Opinion
No. A04-1070.
Filed April 26, 2005.
Appeal from the District Court, Washington County, File No. F3-92-592.
Robert L. Weiner, Robert L. Weiner Associates, (for respondent).
James J. Lawton III, Lawton Law Office, (for appellant).
Considered and decided by Halbrooks, Presiding Judge; Toussaint, Chief Judge; and Hudson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2004).
UNPUBLISHED OPINION
Appellant challenges the district court's decision ordering retroactive modification of spousal maintenance. Appellant argues that the district court abused its discretion by retroactively modifying the maintenance when (1) its finding of misrepresentation was inadequate and not supported by the record and (2) the modification was based on a misreading of a previous court order. Appellant also argues that the district court abused its discretion by rejecting his equitable-laches defense. Because we conclude that the district court did not abuse its discretion, we affirm.
FACTS
Married in 1968, appellant Raymond Lee and respondent Elaine Lee dissolved their 25-year marriage by a judgment and decree filed on June 7, 1993. Under the terms of the judgment, appellant was obligated to pay $650 per month in spousal maintenance to respondent. One year later, in June 1994, appellant moved to reduce his maintenance obligation to zero after having been laid off from his job as a union journeyman electrician, claiming unemployment benefits as his sole source of income. A hearing was held on July 11, 1994, and the matter was taken under advisement by the district court. Three days after the hearing, however, appellant returned to work on a temporary basis. The record reflects that appellant did not inform the court of his newfound employment. Without having this information, the district court issued an order on August 17, 1994, amending the original decree and reducing spousal maintenance to $341.08 per month based on "a substantial decrease in [appellant's] earnings." The court also ordered appellant to "immediately upon becoming reemployed . . . inform [respondent] of the name and address of his employer, the hourly wage received, and the number of hours worked per week."
Appellant received a copy of the district court order from his attorney on September 7, 1994, and on September 15, he sent a note to respondent advising her that he was working at Simon Electric in New Richmond, Wisconsin. There is no evidence in the record of appellant informing respondent of employment circumstances thereafter. At some point in 1999, appellant stopped paying maintenance to respondent altogether.
Whether or not respondent actually received appellant's letter remains in dispute. Respondent maintains she did not. Appellant claims that he sent the letter along with a maintenance check and that he knew she received the letter when she cashed the check.
Payments did not resume until November 2003. By then, appellant had accumulated an arrearage of $18,247.78 — calculated at the modified rate of $341.08 per month as ordered by the district court in 1994. By the time of the district court hearing here, appellant had paid respondent $10,000 of the total amount.
In February 2004, respondent moved for post-decree relief from the terms of the 1993 judgment and for relief from the court's 1994 order reducing spousal maintenance. Respondent also sought prospective modification of spousal maintenance and recovery of attorney fees. The district court granted respondent's motion and, in pertinent part, retroactively reinstated the $650 per month obligation of the 1993 decree and ordered prospective modification of spousal maintenance in the amount of $825 per month. The district court issued the following findings of fact:
The court also entered judgment for the remaining debt in the amount of $8,247.08 and granted respondent's motion for need- and conduct-based attorney fees in the amount of $6,000. Those rulings are not at issue here.
[Appellant] has failed to notify [respondent] about his employment, in contravention of the [c]ourt's August 1994 Order.
Based on the annual wages reported in [appellant's] income tax returns since 1993, he has not experienced a change of circumstances that would have warranted a reduction in spousal maintenance at any time. Instead, he seized the opportunity provided by the brief period during which he was collecting unemployment to request relief from his spousal maintenance obligation, and then intentionally disregarded the [court's 1994 order] to inform [respondent] of any further changes in circumstances.
The court concluded that appellant's failure to notify respondent of changes in his employment and income status constituted "a misrepresentation of his financial status and rendered the information supplied to the court in June 1994 incomplete and misleading." The court further rejected appellant's laches argument, explaining that laches was not available to a party with "unclean hands." Appellant then moved for amended findings. That motion was denied by the district court without a hearing. This appeal follows.
DECISION
I. Modification of Spousal-Maintenance Award
Appellant challenges the district court's modification of the spousal-maintenance award. We review a district court's decision to modify a maintenance award under an abuse-of-discretion standard. Kemp v. Kemp, 608 N.W.2d 916, 921 (Minn.App. 2000). A district court abuses its discretion regarding maintenance if its findings of fact are unsupported by the record or if it improperly applies the law. Dobrin v. Dobrin, 569 N.W.2d 199, 202 (Minn. 1997). Otherwise, "[f]indings of fact concerning spousal maintenance must be upheld unless they are clearly erroneous." Gessner v. Gessner, 487 N.W.2d 921, 923 (Minn.App. 1992).
A. Material Misrepresentation
Appellant argues that the district court's finding of material misrepresentation was inadequate and not supported by the record. Specifically, appellant asserts that there is "no evidence in the record to suggest [he] was insincere in his attempt to reduce spousal maintenance." Here, the district court reinstated the original monthly maintenance obligation of $650 and further increased it to $825 based on its finding that appellant had made "material misrepresentations regarding his financial status." This misrepresentation finding will be upheld unless we determine it to be clearly erroneous. See Kornberg v. Kornberg, 542 N.W.2d 379, 386 (Minn. 1996).
Minn. Stat. § 518.64 (2004) allows for the modification of a maintenance order. Decisions to modify are discretionary with the district court. Hecker v. Hecker, 568 N.W.2d 705, 709 (Minn. 1997). Minnesota law specifically permits relief from a dissolution decree by retroactively modifying an original maintenance award when "the party seeking modification was precluded from serving a motion by reason of . . . a material representation of another party, or fraud upon the court." Minn. Stat. § 518.64, subd. 2(d)(1).
The supreme court set forth the two elements necessary for "material misrepresentation" in Gully v. Gully, 599 N.W.2d 814, 821 (Minn. 1999). The first element is that appellant must have made a misrepresentation. Id. "An individual makes a misrepresentation by either making `an affirmative statement that is itself false' or `by concealing or not disclosing certain facts that render the facts that are disclosed misleading.'" Id. (quoting M.H. v. Caritas Family Servs., 488 N.W.2d 282, 289 (Minn. 1992)). The second element is that appellant's misrepresentation must be material to the issue at hand. Gully, 599 N.W.2d at 821. "A misrepresentation is material when it `relates to a matter upon which a plaintiff could be expected to rely in determining whether to engage in the conduct in question.'" Id. (quoting Black's Law Dictionary 977 (6th ed. 1990)).
Because these elements have been met here, we conclude that the record adequately supports the district court's finding of material misrepresentation and that it did not abuse its discretion in modifying the maintenance award. First and most determinatively, the record reveals that appellant returned to work on July 14, 1994, just three days after the court heard argument on his motion to reduce his spousal-maintenance obligation to zero. When appellant regained employment so soon after the motion hearing, and given the fact that the motion to reduce maintenance payments was based almost entirely on his unemployment status, appellant had an affirmative duty to submit this new and important information to the court before it rendered its decision. Cf. Doering v. Doering, 629 N.W.2d 124, 129-30 (Minn.App. 2001) (imposing an affirmative duty to disclose financial information completely and accurately in a marriage-dissolution proceeding), review denied (Minn. Sept. 11, 2001). Had appellant informed the district court that he had secured employment and was no longer receiving unemployment benefits, the court's decision to reduce maintenance payments may very well have been different. Due to a lack of current information, the court found that appellant had been "laid off" and that "[t]he extent and duration of this layoff [was] unknown" at the time. The district court further explained that "[appellant's] income [had] decreased to the extent that he [could] not [then] afford the payments contemplated under the [original] judgment and decree." Had the court been aware that appellant had secured employment, these findings could not have been made, and appellant's motion to reduce maintenance payments probably would have been denied.
Second, the record supports the fact that appellant has not experienced a substantial change in circumstances rendering the existing support obligation unreasonable and unfair, as required by Minn. Stat. § 518.64, subd. 2. Tellingly, his income has remained near or well above the $40,768 used as the basis for the determination of the original monthly maintenance award of $650 in 1993. In fact, appellant's gross income increased from 1994 to 2003, fluctuating between $43,406.48 and $77,217.10.
For example, "[t]he terms of an order respecting maintenance or support may be modified upon a showing of . . . substantially increased or decreased earnings of a party[.]" Minn. Stat. § 518.64, subd. 2(a)(1).
For these reasons, we conclude that the district court's finding concerning material misrepresentation was not clearly erroneous. Its decision to reinstate the original award and prospectively increase spousal-maintenance payments was therefore not an abuse of discretion.
B. Interpretation of the 1994 District Court Order
Appellant also argues that the district court's finding of misrepresentation and the resulting modification of his maintenance obligations was based on a misreading of the 1994 amended order for imposing, in his words, "a continuing obligation to inform [r]espondent of all employment activities from and after the date of the [August 1994 order]." Interpretation of a district court order presents a question of law, which we review de novo. Anderson v. Archer, 510 N.W.2d 1, 3 (Minn.App. 1993); see also Mikoda v. Mikoda, 413 N.W.2d 238, 243 (Minn.App. 1987) (treating the interpretation of ambiguities in a decree as a question of law), review denied (Minn. Dec. 22, 1987).
In reducing appellant's spousal-maintenance obligation from $650 to $341.08 per month, the district court ordered appellant to "immediately upon becoming reemployed, . . . inform [respondent] of the name and address of his employer, the hourly wage received, and the number of hours worked per week." Appellant partially complied with this order by sending respondent a note on September 15, 1994, advising her that he was then working at Simon Electric. But on respondent's motion for post-decree relief, the district court found that the note demonstrated that appellant "was aware of his obligation to notify [respondent] of his employment changes pursuant to the [1994] order, and that his subsequent failure to comply with that order was not an inadvertent mistake." It concluded that this failure to notify respondent of the changes in his employment status constituted "a misrepresentation of his financial status[,] [rendering] the information supplied to the [district court in June 1994] incomplete and misleading."
While it is arguable whether the 1994 district court order imposed a continuing obligation on appellant to report his employment status to respondent, appellant's note of September 16 states, "I do not expect to be employed by this company [for] more than a month. . . ." It would be unreasonable for appellant's reporting obligation under the district court's order to be satisfied by this one-time reporting of a job that he purported would last no more than one month. Moreover, even if the district court did misinterpret the August 1994 order by imputing a continuing obligation on appellant to report his employment status to respondent, other facts discussed above that were presented to the district court support a finding of misrepresentation. And it cannot be said that the district court based its decision on its reading of the August 1994 order alone. Accordingly, appellant cannot demonstrate prejudice by the district court's alleged misinterpretation of the 1994 order, and we affirm the district court's finding of misrepresentation. See Minn. R. Civ. P. 61 (instructing courts not to disturb a judgment on the basis of harmless error); see also Ruona v. Ruona, 390 N.W.2d 459, 460-61 (Minn.App. 1986) (declining to reverse a child-support obligation on the basis of non-prejudicial error).
II. Laches
Appellant also contends that the district court erred by denying his affirmative defense of laches. This court reviews a district court's decision on an issue of laches for an abuse of discretion. Opp v. LaBine, 516 N.W.2d 193, 196 (Minn.App. 1994), review denied (Minn. Aug. 24, 1994). Laches is an equitable doctrine which provides that, "when one sits on one's rights for too long a time, that person's claim should be estopped from continuing because it would be inequitable to require the defendant to fight the suit." Gully, 599 N.W.2d at 825. Despite this, a party "may be denied relief where his conduct has been unconscionable by reason of a bad motive, or where the result induced by his conduct will be unconscionable either in the benefit to himself or the injury to others." Id. (quoting Johnson v. Freberg, 178 Minn. 594, 597-98, 228 N.W. 159, 160 (1929)). This is in keeping with the equitable maxim that "he who seeks equity must do equity, and he who comes into equity must come with clean hands." Gully, 599 N.W.2d at 825 (quotation omitted). Therefore, in order to assert the equitable doctrine of laches, a party must come to the court "with clean hands." Id.
In rejecting appellant's laches defense, the district court concluded that "[t]he affirmative defense of laches is not available to a party with unclean hands, including any party who makes material misrepresentations of his financial status." The court further concluded that respondent's motion to reinstate spousal maintenance was brought within a reasonable period of time because of appellant's misrepresentations to the court. Because the district court's finding of misrepresentation was not clearly erroneous, appellant did not come to the district court "with clean hands," and it was therefore not an abuse of discretion for the court to reject appellant's equitable laches defense.