Opinion
No. C4-00-1706.
Filed April 17, 2001.
Appeal from Hennepin County District Court, File No. 189104.
Kathleen M. Picotte Newman, Larkin Hoffman Daly Lindgren, Ltd., (for respondent)
Jane Binder, Binder Law Office, (for appellant)
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
Appellant and respondent both challenge a district court order modifying a stipulated dissolution decree by reducing the monthly maintenance obligation. Because the district court did not err when it (1) failed to consider income respondent could earn by making annuitized withdrawals from her retirement fund; (2) found that respondent had reduced housing expenses; (3) found that appellant's monthly expenses had significantly increased; (4) declined to terminate appellant's obligation to secure his maintenance obligation with life insurance; (5) limited appellant's discovery requests; and (6) awarded respondent conduct-based attorney fees, we affirm.
FACTS
In December 1994, the 27-year marriage of appellant Rick Nemer and respondent Suzanne Singer (f/k/a Suzanne Nemer) was dissolved by stipulated decree. In arriving at the stipulation, the parties participated in the Divorce with Dignity Program over several years. In 1999, appellant brought a motion seeking termination or reduction of his maintenance obligation. After a hearing before the same district court judge who presided over the 1994 stipulated judgment, spousal maintenance was reduced from $5,200 per month to $3,700 per month. Both parties are dissatisfied and challenge the modification.
At the time of dissolution, appellant's net monthly income as a physician at Colon Rectal Surgery Associates, Ltd. was $11,665.50 and his monthly living expenses were $3,635. Respondent had been primarily a homemaker; nevertheless, she had a net monthly income of $1,090 as a part-time clerical worker. Her monthly living expenses were $6,792.39, of which $2,639.39 was attributable to the mortgage, taxes, and insurance on the home in which she resided.
Respondent was awarded $4,600 per month in permanent maintenance, with an increase to $5,200 once all of the condominiums owned by the couple had been sold. Maintenance was to continue until respondent's remarriage or death. Appellant was required to maintain $750,000 in life insurance, naming respondent as the beneficiary.
Since the dissolution, both parties have entered into new relationships. Respondent resides with a physician in a home owned and paid for solely by him. Respondent earns $1,005 per month net from part-time employment, and receives $422 per month in investment income. She has non-retirement investments of $231,808 and an IRA valued at $547,499. Her monthly living expenses are $6,704. For the most part, respondent shares all living expenses equally with the physician with whom she lives, and her monthly budget reflects only her share of those expenses. Respondent's stated housing expenses of $760 per month include only half the cost of utilities incurred each month. She is not responsible for any portion of the mortgage, taxes, or insurance, or the rental value of the home in which she resides. Respondent provided evidence that if she were to purchase a home, her housing expenses would be an additional $2,000 per month.
Appellant is remarried; he provides a home for his wife and her child. He is still employed by Colon Rectal Surgery Associates and has a gross monthly income of $21,486.25. In addition, appellant has assets totaling $921,241. Appellant states that in order to maintain his income, he has had to increase the number of hours he works. Appellant's stated monthly expenses are $10,730.55, not including spousal maintenance.
After considering appellant's motion to terminate or reduce maintenance, the district court found that there had been a substantial change in circumstances since the 1994 stipulated decree and reduced appellant's monthly spousal maintenance obligation by $1,500. The district court declined to relieve appellant of his obligation to provide $750,000 in life insurance for the benefit of respondent. Appellant's motion for amended findings was denied and this appeal followed. Respondent also appealed, arguing that there should have been no reduction in maintenance. The appeals were consolidated.
DECISION I. Modification of Dissolution Decree
Generally, the decision whether to modify a maintenance award 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) (quotation omitted), aff'd, 568 N.W.2d 705 (Minn. 1997). A reviewing court will find an abuse of discretion only if the district court reaches "a clearly erroneous conclusion that is against logic and the facts on record." Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).
A maintenance order may be modified upon a showing of substantially increased or decreased earnings of a party or substantially increased or decreased need of a party, either of which makes the terms unreasonable and unfair. Minn. Stat. § 518.64, subd. 2(a) (2000). A party seeking modification of maintenance has the burden of showing not only a substantial change in circumstances but also that the change makes the previous maintenance award unreasonable and unfair. Hecker, 568 N.W.2d at 709.
When courts consider a maintenance modification, the parties' prior stipulation carries great weight. See Cisek v. Cisek, 409 N.W.2d 233, 236-37 (Minn.App. 1987) (district court should only reluctantly alter terms of stipulation governing maintenance), review denied (Minn. Sept. 18, 1987). In Beck v. Kaplan, 566 N.W.2d 723, 726-27 (Minn. 1997), the supreme court held that it was neither unreasonable nor unfair to hold the parties to their original, negotiated, permanent-maintenance agreement because at the time the agreement was reached, it undoubtedly balanced the parties' compromised interests. In Beck, the supreme court acknowledged that a stipulation for permanent maintenance does not, without an affirmative waiver, preclude a later modification, but cautioned that the considerable discretion of the district court should be exercised carefully and only reluctantly when faced with a request to alter the terms of an agreement negotiated by the parties. Id. at 726.
Both parties challenge the exercise of the district court's discretion here; appellant insists that changed circumstances compel an even more substantial reduction in maintenance; respondent insists that maintenance should have continued at $5,200 per month.
We note initially that although both parties complain that the district court's findings on the respective issues are insufficient, we deem those findings sufficient to conduct meaningful review. See Stich v. Stich, 435 N.W.2d 52, 53 (Minn. 1989) (stating that effective appellate review can be had when the district court "has issued sufficiently detailed findings of fact to demonstrate its consideration of all factors relevant to an award of permanent spousal maintenance").
A. Modification of Permanent Spousal Maintenance
Appellant argues that he is financially unable to pay $3,700 per month maintenance, that respondent has sufficient means to meet her reasonable expenses by virtue of the fact that she is co-habitating with someone, and that income from respondent's retirement plan is available for consideration in determining her income for purposes of maintenance. Respondent argues that her income and living expenses are essentially the same now as they were at the time of the dissolution.
1. Respondent's Income
Appellant first argues that the district court erred in failing to impute investment income to respondent based on a market rate return, and that the $422 per month investment income determined by the district court represents only a 2% rate of return, which is unacceptable "given today's market." Appellant, however, did not submit any evidence regarding what respondent could earn without assuming greater risk, nor any evidence of what would be reasonable in "today's market." While caselaw requires a district court to consider income from investment assets when determining maintenance, appellant cites no authority supporting his argument that investment income must be imputed at the market rate for purposes of determining spousal maintenance. Cf. Lyon v. Lyon, 439 N.W.2d 18, 22 (Minn. 1989) (treating earnings generated by spouse's liquid assets as income when determining spousal maintenance); Schreifels v. Schreifels, 450 N.W.2d 372, 373 (Minn.App. 1990) (treating investment earnings generated from $20,000 cash, received as part of marital property, as income when determining spousal maintenance). Therefore, we cannot conclude that the district court erred in relying on the only evidence before it — that respondent earns $422 per month in investment income from her non-retirement assets.
Appellant next argues that the district court erred when it failed to consider the income that respondent would be receiving from an anticipated inheritance of $70,000. Appellant asserts that assuming a rate of return of 6%, respondent could earn an additional $350 per month in investment income. We see no error in the decision of the district court on this issue. The matter is still in probate; respondent has not yet received any funds. The district court is required to evaluate the income and expenses of the party at the time a party seeks modification of a maintenance award. Minn. Stat. § 518.64, subd. 2(c) (2000); Dean v. Pelton, 437 N.W.2d 762, 763 (Minn.App. 1989). Therefore, it was proper for the district court to disregard respondent's potential inheritance in determining the level of maintenance.
Appellant also argues that the district court erred in refusing to consider respondent's retirement assets when determining her income. Both respondent's and appellant's experts stated that respondent could make properly structured withdrawals from her retirement funds without incurring penalties. Nonetheless, we see no error.
The court may not consider retirement funds as income in a subsequent motion to modify maintenance where, as here, the decree awarded those funds to a party as property and provided otherwise for maintenance. See Taylor v. Taylor, 329 N.W.2d 795, 798 (Minn. 1983) (pension rights must be characterized as either marital property or spousal maintenance in order to ensure just and equitable division). Furthermore, an annuitized withdrawal over the respondent's life expectancy will lessen the ultimate value of her retirement assets and could cause her future economic hardship. Cf. Kruschel v. Kruschel, 419 N.W.2d 119, 122-23 (Minn.App. 1988) (declining to consider pension benefits awarded as property as income for maintenance purposes, and permitting modification where husband awarded sole right and interest to pension plan at time of decree, husband voluntarily retired, and absent modification, original maintenance award would deplete husband's original property award).
2. Appellant's Income and Expenses
Appellant argues that the spousal maintenance must be further modified or eliminated because of a change in his financial ability to pay. The district court found that appellant made decisions that have greatly increased his expenses, that the increase stems mainly from his new marriage, and that an inability to pay occasioned by the new marriage does not provide sufficient cause to reduce a spousal maintenance obligation. See Beck, 566 N.W.2d at 726-27 (declining maintenance modification where a party remarries and takes on new obligations with knowledge of his obligations to his first family). The record supports the decision of the district court.
Appellant's income has increased slightly since 1994, and his claimed monthly expenses have increased by more than $7,000. While appellant asserts that the increase in his monthly expenses was not caused by his new marriage, the district court found otherwise. The court reviewed appellant's 1994 pre-hearing budget and his 1999 budget. See Kitchar v. Kitchar, 553 N.W.2d 97, 102 (Minn.App. 1996) (holding that it was appropriate for district court to base its findings on value of marital estate, including the investment accounts, as of the prehearing conference), review denied (Minn. Oct. 29, 1996). We defer to the district court's decisions with regard to the credibility and weight of the evidence before it. General v. General, 409 N.W.2d 511, 513 (Minn.App. 1987). Therefore, we cannot conclude that the district court erred in declining to reduce appellant's maintenance obligation beyond the $1,500 reduction granted.
3. Respondent's Housing Costs
Respondent, in her appeal, alleges that there should have been no reduction in maintenance, and that the district court erroneously concluded that respondent's housing costs have been substantially reduced. We disagree. The record supports this conclusion of the district court. At the time of the dissolution, respondent had total housing expenses of $3,514.39 per month. Under respondent's present living arrangement, she pays for one-half of the utilities and maintenance. Her actual housing is free of rent or mortgage obligation; her total housing expense is $760 per month. Thus, respondent's housing expense has decreased by $2,754.39.
Respondent, however, argues that an additional housing expense of $2,000 should be imputed to her total housing expense because of the unstable nature of her present living arrangements. While both respondent and the physician with whom she lives testified that they are not likely to terminate their relationship, they also testified that respondent has no right, title, or interest in the physician's home. Because respondent is merely cohabitating with the physician, her present living arrangement could be discontinued at any time without obligation. See Plonske v. Plonske, 473 N.W.2d 911, 914 (Minn.App. 1991) (cohabitation agreements "can be broken off without obligation"); s ee also Bateman v. Bateman, 382 N.W.2d 240, 251 (Minn.App. 1986) (living with another individual in a meretricious relationship does not automatically trigger economic dependency), review denied (Minn. Apr. 24, 1986). We believe, however, that by reducing maintenance only $1,500 per month, the district court appropriately recognized the relative instability of respondent's living arrangements. There was no error.
Reviewing the record as a whole, it appears that the district court in reaching its decision to reduce the spousal maintenance by $1,500 was attempting to balance the decrease in respondent's housing expenses, the instability of her present living arrangement, and an increase in appellant's expenses. We cannot say that the district court, which oversaw the parties' participation in the Divorce with Dignity Program in 1994, and the resulting stipulation on all issues, abused its discretion when it reduced the appellant's maintenance obligation by $1,500.
B. Securing Maintenance Award with Life Insurance
Appellant argues that the district court abused its discretion by ordering him to continue to secure his spousal maintenance obligation with life insurance of $750,000. We disagree. Respondent's prospects for meeting her expenses through employment income are poor; she will not reach retirement age for several years; the security provision was part of the parties' stipulated agreement. The district court did not abuse its discretion by continuing to require security for the maintenance obligation. See O'Brien v. O'Brien, 343 N.W.2d 850, 853 (Minn. 1984) (securing maintenance award with life insurance where the maintenance obligee's employment prospects were poor and unlikely to improve and the dissolution decree provided that maintenance would terminate at the obligor's death).
II. Limitation of Discovery
Appellant argues that the district court erred when it limited the deposition of the physician with whom respondent lives and prevented the discovery of his financial documents. We disagree. The district court "has wide discretion to issue discovery orders and, absent clear abuse of that discretion, normally its order with respect thereto will not be disturbed." Shetka v. Kueppers, Von Feldt Salmen, 454 N.W.2d 916, 921 (Minn. 1990).
Intrusions into an individual's personal financial situation should be limited. Id. Because appellant was able to establish respondent's monthly expenses through at least limited deposition of the physician with whom respondent lives, we find no prejudicial error. Kellar v. VonHoltum, 568 N.W.2d 186, 191 (Minn.App. 1997) (finding no error where district court allowed at least limited opportunity to depose persons possibly having relevant information), review denied (Minn. Oct. 31, 1997).
III. Attorney Fees
An award of attorney fees is within the discretion of the district court and will be reversed only when it abuses that discretion. Berenberg v. Berenberg, 474 N.W.2d 843, 849 (Minn.App. 1991), review denied (Minn. Nov. 13, 1991). Attorney fees are proper where a spouse's efforts to obstruct discovery and his refusal to comply with court orders causes the other spouse's attorney to spend significantly more time handling the dissolution that would have been necessary had the husband cooperated. Dabrowski v. Dabrowski, 477 N.W.2d 761, 766 (Minn.App. 1991); Burton v. Burton, 365 N.W.2d 310, 312 (Minn.App. 1985), review denied (Minn. May 31, 1985).
The record supports the district court finding that appellant was evasive in releasing information about a lawsuit pending at the time of the dissolution, and that he did not readily inform respondent of the limited information to which she was entitled pursuant to the decree — the settlement amount, the legal fees and costs, and the amount to which respondent was entitled. Further, the record indicates difficulty on the part of both attorneys in scheduling depositions. Nevertheless, appellant persisted in continuing to seek discovery from the physician with whom respondent lives beyond that which was necessary to establish the veracity of respondent's stated monthly expenses. This pursuit placed unnecessary burdens on the court, the attorneys involved, and the physician with whom respondent lives. The district court did not abuse its discretion in awarding attorney fees.
Affirmed.