Opinion
No. C3-96-72.
Filed July 9, 1996.
Appeal from the District Court, Dakota County, File No. FX-94-13522.
John A. Cairns, Margaret K. Savage, Briggs Morgan, (for Appellant).
A. Larry Katz, Elizabeth Boleyn Bowling, Katz Manka, Ltd., (for Respondent).
Considered and decided by Harten, Presiding Judge, Davies, Judge, and Willis, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).
UNPUBLISHED OPINION
In an appeal from a dissolution judgment, appellant challenges property division, claiming that the district court erred in designating certain proceeds as marital property. Appellant also challenges the district court's reservation of maintenance jurisdiction and its award of attorney fees to respondent. We affirm.
FACTS
Appellant David Benton and respondent Kathy Benton were married on August 13, 1988. No children were born of the marriage. The marriage dissolution trial took place in July 1995. At trial, only the parties and appellant's accountant, Tom Marsh, testified; also, the deposition of appellant's father, A.C. Benton, was received into evidence. The district court awarded respondent the parties' townhome and ordered appellant to satisfy the $125,000 mortgage held by appellant's parents on the townhome. The district court also determined that the proceeds from a real estate contract (the Vosburg contract) received by appellant in 1994, totaling approximately $272,000, constituted marital property; the district court intimated that appellant would satisfy the mortgage from the Vosburg proceeds. The district court denied respondent's request for maintenance, but reserved maintenance jurisdiction for five years. Finally, the district court awarded respondent $14,733.85 for attorney fees. This appeal resulted.
DECISION
1. Upon dissolution, the court shall make a "just and equitable division" of the parties' marital property. Minn. Stat. § 518.58, subd. 1 (1994). Appellant contends that the district court erred in ruling that the Vosburg contract proceeds, which apparently are available to be used to satisfy the mortgage, were marital property; he asserts that they were nonmarital property and thus not subject to division under the above provision.
All property acquired by either spouse after the marriage and before the valuation date (here, December 1, 1994) is presumed to be marital property. Minn. Stat. § 518.54, subd. 5 (1994). Nonmarital property includes property acquired by one spouse that
(a) is acquired as a gift * * * made by a third party to one but not to the other spouse; (b) is acquired before the marriage; (c) is acquired in exchange for or is the increase in value of property which is described in clauses (a), (b), (d), and (e); (d) is acquired by a spouse after the valuation date; or (e) is excluded by a valid antenuptial contract.
Id. Appellant bears the burden of proof on the marital-nonmarital issue:
The party seeking a nonmarital classification must show by a preponderance of the evidence that the asset is readily traceable to a nonmarital source.
Hafner v. Hafner , 406 N.W.2d 590, 593 (Minn.App. 1987). Our standard of review establishes that
[a] trial court has broad discretion over the division of marital property and will not be overturned on appeal absent a clear abuse of discretion. This court need not, however, defer to a trial court's legal conclusion about the marital or nonmarital nature of property. Whether property is marital or nonmarital is a question of law that this court may review with independent judgment, but facts underlying a finding that property is marital or nonmarital will be set aside only if clearly erroneous.
White v. White , 521 N.W.2d 874, 877 (Minn.App. 1994) (citations omitted). "[D]ue regard is given to the trial court's opportunity to judge the credibility of witnesses." Haaland v. Haaland , 392 N.W.2d 268, 272 (Minn.App. 1986).
Appellant's father assigned the Vosburg contract to appellant during the parties' marriage. Therefore, the contract and its proceeds are presumed to be marital property. Appellant argues that the Vosburg proceeds were nonmarital property because they can be traced back to other property he owned before the parties' marriage.
At trial, appellant attempted to show that the Vosburg contract assignment was the final transfer to him in a series of transactions dating back to 1982. Many of the transactions took place between appellant and his father; appellant's father managed all of appellant's financial investments and held all of the investment proceeds in his own bank account. Appellant asserted at trial that his father had assigned the Vosburg contract to him in exchange for an Iowa condominium (transferred to appellant by his father in approximately 1985) and the net proceeds from the sale of Iowa farmland (owned by appellant and his father, purchased sometime in 1988 or 1989).
We conclude that appellant failed to overcome the presumption that the Vosburg proceeds constituted marital property. As the district court noted, the trail of assets as shown by appellant's evidence was "tenuous, obscure and fraught with unreliability." Few of the transactions were supported by documentary evidence. The testimony of appellant and his father conflicted at times; for example, appellant's father testified in his deposition that he had borrowed money from appellant at one time, but neither appellant nor the accountant (who also worked for the father) could recall such a loan. There was little evidence actually linking the various transfers, i.e., showing that assets were actually given in consideration for each other.
The circumstances surrounding the assignment of the Vosburg contract are particularly obscure. Appellant and his father testified that appellant received the contract from his father in 1990, but the written assignment of the contract was not executed until 1992. The value of the consideration purportedly given by appellant for the assignment was never clarified. Appellant and his father disagreed on the value of the Iowa condominium purportedly given by appellant in exchange. In addition, his father testified that in assigning the contract he also repaid the money he had borrowed from appellant (out of the father's own bank account); appellant and the accountant did not consider the assignment to be in exchange for any such debt owed by the father.
Moreover, after the marriage, part of appellant's investment "fund" may have become marital property.
[I]ncreases in value [of nonmarital property] during marriage attributable to efforts of the spouses, whether by financial investment , labor, or entrepreneurial decision-making , are marital property.
White , 521 N.W.2d at 878 (emphasis added). Thus, to the extent that the assignment of the Vosburg contract and the receipt of contract proceeds represented a positive return on his previous investments, they became marital property. Appellant did not show the value of the assets exchanged for the assignment; thus, appellant did not meet his burden of distinguishing nonmarital proceeds from marital proceeds.
Appellant argues that, even though the transactions between his father and him were obscure, that obscurity is irrelevant because all of the transactions involved property distinct from appellant's marital property. The evidence introduced by appellant, however, contradicts his argument that all of the investments were financed through his father's bank account. Specifically, appellant testified that he purchased the Iowa farmland by canceling a loan originally made to enable a third person to buy the farmland. Appellant's first payment, made in 1989 after the parties' marriage, was made by check written on appellant's own account , not on his father's account, where appellant allegedly kept all of his investment money. This supports an inference of the commingling of purported nonmarital and marital resources.
In summary, we agree with the district court that appellant did not present sufficiently clear evidence tracing the Vosburg contract and its proceeds to nonmarital property; appellant thereby failed to overcome the marital property presumption. See Coffel v. Coffel , 400 N.W.2d 371, 374 (Minn.App. 1987) (appellant failed to present "clear and convincing evidence" tracing the property at issue to nonmarital property and so failed to overcome the presumption of marital property where the terms of the property exchange were vague and documentary evidence was lacking); Haaland , 392 N.W.2d at 272 (upholding marital classification where evidence documenting exchange was lacking and nonmarital funds were commingled with marital funds).
The district court awarded each party approximately one-half of the parties' marital property. We conclude that the property division was "just and equitable" and not the product of an abuse of district court discretion.
We also note that, even if the proceeds were considered nonmarital property, the award of the townhome free of the mortgage could be sustained as a proper invasion of appellant's nonmarital property under Minn. Stat. § 518.58, subd. 2, given the district court's specific finding of respondent's "unfair hardship."
2. Despite its denial of respondent's request for a present maintenance award, the district court reserved maintenance jurisdiction for five years. Appellant argues that the district court abused its discretion in ordering the five-year reservation. In a dissolution proceeding, the court may award maintenance to a spouse if it finds that the spouse
(a) lacks sufficient property, including marital property apportioned to the spouse, to provide for reasonable needs of the spouse considering the standard of living established during the marriage * * *, or
(b) is unable to provide adequate self-support, after considering the standard of living established during the marriage and all relevant circumstances, through appropriate employment.
Minn. Stat. § 518.552, subd. 1 (1994). The court may also reserve jurisdiction of the issue for future determination. Minn. Stat. § 518.55, subd. 1 (1994). The district court has broad discretion regarding spousal maintenance. Van de Loo v. Van de Loo , 346 N.W.2d 173, 178 (Minn.App. 1984).
Appellant argues generally that the district court improperly reserved the maintenance issue because the parties have similar educational backgrounds and have earned similar wages in the past. We conclude, however, that the district court did not abuse its broad discretion here.
At the time of trial, appellant was about to begin a job at a Nevada casino, netting approximately $1,700 per month; respondent netted less than $1,300 in the month before trial, and before then her income was significantly less. Thus, the district court's finding a disparity in income is not clearly erroneous. Moreover, respondent testified that she was in need of treatment and medication for mental health problems that affected her employment. See Wopata v. Wopata , 498 N.W.2d 478, 485 (Minn.App. 1993) (reservation of maintenance proper where future health uncertain). Particularly applicable here is our statement in a previous case:
Reservation of the issue [of maintenance] under these facts protects the interests of appellant as well as respondent. Respondent has a potential source of protection if her health deteriorates significantly. Appellant has no present obligation to pay maintenance and may never be required to do so.
Van de Loo , 346 N.W.2d at 178.
3. Finally, appellant argues that the district court erred in awarding respondent $14,733.85 for attorney fees.
Allowance of attorney fees * * * rests almost entirely within the discretion of the trial court. Only rarely will a trial court's decision regarding attorney fees be overturned on appeal.
Duffey v. Duffey , 432 N.W.2d 473, 478 (Minn.App. 1988) (citation omitted).
We affirm the attorney fee award. The district court did not abuse its discretion in its evaluation of respondent's need and appellant's ability to pay. See Minn. Stat. § 518.14, subd. 1 (1994). Affirmed.
Respondent's attorney submitted an affidavit to the district court detailing $14,733.85 in attorney fees and disbursements, and the district court found that respondent was entitled to an award of that amount. In its conclusions of law, however, the district court ordered appellant to pay $14,039.85 to respondent for attorney fees. Whereas this discrepancy is unexplained, we assume that it resulted from a clerical error. Accordingly, our affirmance applies to an award of up to $14,733.85 attorney fees and disbursements requested by respondent and approved by the district court.