In re the Marriage of: Richard K. Burtness, petitioner, Appellant,
Janine Burtness, Respondent
Koochiching County District Court File No. 36-F1-04-000259.
John P. Dwyer, Fargo, North Dakota (for appellant).
Steven A. Nelson, International Falls, Minnesota (for respondent).
Considered and decided by Rodenberg, Presiding Judge; Worke, Judge; and Smith, Judge.
Appellant challenges the district court's order finding him in contempt, arguing that he did not have the current ability to comply with the district court's spousal-maintenance order and that he could not perform the purge conditions. Appellant further argues that the district court abused its discretion by refusing to modify his spousal-maintenance obligation. We affirm.
Appellant Richard K. Burtness and respondent Janine Burtness were divorced in 1994. In the dissolution action, appellant was awarded virtually all of the parties' assets, worth $2.3 million, while respondent received a car, some household items, and the promise of permanent spousal maintenance of $5, 000 per month. Burtness v. Burtness, No. A05-2432, 2006 WL 1985722, at *2 (Minn.App. July 18, 2006). By 2004, appellant was in arrears. This court affirmed the district court's judgment entered against appellant for $119, 500 of past due spousal maintenance and its order denying appellant's request to reduce his monthly maintenance obligation. Id. In June 2004, appellant paid respondent $50, 000 against the judgment, but made no further payments, resulting in $567, 200 in maintenance arrearages. On August 12, 2011, the district court found appellant in contempt and ordered him jailed, unless he posted $50, 000 in cash or surrendered his passport, signed over ownership of all of his guns and mounted animal trophies to respondent so that she could sell them, and gave respondent $1000 each month from his social security check. The district court further directed appellant to make a full disclosure of all financial activity that occurred between 2004 and 2011, and to provide respondent with all documents and tax returns supporting this. Appellant surrendered his passport, turned over the guns and trophies, paid respondent $1000 per month and began the process of financial disclosure.
The central issue in this matter is appellant's financial status and his ability to pay. Appellant's income was variable throughout the parties' marriage and that same pattern continued after the dissolution; although appellant's income varied, he continued to maintain a lavish lifestyle. In 2000, appellant remarried. Appellant described his second wife as an equal partner in many of his development projects. At the time of the current hearings, appellant claimed that he had no assets and that he and his wife were living on his social security income and her monthly receipt of $400 from an Indian tribe.
Respondent's quest for financial information was greatly hampered by the fact that appellant had not filed tax returns for 19 years and did not keep documentation of loans, investments, expenses, or other financial matters. Appellant's wife testified that she and appellant had as many as 25 credit cards, but she only had records for eight or nine of the accounts. Appellant and his wife worked together on two major developments, the Jackson Creek development in Colorado and the Dismal River project in Nebraska. Appellant's claim is that both projects were spectacular failures and that he received only negligible payouts, which were offset by expenses that he was obligated to pay. Bank records show that his wife received cash payouts in excess of $341, 000, but appellant claimed that these were offset by expenses for the projects that appellant and his wife had paid for with credit cards. However, the district court noted "that it appears that none of this alleged credit card debt has been paid."
The true extent of appellant's financial resources is almost impossible to determine. Appellant produced income tax filings, which were prepared in 2011-12, for tax years 2006-2011, but these filings are based on information provided to the accountant by appellant, who did not have records to document many of the claimed deductions. As to the Dismal River project, appellant testified that he was to receive $750, 000 in commissions, but that he was forced to accept shares instead, and then was forced to loan $209, 000 of the shares to the company. However, the 2007 K-1 filed by Dismal River II (DRII) reflects a $209, 000 withdrawal made from appellant's capital account. Appellant's wife admitted that the holding company that she and appellant formed, Dismal River Marketing, LLM (DRM), received a check of $245, 800 from DRII designated as commissions, as well as a $48, 185.60 check designated as reimbursement for expenses. She also admitted that DRM then issued checks worth $236, 500 to her personal account. Appellant claimed that his wife received $341, 000 as reimbursement for actual costs, but the district court found that the two were only able to document $94, 000 in legitimate business expenses. Appellant's 2007 tax return also listed a payment of $165, 000 for the value of the shares he sold back to DRII. It is obvious that appellant's finances are fluid and cannot be precisely determined.
The Jackson Creek development went into bankruptcy in 2004. Appellant received a promissory note worth $1.9 million dollars from the bankruptcy, secured by the Jackson Creek property. Appellant claimed that this was extinguished in a foreclosure sale, but appellant transferred his ownership interest in 2006 to his wife, who wrote a series of checks totaling $55, 000 from the Jackson Creek, LLC account that were deposited in her personal bank accounts. In addition, she received checks from Kenneth "Buddy" Barfield, who is the principal in a company called Bair Chase. Bair Chase is associated with LinksVest/Bair Chase, LLC, Bair Chase Property Company, LLC, as well as JRJ Investment Fund, Ltd., WestVest Properties, Ltd., LinksVest, LLC, Jackson Creek, and Alexander Group Consulting. Bair Chase acquired the Jackson Creek property, which ultimately was sold to a man from Texas for more than $20 million. The LinksVest entities sold the Jackson Creek property to Bair Chase. During the closing of the sale to the man from Texas, $900, 000 was paid to Jackson Creek Parties; appellant was identified by the bankruptcy court as being a part of this group. Appellant testified that the $245, 000 paid to his wife by Barfield was repayment of numerous loans. Appellant's wife testified that Barfield was appellant's good friend and he sent money to her individual accounts so they could pay bills, but she has never met Barfield. When respondent challenged these loans, suspecting that they were payments for appellant's interest in Jackson Creek, appellant produced 57 promissory notes, prepared in 2012, to document that the money Barfield sent was in the form of loans.
The district court found certain other testimony suspect. Appellant stated that he had received a lot from DRII as part of his compensation, but he did not register the title to the lot. Appellant and his wife set up a limited liability company, DR Sunset, LLC; she was the sole member of the company. After the incorporation, appellant's wife signed the deed to transfer the property to DR Sunset, with appellant signing solely as spouse. Although appellant testified that this was to limit liability to third parties other than respondent and not to evade respondent's judgment, ...