finally, appellant argues that the court abused its discretion by not ordering a sufficient disposition after it found respondent in contempt for canceling the life insurance that secured respondent's spousal-maintenance obligation.
The district court has discretion to invoke and apply its contempt powers and we will not reverse unless the court abuses that discretion. Mower County Human Servs. v. Swancutt, 551 N.W.2d 219, 222 (Minn. 1996).
The district court found respondent in contempt and ordered him to either replace the cancelled life insurance or to pay the insurance principal into court. Appellant contends that the court should also have ordered respondent to verify his compliance with the contempt order. Appellant did not raise this issue in the district court. Because the case is being remanded on other issues, we direct that appellant also have an opportunity to address this issue on remand.