Beverly Alto v. Kenneth Alto

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2012).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-0116
Beverly Alto, petitioner,
Respondent,
vs.
Kenneth Alto,
Appellant.
Filed September 22, 2014
Affirmed in part, reversed in part, and remanded
Hooten, Judge
St. Louis County District Court
File No. 69-FX-99-101357
Beverly Alto, Hibbing, Minnesota (pro se respondent)
Ellen E. Tholen, Ellen E. Tholen Law Office, Grand Rapids, Minnesota (for appellant)
Considered and decided by Connolly, Presiding Judge; Johnson, Judge; and
Hooten, Judge.
UNPUBLISHED OPINION
HOOTEN, Judge
Appellant-husband argues that the district court should have awarded him attorney
fees, and challenges several aspects of the district court’s denial of his motion to
terminate his maintenance obligation to respondent-wife. We affirm in part, reverse in
part, and remand.
FACTS
In the parties’ amended judgment and decree, the district court determined that
appellant-husband Kenneth Alto had a net monthly income of $3,000, respondent-wife
Beverly Alto had a net monthly income of $1,200, and each had reasonable monthly
expenses of $2,100. Further, wife was awarded $200 in permanent monthly spousal
maintenance, as well as one-half of the $65,152.73 then in husband’s 401(k) account and
one-half of husband’s pension benefits earned through June 30, 1999. Wife appealed the
amended judgment and decree, and this court affirmed. Alto v. Alto, No. C4-00-636
(Minn. App. Nov. 21, 2000). Cost of living adjustments later increased wife’s monthly
maintenance award to $227.
When husband retired at the end of May 2010, he, without obtaining court
permission, stopped paying maintenance. Finding that husband had not paid a total of
$4,704 in maintenance between September 8, 2010 and April 17, 2012, the district court,
in an order filed on April 17, 2012, held husband in constructive contempt of court, and
directed him to pay maintenance as ordered. Husband, in June 2012, moved to terminate
his maintenance obligation retroactively to May 2010, and for attorney fees. By an order
filed on October 10, 2012, the district court concluded that husband failed to show that
substantially changed circumstances rendered his existing maintenance award
unreasonable and unfair, and denied relief. In denying relief, the October 10, 2012 order
found, after recognizing that husband’s 50% share of the marital portion of his pension
($547.00) was property and not income, that husband’s gross monthly income was
$2,753, while wife had a gross monthly income of $1,432. The district court further
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found that husband’s reasonable monthly expenses were $2,100 while wife had
reasonable monthly expenses of $2,110.
Husband then moved the district court to amend the October 10, 2012 order based
on newly discovered evidence, claiming that wife failed to divulge income that she
earned caring for the parties’ grandchildren, and that her 2009 tax returns omitted her
receipt of maintenance. Husband also moved for an order requiring wife to sign a release
regarding this additional income, and awarding him attorney fees.
Wife opposed the motion. By order filed on March 11, 2013, the district court
noted that, despite being ordered to do so at the hearing four months earlier, wife had not
yet signed a release for her financial information. The district court also noted that
husband was still not current on his spousal maintenance payments to wife. Finding that
it was “without sufficient credible evidence” to fully address the parties’ claims, the
district court set husband’s motion to modify maintenance for an evidentiary hearing,
directed wife to sign the release, directed the parties to exchange their 2012 tax returns,
and reserved husband’s request for attorney fees.
After the evidentiary hearing, the district court filed an order on November 15,
2013, finding that (a) husband’s gross monthly payments from his pension and 401(k)
account were $2,297 and $1,100, respectively; (b) wife had a gross monthly income of
$1,326 from her employment as a certified nursing assistant (CNA) and earned additional
nominal and inconsistent amounts caring for the parties’ grandchildren; (c) each party’s
reasonable monthly expenses were $2,300; (d) wife is unable to meet her needs while
husband is able to meet his monthly needs and pay maintenance; and (e) husband failed
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to show a substantial change in circumstances rendering his existing maintenance
obligation unreasonable and unfair. The district court then denied husband’s motions to
modify maintenance, and for attorney fees. In a subsequent order, the district court
required husband’s $227 monthly maintenance obligation to be withheld from his
monthly pension payment. Husband appeals the November 15, 2013, order and the
subsequent order requiring the withholding of maintenance from his monthly pension
payment. Although wife did not file an appellate brief, this court determined that the
appeal should be decided on its merits under Minn. R. Civ. App. P. 142.03.
DECISION
I.
Husband challenges the district court’s denial of his request for attorney fees.
Generally, attorney fees are not recoverable unless authorized by statute or contract.
Dunn v. Nat’l Beverage Corp., 745 N.W.2d 549, 554 (Minn. 2008). Here, the statute or
rule under which husband sought attorney fees was not cited to, or mentioned by, the
district court, and is not cited in husband’s brief to this court. Because husband claims he
is entitled to attorney fees based on what he alleges is wife’s bad faith, it appears that he
is seeking conduct-based attorney fees under Minn. Stat. § 518.14, subd. 1 (2012). Cf.
Geske v. Marcolina, 624 N.W.2d 813, 816−19 (Minn. App. 2001) (noting multiple
possible bases for attorney-fee awards in family cases, that each has different
requirements, and assuming, when a district court failed to identify the authority under
which it awarded fees, that the fees were awarded under Minn. Stat. § 518.14, subd. 1).
Under that provision,
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a district court may, in its discretion, award attorney fees
against a party who unreasonably contributes to the length or
expense of the proceeding. An award of conduct-based
attorney fees is reviewed for an abuse of discretion. Conduct
occurring outside the litigation process cannot support an
award of conduct-based attorney fees, but if an award of
conduct-based fees is proper, it may be made regardless of the
recipient’s need or the payor’s ability to pay.
Brodsky v. Brodsky, 733 N.W.2d 471, 476 (Minn. App. 2007) (internal citations omitted).
Husband asserts that a remand is required for the district court to make findings
that will allow review of the denial of his request for fees. See Kronick v. Kronick, 482
N.W.2d 533, 536 (Minn. App. 1992) (remanding a denial of conduct-based fees sought
under Minn. Stat. § 518.14 because the findings were inadequate to support the denial).
We decline to remand because husband failed to cite the authority authorizing the fees he
sought to either the district court or this court. Further, a lack of findings does not require
a remand if it would not change the result. See Grein v. Grein, 364 N.W.2d 383, 387
(Minn. 1985) (affirming a custody decision despite a lack of statutorily “mandated”
findings when the file showed that, on remand, the district court “would undoubtedly
make findings that comport with the statut[e]” and reach the same result); Tarlan v.
Sorensen, 702 N.W.2d 915, 920 n.1 (Minn. App. 2005) (citing Grein). In the March 11,
2013, order, the district court declared:
Under the doctrine of unclean hands: “he (she) who seeks
equity, and he (she) who comes in equity must come with
clean hands.” Hruska v. Chandler Assocs., Inc., 372 N.W.2d
709, 715 (Minn. 1985). It is clear to the Court that there has
not been compliance with the previous Findings of Fact,
Conclusions of Law, Orders and Judgments. That
maintenance repeatedly has not been paid by [husband] as
Ordered by this Court. That [wife], though providing
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financial information as requested by [husband], did not sign
financial release documentation as Ordered by this Court.
After the evidentiary hearing, the district court found that wife’s alleged additional
“income” was actually reimbursement through the Minnesota Child Care Assistance
Program for her expenses in caring for her grandchildren, not income. The district court
further found that wife continued to have “the requisite need for spousal maintenance”.
Because the district court determined that both parties contributed to the length and
expense of the proceedings, and found no support for husband’s claims that wife, in bad
faith, failed to report all of her income, we conclude that a remand would not change the
denial of conduct-based attorney fees to husband. We therefore decline husband’s
request to remand this matter for further findings, and affirm the district court’s denial of
attorney fees.
II.
The denial of modification of maintenance is reviewed for an abuse of discretion.
Hemmingsen v. Hemmingsen, 767 N.W.2d 711, 716 (Minn. App. 2009).
A district court abuses its discretion when it makes findings
unsupported by the evidence or when it improperly applies
the law. Findings of fact concerning spousal maintenance
must be upheld unless they are clearly erroneous. Findings of
fact are clearly erroneous when they are manifestly contrary
to the weight of the evidence or not reasonably supported by
the evidence as a whole.
Id. Generally, a party moving to modify maintenance must show
a substantial change of circumstances since the last time
maintenance was modified or, if maintenance has not been
modified, since it was originally set. After showing changed
circumstances, the moving party must demonstrate that the
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change renders the original award unreasonable and unfair.
Changed circumstances include substantially increased or
decreased income or expenses of either party.
Id. It is presumed that there has been a substantial change in circumstances, and there is
a rebuttable presumption that the terms of a maintenance order are unreasonable and
unfair, if “the gross income of an obligor or obligee has decreased by at least 20 percent
through no fault or choice of the party.” Minn. Stat. § 518A.39, subd. 2(b)(5) (2012).
Here, the district court denied husband’s motion to modify his maintenance
obligation based on its determination that, since the entry of the amended judgment and
decree, there had not been a substantial change in circumstances rendering the existing
maintenance award unreasonable and unfair. Husband challenges that denial.
Alternatively, husband claims that the district court failed to make sufficient findings
regarding his net monthly income. We agree that the district court failed to make
sufficient findings of fact addressing husband’s ability to pay maintenance, and failed to
account for his income tax liability and his share of the property division under the
dissolution judgment.
A. Husband’s ability to pay maintenance
The district court found that husband, who is retired, receives a gross monthly
pension payment of $2,297 and a $1,100 monthly payment from his 401(k) account.
While “gross income” includes “any form of periodic payment to an individual,
including, but not limited to . . . pension . . . payments[,]” Minn. Stat. § 518A.29 (a)
(2012), pension payments received by a maintenance obligor that arise from pension
interests awarded to that obligor in the division of marital property in a dissolution
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judgment are excluded when determining that obligor’s ability to pay maintenance. Lee
v. Lee, 775 N.W.2d 631, 639−42 (Minn. 2009); see Minn. Stat. § 518.003, subd. 3a
(2012) (defining maintenance as “payments from the future income or earnings of one
spouse”); Neubauer v. Neubauer, 433 N.W.2d 456, 461 (Minn. App. 1988) (stating that
basing a maintenance award on a pension interest previously awarded to the obligor as
property “would be to allow the subsequent redistribution of th[at] pension as income
after it had been awarded as property”), review denied (Minn. Mar. 17, 1989).
Here, the district court acknowledged this principle in its order of October 10,
2012 when it stated that “the division of the [husband’s] pension and 401K plan was and
remains a property distribution to each[,]” and did not treat husband’s “50% share of the
marital portion of the pension ($547.00)” as income. But the October 10, 2012 order did
not address whether the portion of husband’s payments from the 401(k) account
attributable to the marital property division should also be excluded from the calculation
of his income for purposes of determining his ability to pay spousal maintenance.
In its November 15, 2013 order, the district court found that husband received
monthly payments of $2,297 from his pension and $1,100 from his 401(k) account but
did not determine husband’s monthly “income,” and did not address husband’s income
tax liability on his receipt of these (or other) funds. The district court further did not
address the fact that the amended judgment and decree awarded husband 50% of the
marital portion of the 401(k) account as property, and it failed to do so despite the fact
that the parties did not dispute that the analogous portion of husband’s monthly pension
payment ($547.00) attributable to the marital property division was properly excluded
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from consideration when addressing husband’s ability to pay maintenance. Consistent
with Lee, the portions of the payments to husband arising from the pension and the
401(k) interests awarded to him in the amended judgment and decree as marital property
should be excluded from the calculation of his ability to pay maintenance.
There was also evidence in the record of husband’s income tax liability on his
receipt of pension and 401(k) payments. In determining husband’s ability to pay
maintenance, the district court, in addition to excluding the portions of the payments to
husband arising from the pension and the 401(k) interests awarded to him in the
dissolution judgment as marital property, should also have accounted for husband’s
income tax liability.
Husband additionally argues that the portion of his 401(k) payments not
attributable to the marital property division in the dissolution judgment should also be
excluded when addressing his ability to pay maintenance. The basis for his argument is
his assertion that his 401(k) account is a “savings” account. The statutory definition of
“gross income” in § 518A.29(a) (2012) applies to chapter 518, which governs spousal
maintenance. Lee, 775 N.W.2d at 635 n.5. As noted, under that definition, “gross
income” includes “any form of periodic payment to an individual[.]” Minn. Stat.
§ 518A.29(a) (emphasis added). Lee notes that “[t]he legislature’s use of the term
‘payments’ in [this definition] is of particular significance, indicating a legislative intent
to consider pension benefits as income when the obligor actually receives a disbursement
of pension funds.” 775 N.W.2d at 638. Based on this definition, Lee goes on to state that
the mere fact that pension benefits earned before a marriage are non-marital property,
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“does not foreclose the conclusion that pre-marital pension benefit payments may also be
characterized as future income available for maintenance.” 775 N.W.2d at 638−39. As a
result, courts are authorized “to consider pension benefit payments as income when
calculating maintenance awards[,]” and “this consideration is subject only to the rule . . .
that pension benefits that have previously been awarded as marital property cannot also
be considered income.” Lee, 775 N.W.2d at 639 (footnote omitted). While this portion
of Lee addresses pension payments, husband has not articulated a viable rationale for
distinguishing his 401(k) payments from the pension payments at issue in Lee.1 Absent
more, we conclude that the portion of husband’s 401(k) payments not attributable to the
division of marital property in the dissolution judgment is included in his “gross income”
for maintenance purposes.
While we reject husband’s argument with respect to the portion of the payments
he receives from his 401(k) account that are not attributable to the division of marital
property in the dissolution judgment, there is no indication that the district court, after
properly accounting for the division of marital property in the amended judgment and
decree, made the findings and calculations necessary to assess whether there has been a
substantial change in husband’s income between entry of the amended judgment and
decree and his current motion. Therefore, we reverse the denial of husband’s motion to
modify his maintenance obligation, and remand this matter for the necessary findings and
calculations, a determination of whether there has been a substantial change in husband’s
1
Indeed, the statutory definition of “gross income” states that “[n]o deductions shall be
allowed for contributions to pensions, 401-K, IRA, or other retirement benefits.” Minn.
Stat. § 518A.29(a).
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income, and if so, whether it renders his existing maintenance obligation unreasonable
and unfair.2
B. Wife’s income
Husband also asserts that the district court should have attributed full-time CNA
income to wife. After the evidentiary hearing generating the order from which this
appeal is taken however, husband did not argue that the district court should attribute
full-time CNA income to wife. Therefore, we decline to address this question. See
Thiele v. Stich, 425 N.W.2d 580, 582 (Minn. 1988) (stating that appellate courts generally
address only questions presented to and considered by the district court).
C. Husband’s expenses
Based on what he asserts is his own “credible testimony,” husband claims that his
reasonable monthly expenses are $3,080, instead of the $2,300 found by the district court.
Because the district court, despite husband’s testimony otherwise, found his monthly
expenses to be $2,300, it, implicitly, did not find his testimony credible on this point.
Appellate courts defer to district court credibility determinations, Sefkow v. Sefkow, 427
N.W.2d 203, 210 (Minn. 1988), even when those determinations are implicit, Pechovnik
v. Pechovnik, 765 N.W.2d 94, 99 (Minn. App. 2009).
2
Husband agrees with the district court that wife’s receipt of distributions from his
pension and 401(k) should not be included in the calculation of wife’s income since these
amounts were awarded to her as part of the marital property division set forth in the
dissolution judgment. See Lee, 775 N.W.2d at 640 n.10 (stating that “when considering
the property awarded to a spouse seeking maintenance, we have looked at the income
generated from that property, and not required the obligee spouse to invade the principal
of the property to pay living expenses”).
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Husband also asserts that the district court understated his reasonable monthly
expenses because, eventually, he will need to replace his truck. But husband can move to
modify maintenance when he replaces his truck, based on whatever the actual change in
his expenses turns out to be. See Rask v. Rask, 445 N.W.2d 849, 854 (Minn. App. 1989)
(reversing a district court’s inclusion in a maintenance recipient’s expenses of an expense
when “[t]here [was] no evidence in the record concerning when respondent will begin
incurring this expense, or whether she ever will”).
D. Wife’s expenses
Husband argues that the district court overstated wife’s reasonable expenses, but
does not identify the amount by which he believes the district court overstated those
expenses. Absent a more developed argument by husband, the degree of overstatement
he alleges is unclear, and he has not shown that the finding of wife’s monthly expenses is
clearly erroneous. See Loth v. Loth, 227 Minn. 387, 392, 35 N.W.2d 542, 546 (1949)
(stating that “on appeal error is never presumed. It must be made to appear affirmatively
before there can be reversal . . . [and] the burden of showing error rests upon the one who
relies upon it.”) (quoting Waters v. Fiebelkorn, 216 Minn. 489, 495, 13 N.W.2d 461,
464−65 (1944)); see also Braith v. Fischer, 632 N.W.2d 716, 724 (Minn. App. 2001)
(applying Loth).
III.
Husband argues that the district court should have modified his maintenance
obligation retroactively. See Minn. Stat. § 518A.39, subd. 2(e) (2012) (addressing
retroactivity); Lee, 775 N.W.2d at 643 (same). Husband also challenges the imposition
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of withholding to collect his maintenance obligation. See Minn. Stat. § 518A.53, subd. 3
(2012) (addressing withholding). Because we are remanding other aspects of the
maintenance question, we also remand these questions for the district court to re-address
them in light of whatever decisions it may make on remand.
In sum, we are affirming the district court’s denial of attorney fees and findings
regarding wife’s income and each party’s expenses. But we are reversing the district
court’s finding regarding husband’s income and remanding for reconsideration of
whether, with the appropriate deductions and exclusions from husband’s income
consistent with this opinion, there has been a substantial change in circumstances which
renders the prior award of maintenance in the amended judgment and decree
unreasonable and unfair. It is discretionary with the district court whether to reopen the
record on remand.
Affirmed in part, reversed in part, and remanded.
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