Opinion
No. C9-02-2080.
Filed August 26, 2003.
Appeal from the District Court, Cass County, File No. F501576.
David R. Forro, Caldecott Forro, P.L.C., (for appellant)
Cara A. Wittwer, Mary J. Bjorklund Law Office, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2002).
UNPUBLISHED OPINION
This appeal is from a dissolution judgment and an order amending the judgment. Appellant argues that the trial court committed reversible error by (1) awarding respondent the Backus homestead without a finding of unfair hardship; (2) awarding respondent the 1992 Dodge truck with plow; and (3) finding that the American Century Select I IRA was marital property. Appellant further claims that the trial court abused its discretion in concluding that respondent had reimbursed appellant certain premarital funds misappropriated by respondent, and in ordering the liquidation of the Fortis life insurance policy and annuity. Because we conclude that the trial court's findings were insufficient to support its award of the Backus homestead to respondent, we reverse and remand for additional findings. Because we conclude the 1992 Dodge truck with plow and the American Century Select I IRA are appellant's non-marital properties, we reverse the trial court's award of these assets to respondent. Additionally, we conclude the trial court abused its discretion when it concluded that appellant had been reimbursed premarital funds misappropriated by respondent and reverse on this issue. Finally, we conclude the trial court did not abuse its discretion in ordering the liquidation of the Fortis life insurance policy and annuity, and we affirm on this issue.
FACTS
Appellant John Clarence Wiedewitsch and respondent Lisa Marie Erickson were married on October 3, 1997, but had resided together since 1989. They had no children. Appellant filed for dissolution of the marriage and his petition was granted in July 2002.
Before, during, and after the marriage, appellant and respondent were employed by Plumbing Heating Economizer's, Inc., a business started by appellant in 1977. Appellant is the company's owner and president, and respondent worked mostly in a secretarial capacity for approximately ten years. At the time of the dissolution hearing, respondent was no longer employed by Plumbing Heating Economizer's, Inc., and is currently working with a realty firm earning $9 an hour with plans to obtain her realtor's license.
Both parties owned assets prior to the marriage and acquired substantial assets once they were married. The Backus homestead, at issue in this dispute, was purchased during the marriage in 1999. The majority of the purchase price for the Backus homestead was paid with appellant's non-marital funds. Appellant is also a partner in J M Properties, Inc., a partnership that invests in real estate. The parties further own several vehicles, horses, investments, retirement accounts, and a Fortis annuity and insurance policy in which appellant is the beneficiary and respondent is the insured life.
In dividing the marital property, the trial court attempted to make an equitable division. The Backus homestead was awarded to respondent along with a 1992 Dodge truck with plow. Appellant was awarded the plumbing and heating business, the partnership, the Fortis policy, the retirement accounts, and the investments. In addition, the trial court concluded that respondent had misappropriated approximately $4,200 from appellant's non-marital bank account located in Walker, Minnesota, and ordered respondent to reimburse appellant this amount from the one-half interest respondent was awarded in the parties' joint bank account located in Walker.
Neither party moved for a new trial, but both parties moved for amended findings. After a hearing, the trial court issued an order modifying its original judgment to indicate that the Walker joint bank account it previously referenced was no longer in existence at the time of trial and to indicate that appellant had already been reimbursed the $4,200 misappropriated by respondent. Additionally, the trial court ordered the liquidation of the Fortis annuity and life insurance policy. This appeal follows.
DECISION I
Appellant argues that having found that respondent had no marital interest in the Backus homestead, the trial court erred in awarding the homestead to respondent without a finding of unfair hardship, as required by Minn. Stat. § 518.58, subd. 2 (2002). Respondent counters that appellant waived this issue by failing to request a finding of unfair hardship in his motion for amended findings. On appeal from a judgment where there has been no motion for a new trial, the only questions for review are whether the evidence sustains the findings of fact and whether those findings sustain the conclusions of law and judgment. Alpha Real Estate Co. v. Delta Dental Plan, 664 N.W.2d 303, 309-10 (Minn. 2003); Erickson v. Erickson, 434 N.W.2d 284, 286 (Minn.App. 1989). Here, we interpret the appeal as a challenge to the trial court's property division, specifically its award of the Backus homestead to respondent in light of its finding that respondent had no marital interest in the property. Although our scope of review is limited because there was no motion for a new trial, the trial court's marital property division is properly before us.
The Backus Homestead
The trial court exercises broad discretion in dividing marital property, and we will not disturb that division absent a clear abuse of discretion. Chamberlain v. Chamberlain, 615 N.W.2d 405, 412 (Minn.App. 2000), review denied (Minn. Oct. 25, 2000). A trial court abuses its discretion if its findings are "against logic and the facts on [the] record." Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984) (citation omitted). We will affirm the trial court's property division if it has "an acceptable basis in fact and principle even though this court may have taken a different approach." Servin v. Servin, 345 N.W.2d 754, 758 (Minn. 1984) (citation omitted). "Whether property is marital or non- marital is a question of law[.]" Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997) (citation omitted). This court need not give deference to the trial court's decision on a purely legal question. Frost-Benco Elec. Ass'n v. Minn. Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).
Here, the trial court found that respondent has no marital interest in the Backus homestead. The trial court is permitted to award a spouse non-marital property if it determines that the spouse's portion of the marital property is "so inadequate as to work an unfair hardship." Minn. Stat. § 518.58, subd. 2. But the trial court's finding that respondent has no marital interest in the Backus homestead is contrary to the evidence.
First, the record indicates the Backus homestead was purchased in July 1999 during the parties' marriage. Property acquired during the marriage is "presumed to be marital property regardless of whether the title is held individually or in co-ownership." Schmitz v. Schmitz, 309 N.W.2d 748, 749 (Minn. 1981) (citing Minn. Stat. § 518.54, subd. 5). This presumption may be overcome upon a showing that the property is non-marital. Minn. Stat. § 518.54, subd. 5 (2002). Second, the trial court recognized that appellant financed the $195,000 purchase price of the Backus homestead with approximately $180,000 of his non-marital funds. Accordingly, the trial court applied the Schmitz formula and apportioned appellant's marital and non-marital interest in the homestead as approximately $260,000 and $11,000 respectively. The trial court also made a finding that respondent's marital interest in the Backus homestead was $11,000.
On these facts, we conclude that the Backus homestead is comprised of both marital and non-marital interests. Therefore, the trial court erred in finding that there was no marital interest in the Backus homestead. Furthermore, contrary to appellant's claim that the Backus homestead is entirely his non-marital property, we conclude that appellant has a non-marital interest in the Backus homestead. The question then becomes whether the trial court erred in invading appellant's non-marital interest in the Backus homestead when making the property division.
In deciding this issue, we are guided by Haasken v. Haasken, 396 N.W.2d 253 (Minn.App. 1986), in which this court affirmed the trial court's award to wife of husband's non-marital interest in the homestead. We noted the trial court's effort to make an equitable, although not equal, award. Id. at 260. Furthermore, we emphasized the trial court's recognition of husband's non-marital interest in the homestead and the allowance the trial court made in its overall property division for its invasion into that interest. Id. We also noted that husband was awarded a substantially greater portion of the marital assets. Id.
Relying on Haasken, respondent argues that the trial court here properly compensated appellant for its invasion of his non-marital interest in the Backus homestead by awarding the marital interest in the plumbing and heating business, the partnership, and the investments entirely to appellant. Appellant counters that Haasken is factually distinguishable because the Haaskens were married for twelve years, while appellant and respondent were married for only five years. Furthermore, appellant contends, the Haaskens had three children while the parties here have no children. Finally, appellant asserts that in Haasken, even with the award of the husband's non-marital interest in the homestead, the wife's award exceeded the husband's by just under $20,000. Here, by contrast, the award of appellant's $260,000 non-marital interest in the Backus homestead to respondent gives respondent nearly 150% of the total marital assets.
We agree with appellant that the facts here are distinguishable from Haasken. However, we are unable to ascertain from the record certain evidence that is necessary to properly analyze this issue. A trial court has the "inherent power to grant equitable relief [in a dissolution proceeding] as the facts . . . and the ends of justice may require." DeLa Rosa v. DeLa Rosa, 309 N.W.2d 755, 758 (Minn. 1981) (quotation omitted). In this regard, some courts have awarded a party non-marital property without a finding of unfair hardship pursuant to Minn. Stat. § 518.58, subd. 2. See Haasken, 396 N.W.2d at 260-61 (accepting trial court's alternative explanation to support its award of non- marital property); Riley v. Riley, 369 N.W.2d 40, 43 (Minn.App. 1985) (affirming district court's award of nonmarital property as "just and equitable," even without any finding of unfair hardship), review denied (Minn. Aug. 29, 1985).
Here, following the approach taken in Haasken, the trial court attempted to make an equitable property distribution by awarding appellant the plumbing and heating business, the partnership, and the investments as an offset to its award of appellant's non-marital interest in the Backus homestead to respondent. But there is nothing in the record to indicate that the trial court made any findings with respect to the plumbing and heating business. There are no findings as to the fair market value of the business, whether the business is marital or non-marital property, or whether the apportionment of the business consists of both marital and non-marital interests. We also note that these same findings are absent with respect to certain other properties, namely the Breezy Point property and the Longville cabin. Without these findings, we are unable to ascertain the total value of the marital property, which is necessary to determine if the trial court's property division fairly compensates appellant for the trial court's invasion into his non-marital interest in the Backus homestead. Therefore, we reverse and remand for the trial court to make the necessary findings. We recognize that as a result of this opinion, a restructuring of the property division may be required.
1992 Dodge Truck
Appellant argues that the trial court erred in awarding the 1992 Dodge truck with plow to respondent after finding that this was appellant's non-marital asset. Respondent counters that the trial court recognized respondent's need for the plow and awarded it to the party to whom it was most beneficial. Respondent testified at trial that she used the truck for plowing at the Backus homestead; appellant did not claim that he had a need for the truck. But appellant purchased this asset prior to the marriage and it is undisputedly a non-marital asset. Non-marital property is distributed only in an unusual case. Dammann v. Dammann, 351 N.W.2d 651, 653 (Minn.App. 1984). Therefore, we conclude the trial court abused its discretion when it awarded the 1992 Dodge truck with plow to respondent.
American Century Select I IRA
Appellant argues the trial court's conclusion that the American Century Select I IRA is marital property is erroneous. Appellant contends that because the trial court found this asset was established prior to the parties' marriage and that nothing was added to or taken from the account, the IRA is appellant's non-marital property. Respondent counters that appellant has waived this issue because he failed to provide evidence or legal authority to the trial court that this was a non-marital asset and, in fact, provided evidence at trial that respondent has a marital interest in the asset. Respondent contends that appellant is prohibited from shifting his position on appeal. See Sec. Bank of Pine Island v. Holst, 298 Minn. 563, 564, 215 N.W.2d 61, 62 (1974) (holding that party may not shift his theory of the case on appeal).
But as respondent correctly points out, appellant argued at trial that this IRA was his non-marital asset. At trial, appellant presented an exhibit that illustrated the pre- and post-marriage value of the IRA. The exhibit included a heading that noted the marital equity in the asset. The exhibit also documented that no funds were added to or taken from the account during the parties' marriage.
Nevertheless, we conclude that the trial court clearly erred in finding that the IRA is marital property. Although the evidence indicates that neither party made any deposits to or withdrawals from the account, the IRA did increase in value. But there is nothing in the record to suggest that the increase in value was attributable to the effort of either party during the marriage. Therefore, the IRA is not marital property. See Gottsacker v. Gottsacker, 664 N.W.2d 848, 853 (Minn. July 17, 2003) (distinguishing "active appreciation" from "passive appreciation" and stating that "passive appreciation is nonmarital"). Although the trial court did not determine whether the increase in value was the result of market forces, on this record, we agree with appellant that the appreciation in value of the account could only be attributable to the passive activity of market forces. When an increase in the value of non-marital property is attributable to inflation or market forces or conditions, it retains its non-marital character. Id. Therefore, we conclude the trial court erred when it awarded respondent a one-half interest in the American Century Select I IRA because this is appellant's non-marital property.
II
Appellant also claims that the trial court clearly erred when it found that respondent had reimbursed appellant premarital funds misappropriated by respondent. We agree. The trial court found that respondent had improperly taken approximately $4,200 from a bank account located in Walker that was established by appellant prior to the marriage. The trial court originally ordered that respondent was to reimburse appellant the $4,200 from respondent's one-half interest in the parties' separate joint bank account in Walker. Following trial, both parties moved the trial court to make amended findings with respect to the Walker joint account. Appellant's motion requested that the trial court amend its order to state that the $4,200 respondent was ordered to reimburse appellant be deducted from the $12,000 in attorney fees appellant was ordered to pay respondent. Respondent's motion requested that the trial court amend its order to state that the Walker joint bank account referenced by the trial court no longer existed and that appellant had been reimbursed the $4,200 prior to trial.
After reviewing the parties' affidavits, the trial court found that appellant had closed the Walker joint bank account prior to trial and kept the proceeds. Therefore, the trial court reasoned that appellant had already been reimbursed the $4,200. Appellant argues that the trial court erred because it made no findings as to the existence of the Walker joint bank account, the amount in the joint account, and how much had been withdrawn by either party. Respondent counters that by taking over $55,000 from the parties' other joint banking accounts, appellant has already been reimbursed.
Respondent also argues that she could not have misappropriated the funds from the Walker bank account because they were marital property. However, respondent failed to file a notice of review to challenge the trial court's finding that the Walker bank account was non-marital property. Failure to file a notice of review limits issues on appeal to those in notice of appeal. Nordling v. N. States Power Co., 465 N.W.2d 81, 87 (Minn.App. 1991), rev'd on other grounds, 478 N.W.2d 498 (Minn. 1991). Therefore, we decline to consider this issue. Additionally, respondent takes issue with other findings, including those involving the marital value of the J M partnership, the characterization and valuation of the various motor vehicles, and respondent's marital equity in the Backus homestead. But respondent did not file a notice of review on these issues either. Issues decided adversely to respondent are not properly before the court if no notice of review is filed. City of Ramsey v. Holmberg, 548 N.W.2d 302, 305 (Minn. 1996), review denied (Minn. Aug. 6, 1996). Therefore, we decline to consider these issues.
Upon review of the record, the parties are in agreement that the Walker joint bank account was closed prior to trial. Furthermore, there is no documentation in the record with respect to this account. For example, there are no bank statements, deposit, or withdrawal slips documenting the activity in the account. Therefore, we are unable to find support in the record for the trial court's finding that appellant closed the account and kept the proceeds. Moreover, because of the lack of documentation, the account's balance at the time it was closed is unknown. Even if the record supported a finding that appellant kept the proceeds, there is no evidence in the record as to how much appellant received.
Respondent points to several joint bank account statements for the plumbing and heating business and contends that the monies in these accounts were marital property; but that appellant withdrew the funds for himself. However, we find no evidence in the record to support respondent's claim. Appellant did admit that he withdrew $15,000 from the JM Properties account after the parties separated. But the marital interest in this asset was awarded to appellant. Furthermore, appellant was awarded all rights, title, interest, and equity in the cash and bank accounts in his name or under his control. Because the record does not support a finding that appellant received $4,200 from the Walker joint bank account, we conclude that the trial court abused its discretion in concluding that appellant had been reimbursed the $4,200 misappropriated by respondent.
III
Finally, appellant argues that the district court abused its discretion by considering new evidence in its decision to liquidate the Fortis life insurance policy and annuity, both of which were awarded to appellant. Appellant admitted at trial that he had assaulted respondent during their marriage. Nevertheless, appellant contends that respondent's claim that she was fearful of appellant was presented to the trial court for the first time in her motion for amended findings and should not have been considered by the trial court. Appellant argues further that the basis of the trial's court decision to liquidate the Fortis life insurance policy and annuity is contrary to Minnesota law because in Minnesota appellant would be prohibited from collecting on the life insurance policy if appellant was responsible for respondent's death. Respondent argues that her fear of appellant is not new evidence because appellant testified to the assault at trial.
When addressing a motion for amended findings, the trial court may only consider the evidence submitted during the trial . Rathbun v. W. T. Grant Co., 300 Minn. 223, 238, 219 N.W.2d 641, 651 (1974). At trial, respondent did not testify that she was fearful of appellant and made this assertion for the first time in her motion for amended findings. But appellant was convicted of assaulting respondent in April of 1999, and testified to that fact in the dissolution proceedings. The trial court decided that for reasons of public policy and moral hazard, the law disfavored having appellant as the beneficiary of a life insurance policy secured by the life of respondent given appellant's conviction for violence against respondent. On this record, the criminal assault by appellant against respondent was not new evidence and the trial court properly considered it in deciding respondent's request to liquidate the Fortis life insurance policy and annuity.
Further, we find appellant's contention that the basis for the trial court's decision to liquidate the Fortis assets is contrary to the law, is without merit. It is true that under Minnesota law appellant would be prohibited from collecting on the proceeds of the life insurance policy if appellant caused respondent's death. See Minn. Stat. § 524.2-803(d) (2002) (prohibiting named beneficiary from collecting on insurance policy if beneficiary intentionally kills person whose life is secured by policy). But we cannot discount the possibility — however remote that respondent's life could be at risk if appellant is the sole beneficiary to an insurance policy secured by respondent's life. We agree with the trial court that public policy does not favor such an arrangement. As respondent argues, because there is no child support or spousal maintenance to secure, there is no need for appellant and respondent to maintain joint ownership in a life insurance policy with appellant as the sole beneficiary and respondent as the insured, particularly given the history of violence in their relationship. We therefore conclude that the trial court did not abuse its discretion in ordering that the Fortis life insurance policy and annuity be liquidated and awarded to respondent.