Ramsey County District Court File No. 62-FA-10-151
Susan Marie Gallagher, Gallagher Law Office, Eagan, Minnesota (for respondent)
Kay N. Hunt, Lommen, Abdo Cole King Stageberg P.A., Minneapolis, Minnesota (for appellant)
Considered and decided by Peterson, Presiding Judge; Bjorkman, Judge; and Klaphake, Judge. [*]
In this marital-dissolution dispute, appellant-father challenges the district court's maintenance and support awards, the division of marital property and debt, the characterization of certain property as marital rather than nonmarital, the amount of the property-equalization payment, the award of sole legal custody of the parties' children to respondent-mother, the parenting-time schedule, and the award of conduct-based attorney fees. We affirm in part, reverse in part, and remand for further proceedings.
Appellant-father Victor Olaf Toso and respondent-mother Maria Toso were married on May 11, 1998, and divorced on January 3, 2012. The parties have two minor children, INT (DOB: January 7, 2000), and JMT (DOB: November 27, 2002).
Mother is a dual United States/Danish citizen. She has the equivalent of a bachelor's degree in business communications from a Danish university. Mother worked in that field for a time, but after the children were born, she was a homemaker for several years. In 2007, she was employed in Minnesota by a Danish company, Coloplast Corporation, but she was laid off in 2009. At the time of the trial, she was receiving unemployment compensation of $566 per week, which ended before the district court issued its dissolution judgment. She was also teaching yoga and doing translation work, earning approximately $520 per month. Mother stated that she was not seeking further education, but that she was looking for work; she noted that her absence from the workforce for eight years and the fact that her work experience was largely in Denmark, not the United States, weakened her resume. Mother testified that she had been looking for a job in corporate communications, but had only secured three interviews. She worked briefly at one job, but lost the job because it involved online marketing, rather than communications. The district court found that mother had been making a "reasonable and diligent job search" but had "found that her skill set is not in high demand given the reduced needs of businesses during the economic downturn." The court also found that she would benefit from a period of retraining "as she has not had recent long term employment."
Father owns and operates Nada-Concepts, Inc. He has owned the business since 1985, before the parties married. Father is paid $5, 000 per month by the business, which is $60, 000 yearly. Father owns the building that houses Nada-Concepts and is paid $1, 446.08 every two weeks for rent, which is an additional yearly income of $37, 598.08. The district court found that father is entitled to receive corporate profits, but the court was not able to determine whether father received any profits in recent years because "the business records were not complete." The court found that father "intentionally reduced his efforts in furtherance of his business during the pendency of the divorce." The court found "that combining the wages paid by the business, personal expenses paid by the business, and rental income paid by the business [father] has a gross annual income of $108, 000 and gross monthly income of at least $9, 000." Finally, the court found that father received an additional $11, 160 per year in medical and dental insurance or expense reimbursement, but it did not include this amount in father's income.
The district court found that both parties had reasonable monthly living expenses of $4, 500 and that mother lacked sufficient income to meet her expenses but father had sufficient income to pay spousal maintenance. The district court ordered father to pay mother $3, 200 per month in spousal maintenance for 60 months "to allow [mother] to become self-supporting" and "obtain any needed education or retraining."
Based on its findings as to income and its award of maintenance, the district court ordered father to pay $1, 056 per month in child support. The district court attributed a monthly gross income of $9, 000 to father and reduced that amount by the maintenance award to $5, 800. This resulted in a basic child support obligation of $1, 056 after a parenting-expense adjustment.
The parties moved to Denmark in 2005 and remained there until 2006. During that time, father attempted to set up a Nada-Concepts business in Europe. As part of that attempt, the parties borrowed $80, 000 from the fiancé of mother's mother. According to mother, the loan was paid off with a $30, 000 payment from Nada-Concepts and $50, 000 from a home-equity line of credit (HELOC) secured by the homestead. The parties had obtained a HELOC in 2005 in order to fix the homestead so that they could rent it while they were living in Denmark. At the time of the dissolution trial, the HELOC balance was approximately $100, 000. Other than mother's testimony about using the HELOC to pay off the loan, neither party offered any evidence about the HELOC. But father submitted a balance sheet to the district court in support of his motion for temporary relief, in which he claimed that the HELOC loan with a balance of $99, 587.71 was a business debt. The district court cited this filing in determining that the HELOC loan had been "considered as a source of funds for [father's] business and a debt of the company, to be repaid by Nada-Concepts, Inc."
In 2009, the district court ordered the parties to file joint tax returns. Father filed as married filing separately, and, because of this, mother owed the Internal Revenue Service (IRS) more than $11, 000. Mother testified that she had set aside money in a savings account to pay taxes on the income she earned as a consultant at Coloplast. However, father closed all but one of the joint accounts, including the savings account, and consolidated the accounts into his name. Father testified that he filed separately because mother did not give him the information he requested. The district court concluded that father should be responsible for the IRS debt because father "wrongfully withheld the funds" set aside to pay the tax liability.
Father purchased the building where his business is located in 1997, before the marriage, for $305, 000. Father made a down payment of $55, 000 and entered into a contract for deed for the $250, 000 balance. In 2004, after the marriage, the parties obtained a mortgage loan to pay off the contract for deed, and the mortgage loan was later paid off. At the valuation date, the building was valued at $315, 000. The building was used as security for a line of credit used by the business. Father also personally guaranteed repayment of the line of credit. Father presented no evidence of the value of the building on the date of marriage.
The district court found that there was conflicting evidence of the premarital value of the building, because father's testimony about payments he made before the marriage conflicted with written documentation of payments made. Therefore, the district court concluded that the only credible evidence of nonmarital value was the $55, 000 down payment; the court used the current assessed value of $315, 000 and reduced that amount by $55, 000 to arrive at a figure of $260, 000 in marital interest in the property. The district court acknowledged the existence of the commercial credit line, but concluded that it was a business debt that was primarily the responsibility of Nada-Concepts and father as personal guarantor. The district court declined to offset the line of credit from the marital value of the property, because it was solely a business debt, and assigned mother a $130, 000 marital interest in the commercial property. Father argues that it is unfair not to deduct the value of the commercial line of credit from the value of the property, particularly when the court awarded father the entire business because of "the significant decline in the value of the business during the period of the marriage, " which resulted in the business having "no marital value."
On the valuation date, both parties had retirement accounts. Mother, whose account was valued at $20, 000, had withdrawn all of the funds in her account to pay expenses. Father had $74, 000 in a retirement account that he claimed predated the marriage. Father provided no documentation about the value of the retirement account on the date of marriage. Mother testified that she did not think that contributions had been made to the retirement account during the marriage, although the record contains two checks that are dated after the marriage and labeled as contributions to the account. The district court found that both retirement accounts were marital property.
Father owned a home before the marriage, which was sold shortly after the marriage in 1998. The district court found that this house was nonmarital property. The parties received $125, 315.97 from the sale. Seven months later, in 1999, the parties purchased a home for $204, 000, with a $79, 500 down payment. Father contends that $79, 000 of the down payment was made with nonmarital funds from the sale of his nonmarital home. The second home was sold in 2001, and the parties purchased the current homestead for $380, 000, with a down ...