Opinion
No. C7-97-98.
Filed June 17, 1997.
Appeal from the District Court, Hennepin County, File No. 203470.
A. Larry Katz, Robert W. Due, (for Appellant)
Richard D. Goff, Shelly D. Rohr, (for Respondent)
Considered and decided by Lansing, Presiding Judge, Short, Judge, and Klaphake, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Patrick Charles Sommers appeals from a dissolution judgment and decree. Respondent Constance Sue Sommers requests attorney fees on appeal. Because the trial court did not abuse its discretion in valuing or distributing assets, setting maintenance, or requiring appellant to maintain life insurance for respondent's benefit, we affirm. We also decline to award respondent attorney fees on appeal because she has not demonstrated a need for the fees.
DECISION I. Property Valuation Distribution
A. Claimed Joint Expenses
Appellant claims he should have been reimbursed $61,274 in joint expenses he paid during the pendency of the dissolution. He argues that this claim was included in an evidentiary summary attached to his final argument which outlined $45,742 in joint expenses. He also claims that a separate affidavit and accounting attached to his posttrial motions outlined pre-decree joint expenses totalling $61,274.
The evidence of the $45,742 is not clearly established. In his 51-page "Final Argument," appellant stated:
He has paid expenses from January 1, 1991, through April 16, 1996, totalling $87,909.84, however, including child support and maintenance of $27,324, additional expenses for Whitney of $6,510.30, and expenses for maintaining the Shawnee Circle property of $27,772.63 (see appendix).
Appellant included in his lengthy, unindexed appendix a list entitled "1996 Expenses" that included various items. Some items were clearly reimbursable to appellant, such as child support; some were not, such as job search costs; and some were questionable, such as "Additional Child." The trial court did not specifically adopt this evidence of expenses in the decree, although the court did credit appellant for payment of pre-decree child support and maintenance as established by other documentary evidence.
When the issue was more expressly raised in appellant's post-decree motions, the trial court declined to modify the original decree, stating that it was "too late" to claim joint expenses. The court also noted that appellant had "freely withdrawn" from the account from which he allegedly paid pre-decree joint expenses. Because the evidence on the claimed joint expenses was not clearly established at trial and the court balanced the interests of the parties in its findings relative to the funds going into and out of this account, we affirm. See Ronnkvist v. Ronnkvist , 331 N.W.2d 764, 766 (Minn. 1983) (property valuation and distribution must be supported by evidence). Further, because the court evenly divided the over-$2 million marital estate to within $1, even if any claimed joint expenses should have been credited to appellant, this does not make the overall property division inequitable. See Minn. Stat. § 518.58, subd. 1 (1994) (marital property division must be "just and equitable").
B. Division of Nonvested Stock Options
Appellant received numerous stock options between 1992 and 1994 from his employer, Ceridian Corporation. He received all options during the marriage and prior to the first pretrial conference of March 27, 1995, the statutory valuation date for marital property. See id. The disputed portions of the options vested between March 27, 1995, and January 1, 1996, the date they were exercised. The options were exercised before the decree and, in fact, before the trial was held in this matter. The after-tax value of these options was $423,798.24, which the court evenly divided between the parties.
Appellant contends that Salstrom v. Salstrom , 404 N.W.2d 848 (Minn.App. 1987), controls this issue. In Salstrom , this court held that stock options not vested at the time of the dissolution decree should be divided according to a formula that recognizes the marital and nonmarital aspects of the options. Id. at 851-52. The Salstrom court noted that the formula shall be used as a "starting point for its determination" and that "[m]odifications of the rule may be warranted, especially because in Minnesota property is marital until the date of dissolution." Id. at 852.
We agree with the trial court that Salstrom is distinguishable because the assets in that case were not vested or exercised at the time of the dissolution. As the options here were acquired before the valuation date, they are presumed to be marital. See Minn. Stat. § 518.54, subd. 5 (1994). Because the options vested and were exercised prior to the trial or the decree, the court, within its power to make an equitable property distribution, properly divided the proceeds between the parties. See Minn. Stat. § 518.58, subd. 1. As the value of this asset changed substantially between the valuation date and the distribution date, the trial court could, within its equitable powers, adjust the valuation. See id.
C. Division of Appellant's Noncompetition Payment
On October 23, 1995, Ceridian Corporation terminated appellant's employment. Appellant's severance package included $550,000 as severance pay and $80,000 for a noncompetition agreement from appellant. The trial court included both as marital property, but appellant contends the $80,000 should not have been considered marital property. As in the property division issue concerning the stock options, the $80,000 was received after the March 27, 1995 valuation date and before the dissolution decree.
A covenant not to compete may serve as a method for limiting future employment and income. See Sweere v. Gilbert-Sweere , 534 N.W.2d 294, 298 (Minn.App. 1995); see also Ward v. Ward , 453 N.W.2d 729, 732 (Minn.App. 1990) (portion of personal injury award for future losses construed as nonmarital property), review denied (Minn. June 6, 1990). As such, a noncompetition agreement should be considered nonmarital. Here, however, appellant's noncompetition agreement had no restrictive impact on his future employment or income because he was able to procure a new job with similar benefits and income. Thus, the $80,000 was actually like the severance pay appellant received from Ceridian, which he agrees is marital. Again, even if the court incorrectly included this item in the marital estate, its inclusion does not make the overall property division inequitable. See Minn. Stat. § 518.58, subd. 1.
II. Maintenance
A. Initial Award
The trial court analyzed each required statutory factor in awarding respondent permanent maintenance of $5,600 per month. See Minn. Stat. § 518.552, subds. 1 2 (1994). The record and findings indicate that the parties had a very affluent standard of living, that respondent had no independent financial resources, that the marriage was long-term, that respondent had not worked full time for 16 years, that respondent lost career opportunities due to the priority of appellant's career, that each party contributed to the marital estate, and that, at 48 years of age, respondent's physical health is good, but she has suffered from depression for over two years.
Appellant's claim that respondent's expenses are too high is unsupported by the record. Both parties' claimed expenses included items consistent with the parties' affluent marital lifestyle. Any differences in these expenses is partly due to respondent's medical expenses.
Appellant's strongest challenges to the award of maintenance are based on the trial court's calculation of his income and the respondent's earning capacity. The trial court's findings on appellant's income are not clearly erroneous. Between 1989 and 1994, appellant's net monthly income averaged $20,000 per month. Appellant's lower income calculations fail to take into account non-cash taxable income, such as moving expenses or country club memberships, and other items of cash flow that were not included in his base salary. The most recent evidence received by the court demonstrates that appellant recently began a position with Medicus Systems Corporation at a salary of $250,000 per year, excluding a projected 44% bonus and stock options. Although appellant speculates that his income will decrease because of this new job, the trial court's conclusion that appellant will receive a net income comparable to his former incomes is supported by appellant's employment contract with Medicus, which spells out continued high earnings. Thus, appellant has the ability to pay respondent maintenance of $5,600 per month. After deducting his own expenses, maintenance, and child support, appellant has $6,815 remaining in monthly net income. Additionally, by this time his child support obligation has ended because the parties' child has become emancipated, making an additional $1,331 available to appellant.
Appellant also claims that respondent should be attributed some earning capacity. Appellant argues that the trial court found that respondent is not "unable to work and contribute to her own support, only that she should not have to." This characterization of the facts trivializes the two and one-half year major depression that respondent has suffered. Respondent's psychologist described various symptoms that included respondent being immobilized by her depression. In her March 19, 1996 deposition, the psychologist stated that she had observed no variance in the diagnosis or degree of respondent's depression, that respondent's symptoms had become more intense after she had made her earlier written report, and that she did not know whether respondent's condition would change after the parties' marriage was dissolved. Although respondent was once qualified and licensed as an elementary teacher, she has demonstrated that she is currently unable to teach. The trial court stated that appellant may request a modification of maintenance if respondent is able to resume working.
For these reasons, the trial court did not abuse its discretion in awarding respondent $5,600 in maintenance. See Erlandson v. Erlandson , 318 N.W.2d 36, 38 (Minn. 1982).
B. Modification Request
In his September 3, 1996 motion for amended findings or a new trial, appellant requested a maintenance modification under Minn. Stat. § 518.64, subd. 2, claiming his changed employment amounts to a change in circumstances. The trial court summarily denied this request, concluding that appellant was merely attempting to relitigate matters recently decided in the August 9, 1996 decree.
Any motion based on a change in circumstances is premature. Because appellant's income has historically been derived primarily from salary, bonuses, and stock options, he should be employed for at least one fiscal year at Medicus before moving to modify maintenance because of a claimed reduction in his income. See Wiese v. Wiese , 295 N.W.2d 371, 372 (Minn. 1980) (modification of maintenance requires "clear proof of facts showing that a substantial change in circumstances renders modification equitable").
III. Insurance
Appellant claims that the trial court erred in ordering him to maintain nearly $1 million in life insurance coverage to secure his maintenance obligation. Appellant contends that because respondent was awarded significant assets in the dissolution and she is not disabled from working, there is no need to secure appellant's maintenance obligation. See Duffey v. Duffey , 432 N.W.2d 473, 477-78 (Minn.App. 1988) (trial court properly refused to secure maintenance where spouse seeking maintenance received sufficient assets and was able to work). Respondent argues that because of the length of the marriage, her age, and her lengthy absence from the work force, her maintenance should be secured. See Maeder v. Maeder , 480 N.W.2d 677, 679-80 (Minn.App. 1982) (trial court properly ordered maintenance secured based on 21-year marriage and 54-year-old maintenance recipient who had weak job prospects), review denied (Minn. Mar. 19, 1992). This case is factually similar to Maeder , with the additional distinction that respondent here suffers from disabling depression. Thus, the trial court did not abuse its discretion in requiring maintenance to be secured. See Katter v. Katter , 457 N.W.2d 750, 754 (Minn.App. 1990). While respondent was awarded significant assets in the decree, she will be unable to maintain her former affluent lifestyle without the maintenance.
IV. Attorney Fees
Respondent requests attorney fees on appeal. Under Minn. Stat. § 518.14, subd. 1 (1996), a court may award attorney fees if they are necessary for a party to make a good-faith assertion of rights, the rights asserted will not unnecessarily prolong or add expense to the proceedings, and the fees are needed by one party and affordable to the other. A court may also award fees if a party unreasonably contributes to the length or expenses of a proceeding. Id. Attorney fees are allowable on appeal. See Wilson v.Wilson , 229 Minn. 126, 130-31, 38 N.W.2d 154, 157 (1949).
Respondent requests attorney fees based on need rather than based on appellant's conduct. Although a sizable award of assets does not preclude an award of attorney fees, the award of fees must be based on demonstrated need. See Nemitz v. Nemitz , 376 N.W.2d 243, 249 (Minn.App. 1985), review denied (Minn. Dec. 30, 1985). Here, respondent's only claimed need is due to the disparity between appellant's and respondent's incomes. Any such disparity was fully addressed by the court in the terms of the dissolution. Because respondent has significant liquid assets from which to pay attorney fees, we decline to award her attorney fees on appeal.