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In re Marriage of Mahowald

Court of Appeals of Minnesota

September 9, 2013

In re the Marriage of: Michael Kenneth Mahowald, petitioner, Appellant,
Teresa Elizabeth Mahowald, Respondent.


Dakota County District Court File No. 19AV-FA-11-3579

James C. Lofstrom, Lofstrom Law Office, P.A., Eagan, Minnesota (for appellant)

Jacqueline A. Dorsey, Mary L. Hahn, Hvistendahl. Moersch, Dorsey & Hahn, P.A., Northfield, Minnesota (for respondent)

Considered and decided by Rodenberg, Presiding Judge; Connolly, Judge; and Chutich, Judge.


Appellant-husband contends that the district court erred by (1) determining that wife had proven and traced a nonmarital interest in the parties' homestead; (2) finding that the survivorship interest in appellant's pension plan awarded to respondent-wife has a present value of "zero"; (3) offsetting against wife's share of the marital estate only $25, 000 for her gambling losses during the marriage, and (4) awarding wife temporary spousal maintenance. We affirm.


Appellant-husband Michael Kenneth Mahowald and respondent-wife Teresa Elizabeth Mahowald, n.k.a. Teresa Elizabeth Pretasky, were married on December 14, 1991. Until their separation in October 2011, they lived in a home that had been owned by wife prior to the marriage. Although there are no children of the marriage, each party has adult children from previous relationships.

At the time of the marriage, wife had equity in the homestead of $7, 400. The property was improved during the parties' marriage with the addition of new siding, a deck, a remodeled kitchen, and a new garage/shop. The home was refinanced three times during the marriage, including one refinancing from which a 2009 Harley Davidson motorcycle was purchased. The parties also owned rental real estate at the time of trial, which has since been sold. The parties owned various checking, savings, and investment accounts, including a joint account that was closed when the parties separated.

At the time of the parties' marriage, wife operated a daycare facility and the parties made joint use of wife's earnings. Although wife retired in 2011, she returned to part-time work in April 2012. She now receives monthly social security benefits of $370, and earns a gross monthly income of $1, 113 from her part-time job. Husband worked as an iron worker for 39 years until his retirement in 2009. The parties made joint use of his earnings. He is a vested participant in a pension plan and receives a gross monthly pension benefit of $3, 083.50 ($2, 578.50 net). Husband's pension is partly nonmarital, as a result of his employment prior to the marriage. He also does woodworking and has performed "side jobs" out of the family's garage, both during his working years and after his retirement. The garage has been renovated to accommodate husband's woodworking. He has purchased specialized equipment, advertised his woodworking business, and engaged in marketing efforts. He testified at trial that he had made "a couple hundred bucks here or there" from woodworking and that he planned to expand this business.

At a two-day bench trial in July 2012, the parties testified about their assets, debts, marital estate, and nonmarital claims. Wife enjoys gambling at casinos (which she described at trial as a "hobby") and she wagered with earnings from her part-time job and from her social security benefit payments. She reported both winnings and losses for tax purposes and testified that, when she won or had money left over, she would deposit it into the parties' bank account. The district court also heard testimony from husband's expert concerning both the present value of the marital portion of husband's pension and the present value of wife's survivorship rights to husband's pension. The district court issued its findings of fact, conclusions of law, and order for judgment on August 3, 2012. Both parties moved for amended findings of fact and conclusions of law. The district court issued an amended order on October 17, 2012. This appeal from the resulting judgment and decree followed.



Husband challenges the district court's award to wife of a portion of the current value of the homestead corresponding to her premarital interest in the homestead. Husband agrees that wife had $7, 400 in equity in the home prior to the parties' marriage in 1991, but argues that there remains no identifiable nonmarital interest in the property.

We review whether property is marital or nonmarital de novo, but we defer to the district court's findings of fact. Baker v. Baker, 753 N.W.2d 644, 649 (Minn. 2008). All property acquired during a marriage is presumed to be marital; property acquired before the marriage is nonmarital. Minn. Stat. § 518.003, subd. 3b (2012); Antone v. Antone, 645 N.W.2d 96, 100-01 (Minn. 2002). Nonmarital property includes property acquired by either spouse before the marriage, and property that is "acquired in exchange for or is the increase in value of property" acquired before the marriage. Minn. Stat. § 518.003, subd. 3b(c). "Increases in value of nonmarital property remain nonmarital if shown to be attributable solely to market forces or conditions, such as simple appreciation in value of an asset." Kerr v. Kerr, 770 N.W.2d 567, 570 (Minn.App. 2009) (quotation omitted). "To overcome the presumption that property is marital, a party must demonstrate by a preponderance of the evidence that the property is nonmarital." Antone, 645 N.W.2d at 101 (citing Minn. Stat. 518.54, subd. 5 (2000)). A nonmarital interest in property may be established based upon credible testimony. See, e.g., Doering ...

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