Opinion
No. C3-99-748.
Filed September 21, 1999.
Appeal from the District Court, Hennepin County, File No. 160187.
A. Larry Katz, Elizabeth B. Bowling, Katz Manka, Ltd., (for appellant)
Edward Galbraith, (for respondent)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1998).
UNPUBLISHED OPINION
Appellant Phil E. Gierman challenges the district court's denial of his motion to reduce or eliminate his spousal maintenance obligation arguing that respondent Janet E. Gierman's current income exceeds her reasonable living expenses and that the change in circumstances has rendered the original decree unfair and unreasonable. We affirm.
FACTS
When appellant Phil E. Gierman and respondent Janet E. Gierman dissolved their 22-year marriage in May, 1991, they stipulated that the decree would include a specific provision for spousal maintenance:
Petitioner (Mr. Gierman) will pay to Respondent (Ms. Gierman) commencing July 1, 1991, and each month thereafter, permanent spousal maintenance in the amount of One Thousand Dollars ($1,000) per month, payable in equal installments on the first day and fifteenth day of each month, and continuing thereafter until the death of the Respondent, the remarriage of the Respondent, or the death of the Petitioner, whichever shall first occur.
The parties also stipulated that Mr. Gierman had a net monthly income of $3,161.60 in 1990 and that Ms. Gierman was a homemaker.
In September 1997, Mr. Gierman moved to eliminate or reduce his maintenance obligation because "[Ms. Gierman] is able to support herself in keeping with the marital standard of living, based upon a substantial increase in her income and resources." In its June 1998 order and memorandum, the district court found that Ms. Gierman received social security payments of $500 per month, that she earned about $690 per month from part-time employment, and that she received $1,600 per month from a family trust. According to the district court, her gross income, exclusive of maintenance payments, was $2,415 per month and her net income was $2,175. It is undisputed that Ms. Gierman has reasonable monthly living expenses of $3,125. Based on these facts, the district court denied Mr. Gierman's motion.
In July 1998, Mr. Gierman moved the district court for amended findings. In denying Mr. Gierman's motion to eliminate his maintenance obligation, the district court found that Ms. Gierman's income had increased substantially. However, the district court found that Mr. Gierman had failed to establish the requisite unfairness or unreasonableness of the original award.
In November 1998, Mr. Gierman again moved the district court to amend its findings, arguing that Ms. Gierman's income was supplemented by non-taxable annuity income totaling $20,694 in 1992 and $21,194 in 1996. The district court made one amendment, finding that Ms. Gierman's annual net income, including spousal maintenance, was $39,749 ($3,312.42 per month). But the court refused to reduce or eliminate Mr. Gierman's maintenance obligation. Mr. Gierman appeals the district court's denial of his motion to reduce or eliminate his spousal maintenance obligation.
DECISION
Generally, the decision to modify a spousal maintenance obligation is within the discretion of the district court. Claybaugh v. Claybaugh, 312 N.W.2d 447, 449 (Minn. 1981). Maintenance awards are not altered on appeal unless the district court abused its "wide discretion." Hecker v. Hecker , 543 N.W.2d 678, 680 (Minn.App. 1996) (quoting Erlandson v. Erlandson , 318 N.W.2d 36, 38 (Minn. 1982)).
A party seeking the modification of a maintenance obligation must demonstrate the existence of a substantial change of circumstances and show that the change has the effect of rendering the original maintenance award both unreasonable and unfair. Beck v. Kaplan , 566 N.W.2d 723, 726 (Minn. 1997).
When a stipulation fixing the respective rights and obligations of the parties is central to the original judgment and decree, the district court must appreciate that the stipulation represents the parties' voluntary acquiescence in an equitable settlement. In that regard, we have cautioned the district court to exercise its considerable discretion carefully and only reluctantly when it is faced with a request to alter the terms of an agreement which was negotiated by the parties.
Id. (citations omitted). A maintenance award may be modified only upon clear proof of facts showing a significant change in circumstances. Wiese v. Wiese , 295 N.W.2d 371, 372 (Minn. 1980).
In its October 1998 order, the district court concluded that Ms. Gierman's increased income constituted a substantial change of circumstances. Ms. Gierman concedes that her income has increased, and the record supports the court's conclusion that the increase constitutes a substantial change. At the time of the decree, Ms. Gierman received monthly trust income of approximately $1,400 and child support totaling $1,360 per month. Currently, Ms. Gierman receives monthly trust income of $1,600, as well as $1,000 in spousal maintenance, $500 in social security benefits, and wages totaling approximately $700 per month. Based on these facts, the district court did not abuse its discretion in determining that the approximate increase of $1,040 in Ms. Gierman's monthly gross income represented a substantial change in circumstances. See Minn. Stat. § 518.64, subd. 2(a) (1998) (stating that substantial change in circumstances can be proved by evidence of substantially increased earnings of a party).
The inquiry does not end with the conclusion that Ms. Gierman has enjoyed a substantial change in circumstances. Mr. Gierman is also required to show that the change has rendered the original maintenance award both unreasonable and unfair. See Savoren v. Savoren, 386 N.W.2d 288, 291 (Minn.App. 1986) (moving party has burden of demonstrating " both a substantial change in earnings and unfairness of existing obligation as a result of change"). In this case, Ms. Gierman's income is the only disputed variable. Mr. Gierman concedes that his "income has not changed significantly since the decree in 1991." Additionally, Mr. Gierman concedes that his expenses have not changed significantly and that Ms. Gierman's reasonable monthly expenses are $3,125.
The focus of this dispute is Ms. Gierman's current income, and whether the increase in her income has rendered spousal maintenance payments unreasonable and unfair. According to Ms. Gierman, her current net monthly income is $3,312, including spousal maintenance payments. In contrast, Mr. Gierman contends that Ms. Gierman's net monthly income in 1996 was $4,157 and averaged $2,902 from 1992 to 1996, excluding maintenance payments.
The principal cause for this disparity appears to be Mr. Gierman's claim that Ms. Gierman received non-taxable annuity income of $20,694 in 1992 and $21,194 in 1996. It is clear that the non-taxable annuity amounts should not be included in Ms. Gierman's income in 1992 and 1996. According to the parties' accountant, the sums represent the rollover of funds received in the dissolution settlement to an IDS account in 1992 and then another rollover of the same assets to an ITT/Hartford account in 1996. According to the accountant, the annuity amounts only appeared on the 1992 and 1996 tax returns due to an IRS reporting requirement.
When the non-taxable annuity amounts are not considered income, Ms. Gierman's net yearly income, excluding spousal maintenance, was $23,738 in 1992, $24,358 in 1993, $25,434 in 1994, $30,031 in 1995 and $28,683 in 1996. From 1992 to 1996, Ms. Gierman's average annual net income was $26,450 ($2,204 per month). Excluding maintenance payments, Ms. Gierman has had an average shortfall of $921 each month in those five years. Under these circumstances, the district court did not abuse its discretion in determining that Ms. Gierman's increased income has not rendered Mr. Gierman's $1,000-per-month maintenance obligation unreasonable and unfair.
Each of these figures comes from the data provided by Mr. Gierman. The only alteration is the exclusion of the non-taxable annuities, the rationale for which is set forth above.
Throughout his arguments, Mr. Gierman wholly ignores the fact that Ms. Gierman suffered a significant budget shortfall at the time of the dissolution. At the time of the decree, Ms. Gierman's monthly expenses were greater than $3,000, yet her monthly income was approximately $2,760. After taxable spousal maintenance replaced untaxed child support two months after the decree, Ms. Gierman's gross monthly income was approximately $2,400. As these figures show, Ms. Gierman's new sources of income were, and continue to be, necessary to meet her monthly budget and have not rendered the original decree unreasonable and unfair.
Finally, the district court's conclusion is supported by the notion that permanent maintenance does not contemplate future self-sufficiency. Sand v. Sand, 379 N.W.2d 119, 124 (Minn.App. 1985), review denied (Minn. Jan. 31, 1996). Rather, permanent maintenance is compensatory in nature, and recipients of permanent maintenance are not automatically penalized if their earnings increase through the years. Borchert v. Borchert, 391 N.W.2d 74, 76 (Minn.App. 1986). For each of the foregoing reasons, the district court's denial of Mr. Gierman's motion to reduce or eliminate his maintenance obligation was not an abuse of discretion.