Court Opinion

ID: 2731276
Source: CourtListenerOpinion
Date Created: 2014-09-09 17:07:13.99189+00
Date Added: 2024-06-11T12:43:11.552990
License: Public Domain

This opinion will be unpublished and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
                                  A13-2150

                               In re the Marriage of:

                          Pamela Kay Beltrand, petitioner,
                                  Respondent,

                                        vs.

                               Thomas Leo Beltrand,
                                   Appellant.

                             Filed September 8, 2014
                             Reversed and remanded
                                 Schellhas, Judge

                           Hennepin County District Court
                              File No. 27-FA-11-6982

Jade K. Johnson, David C. Gapen, Gapen, Larson & Johnson, LLC, Minneapolis,
Minnesota (for respondent)

Becky L. Martin, Stefanie P. Wagner, Martin & Wagner, P.A., Rogers, Minnesota (for
appellant)

      Considered and decided by Peterson, Presiding Judge; Schellhas, Judge; and

Klaphake, Judge.*

*
 Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
                        UNPUBLISHED OPINION

SCHELLHAS, Judge

       Appellant challenges the district court’s order that he pay $5,600 per month in

permanent maintenance to respondent. We reverse and remand.

                                        FACTS

       When the district court dissolved the parties’ 29-year marriage, appellant Thomas

Beltrand worked about 50 hours per week for Premier Manufacturing Inc., an S

corporation, in which he was a one-third owner; respondent Pamela Beltrand worked part

time for a school district, where she had worked for almost 20 years. The parties resolved

most dissolution issues through stipulations, reserving for trial determinations of the

parties’ reasonable monthly expenses, the amount of Thomas’s distributions from

Premier, and the award of permanent spousal maintenance to Pamela. They stipulated

that Thomas would pay permanent maintenance to Pamela. They also stipulated that

Thomas’s average gross annual “W2 income” was $87,357.79, or $7,279.82 per month,

and $5,868.64 per month “after [deducting for] retirement, taxes, [and] health insurance”;

that Thomas’s income also included discretionary distributions from Premier; that

Pamela’s average gross annual “W2 income” was $25,775.01, or $2,147.92 per month,

and $1,648.83 per month after deducting “for taxes and retirement”; and that Pamela

would receive $338,873 in retirement accounts as part of the dissolution property

division.

       The district court found that Thomas’s monthly net W-2 income was $5,868.64

and that his average monthly gross distribution from Premier, based on the years 2006

                                            2
through 2011, was $9,616.69. Thomas submitted a monthly budget of $10,922.88 and

Pamela submitted a monthly budget of $8,197.14. Thomas asked the district court to

award Pamela $1,750 as a base amount of monthly maintenance plus additional payments

of 25% of after-tax distributions from Premier to be paid when he receives them. Pamela

requested monthly maintenance of $7,200.

       Following a trial before a referee, the district court awarded Pamela $5,600 per

month in permanent spousal maintenance and denied Thomas’s motion for amended

findings and/or a new trial. This appeal follows.

                                     DECISION

       Thomas argues that the court overestimated Pamela’s need for maintenance,

overestimated his ability to pay monthly maintenance, and abused its discretion by not

ordering him to pay a base amount of monthly maintenance plus a percentage of his

corporate distributions when he receives them.

       “The district court’s award of maintenance . . . will only be reversed on appeal if

the court abused its [broad] discretion.” Lee v. Lee, 775 N.W.2d 631, 637 (Minn. 2009).

The district court abuses its discretion by making “a clearly erroneous conclusion that is

against logic and the facts on record,” “by making findings unsupported by the

evidence[,] or by improperly applying the law.” Dobrin v. Dobrin, 569 N.W.2d 199, 202

(Minn. 1997) (quotation omitted). We must sustain findings unless clearly erroneous and

defer to the district court’s opportunity to assess witness credibility. Sefkow v. Sefkow,

427 N.W.2d 203, 210 (Minn. 1988). Findings are clearly erroneous when, viewing the

record in the light most favorable to them, they leave us with “‘the definite and firm

                                             3
conviction that a mistake has been made.’” Vangsness v. Vangsness, 607 N.W.2d 468,

472 (Minn. App. 2000) (quoting Fletcher v. St. Paul Pioneer Press, 589 N.W.2d 96, 101

(Minn. 1999)) (other quotation omitted).

       “The purpose of a maintenance award is to allow the recipient and the obligor to

have a standard of living that approximates the marital standard of living, as closely as is

equitable under the circumstances.” Melius v. Melius, 765 N.W.2d 411, 416 (Minn. App.

2009) (quotation omitted). “In essence, the district court balances the recipient’s needs

against the obligor’s ability to pay.” Maiers v. Maiers, 775 N.W.2d 666, 668 (Minn. App.

2009); accord Erlandson v. Erlandson, 318 N.W.2d 36, 39–40 (Minn. 1982).

Pamela’s Need for Maintenance

       We first address Pamela’s need for maintenance because “[a] spouse’s ability to

pay maintenance does not . . . obviate the statutory mandate that the other spouse’s own

independent financial resources must be considered.” Lyon v. Lyon, 439 N.W.2d 18, 22

(Minn. 1989); see also Lee v. Lee, 749 N.W.2d 51, 60 n.2 (Minn. App. 2008)

(“[E]qualization of the parties’ incomes by an adjustment of maintenance is without

authority or precedent.”), aff’d in part, rev’d in part on other grounds, 775 N.W.2d 631

(Minn. 2009).

       Pamela’s Reasonable Monthly Expenses

       The district court found that Pamela’s reasonable monthly expenses are $5,412.

Based on Pamela’s stipulated W-2 gross income of $2,148 and a monthly maintenance

award of $5,600, the court found that Pamela will have a $274 after-tax surplus. Citing

Rask v. Rask, 445 N.W.2d 849, 854 (Minn. App. 1989); cf. Kampf v. Kampf, 732 N.W.2d

                                             4
630, 634 (Minn. App. 2007) (referring to the “speculative mortgage payment”), review

denied (Minn. Aug. 21, 2007), Thomas argues that Pamela’s surplus will be greater

because her reasonable monthly expenses are $500 less than the $5,412 found by the

district court because Pamela did not incur some of her claimed expenses, such as $54 for

window-and-gutter cleaning, $50 for a home security system, $10 for AAA service, and

$30 for golf and cross-country skiing. Pamela testified that these expenses were part of

her “budget going forward.” The district court found that Pamela’s testimony was

credible. In light of the parties’ marital standard of living, we conclude that the district

court did not clearly err by finding that these expenses are reasonable.

       Thomas argues that the district court clearly erred by finding that Pamela’s

reasonable monthly expenses include $100 for a cell phone because Pamela shares a

phone plan with her father and adult daughter and should only be allocated one third of

the cost as a reasonable monthly expense. But the court found that Pamela “testified

credibly that this cost was for herself only; her father and her daughter are on her plan,

however, she subtracted the cost for them.”

       Thomas also argues that the court clearly erred by finding that Pamela’s

reasonable monthly expenses include $109 for pet boarding. But the court did not make

such a finding. The court allowed Pamela $250 per month for reasonable monthly pet

expenses (including checkups, medications, food, beds, supplies, and boarding). This

amount is less than Pamela’s requested amount of $330. Thomas argues that the district

court clearly erred by finding that Pamela’s reasonable monthly expenses include $140

for counseling. But the court credited Pamela’s testimony that, although sometimes she

                                              5
attended counseling only twice per month, she was attending counseling four times per

month and paying $35 per visit. Although we might have reached a different decision

regarding the reasonableness of Pamela’s expenses, we defer to the district court’s

exercise of its discretion and cannot conclude that the district court abused its discretion

on these facts.

       Thomas also argues that the district court clearly erred by finding that Pamela has

a $333 reasonable monthly expense for property taxes. We agree. The court based its

finding on Pamela’s testimony, and Pamela based her testimony on a percentage of an

assumed value of the homestead rather than on the actual taxes assessed against the

property. The parties’ 2012 joint federal income tax return lists $2,973 as a deduction for

real estate taxes paid, or $248 per month. The amount found by the court therefore

exceeds the amount paid by $85. Pamela’s reasonable monthly expenses must be reduced

by $85 to arrive at a total of $5,341.

       Pamela’s Need for Maintenance

       Thomas argues that the district court abused its discretion by not adding to

Pamela’s stipulated average net monthly W-2 income of $1,648.83 a monthly amount of

interest that she could earn on the retirement accounts awarded to her. Thomas calculated

that amount to be $17,000 annually at the rate of five percent on retirement accounts

totaling $338,873. We reject Thomas’s argument. “Minn. Stat. § 518.552, subd. 2(a)

requires the courts to consider . . . income generated by liquid assets.” Fink v. Fink, 366

N.W.2d 340, 342 (Minn. App. 1985) (emphasis added); see also Lyon, 439 N.W.2d at 22

n.1 (considering “interest income” that obligee would receive by investing marital-

                                             6
property); Broms v. Broms, 353 N.W.2d 135, 138 (Minn. 1984) (similar); Rask, 445

N.W.2d at 853–54 (reasoning that maintenance was excessive when “interest income”

that obligee would receive from marital-property award, “prudently invested,” would

“enable [her] to live comfortably”). But we have found no authority to support a

proposition that courts must consider income that might be generated by illiquid

retirement accounts. Cf. Bury v. Bury, 416 N.W.2d 133, 138 (Minn. App. 1987)

(“[Obligee] should not be required to place herself at risk by liquidating her assets to

meet her expenses.”); Kroening v. Kroening, 390 N.W.2d 851, 855 (Minn. App. 1986)

(stating parties’ financial disparity was “large” when “[obligor] received liquid assets and

ha[d] a high earning capacity” and “[obligee] received nonliquid assets in the property

settlement and ha[d] a fairly low earning potential”); Fick v. Fick, 375 N.W.2d 870, 873

(Minn. App. 1985) (recognizing that, “while [obligee] received nearly $115,000 in assets

upon dissolution of the marriage, most of those assets were non-liquid and not income

producing”).

       The district court reasoned that Pamela would need the retirement accounts

awarded to her for her retirement and that “there are virtually no liquid assets or assets

that would generate a regular income for her.” Indeed, at the posttrial hearing, Thomas

did not challenge the statements of Pamela’s attorney when she said, with regard to

interest withdrawals from the retirement accounts, “We know that it’s taxed. We know

it’s penalized.” We conclude that the district court did not err by refusing to attribute to

Pamela interest income on her retirement accounts or by refusing to require Pamela to

make early withdrawals from her retirement accounts in order to pay her living expenses.

                                             7
We conclude that the district court did not abuse its discretion by not including interest

potentially earned from Pamela’s retirement accounts when calculating her income.

       The district court concluded that Pamela “should receive” $5,600 per month in

maintenance “in light of the marital standard of living and all of the [section 518.552,

subdivision 2 factors].” The court based that conclusion in part on its finding that the sum

of $5,600 would leave Pamela with a surplus of $274.            With the $85 downward

adjustment to Pamela’s reasonable monthly living expenses, her monthly surplus

becomes $359. Although we conclude that the district court did not abuse its discretion

by awarding maintenance in an amount that exceeds Pamela’s needs by $359, we direct

the district court’s attention to the matter in light of our decision below. See Lee, 775

N.W.2d at 642 (“By awarding Elaine maintenance of $700 per month, the district court

appears to have awarded Elaine more than she reasonably needed to support herself. On

remand, the district court should reexamine the maintenance award with these principles

in mind.”).

Thomas’s Ability to Pay Maintenance

       The district court must calculate maintenance based on a nonexclusive list of eight

factors, which include the maintenance recipient’s financial resources and maintenance

obligor’s “ability to meet needs while meeting those of the [recipient].” Minn. Stat.

§ 518.552, subd. 2(a), (g) (2012). “A finding of a maintenance obligor’s ability to pay

maintenance is required to support an award of maintenance,” and “[a] district court’s

determination of income for maintenance purposes is a finding of fact and is not set aside

unless clearly erroneous.” Peterka v. Peterka, 675 N.W.2d 353, 357−58 (Minn. App.

                                             8
2004). “[S]ection 518A.29’s definition of gross income . . . appl[ies] to chapter 518,

which governs maintenance.” Lee, 775 N.W.2d at 635 n.5. But, “[i]n order to properly

consider the financial ability of a spouse, the court must determine the spouse’s net or

take-home income.” Schreifels v. Schreifels, 450 N.W.2d 372, 373 (Minn. App. 1990);

see Kostelnik v. Kostelnik, 367 N.W.2d 665, 670 (Minn. App. 1985) (similar), review

denied (Minn. July 26, 1985); see also Passolt v. Passolt, 804 N.W.2d 18, 25 n.3 (Minn.

App. 2011) (“[A] district court may not compute the amount of a maintenance award

based on an obligor’s earning capacity, absent a finding of the obligor’s bad faith or

unjustifiable limitation of income.”), review denied (Minn. Nov. 15, 2011); Lynch v.

Lynch, 411 N.W.2d 263, 266 (Minn. App. 1987) (“Bonuses which provide a dependable

source of income may properly be included in calculation of future income.”), review

denied (Minn. Oct. 30, 1987).

      The district court found that Thomas’s reasonable monthly expenses were $5,400

and calculated his total income and ability to pay maintenance as follows:

             Salary                             $16,8961
             Spousal Maintenance                  (5,600)
             Adjusted Monthly Income              11,296
             Federal Income Tax2                   (2,873)

1
  The district court calculated this amount by adding Thomas’s stipulated gross monthly
W-2 income of $7,279.82 to his average gross monthly distributions of $9,616.69 from
Premier. The $16,896 amount does not include the cost of Thomas’s monthly health
insurance premium paid by Premier or Thomas’s one-third share of Premier’s retained
earnings.
2
  Because Thomas must pay income taxes on his one-third share of Premier’s retained
earnings, the district court calculated federal and state income taxes based on a salary of
$19,014, which included Thomas’s one-third share of Premier’s retained earnings. The
district court applied a combined federal and state tax rate of 33.7% to all of Thomas’s
income.

                                            9
              State Income Tax                      (869)
              Soc. Sec./Self-Emp’t Tax              (661)
              Mandatory Pension                     (449)
              Cash to Meet Living Expenses       $ 6,444
              Thomas’s monthly needs               (5,400)
              Surplus after Maintenance Paid      $ 1,044.

Thomas argues that the district court erred in its calculation, claiming that the court

included the amount of his health insurance premium, $434.36, in his income. But the

district court did not do so, as evidenced by finding of fact XIII, which includes the

following paragraph:

                       5.      Health Insurance. For clarification, the Court
              included health and dental insurance in [Pamela]’s budget but
              not in [Thomas]’s budget (and he did not submit it as a line
              item in his budget, Exhibit 115). Expert testimony, Exhibit
              91, and the parties’ joint income tax returns show that
              [Thomas]’s health insurance is paid by Premier
              Manufacturing, Inc. It is thus considered income and then
              deducted. Therefore, the cost is neutralized and the Court has
              left it out of the calculations all together.

       Thomas’s income is comprised of both wages and profit distributions from

Premier. Historically, Premier’s distributions to shareholders have varied, sometimes

greatly, in terms of timing and amount. For this reason, Thomas asked the district court to

award maintenance in a base amount plus a percent of his distributions and reiterated this

request, in his posttrial motion, bolstering his request with an offer to pay Pamela’s

attorney fees. Thomas argued to the district court that his distributions from Premier are

undependable and variable and asked the district court to amend the judgment to include

the following language:

                                            10
             Commencing July 1, 2013: as and for permanent spousal
             maintenance, [Thomas] shall pay to [Pamela] the sum of
             $1,750 per month . . . .

             As and for additional spousal maintenance to [Pamela],
             [Thomas] shall pay to [Pamela] 25% of his net distribution
             within 10 days of receipt of such. [Thomas] shall provide a
             complete copy, including all schedules, of his Federal and
             Minnesota State income tax returns by no later than April 20th
             of each applicable year or a copy of his extension request and
             then once completed, within 10 days. In the event [Thomas]
             fails to timely and properly pay to [Pamela] this additional
             “distribution” spousal maintenance award and [Pamela] is
             forced to bring Court Action to secure payment, [Thomas]
             shall be financially responsible for [Pamela]’s reasonable
             attorneys’ fees and Court Costs.

(Emphasis omitted.) Thomas acknowledged that “[i]f Premier continues to be successful,

in all reality, Pam[ela]’s spousal maintenance award could exceed, on average, $5,600

per month” with an award of a base plus percent of the distributions. But he argued that

$5,600 as a base amount of maintenance is inequitable because his net monthly W-2

income, as found by the court, is $5,868.64, leaving him without enough money to pay

his monthly bills and unable to “buy anything, even groceries, because [he does] not

know when the next distribution check is coming so that [he has] money in the bank.”

      The district court rejected Thomas’s arguments, citing McCulloch v. McCulloch,

435 N.W.2d 564 (Minn. App. 1989), for the proposition that public policy disfavors

Thomas’s “proposed ‘base-plus-a-percent’ approach.” And the district court stated that

             Husband can surely budget for his spousal maintenance
             payments and still meet his needs. . . . In a year such as 2012
             that is above average, he needs to save enough for the years
             that may be below average. And if his business profits drop
             dramatically he may seek a modification from the Court.

                                           11
Thomas argues on appeal that the averaging of his distributions from Premier exaggerate

his ability to pay monthly spousal maintenance and his own monthly expenses. Citing

Doherty v. Doherty, 388 N.W.2d 1, 2 (Minn. App. 1986), Thomas acknowledges that

courts have expressed concern that a base-plus-a-percent maintenance award may lead to

litigation in the future but correctly points out that the record contains no evidence

suggesting that he has acted in bad faith or that he would fail to disclose financial

information to Pamela. The record evidence shows that Thomas was forthcoming with all

financial information for the business and Thomas argues that he would continue to do so

if the court ordered that he pay maintenance to Pamela on a base-plus-a-percent basis.

       Under the facts in this case, we conclude that the district court abused its

discretion by ordering Thomas to pay monthly maintenance of $5,600, which exceeds his

reasonable monthly expenses by $200. Over the six-year period of averaging used by the

court, Thomas’s distributions fluctuated greatly on an annual basis, as follows: $172,632

in 2006, $171,245 in 2007, $83,995 in 2008, $45,645 in 2009, $72,007 in 2010, and

$146,878 in 2011. During the marriage, the parties shared the benefits and the uncertainty

and risks associated with Thomas’s receipt of the distributions. Under the $5,600 monthly

maintenance award, Pamela is able to maintain her marital standard of living while

Thomas is required to bear all uncertainties and risks associated with his receipt, or lack

of receipt, of distributions from Premier. In consideration of the parties’ marital standard

of living, the award is inequitable. While “[a]n average takes into account fluctuations

and [may] more accurately measure[] income,” Veit v. Veit, 413 N.W.2d 601, 606 (Minn.

App. 1987), a maintenance award must “keep with the circumstances and living standards

                                            12
of the parties at the time of the [dissolution],” Lee, 775 N.W.2d at 642 (quotation

omitted), and “allow the recipient and the obligor to have a standard of living that

approximates the marital standard of living, as closely as is equitable under the

circumstances,” Melius, 765 N.W.2d at 416 (quotation omitted). A base-plus-a-percent

award may be appropriate when, as here, a portion of the obligor’s income is irregular.

See Frank-Bretwisch v. Ryan, 741 N.W.2d 910, 916 (Minn. App. 2007) (child-support

case) (citing Novak v. Novak, 406 N.W.2d 64, 68 (Minn. App. 1987) (concluding that

district court did not abuse discretion by ordering base-plus-a-percent child-support

award), review denied (Minn. July 22, 1987)).

       Because the monthly maintenance award of $5,600 is inequitable and therefore

reflects an abuse of discretion, we reverse the $5,600 maintenance award and remand to

the district court for a base-plus-a-percent maintenance award. We leave to the district

court’s discretion the determination of both the base amount and the percentage of after-

tax distributions. The district court may, in its discretion, reopen the record to determine

the base amount of maintenance and percentage of distributions.

       In light of our reversal of the maintenance award, we need not reach Thomas’s

argument that the maintenance award violated the Consumer Credit Protection Act. But,

for the purpose of the remand, we note that the Act generally prohibits garnishment in

excess of 60% of a person’s disposable weekly earnings. 15 U.S.C. § 1673(b)(2)(B)

(2012). We decline Thomas’s request that we instruct the district court on remand to

calculate his ability to pay maintenance under the Minn. Stat. § 518A.30 (2012) formula,

in light of Haefele v. Haefele, 837 N.W.2d 703, 704−05 (Minn. 2013). Haefele turned on

                                            13
application of section 518A.30’s “plain language,” 837 N.W.2d at 711, which was

available to Thomas when he decided which arguments to raise in district court. Thomas

did not make this request in district court and therefore waived it. 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)).

       Reversed and remanded.

                                               14