Laura M. Engelhart, n/k/a Laura Hoss v. Robert J. Engelhart ( 2015 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A15-0603
Laura M. Engelhart, n/k/a Laura Hoss, petitioner,
Respondent,
vs.
Robert J. Engelhart,
Appellant.
Filed December 28, 2015
Affirmed
Kirk, Judge
Dakota County District Court
File No. 19-FX-08-002319
Laura Hoss, Eagan, Minnesota (pro se respondent)
Edward F. Rooney, Minneapolis, Minnesota (for appellant)
Considered and decided by Stauber, Presiding Judge; Kirk, Judge; and Willis,
Judge.
UNPUBLISHED OPINION
KIRK, Judge
On appeal in this spousal-maintenance dispute, appellant argues that the district
court (1) overstated his income; (2) improperly considered his current wife’s income in

Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
calculating his income available to pay spousal maintenance; (3) erred in denying his
motion for a new trial on the basis that his 2013 tax returns were newly discovered
evidence; and (4) erred in denying his motion for a new trial because respondent
submitted an allegedly misleading document suggesting that appellant had income from
an undisclosed business. We affirm.
FACTS
In 2010, appellant-husband Robert J. Engelhart and respondent-wife Laura Hoss
were divorced by a stipulated judgment and decree. The judgment and decree awarded
husband the business PB Exchange, Inc. (PBE), and wife permanent spousal maintenance
of $4,700 per month.
In April 2012, husband moved to modify his spousal-maintenance obligation,
alleging that his income had significantly declined because PBE was failing and that
wife’s reasonable monthly expenses had substantially decreased. In July 2012, the
district court denied husband’s motion, which was affirmed on appeal. Engelhart v.
Engelhart, No. A12-1705, 2013 WL 2372164, at *3 (Minn. App. June 3, 2013).
In May 2013, while his appeal was pending, husband again moved the district
court for a reduction of his spousal-maintenance obligation, on the grounds that his
income from PBE had decreased even further and that wife’s reasonable monthly
expenses had decreased. After a delay for discovery and mediation, in October 2014, the
district court reduced husband’s monthly maintenance obligation to $3,600, a lesser
reduction than husband requested.
2
On November 14, husband moved the district court for amended findings of fact
with respect to its October order or, alternatively, for a new trial. In February 2015, the
district court amended several findings and conclusions, but did not further reduce
husband’s spousal-maintenance obligation or grant him a new trial.
Husband appeals.
DECISION
We review a district court’s decision concerning modification of spousal
maintenance for an abuse of discretion. Hecker v. Hecker, 568 N.W.2d 705, 709-10
(Minn. 1997). A district court abuses its discretion if it resolves the matter in a manner
“that is against logic and the facts on record.” Dobrin v. Dobrin, 569 N.W.2d 199, 202
(Minn. 1997). Modification of spousal maintenance is appropriate if a substantial change
in circumstances makes the original amount unreasonable and unfair. Minn. Stat.
§ 518A.39, subd. 2(a) (2014). Changed circumstances can be established by showing a
substantial increase or decrease in the gross income or need of either the obligee or the
obligor. Id. The movant for spousal-maintenance modification bears the burden of
demonstrating a substantial change in circumstances that renders the current maintenance
amount to be both unreasonable and unfair. Beck v. Kaplan, 566 N.W.2d 723, 726
(Minn. 1997).
I. The district court’s findings regarding husband’s income are not clearly
erroneous.
We defer to a district court’s findings of fact and will uphold them unless they are
clearly erroneous. Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002); see Minn. R.
3
Civ. P. 52.01 (stating that findings of fact shall not be set aside unless clearly erroneous).
“Findings of fact are clearly erroneous where an appellate court is left with the definite
and firm conviction that a mistake has been made.” Goldman v. Greenwood, 748
N.W.2d 279, 284 (Minn. 2008) (quotation omitted). When determining whether a district
court’s findings are clearly erroneous, an appellate court views the record in the light
most favorable to the court’s findings. Vangsness v. Vangsness, 607 N.W.2d 468, 472
(Minn. App. 2000). Also, appellate courts defer to district court credibility
determinations. Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).
At the time of the dissolution, husband’s monthly salary from PBE was composed
of a “base income of $11,000,” and fringe benefits, including medical and dental
insurance and an annual $6,000 flex-spending account cap. In June 2012, in support of
his first motion to reduce his spousal-maintenance obligation, husband filed an affidavit
stating that he was receiving interest income on a loan that he made to PBE. He reported
receiving interest from PBE of $16,307 in 2010 and $14,423 in 2011.
In May 2013, husband filed an affidavit in support of his second motion stating
that he received “$107,227 in salary/contractor income from” PBE and another business,
Managed Services Inc. (MSI), in 2012, as well as “interest income from” PBE, and that
he believed there were “some business losses.” He explained that he lacked some figures
because the corporate income tax returns had not been completed. Husband did not
submit his 2012 personal tax returns to the court. He claimed that he was earning a
monthly salary of $6,000 from PBE, was no longer working for MSI, and that he
anticipated that his interest income would remain at approximately $1,300 per month.
4
In a supplemental affidavit filed in April 2014, husband described how PBE was
struggling due to technology changes in the telecommunications industry and that he was
in the process of ceasing its operations. He also stated that he had obtained new
employment in January 2014 and was earning $8,000 per month. In his next
supplemental affidavit, which was filed in July, husband reported income from PBE in
the form of payments to him or on his behalf, credited against his loan to PBE. Because
he was taking distributions from PBE rather than a salary in order to reduce his tax
liability, he agreed to consider the payments as income for purposes of spousal
maintenance.1
In its October 2014 order modifying husband’s spousal-maintenance obligation,
the district court found husband’s current monthly income to be approximately $10,900,
consisting of his salary, PBE interest income, and PBE loan payments. The district court
repeatedly emphasized that the failure to provide the court with documentation negatively
impacted his credibility with respect to his income. For example, husband had not
provided his 2013 personal income tax returns, documentation of any 2013 interest
income, documentation of his wife’s 2013 income, or any PBE financials for 2014.
On appeal, husband first asserts that the district court erred in determining his
income. Husband contends that: (1) other than suggesting that he received income from
an undisclosed business, wife did not dispute his asserted income, and (2) the missing
1
We note that, normally, where marital property awarded to a party produces a stream of
payments, the payments are not considered in determining that party’s ability to pay
spousal maintenance to the extent that those payments represent the marital property that
was awarded to the party in the dissolution judgment. See Lee v. Lee, 775 N.W.2d 631,
638-39 (Minn. 2009).
5
documents concerning husband’s income were in wife’s possession through discovery,
not requested, or, with respect to the 2013 tax returns, not yet prepared.
Contrary to husband’s assertion, the record reflects that wife consistently
questioned husband’s claimed income figures and his ability to meet his spousal-
maintenance obligation. More importantly, it was not necessary for wife to question
husband’s income or to provide documentation, even that which she received in
discovery, since husband carried the burden of proof. See, e.g., Zieman v. Zieman, 265
Minn. 190, 192, 121 N.W.2d 77, 79 (1963); Kielley v. Kielley, 674 N.W.2d 770, 779
(Minn. App. 2004) (“‘Unreasonable and unfair’ are strong terms which place upon the
claimant a burden of proof more than cursory.”); Eisenschenk v. Eisenschenk, 668
N.W.2d 235, 243 (Minn. App. 2003) (stating that a party who does not submit evidence
to allow the district court to fully address a question may not complain that the court
failed to rule in that party’s favor), review denied (Minn. Nov. 25, 2003). “The finder of
fact is not required to accept even uncontradicted testimony if the surrounding facts and
circumstances afford reasonable grounds for doubting its credibility.” Varner v. Varner,
400 N.W.2d 117, 121 (Minn. App. 1987). It was not clearly erroneous for the district
court to question husband’s credibility on the basis of his failure to submit basic financial
information in support of his motions.
Husband next argues that the district court improperly took into account his
income for all of 2013 instead of only his income since May 2013, when his maintenance
modification motion was pending. However, the district court did not err in considering
husband’s income prior to the motion because he historically received much of his
6
income from a business that he owns, and it is therefore subject to manipulation. See
Fulmer v. Fulmer, 594 N.W.2d 210, 213 (Minn. App. 1999) (stating that a district court
may use earning capacity to measure income if it is either impracticable to determine an
obligor’s actual income or his income is “unjustifiably self-limited”); Ferguson v.
Ferguson, 357 N.W.2d 104, 108 (Minn. App. 1984) (“[T]he opportunity for a self-
employed person to support himself yet report a negligible income is too well known to
require exposition.”).
Finally, husband argues that the district court erroneously treated interest income
from his loan to PBE as separate from loan payments from PBE, and that he received
only “modest and irregular” loan payments in 2014. These arguments are also
unavailing.
Until his November 2014 motion for amended findings, husband never asserted
that he was no longer receiving interest payments or that he was receiving interest as part
of each loan payment. See Allen v. Cent. Motors, 204 Minn. 295, 299, 283 N.W. 490,
492 (1939) (stating that an issue first raised in a motion for amended findings is “too
late”); Grigsby v. Grigsby, 648 N.W.2d 716, 726 (Minn. App. 2002), review denied
(Minn. Oct. 15, 2002). Further, the documentation of the payments against the loan
reflects nothing regarding interest. The amount by which the loan balance was
decreasing each month matches almost exactly the average monthly payments husband
received,2 which strongly suggests that he was receiving interest payments in addition to
2
This pertains to the period of June 1, 2013, to December 31, 2013; the record does not
contain information regarding 2014.
7
payments described as reducing principal. Further, in finding husband’s non-interest loan
income, the district court used only 2014 figures, which were significantly lower than
those from 2013. The district court did not clearly err in including separate interest
payments in husband’s total income.
The district court reasonably declined to adopt husband’s income figures in light
of the evidence in the record and his failure to produce more complete financial
information. We are not left with a “definite and firm conviction that a mistake has been
made” with respect to husband’s income. Goldman, 748 N.W.2d at 284.
II. The district court did not err by taking the income of husband’s current
spouse into account in calculating his ability to pay spousal maintenance.
In considering a motion to modify spousal maintenance, the district court may
regard the income of an obligor’s current spouse as a source for meeting monthly
expenses attributable to both the obligor and the current spouse. Wagstrom v. Wagstrom,
394 N.W.2d 841, 844 n.3 (Minn. App. 1986), review denied (Minn. Nov. 26, 1986).3
Husband provided a budget delineating the household expenses that he pays and
those that his new spouse pays, which reflects that they pay approximately 75% and 25%
of the total household expenses, respectively. Using the district court’s income figures,4
this distribution of expenses is proportional to their incomes.
3
Notably, in considering a motion to modify child support, a district court “shall not
consider the financial circumstances of each party’s spouse.” Minn. Stat. § 518A.39,
subd. 2(d)(1) (2014). There is no such restriction relating to a motion to modify
maintenance. Id., subd. 2(d).
4
The district court adopted husband’s figures for his spouse’s income.
8
Noting a lack of documentation and that some “expenses are shared at 2/3 and
others at 3/4,” the district court found it “more reasonable to consider [husband]’s entire
household budget than to consider [his] self-apportioned budget.” In calculating his
income available to pay spousal maintenance, the district court combined the incomes of
husband and his new spouse and subtracted their reasonable monthly expenses, which it
found to be lower than claimed.
Husband argues that the district court erred in considering the contribution of his
current spouse to household expenses because he delineated his share of expenses from
her share. However, the district court was not obligated to accept husband’s
apportionment of expenses. Further, its findings reflect an expectation that his spouse
pays approximately 43% of the household’s reasonable monthly expenses, including
taxes, for purposes of calculating funds available to pay spousal maintenance, which is
reasonable on this record. In fact, because the amount of maintenance ordered is
substantially lower than his household’s monthly surplus, husband could still choose to
pay the same percentage of household expenses relative to his wife as he claimed.
Therefore, the district court did not clearly err by considering his current spouse’s income
in calculating his income available to pay spousal maintenance.
III. The district court did not abuse its discretion in denying husband’s motion
for a “new trial” on the basis that his 2013 tax returns were newly discovered
evidence.
In his November 2014 motion, husband argued for a new trial on the basis that his
2013 tax returns were newly discovered evidence. Hearings on motions to modify
spousal maintenance are “special proceedings,” not trials under Minn. R. Civ. App. P.
9
103.03(g). Huso v. Huso, 465 N.W.2d 719, 720 (Minn. App. 1991). Thus, a motion for a
new trial in a post-decree spousal-maintenance modification proceeding is not authorized,
and an order denying such a motion is not appealable. Id. at 721. Even assuming it were,
the district court did not err in denying husband relief.
Minn. R. Civ. P. 59.01(d) authorizes the district court to grant a new trial due to
“[m]aterial evidence newly discovered, which with reasonable diligence could not have
been found and produced at the trial.”5 Generally, newly discovered evidence “must
have been in existence at the time of trial but not known to the party at that time.”
Swanson v. Williams, 303 Minn. 433, 436, 228 N.W.2d 860, 862 (1975). “The primary
consideration in determining whether to grant a new trial is prejudice.” Wild v. Rarig,
302 Minn. 419, 433, 234 N.W.2d 775, 786 (1975). A district court’s decision on a
motion for a new trial is reviewed for abuse of discretion. Halla Nursery, Inc. v.
Baumann-Furrie & Co., 454 N.W.2d 905, 910 (Minn. 1990).
Husband never alleged that, at the time of the August 2014 hearing, he was
unaware that his 2013 tax returns had not been completed and filed. At that time,
husband did not indicate to the district court that he had not completed his 2013 tax
returns or ask for time to submit them. Even in his affidavit in support of his motion for a
5
On appeal, husband argues for a new trial under Minn. Stat. § 518.145, subd. 2(2)
(2014), which authorizes a court to grant a new trial due to “newly discovered evidence
which by due diligence could not have been discovered in time to move for a new trial
under the Rules of Civil Procedure, rule 59.03.” Because husband filed a timely motion
for a new trial under Minn. R. Civ. P. 59.01 before the district court, on appeal we
analyze the issue under that rule. See Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988)
(“A reviewing court must generally consider only those issues that the record shows were
presented and considered by the trial court in deciding the matter before it.”) (quotation
omitted).
10
new trial, husband did not explain why he failed to complete the returns by the hearing,
state whether he had received an extension from the IRS, or state when he gave his
accountant the materials to complete the returns. Moreover, the tax returns did not exist
at the time of the hearing. See Swanson, 303 Minn. at 436, 228 N.W.2d at 862.
IV. The district court did not abuse its discretion in denying husband a “new
trial” on the basis that wife offered into evidence an allegedly misleading
document indicating that he had income from an undisclosed business.
In an affidavit filed in June 2014, wife first alleged her belief that husband had an
undisclosed interest in a business called “PB Exchange - Minnesota Trucking Company.”
She attached a document reflecting types of cargo hauled by a company identified this
way, as well as an address, telephone number, and other limited information. In
response, husband explained that PBE owns the truck to which the document referred, for
its own use. He denied having an interest in any sort of trucking or transport business.
Wife responded by submitting a screenshot of an “advertisement” describing “Pb
Exchange” as a “Minnesota Transport Company,” with contact information including
husband’s cellphone number.
In its order modifying maintenance, the district court noted the dispute and
commented that “it is curious why there would be an online presence for a company that
does not exist.” In his affidavit following the order, husband attached a print-out of what
he asserted to be the full webpage of the “advertisement” submitted by wife, arguing that
it proves that PBE did not post the information because the advertisement invites the
business to use the site as a “marketing platform.”
11
Husband argues that the district court should have granted a new trial on the basis
that wife submitted a deceptive document suggesting that he was engaged in an income-
producing trucking business, when that was not the case. Again, such a motion is not
authorized in these proceedings and an order denying it is not appealable. Huso, 465
N.W.2d at 721. Even assuming it were, the district court did not abuse its discretion in
denying husband relief on this basis.
Minn. R. Civ. P. 59.01 authorizes a district court to grant a new trial due to, in
pertinent part, “(a) [i]rregularity in the proceedings of the . . . prevailing party, or any
order or abuse of discretion, whereby the moving party was deprived of a fair trial;
(b) [m]isconduct of the . . . prevailing party; [or] (c) [a]ccident or surprise which could
not have been prevented by ordinary prudence . . . .”6
Over three months had elapsed between wife’s submission of the screenshot in
July 2014 and husband’s submission of the webpage print-out in November 2014, and
differences between the two are plainly evident in the documents provided. Therefore, it
is not clear that the webpage wife viewed contained the information husband asserts
made her conduct purposefully misleading. Even assuming the print-out husband
provided shows that PBE did not post the “advertisement” and that wife was aware of
this, there could still be a transport company named Pb Exchange. Indeed, the original
evidence submitted by wife appears to be from a different source.
6
On appeal, husband cites Minn. Stat. § 518.145, subd. 2(3) (2014), which allows a new
trial for “fraud, whether denominated intrinsic or extrinsic, misrepresentation, or other
misconduct of an adverse party.” Because husband argued for relief under Minn. R. Civ.
P. 59.01(a)-(c) at the district court, we analyze this issue under those provisions instead.
See Thiele, 425 N.W.2d at 582.
12
Further, in making findings regarding husband’s income contrary to his claims, the
district court imputed no income to husband from the alleged undisclosed trucking
business. Hence, its decision not to grant relief on this basis was reasonable and
supported by the record. See Dobrin, 569 N.W.2d at 202.
Affirmed.
13