Opinion
No. C1-03-155.
Filed July 15, 2003.
Appeal from the District Court, Anoka County, File No. F69511276.
Jennifer R. Wellner, Wellner Isaacson, PLLP, (for appellant)
Thomas R. Hughes, Hughes Costello, (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This opinion will be unpublished and may not be cited except as provided by Minn.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UNPUBLISHED OPINION
On appeal from the post-dissolution termination of her maintenance award, appellant argues that the district court improperly based its decision on new findings regarding the distribution of marital property in the dissolution decree. Because we conclude that the district court erred in making and relying on new findings regarding property distribution in deciding to terminate spousal maintenance, we reverse and remand.
Facts
Appellant Kim Teresa Pattinson and respondent Daniel Keller Pattinson were married in 1984, had two children, and dissolved their marriage in 1996. In an amended decree entered in February 1997, appellant was awarded permanent spousal maintenance of $600 per month, with a provision for a review hearing in five years upon either party's motion. On respondent's appeal from the amended decree, this court affirmed in an unpublished opinion. Pattinson v. Pattinson, No. C0-97-458, 1997 WL 633297 (Minn.App. Oct. 14, 1997).
Respondent, a high school graduate, has been a carpet installer throughout his career; from 1993 through early 1997 he owned and operated Carpet Concepts, Inc., a company that sold and installed carpeting. The company dissolved shortly after the dissolution proceedings, at which time respondent returned to work full time for a carpet installation company.
Appellant does not have a high school diploma and worked at low-paying positions throughout the marriage. She was a homemaker until 1991, when she started working part time selling pull-tabs. In 1993, she became employed part time at Minnesota Plastics, making $9 per hour for four hours a week. At the time of the dissolution, she worked nearly full time for this employer at the rate of $9.25 per hour. Her monthly net income was $961; her reasonable living expenses were $2,960.28. She testified at the dissolution hearing that she could increase her hourly rate by $2 per hour by pursuing her GED and an accounting diploma. At the time of hearing on the motion presently being reviewed, appellant had taken classes toward, but had not yet received, her high school or accounting diploma. Despite the lack of further education, appellant's monthly net income eventually increased to $1,731.76.
In March 2002, respondent moved to terminate spousal maintenance, which had increased through cost-of-living adjustments to $720 per month. Respondent based his motion not on a change in his own circumstances, but on the improvement of appellant's circumstances.
After a hearing on respondent's motion, the district court terminated spousal maintenance. The court, in concluding that appellant's circumstances had significantly and substantially improved, rendering the current spousal maintenance obligation unreasonable and unfair, found that appellant (1) has a monthly net income of $1,731.36, an increase of 80%; (2) has monthly expenses of $3,678.44; and (3) enjoys many benefits that she did not have at the time of the dissolution decree, including medical insurance, dental coverage, a 401(k) plan, long-term disability insurance, and personal leave time.
The court also found that the value of respondent's carpeting business was inflated in the dissolution decree, resulting in a disproportionate distribution of assets and an inflated standard of living in favor of appellant. The court noted that it had admitted and considered evidence not previously before the district or appellate courts that showed the business's lower value. Finally, after recognizing appellant's debt obligations, the court stated that appellant could use a $10,999 marital-property disbursement to significantly reduce her debt.
Decision
This court will not reverse a district court's maintenance award unless it abused its discretion. Erlandson v. Erlandson, 318 N.W.2d 36, 38 (Minn. 1982). The district court abuses its discretion when it makes a conclusion that is clearly erroneous and against logic and the facts on the record. Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).
Spousal maintenance may be modified or terminated under a showing of one or more of the following:
(1) substantially increased or decreased earnings of a party;
(2) substantially increased or decreased need of a party * * *;
(3) receipt of assistance under [an] AFDC program * * *;
(4) a change in the cost of living for either party * * * [making] the terms unreasonable and unfair * * * .
Minn. Stat. § 518.64, subd. 2(a) (2002). Although all factors must be weighed,
the essential consideration [in awarding maintenance] is the financial need of the spouse receiving maintenance, and the ability to meet that need, balanced against the financial condition of the spouse providing the maintenance.
Novick v. Novick, 366 N.W.2d 330, 334 (Minn.App. 1985) (citation omitted).
Here, the district court concluded that appellant's substantially improved circumstances rendered the existing spousal maintenance award unreasonable and unfair. In doing so, the court acted within its discretion in finding that appellant enjoyed an 80% increase in income with only a 24% increase in expenses, and that this resulted in appellant's ability to reach a standard of living similar to that enjoyed during the marriage.
The district court also balanced appellant's income against what it found to be inaccurate information before the court that conducted the dissolution hearing regarding valuation of respondent's business, Carpeting Concepts, Inc. It noted that the dissolution court was unaware that respondent's business was failing at the time of trial and that shortly after trial that business would be liquidated with $20,000 in debt. The district court then relied on these post-decree developments in making its decision to terminate spousal maintenance.
Appellant argues that the district court lacked jurisdiction to determine that the initial award of spousal maintenance was based on inaccurate financial information. Specifically, she argues that respondent's business was valued in the decree and that the district court that considered the maintenance modification motion impermissibly substituted new findings on property value for those included in the decree. There is merit to appellant's arguments.
Divisions of real and personal property are final and may be revoked or modified only where a district court re-opens the judgment. Minn. Stat. § 518.64, subd. 2(e) (2002); see Minn. Stat. § 518.145, subd. 2 (2002) (listing grounds for reopening a dissolution judgment); Shirk v. Shirk, 561 N.W.2d 519, 522 (Minn. 1997) (stating "sole" relief from dissolution judgment "lies in meeting the requirements of Minn. Stat. § 518.145, subd. 2"). After expiration of the appeal period, a district court lacks jurisdiction to modify the property award of the decree. See Rydell v. Rydell, 310 N.W.2d 112, 114 (Minn. 1981) (res judicata barred relitigation of marital property award); Stevens v. Stevens, 501 N.W.2d 634, 637-38 (Minn.App. 1993) (stating that a court may not "relabel" a property award to be one for maintenance).
The district court did not have jurisdiction to make new findings regarding the value of marital property. The dissolution court originally made findings regarding the valuation of respondent's business, and those findings were not later modified through a re-opening of the judgment. On the appeal of the decree, this court affirmed the district court's valuation of the business and declined to consider factors occurring after trial. Pattinson, No. C0-97-458, 1997 WL 633297, at *1 n. 1, *5 -*6 (Minn.App. Oct. 14, 1997). Therefore, to the extent that the district court relied on its substituted findings regarding the value of respondent's business in deciding to terminate maintenance, that reliance was improper.
Appellant next contends that the termination of maintenance was an abuse of discretion, arguing that her increased income, even including the existing spousal maintenance, is still insufficient to cover her expenses. Again, there is merit to appellant's argument. The district court acknowledged that appellant's stated expenses of $3,678.44 were not unreasonable, but it nonetheless terminated spousal maintenance even though appellant's net monthly income of $1,731.36 would assure that she will continue to go deeper into debt each month.
The district court suggested that appellant could use the proceeds from her marital-property award to reduce her debt obligations. But just as the payment of living expenses may not be considered a distribution of marital property, appellant should not be required to invade her property distribution to meet her reasonable expenses or to decrease the debt incurred through meeting those reasonable expenses. See Holder v. Holder, 403 N.W.2d 269, 272 (Minn.App. 1987) (noting that payment of living expenses does not constitute distribution of marital property); see also Ernst v. Ernst, 408 N.W.2d 679, 681 (Minn.App. 1987) (distinguishing property distribution from spousal maintenance).
Finally, appellant argues that the district court erred by terminating, rather than reducing, the maintenance award when the decree's review provision only provides for review of the "amount" of appropriate spousal maintenance. Respondent's attorney, while arguing that a reduction to a zero amount of maintenance was proper, conceded at oral argument that maintenance would nevertheless continue to be reserved. We agree that a motion to "reduce" might properly result in an order reducing maintenance to a zero amount. We also agree that even if permanent maintenance award in this case is reduced to a zero amount, it will continue to be reserved and, therefore, subject to further review under Minn. Stat. § 518.64 (2002). However, because we are reversing and remanding this matter for the reasons stated in this opinion, we do not reach the issue of whether reduction to zero would be sustainable on the record before us.
The district court abused its discretion by making new findings regarding the value of respondent's business. Accordingly, we reverse the decision to terminate spousal maintenance and remand to enable the court to reconsider the merits of respondent's motion and to render a decision based upon only those factors that are appropriately considered in deciding the question of whether and to what extent maintenance should be modified.