On Feb. 18, 2020, the Minnesota Court of Appeals issued an unpublished decision in In re the Marriage of Suhsen and Suhsen. A number of interesting issues surrounding the division of assets and debts, along with spousal maintenance, were addressed.
In Suhsen, Husband and Wife were married for over 25 years. During the marriage, Husband worked as an air traffic controller earning approximately $181,000.00 per year. Wife worked as an elementary school teacher until leaving the workforce to care for the parties’ children for 16 years.
A few months before the dissolution action was commenced, Husband was injured in an automobile accident. Due to his use of disqualifying medication, he lost the medical certification necessary to work as a controller. Husband’s change in employment led to prolonged dissolution proceedings.
The District Court held a trial on the financial issues with numerous experts, including a vocational assessor and Federal Employees Retirement Systems (FERS) specialist.
The initial decree allocated 75% of the marital debt to Husband and 25% to Wife. The District Court also found that Husband refused to provide information about his personal injury action and was “hiding the claim from discovery and at trial.”
Wife was awarded $2,000 per month in temporary spousal maintenance. The District Court found that Wife was unemployed with an earning capacity of up to $3,000 per month if she returned to work. A permanent award of alimony was reserved in light of the fact that the nature of Husband’s future FERS benefits was unknown.
The final Judgment and Decree, issued 15 months later, awarded Wife $2,500 in permanent monthly spousal maintenance. In addition, the Court awarded Wife 40% of Husband’s personal injury award paid for lost wages. The net amount of the award totaled approximately $252,000. Wife’s share totaled approximately $92,500.
Husband appealed, arguing that the District Court abused its discretion by: (1) awarding $2,500 in permanent spousal maintenance to Wife; (2) ordering Husband to maintain an annuity survivorship benefit for Wife; (3) requiring Husband to maintain a life insurance policy as security for support payments to Wife; (4) assigning Husband 75% of the marital debt; and (5) declining to consider the income tax consequences of Husband’s personal injury award in apportioning said funds.
While the Court of Appeals reversed and remanded on the issue of spousal maintenance, it affirmed the District Court on all other issues.
As to spousal maintenance, Judge Tracy Smith reiterated that the party seeking an award of alimony bears the burden of demonstrating a need for support. Once the movant proves need, the District Court must then consider the eight statutory factors within Minn. Stat. sec. 518.552 in determining the amount and duration of the award.
The relevant statute provides eight non-exclusive factors, including the resources and budgetary needs of the parties, the standard of living established during the marriage, the role each party may have played in terms of raising children or sacrificing their own career for the sake of the other, and the age, health and education of each party.
Husband argued that the District Court failed to consider the required statutory factors, including his ability to pay alimony. He emphasized that the District Court made no findings regarding either party’s monthly expenses or how those expenses compared to the marital standard of living.
Smith opined that “effective” appellate review of the District Court’s discretion on the issue is possible only when the District Court “has issued sufficiently detailed findings of fact to demonstrate its consideration of all factors relevant to an award of permanent spousal maintenance.”
In this instance, the Court of Appeals noted, “the District Court … did not make findings regarding the parties’ separate expenses of the maintenance obligor’s ability to pay while meeting his own needs.”
As to the FERS survivorship annuity, Smith, citing Minn. Stat. sec. 518.581, reiterated that “Minnesota law specifically grants authority to the courts to award all or part of a survivor benefit to a former spouse, unless such is prohibited by the pension plan.”
Wife’s expert testified about the importance of the survivorship annuity during the trial, noting that it was important to “ensure that the marital share of [the] income stream continues” if the employee or retiree dies. Husband offered no testimony to refute Wife’s expert.
On the issue of life insurance, the Court of Appeals noted that the District Court has “broad” discretion to consider whether the circumstances justify securing a property award or spousal maintenance with a life insurance obligation. In short, Smith opined that the District Court acted within its discretion by requiring Husband to maintain a life insurance policy as security for spousal maintenance.
As to the disproportionate division of debts, the District Court found that Wife had been out of the workforce for over 16 years to care for the parties’ children (one of which required full-time care in light of special needs). The District Court also considered the earning capacity of each party in dividing liabilities unequally.
Citing Filkins v. Filkins, Smith suggested that “considering [Husband’s] greater ability to pay and the nature of the debts, it is not inequitable to make him pay more.”
Finally, the Court of Appeals considered Husband’s position that the District Court abused its discretion in failing to consider the income tax consequences associated with his personal injury award.
Judge Smith, citing Mauer v. Mauer, opined that it is within the District Court’s discretion to consider the tax consequences, without speculation, of its marital property allocation.
At the underlying hearing, the District Court noted that “the taxes are what the taxes are … I’m not going to figure out what that number is.”
In Response, Husband’s counsel provided self-created post-trial FinPlan calculations. Those calculations, according to Smith, were speculative at best.
In addition, the Court of Appeals went out of its way to include a lengthy quote from the District Court concerning Husband’s attempt to conceal the underlying personal injury action.
The District Court judge suggested, in part, “I have been troubled by the fact that at trial in this case, [Father] was consistently asked about the automobile suit…and was evasive and was not forthcoming about…what ended up being a half a million dollar lawsuit pending at the time of the dissolution trial…[he] doesn’t come to this court with clean hands.”
Suhsen cements the notion that while District Court judges have wide discretion, they also need ample evidence from which to make sufficient findings.
The District Court fell short in satisfying its obligation to the Court of Appeals by making limited findings on the issue of spousal maintenance. Best for judicial officers to break a statute into its essential elements and say something about each of its factors. At the very least, the Court of Appeals will recognize that the District Court considered all necessary elements of a claim – providing a foundation for deference.
Counsel for Husband didn’t help the District Court in submitting self-created tax worksheets. Lawyers cannot serve as witnesses. In any case in which you represent a client dealing with tax implications, be sure to hire an accountant to serve as your expert.
Husband’s conduct in attempting to conceal his personal injury lawsuit reveals a problem that is too common, unfortunately. As lawyers, we rely on our clients to provide good information and behave themselves.
Have that “talk” with your client early in the case. They need to understand the potential ramifications of playing games with a judge. And, you need to avoid the appearance of facilitating a fraud upon the court.
Jason and Cynthia Brown, husband and wife, are the founding shareholders in the Brown Law Offices, P.A., a northwest Twin Cities divorce and family law firm.