Cindy Marie Lund v. Michael Matthew Hrdi ( 2019 )

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
October 30, 2019
A party may file with the Supreme Court a
Sheila T. Reiff petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.
Appeal No. 2019AP84 Cir. Ct. No. 2017FA90
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT II
IN RE THE MARRIAGE OF:
CINDY MARIE LUND F/K/A CINDY MARIE HRDI,
PETITIONER-RESPONDENT,
V.
MICHAEL MATTHEW HRDI,
RESPONDENT-APPELLANT.
APPEAL from a judgment and an order of the circuit court for
Ozaukee County: SANDY A. WILLIAMS, Judge. Judgment affirmed in part;
reversed in part and cause remanded with directions; order affirmed.
Before Neubauer, C.J., Reilly, P.J., and Gundrum, J.
No. 2019AP84
Per curiam opinions may not be cited in any court of this state as precedent
or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
¶1 PER CURIAM. Michael M. Hrdi appeals from the judgment of
divorce from his former wife Cindy Lund, f/k/a Cindy Hrdi, who petitioned for
divorce after a fourteen-year marriage. The circuit court ordered a fifty-five/forty-
five-percent distribution of the marital estate in favor of Cindy and ordered
Michael to pay Cindy $37,574.35 as an equalization payment plus $88,567.50, one
half of the equity of the home.
¶2 Michael contends the court included assets and debt in the marital
estate that should not have been divided. We agree to the extent the court included
the value of the death benefit of one of his life insurance policies. As we will
explain, the court also may have erred in including Cindy’s student loan debt. We
disagree with Michael that the court erred in holding him in contempt and ordering
him to pay Cindy’s associated attorney fees. We thus affirm in part, reverse in
part, and remand with directions.
A. Background
¶3 Michael works for the Veterans Health Administration. He was
diagnosed with multiple sclerosis in 2007. During the divorce, he traded in his
former vehicle and purchased a van for $30,590.72. With an additional $32,135
government grant, the van was converted so that he can drive from his wheelchair.
¶4 Cindy is an assistant professor at Concordia University. She is
pursuing a Ph.D. as a condition of her employment. A $20,500 student loan was
disbursed during the divorce. She testified that Concordia would reimburse half
2
No. 2019AP84
the tuition cost for any class in which she received a grade of “B” or higher. The
court included the full $20,500 loan in the marital estate.
¶5 Michael testified that property he brought into the marriage included
inherited money and two whole-life insurance policies, one from Croatian
Catholic Union, the other from Catholic Knights. The Croatian life policy had a
cash value of $1,073.80 and a death benefit of $5,627. The Catholic Knights
policy had a cash value of $17,484. Both parties testified that they wanted to keep
the two policies in force for the children. The court included in Michael’s share of
the marital estate the cash value of the Catholic Knights policy and the $5,627
death benefit of the Croatian life policy.
¶6 The circuit court found that Michael’s net adjusted estate was
$189,062.50 and that Cindy’s was $120,745.50, for a difference of $68,317. It
ordered a 55/45 split in Cindy’s favor, for an equalization payment from Michael
to Cindy of $37,574.35. It further ordered Michael to refinance the marital home
and pay Cindy $88,567.50, her share of the equity, within sixty days of the date of
the divorce judgment—by December 7, 2018.
¶7 Post-judgment, Michael’s counsel, Attorney Linda Ivanovic, advised
the court that it had erred by adding the Croatian life policy death benefit to the
marital estate. The court denied the Order Correcting Decision without a hearing.
¶8 On December 5, 2018, Attorney Ivanovic advised the court that,
while the closing on the marital residence would proceed on December 7, the
funds would not be paid that day because, under the Truth in Lending Act, funds
are not distributed until three days after closing and Cindy thus would receive her
equalization payment the week of December 10. When Cindy went to Attorney
Ivanovic’s office on December 7, she was informed that the closing would not
3
No. 2019AP84
take place. Cindy moved for contempt. The court granted the motion and
awarded her $3,996.92 in attorney fees and interest. Michael appeals.
B. Croatian Life Policy Death Benefit
¶9 Michael first contends the circuit court erred in including the value
of the death benefit of the Croatian life policy in the marital estate because it is
payable only upon death.
¶10 We have not located a Wisconsin case expressly holding that for
purposes of property division upon divorce, life insurance policies are to be valued
at their cash surrender values, not the amount of the death benefit. Other
jurisdictions have so ruled, however. See, e.g., Wisner v. Wisner, 631 P.2d 115,
120 (Ariz. Ct. App. 1981); Peddycord v. Peddycord, 479 N.E.2d 615, 617 (Ind. Ct.
App. 1985); Bishop v. Eckhard, 607 S.W.2d 716, 717-18 (Mo. Ct. App. 1980);
Fox v. Fox, 626 N.W.2d 660, ¶18 (N.D. 2001).
¶11 But it makes logical sense. The owner’s interests in a life insurance
policy include changing beneficiaries and the power to surrender the policy for its
cash value. Bersch v. VanKleeck, 112 Wis. 2d 594, 596-97, 334 N.W.2d 114(1983). Also, the marital estate usually is valued as of the date of divorce.
Schinner v. Schinner, 143 Wis. 2d 81, 98, 420 N.W.2d 381 (Ct. App. 1988). It
makes little sense to include a payable-on-death benefit in current assets if only
the cash value is available to the policy owner on the date of divorce. As the death
benefit is something Michael never can realize, we conclude that the circuit court
erred in including it in the marital estate.
¶12 Property division is within the circuit court’s discretion. Schinner,
143 Wis. 2d at 97. A court misuses its discretion when it makes a mistake of fact
4
No. 2019AP84
or an error of computation. Van Wyk v. Van Wyk, 86 Wis. 2d 100, 108, 271
N.W.2d 860 (1978); Dean v. Dean, 87 Wis. 2d 854, 877, 275 N.W.2d 902 (1979).
¶13 Had the court excluded the death benefit altogether, Michael’s net
adjusted estate would have been $183,815.50, a difference between his and
Cindy’s of $63,070, for an equalization payment to Cindy of $34,688.50—
$2,885.85 less than he was ordered to pay. Alternatively, had the court included
only the policy’s cash value, Michael would have had a net adjusted estate of
$184,887.30, a difference between his and Cindy’s of $64,141.80. Under that
scenario, his equalization payment to Cindy would have been $35,277.99—
$2,296.36 less than he was ordered to pay.
¶14 We will not reverse a circuit court’s decision if the difference would
be de minimis. Laribee v. Laribee, 138 Wis. 2d 46, 51, 405 N.W.2d 679 (Ct. App.
1987). In Laribee, the court found de minimis a dispute over $640 mistakenly
included in a $192,000 marital estate. Id. Cindy argues the differential is de
minimis in relation to their over-$300,000 marital estate. Few published cases
make clear what de minimis means in the context of property division. We cannot
say, however, that the error here, nearly $2,300, is de minimis.
¶15 Case law teaches that errors of computation equate to a misuse of
discretion. We conclude the court erroneously exercised its discretion in regard to
the Croatian life policy death benefit. Further, the court’s error here was brought
to its attention yet it refused to rectify it or explain its stance. The remedy for a
computation or mathematical error generally is a remand with directions for the
circuit court to recompute the valuation. See Schinner, 143 Wis. 2d at 86, 107;
Vander Perren v. Vander Perren, 105 Wis. 2d 219, 230, 313 N.W.2d 813 (1982).
5
No. 2019AP84
C. Government Grant for Van Conversion
¶16 The court added the $32,135 grant for the van conversion to the
marital estate when it valued Michael’s van at $60,000. Michael argues that, as
the sole reason for the grant was to allow him to more safely and independently
accommodate his physical impairment, he alone is entitled to it. He also points
out there was no diminishment of the marital estate to pay for the van conversion.
¶17 Michael contends the grant is analogous to a gift. A gift from a
person other than the other party is not subject to property division. WIS. STAT.
§ 767.61(2)(a)1. (2017-18).1 He also likens it to a personal injury award, which is
meant to compensate for the loss of a healthy body. See Richardson v.
Richardson, 139 Wis. 2d 778, 785-86, 407 N.W.2d 231 (1987). He contends that
just as an injured party is entitled to full compensation for pain, suffering, bodily
injury, and future earnings, the presumption should be that each spouse is entitled
to leave the marriage with whatever compensates for a healthy body. See id.¶18 “[T]he valuation of marital assets is a finding of fact.” Liddle v.
Liddle, 140 Wis. 2d 132, 136, 410 N.W.2d 196 (Ct. App. 1987). We uphold a
circuit court’s findings of fact unless they are clearly erroneous. Id. “The general
rule is that assets and debts acquired by either party before or during the marriage
are divisible upon divorce.” Derr v. Derr, 2005 WI App 63, ¶10, 280 Wis. 2d
681, 696 N.W.2d 170. Although a circuit court’s decision on how to divide
divisible property is discretionary, we review de novo the determination as to
whether to classify property as divisible or non-divisible. See id., ¶¶9-10.
1
All references to the Wisconsin Statutes are to the 2017-18 version unless noted.
6
No. 2019AP84
¶19 The court found that Michael’s newly purchased converted van was
worth $60,000 and awarded him the $29,404 equity in it. It awarded Cindy her
2005 vehicle, which was valued at $2,400. The court found that Cindy’s car has
180,000 miles on it, that “[t]he older and the more miles on a car, the more
expensive your maintenance is going to be,” and that she was the one driving the
children around. As Cindy points out, if Michael decides he no longer wants to
keep his van, he can sell it for a price that reflects the value of the improvement.
The court’s findings are not clearly erroneous and we see no error in classifying
the enhanced value of the van as divisible property.
D. Cindy’s Educational Loan
¶20 Michael next asserts that including Cindy’s $20,500 student loan in
the marital estate was error because Cindy testified that she incurred the debt
during the divorce. The record is less than clear. If she applied for the loan after
filing the action, he is correct.
¶21 Cindy filed for divorce on April 3, 2017. A stipulation and
temporary order filed on September 20, 2017, ordered that both parties “are to be
restrained from making any further debts against the opposing party’s credit with
each party being responsible for their own debts as of the date of filing this
action.” The ensuing trial colloquy between Cindy and Attorney Ivanovic
addresses Cindy’s loan application.
Q Okay. Now, Miss Hrdi, after this financial
disclosure was filed you ended up entering into a
temporary stipulation and order, correct?
A Yes.
Q Okay. I’m going to hand you Exhibit No. 19
[stipulation for temporary order]. Does that look
familiar to you?
7
No. 2019AP84
A Yes.
Q And did you sign at page four, looks like, of that
document?
A Yes, I did.
Q Okay. Now, this order was entered by the Court,
the first page it looks like it was filed September
20th of 2017, correct?
A Yes.
Q And it looks like the Court approved this order on
September 20th of 2017…. Do you see that?
A I don’t see it. Oh, yes, ma’am.
Q Now, I’m going to refer you to page three of this
document. Now, under paragraph eight, could you
just read that into the record, please?
A “Both parties are to be restrained from making any
further debts against the opposing party’s credit
with[] [each party] being responsible for paying
their own debts as of the date of … the filing of this
action.”
Q Okay. So under this provision you were not
supposed to make any debts against your husband’s
credit, correct?
A Correct.
Q And in addition, it indicates that each party would
be responsible for their own debts as of the date of
filing of this document as of the date of the filing of
divorce, correct?
A Yes.
Q Okay. Now, your student loan that you have
included in your Exhibit No. 40 balance sheet, that
was incurred after this, correct?
….
A So I applied for that and received it to pay tuition
end of August or September of 2017.
8
No. 2019AP84
Q Do you recall the date that you received that
disbursement?
A I don’t recall the exact date.
….
Q I am going to hand you what I just marked as our
20. Is that a printout regarding your student loan?
A Yes.
Q And on disbursements do you see that on the left
end of that document, what does it indicate as far as
your disbursement date?
A November 2nd.
Q Of what year?
A 2017.
Q Okay. So that would be a loan that was taken out
after the temporary order?
A Application was prior to, but the disbursement was
after.
¶22 When the parties made their final arguments, Michael’s counsel
argued that Cindy’s student loan did not exist at the time of the September 20,
2017 temporary-order hearing because it was not on her financials, and thus was a
new debt. This colloquy followed:
THE COURT: But what about the testimony that
she actually had applied for it, it was just the disbursement
that came after the divorce was filed.
MS. IVANOVIC: Well[,] the problem I have with
that is she went into the temporary hearing and did not have
that listed and then she never talked to Mr. Hrdi about it.
She testified that her parents had been helping her out all of
these years and now all of a sudden she incurred a loan
after the temporary order that was never disclosed.
THE COURT: Well, the [student-loan] application
all occurred before.
9
No. 2019AP84
….
MS. IVANOVIC: If Mr. Hrdi had gone out and
bought a car a week before the hearing and filled out an
application, came into the hearing, didn’t have –
THE COURT: Wait, wait. Before the hearing?
MS. IVANOVIC: Yeah.
THE COURT: This was before the action was
filed.
MS. IVANOVIC: I don’t know that it was.
THE COURT: Am I wrong in what I remember
from the testimony, Ms. La Fleur [Cindy’s counsel]?
MS. LA FLEUR: No.
MS. IVANOVIC: It looks like it [divorce action]
was filed April of 2017. I don’t think there is one bit of
evidence that shows that that student loan was applied
for[—]when it was applied for. I think the only document
filed in this Court was the date of disbursement. I don’t
believe Ms. Hrdi provided any information whatsoever
other than her testimony.
THE COURT: The testimony is all we’ve got.
MS. IVANOVIC: Well, what we have in this
exhibit is a statement that says the disbursement was made
after the temporary hearing.
THE COURT: Right and she acknowledged that,
but she also testified that she had applied for that before the
divorce was filed.
….
MS. IVANOVIC: So, Your Honor, I’m just going
to quickly pull my exhibit. I think this is an important
issue. I’m really concerned that Ms. Hrdi applied for a
loan, didn’t tell anyone, comes into the temporary hearing,
we enter this order, everybody pays their own new debts,
and all of a sudden three months later this $20,000 loan
pops up. I don’t think it’s fair that Mr. Hrdi be responsible
for something he didn’t know about, they didn’t talk about,
that never occurred in the past, and he is not benefitting
from.
10
No. 2019AP84
¶23 It is not clear to this court that Cindy made her student loan
application before filing the divorce action. The context of her testimony suggests
only that she applied for it before the temporary order. On remand, we direct the
circuit court to revisit this issue. If Cindy’s loan application was made after the
divorce action was filed, the loan debt is Cindy’s alone and the court shall factor it
into the equalization payment recomputation.
E. Unequal Property Division
¶24 The circuit court awarded Cindy fifty-five percent of the marital
estate. Michael contends the court erroneously exercised its discretion because it
made the unequal award without properly considering the statutory factors and
failed to give weight to his multiple sclerosis.
¶25 While equal division is presumed, a court may deviate from this
presumption after considering twelve statutory factors, plus a catch-all “other
factors as the court may in each individual case determine to be relevant.” WIS.
STAT. § 767.61(3); Derr, 280 Wis. 2d 681, ¶9. Property division determinations
are entrusted to the discretion of the circuit court and are not disturbed on review
unless there has been an erroneous exercise of discretion. LeMere v. LeMere,
2003 WI 67, ¶13, 262 Wis. 2d 426, 663 N.W.2d 789. A discretionary decision is
upheld as long as the court “examined the relevant facts, applied a proper standard
of law, and, using a demonstrated rational process, reached a conclusion that a
reasonable judge could reach.” Id. (citation omitted). We search the record for
reasons to sustain a discretionary decision. State v. Thiel, 2004 WI App 225, ¶26,
277 Wis. 2d 698, 691 N.W.2d 388.
¶26 While the court did not expressly tick through each of the statutory
factors, the parties did. The court considered the following about the fourteen-
11
No. 2019AP84
year marriage: Cindy has credit card debt, a student loan, and owes her parents
$54,113 for loans made to her during the pendency of the divorce; Cindy pays the
children’s health insurance premiums; Michael was able to save for retirement
during the marriage but Cindy was not; Cindy would not be able to purchase a
home similar in quality to the marital residence, awarded to Michael, the value of
which would only increase; Cindy bore the Parent Coordinator costs, which
escalated due, in large part, to Michael’s obstruction; Cindy has full-time
placement of the children plus all of their variable expenses and driving
responsibilities; Cindy must pay Michael maintenance for six years; and Michael
has access to over $101,000 in inheritance monies which were not included in the
marital estate. In addition, ample evidence of his medical condition was
presented, including that he works full time, his employer has been “very
accommodating,” and his converted van permits him to drive. While he testified
that the stress of the divorce has worsened his symptoms and his health may
decline in the future such that he may have to apply for disability, he produced no
medical records or expert testimony regarding his health, prognosis, or continued
ability to work.
¶27 We are satisfied that the court properly considered the statutory
factors and explained its rationale for the unequal property division. Michael has
not shown that the court erroneously exercised its discretion.
F. Contempt
¶28 Finally, Michael contends the court erred in holding him in contempt
and ordering him to pay Cindy’s associated attorney fees.
¶29 “A person may be held in contempt if he or she refuses to abide by
an order made by a competent court.” Krieman v. Goldberg, 214 Wis. 2d 163,
12
No. 2019AP84
169, 571 N.W.2d 425 (Ct. App. 1997). A finding of contempt rests on the circuit
court’s factual findings regarding the person’s ability to comply with the order.
See Balaam v. Balaam, 52 Wis. 2d 20, 29, 187 N.W.2d 867 (1971). The burden
of proof is on the person against whom contempt is charged to show his or her
conduct was not contemptuous. Id. at 30.
¶30 We review a circuit court’s use of its contempt power to determine
whether the court properly exercised its discretion. Krieman, 214 Wis. 2d at 169.
Findings of fact and conclusions of law may underlie discretionary determinations.
Monicken v. Monicken, 226 Wis. 2d 119, 125, 593 N.W.2d 509 (Ct. App. 1999).
A circuit court’s finding that a person is in contempt of court will not be reversed
unless the finding is clearly erroneous. State v. Rose, 171 Wis. 2d 617, 623, 492
N.W.2d 350 (Ct. App. 1992). Whether the circuit court adhered to the proper
procedures in exercising its contempt powers is a question of law we review
independently. Evans v. Luebke, 2003 WI App 207, ¶16, 267 Wis. 2d 596, 671
N.W.2d 304.
¶31 The parties’ divorce was effective October 8, 2018.2 To provide a
cash settlement to Cindy to facilitate the closing on her new house, Michael had to
refinance and close on the marital residence, which the court ordered be done
within sixty days, by December 7. To avoid potentially serious penalties,
including losing the house on which she had put an offer, Cindy had to have proof
of financing by December 7. The closing did not occur by that date.
2
The judgment of divorce was filed on October 23, 2018.
13
No. 2019AP84
¶32 Michael represented to the court in June 2018 that he had the funds
to pay Cindy her share of the equity and testified at trial on September 24, 2018,
that he already had talked to three lenders regarding refinancing and anticipated he
could have it completed within sixty days. He later contended, however, that he
first learned when he sought refinancing that there were four judgments on the
house from the prior owner, which slowed the process, turning it into “a
nightmare.” He did not corroborate that assertion by producing a witness from
any lender or title company to testify that there was a problem with obtaining clear
title or closing on time. Further, even if he did not have the ability to remove
Cindy’s name from the mortgage by December 7, he had claimed six months
earlier that he had funds available.
¶33 Unpersuaded by Michael’s contention that his actions were not
intentional, the court found him in contempt. It found “self-serving” his
statements that he “did everything [he] could” to timely effectuate the closing, as
he failed to provide testimonial or documentary evidence of when he applied for
refinancing with different lenders or of the efforts he said he made to comply with
the court’s order. The court ordered that he pay Cindy’s attorney fees, limiting
them to those directly related to the closing on the marital residence. Attorney
fees incurred in pursuing a contempt of court order are recoverable under WIS.
STAT. § 785.04(1)(a) as a remedial sanction. Benn v. Benn, 230 Wis. 2d 301,
315, 602 N.W.2d 65 (Ct. App. 1999).
¶34 The court’s findings of fact are not clearly erroneous and we see no
erroneous exercise of discretion.
14
No. 2019AP84
G. Conclusion
¶35 In sum, we affirm the judgment to the extent of the court’s valuation
of Michael’s converted van, its award to Cindy of fifty-five percent of the marital
estate, and its holding Michael in contempt and ordering that he pay Cindy’s
associated attorney fees plus interest.
¶36 We reverse the judgment in regard to the court’s inclusion in the
marital estate of the Croatian life policy death benefit. The court made the
decision to include the policy in the marital estate, and we presume the court
intended to similarly treat both life insurance policies by including the cash value
of each. On remand, the court shall exclude the full death benefit of the Croatian
life policy and include only its cash value.
¶37 Also on remand, the court shall determine when Cindy applied for
her student loan. If Cindy made her application after the divorce action was filed,
the loan shall be assigned solely to her. After adjusting for the Croatian life policy
and, if necessary, for Cindy’s student loan, the court then shall recompute the
equalization payment Michael must pay to Cindy.
By the Court.—Judgment affirmed in part; reversed in part and cause
remanded with directions; order affirmed.
This opinion will not be published. See WIS. STAT. RULE
809.23(1)(b)5.
15