LeSueur County District Court File No. F3-01-000065.
Considered and decided by Shumaker, Presiding Judge; Toussaint, Chief Judge; and Dietzen, Judge.
Because Minn. Stat. § 518.58, subd. 1a (2002) assumes that marital property disposed of by one party is not part of the marital estate, the statute does not apply when such property has been returned to the marital estate before the time of the district court's property division.
The opinion of the court was delivered by: Dietzen, Judge
In this dissolution proceeding, appellant challenges the district court's award of marital real property to respondent. The district court found that appellant disposed of marital assets when he did not contest the cancellation of a contract for deed on the property and imputed the value of the property to appellant under Minn. Stat. § 518.58, subd. 1a (2002). Because it was an abuse of discretion for the district court to award the property to respondent based on the marital disposition statute, we reverse and remand.
Appellant Roger Sirek and respondent Carol Sirek married in December 1983 and began farming three parcels of real property consisting of approximately 125 acres (Farmland) in a cooperative relationship with appellant's parents. After appellant's father died, the parties sought to purchase the Farmland from appellant's mother, Arvilla Sirek. On March 20, 1990, Arvilla Sirek as vendor, and appellant and respondent as vendees, entered into a contract for deed. As a result of the contract, appellant and respondent each acquired a contract vendee's interest in the Farmland and Arvilla Sirek retained a life-estate interest in the five acres of property where her residence was located. The price on the contract for deed was $141,000. The Farmland was then worth approximately $180,000 but was offered to the parties at a discount because appellant had been uncompensated for his many years of work on the property.
The parties made regular payments of $1,100 per month on the contract until June 1997. By that time, the parties had suffered a downturn in finances along with strains to their marriage. The marriage was so strained that the parties kept different work hours and barely communicated with each other. In July 1999, appellant drove Arvilla Sirek to an attorney's office so she could determine her options as vendor of the contract for deed. In October 1999, her attorney personally served a mediation notice on appellant at the farm. After the fourteen-day mediation time expired, the attorney personally served at least one copy of a cancellation notice for the contract for deed on appellant at the farm. The cancellation notice was not drafted in accordance with the statutory requirements, but the attorney supplemented the notice by orally notifying appellant that he had 60 days to reinstate the contract for deed. Appellant did not communicate to respondent that he had received the mediation and cancellation notices but instead placed the documents on the kitchen counter. After a period of days, appellant placed the notices in a cupboard with his bills.
In January 2000, immediately after the time for reinstating the contract for deed expired, the attorney recorded the cancellation and the Farmland--now appraised to be worth $374,055--reverted to Arvilla Sirek.*fn1 After the cancellation, appellant continued to farm a portion of the Farmland.
Appellant petitioned to dissolve the marriage in January 2001 (Dissolution litigation). Upon discovering that her interest in the Farmland under the contract for deed had been cancelled, respondent filed suit against appellant and Arvilla Sirek to recover her interest (Farmland litigation). In December 2002, the district court held that respondent's interest in the Farmland was not legally terminated because of the failure to comply with statutory cancellation procedures. The district court granted respondent the right to reinstate the contract for deed by tendering unpaid principal, accrued interest, and property taxes to Arvilla Sirek. No appeal was filed and the decision in the Farmland litigation is final.
Upon conclusion of the Farmland litigation, the district court issued a judgment in the Dissolution litigation that found the Farmland was non-marital property belonging to respondent, subject to Arvilla Sirek's life estate, the contract for deed, and other mortgages. Appellant challenged the judgment and we reversed, concluding that the district court erred in determining that the Farmland was non-marital property and in basing the property division on appellant's marital misconduct. Sirek v. Sirek, No. A03-394, 2004 WL 61126 (Minn. App. Jan. 13, 2004). We remanded the Dissolution litigation to the district court to divide the marital property without regard to marital misconduct.
In May 2004, the district court issued a supplemental judgment in the Dissolution litigation, again awarding respondent the Farmland subject to Arvilla Sirek's life estate and the contract for deed. The district court imputed the value of the Farmland to appellant, reasoning that appellant had disposed of marital assets when he allowed the cancellation of the contract for deed to proceed without protest. The district court concluded that awarding the parties' marital interests in the Farmland to respondent and imputing its value to appellant was warranted under Minn. Stat. § 518.58, subd. 1a. The practical effect of the district court's order was to award the majority of the marital estate, i.e. the ...