In re the Marriage of: Gregory Ross Wickenhauser v. Denise Esther Wickenhauser, n/k/a Denise Esther Peterson, (A14-0417), and Greg Wickenhauser v. Trust B of the Delmar C. Peterson Living Trust dated October 4, 1991, (A14-0428).
This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2014).
STATE OF MINNESOTA
IN COURT OF APPEALS
A14-0417
A14-0428
In re the Marriage of:
Gregory Ross Wickenhauser, petitioner,
Appellant,
vs.
Denise Esther Wickenhauser, n/k/a Denise Esther Peterson,
Respondent (A14-0417),
and
Greg Wickenhauser,
Appellant,
vs.
Trust B of the Delmar C. Peterson Living Trust dated October 4, 1991; et al.,
Respondents (A14-0428)
Filed April 20, 2015
Affirmed
Peterson, Judge
Sibley County District Court
File Nos. 72-FA-11-61, 72-CV-12-85
Kenneth R. White, Law Office of Kenneth R. White, P.C., Mankato, Minnesota; and
Raymond Walz, Walz Law Office, Redwood Falls, Minnesota (for appellant Gregory
Ross Wickenhauser)
Tami L. Peterson, Eskens Peterson Law Firm, Chtd., Mankato, Minnesota (for
respondent Denise Esther Wickenhauser)
Wade S. Davis, Stinson Leonard, Street LLP, Mankato, Minnesota (for respondents Trust
B of the Delmar C. Peterson Living Trust, et al.)
Considered and decided by Peterson, Presiding Judge; Worke, Judge; and
Connolly, Judge.
UNPUBLISHED OPINION
PETERSON, Judge
In these consolidated appeals from judgments in a marital-dissolution action and a
trust action, appellant-husband argues that the district court (1) erred in finding that
respondent-wife has a nonmarital interest in a 136.61-acre parcel of farmland purchased
by the parties from trusts created by wife’s family and in failing to apply the Schmitz
formula to the farmland; (2) erred in denying husband’s claim of a nonmarital interest in
a grain-and-energy account; (3) undervalued an option to purchase property; and (4) erred
in finding that husband failed to show damages as a result of the trusts precluding him
from farming certain land in 2013. We affirm.
FACTS
Appellant-husband Gregory Ross Wickenhauser and respondent-wife Denise
Esther Wickenhauser, n/k/a Denise Esther Peterson, were married in 1996. In 2010,
husband began a marital-dissolution action. The parties stipulated to child-support and
some property-division issues.
In December 2011, a trial was conducted on some disputed issues, including the
value of a 136.61-acre parcel of farmland (136-acre parcel) purchased by the parties from
trusts created by wife’s family after the death of wife’s father and the value of an option
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to purchase additional land from the trusts.1 During the marriage, the parties bought and
sold a 200-acre parcel of farmland, referred to as the Carlson farm. Husband testified
that before selling the Carlson farm, he, wife, and wife’s mother had agreed that he and
wife would buy the 136-acre parcel and a 12.2-acre building site from the trusts.
In an amended order filed June 15, 2012, the district court made findings
regarding the parties’ sale of the Carlson farm and purchase of the property from the
trusts. The parties bought the building site during the same month that they sold the
Carlson farm, and they bought the 136-acre parcel about seven months later. The
appraised value of the 136-acre parcel was $2,200 per acre, and the parties paid $1,500
per acre for a total purchase price of $204,915. The parties paid the purchase price with a
down payment of $17,115 from the proceeds of the sale of the Carlson farm and a
secured loan of $187,800. The titles to the two properties were conveyed by warranty
deeds to husband and wife as joint tenants.
The district court also made findings regarding an option agreement executed by
husband and wife in 2005. The option agreement granted husband and wife an option to
purchase an additional 414 acres from the trusts. The option agreement expires in 2025
or on the death of wife’s mother, whichever comes later. The option agreement provided
for a purchase price of $1,500 through 2014 and for recalculation of the purchase price in
2015 and every five years thereafter at a rate of 68% of the average price for bare-land
sales in the surrounding area. The option agreement states that it runs to the benefit of
husband and wife but that “[i]f the marriage of [husband and wife] is dissolved, any
1
The land owned by wife’s family (the Peterson farm) was held in two trusts.
3
rights [husband] may have under this agreement shall cease, and as to lands [husband and
wife] have acquired, [wife] shall have the right to acquire the interest of [husband] as
determined by the court handling the dissolution.” The option agreement granted wife’s
siblings a right of first refusal permitting them to purchase the 136-acre parcel, the
building site, and the 414 acres for $1,500 per acre through 2014 and as recalculated in
2015 and every five years thereafter.
The district court found:
17. In exchange for the right to purchase the
remainder of the Peterson Farm at a discounted rate, the
parties gave up the right to sell, at fair market value, the
property they already owned and any they would acquire
from the Trust, without first giving wife’s siblings a chance to
purchase the property at the discounted rate.
....
19. Wife understood that purchasing the land for 68%
of the appraised value and by receiving the right to purchase
the entirety of the farm at the reduced rate, she was giving up
any right to any inheritance from the proceeds of the life
insurance policy on her mother.
20. The land subject to the Option to Purchase has not
been put up for sale. The Court finds it likely that wife’s
siblings will exercise their right of first refusal if the land is
put up for sale.
While the dissolution action was pending, husband brought an action against
respondent trusts and trustees seeking specific performance of his right to purchase real
estate under the option agreement and his right to farm the 414 acres under a lease
agreement. The dissolution and trust actions were tried jointly to the court. The district
court then held two additional days of trial in the dissolution action to address issues of
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marital and nonmarital property designations, the parties’ farming rights, and property
valuation and distribution.
Witnesses testified that the main purpose of the trusts was to keep the farm in
wife’s family. Wife’s brother, respondent Darren Peterson, testified that the Peterson
farm had been in the family since 1913 and that after his father died, the family began
having discussions about how to keep the farm in the family. He testified that the first
goal of the trust and option-to-purchase agreements was keeping the farm in the family
and making sure that the opportunity to purchase was available to all family members.
Respondent-brother Daryl Peterson testified that the number one goal of the trusts was to
keep the farm in the family. Certified Public Accountant Charles Morken, whom the
Peterson family consulted about setting up the trusts and option to purchase, testified:
I think the intent of the family was that it was to stay in
the Peterson family. That’s kind of the core of the whole
agreement, that it was really important to the family that it be
kept in the Peterson family and they tried to do everything
legally that they could to assure that end.
Husband agreed that a purpose of the trusts was to keep the farm in the Peterson family
and that he understood that if he and wife got divorced, the Peterson family would be
able to get the land back.
There was also evidence that the conveyance, option, and lease agreements were
in lieu of an inheritance to wife. Husband testified:
Q. I’m wondering, did you think if [wife] got the farm she
would also get some of the life insurance?
A. The life insurance, no.
Q. Why did you have that understanding?
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A. Because that was the understanding, from what [wife] had
told me, that they had decided.
Wife testified:
Q. And then I will direct your attention to the bottom part of
it where it appears that there is a note that life insurance
would then be divided by four. Can you read the rest of that
sentence, please?
A. Life insurance would be divided by 4, [wife’s] portion
being used up front to reduce the per acre cost of the land.
Q. And so is it your understanding that your inheritance was
always part of this land negotiation?
A. Yes.
Daryl Peterson testified:
Q. And do you recall any discussions having to do with
inheritance and [wife]?
A. Yes, the agreement was that [wife] would basically get
her portion up front in lieu of the cheaper prices on the farm,
cheaper agreement.
By order filed May 7, 2013, in the dissolution action, the district court determined
that any interest in the 414 acres under the option agreement exceeding $1,500 per acre
was wife’s nonmarital property and that any value exceeding $1,500 per acre for the 136-
acre parcel was wife’s nonmarital property.
Findings of fact, conclusions of law, order for judgment, and judgment and decree
of dissolution were filed on September 11, 2013. The findings and conclusions are
consistent with those in previous orders. The September 11 judgment also addressed
funds in the South Central Grain and Energy (SCGE) account. The parties stipulated that
each party would receive $102,628.50 from the account for 2009 crop proceeds received
after husband and wife’s separation. Husband claimed that the $506,870.98 balance
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remaining in the account after the April 23, 2010 valuation date was income that he
earned by farming in 2010 and 2011. But the district court found that husband failed to
trace the money in the account to income earned during 2010 and 2011 and rejected
husband’s claim that the account balance was a nonmarital asset.
Husband moved for amended findings. The district court granted the motion in
part, but none of the amended findings are at issue in this appeal.
In the trust action, the district court directed that “if [husband] chooses to proceed
with the exercise of the option to purchase, he may do so.” The court found that husband
failed to prove that he incurred damages as a result of not being allowed to farm the 414-
acre parcel under the lease agreement in 2013.
Husband filed separate appeals in the dissolution and trust actions. This court
consolidated the appeals.
DECISION
I.
“District courts have broad discretion over the division of marital property and
appellate courts will not alter a district court’s property division absent a clear abuse of
discretion or an erroneous application of the law.” Sirek v. Sirek, 693 N.W.2d 896, 898
(Minn. App. 2005). When dividing property, a district court abuses its discretion when it
resolves the matter in a manner “that is against logic and the facts on record.” Rutten v.
Rutten, 347 N.W.2d 47, 50 (Minn. 1984). “This court will affirm the district court’s
division of property if it had an acceptable basis in fact and principle even though this
court might have taken a different approach.” Passolt v. Passolt, 804 N.W.2d 18, 25
7
(Minn. App. 2011) (quotation and alterations omitted), review denied (Minn. Nov. 15,
2011). A property division must be just and equitable but need not be mathematically
equal. Sirek, 693 N.W.2d at 900.
Property acquired by spouses during marriage is presumed to be “marital
property.” Minn. Stat. § 518.003, subd. 3b (2014). This presumption can be “overcome
by a showing that the property is nonmarital property” because the property was
“acquired as a gift, bequest, devise or inheritance made by a third party to one but not to
the other spouse.” Id., subd. 3b(a). We independently review the district court’s
determination of whether property is marital or nonmarital, but we defer to the district
court’s underlying findings of fact. Baker v. Baker, 753 N.W.2d 644, 649 (Minn. 2008).
A district court’s valuation of an asset is a finding of fact, which we will not set
aside unless it is clearly erroneous. Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn.
2001). Although a district court need not determine the exact value of an asset, it must
reach a value “within a reasonable range of figures.” Id. (quotation omitted).
136-acre Parcel
Husband argues that because the 136-acre parcel was conveyed by warranty deed
to husband and wife as joint tenants, the statutory requirement that an inheritance be
given “to one but not to the other spouse” was not satisfied, and the district court erred in
determining that wife has a nonmarital interest in the property. The joint tenancy does
not conclusively show that the parcel is entirely marital property. See McCulloch v.
McCulloch, 435 N.W.2d 564, 568 (Minn. App. 1989) (stating that “merely transferring
8
title from individual ownership to joint tenancy does not transform non-marital property
into marital property” (quotation omitted)).
The most important factor in determining whether a gift is
marital or nonmarital is the donor’s intent. To constitute a
valid gift inter vivos, the donor must intend to make a gift, the
property must be delivered and the donor must absolutely
dispose of the property. Although the issue of intent typically
concerns whether the donor intended a gift at all, it logically
follows that the identity of the donee also turns on the donor’s
intent. Questions of intent are fact questions. Donative intent
is demonstrated by the surrounding circumstances, including
the form of the transfer.
Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997) (citations omitted).
The attorney who was involved in the sale of the 136-acre parcel and who drafted
the option and lease agreements testified that all of these transactions were part of an
estate-planning process intended to keep the farm in the Peterson family. Several other
witnesses testified that the main goal of the trusts was to keep the Peterson farm in the
Peterson family. The option agreement expressly provides for the termination of any
rights husband has under the agreement and any interest he has in lands acquired under
the agreement upon dissolution. Although the 136-acre parcel was not acquired under the
option agreement, the option agreement was drafted at about the same time that husband
and wife purchased the 136-acre parcel, and the right of first refusal in the option
agreement applies to the 136-acre parcel. This evidence and the evidence that the
conveyance, lease, and option agreements were in lieu of an inheritance to wife are
sufficient to overcome the presumption of marital property and support the district court’s
9
conclusion that any value in the 136-acre parcel in excess of $1,500 per acre is wife’s
nonmarital property.
Husband argues that even if the district court properly concluded that wife has a
nonmarital interest in the 136-acre parcel, the matter should be remanded for application
of the Schmitz formula because marital assets were used to purchase the parcel. Under
the Schmitz formula,
the increase in the value of nonmarital property attributable to
the efforts of one or both spouses during their marriage, like
the increase resulting from the application of marital funds, is
marital property. Conversely, an increase in the value of
nonmarital property attributable to inflation or to market
forces or conditions, retains its nonmarital character.
Nardini v. Nardini, 414 N.W.2d 184, 192 (Minn. 1987) (applying Schmitz v. Schmitz, 309
N.W.2d 748, 750 (Minn. 1981)).
Husband’s argument ignores the fact that husband’s and wife’s ownership of the
parcel was encumbered by wife’s siblings’ right of first refusal. On the valuation date
and the date of the final district court order in the dissolution action, wife’s siblings had
the right to purchase the 136-acre parcel for $1,500 per acre, and the district court found
it was likely that they would have exercised that right if the property was sold. The
finding that wife’s siblings likely would have exercised the right of first refusal is
supported by Darren Peterson’s testimony that, if the property were sold, one of the
siblings, more than likely him, would buy it. Daryl Peterson agreed that one of the
siblings would buy it and testified that he would attempt to buy it. Thus, as the district
court stated in the memorandum accompanying its order recognizing wife’s nonmarital
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interest in the 136 acres, “if the parties were to attempt to sell the 136 acre parcel at this
time, they would be required to first offer it to one or more of [wife’s] siblings for
$1,500.00 per acre.” Consequently, regardless of any increase that there may have been
in the market value of the 136 acres, the parties could not sell the property for more than
$1,500 per acre. Under these circumstances, we cannot conclude that the district court
erred in not applying the Schmitz formula to any increase in the property’s value.
Husband also argues that under Schmitz, the debt should have been allocated to
both the marital and nonmarital interests because “[t]he mortgage was incurred in order
to secure the entire asset, not just the marital portion.” But the $1,500-per-acre purchase
price was paid only for the marital interest in the property. Any value in excess of $1,500
per acre was what wife received as a nonmarital interest. The mortgage debt was secured
by both the marital and nonmarital interests in the property, but it was incurred in order to
purchase only the marital interest. The district court did not err in allocating the entire
mortgage debt to the marital interest.
II.
SCGE Account
Husband argues that the district court erred in denying his claim that he had a
nonmarital interest in the SCGE account. Because the account was held by the parties
during the marriage, husband had the burden of proving the nonmarital character of funds
in the account. See Senske v. Senske, 644 N.W.2d 838, 841-42 (Minn. App. 2002)
(explaining that if property is acquired in exchange for both marital and nonmarital
property, the party seeking to prove its nonmarital character must trace an identifiable
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portion of the property to a nonmarital source); see also Prahl v. Prahl, 627 N.W.2d 698,
705 (Minn. App. 2001) (concluding that a portion of property was nonmarital where
party identified the value of the property at the time of the marriage).
The district court found:
42. It was common practice for [husband] to hold the
cash balances in the cooperative accounts and withdraw the
funds at later dates, often in subsequent years.
....
44. [Husband] acknowledged that the [SCGE] account
is directly derived from crops. At trial, he read his deposition
testimony acknowledging that he did not know from which
crop year the funds in the [SCGE] account derived. When
asked which year the crops were grown for the account
balance, he testified that he believed it came from his 2010
and 2011 crops. He also testified that he did not know
whether or not the account balance derived from crops grown
in 2009.
....
46. Furthermore, from the years 2001 through 2011,
[husband] reported that the farming operation lost
approximately $19,000.00 a year on average during those
years. In 2010 and 2011 (the last two years that [husband]
farmed), his tax returns report a loss of $21,937.00 and again
of $14,714.00 respectively. If [husband] had paid the person
who custom farmed the land in 2010 and 2011, the net profits
would have been -$22,807 for 2010 and -$18,949 for 2011.
These losses are also much less pronounced than they
otherwise would have been because of the discounted rent on
the lease property and the fact that [husband] and [wife]
ultimately paid far less than the actual value for the farm
equipment and ethanol stock purchased from Dorothy
Peterson after her husband’s death. [Husband’s] reported
income to both the IRS and the Court supports the
presumption that the values in the [SCGE] account were
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accumulated wealth and not income derived after the parties’
separation.
47. If the parties had stopped farming in 2008, 2009 or
2010, [they] would have realized the significant residual
account balances in the cooperative accounts. That
accumulated wealth would have clearly been a marital asset.
The same is true of the account balance at the end of 2011. It
is not a one year profit for [husband’s] efforts. It is the result
of years and years of accumulation of wealth during the
parties’ marriage. The fact that the amount of the marital
assets was not fully apparent until after the parties’ farming
operation ended in 2011 does not somehow transform the
funds into non-marital assets.
....
50. The Court received 75+ pages of statements at
trial from SCGE, which purport to be a record of the parties’
transactions dating back to 2008. Based upon those
statements, the Court is unable to ascertain whether any sums
may be attributable to particular crop years. As a result, the
Court must find that the [SCGE] assets are the result of
accumulation of wealth throughout the parties’ 17 year
marriage and, as such, are marital assets subject to equitable
division between the parties.[2]
These findings are supported by the evidence and are sufficient to support the denial of
husband’s claim to a nonmarital interest in the SCGE account.
III.
Husband argues that either his right to exercise the option to buy the 414 acres
should have been specifically enforced in the trust action or the district court should have
found that the option was a marital asset with value. Husband argues that “[i]f [he] is
2
Husband argues on appeal that “[t]he extensive records from South Central Grain
demonstrated that the $647,000 was the result of 2010 and 2011 grain production.” But
he does not explain how the records demonstrate this.
13
allowed to close on the option, he secures the 414 acres in his name” and “then has the
right to dispose of that property as he sees fit in the future.” “Specific performance is an
equitable remedy . . . addressed to the sound discretion of the [district] court. . . .”
Lilyerd v. Carlson, 499 N.W.2d 803, 811 (Minn. 1993) (quotation omitted). Because the
dissolution action was pending when husband began the trust action and the option
agreement provided for the termination of husband’s rights under the option agreement
upon dissolution, the district court did not err in declining to specifically enforce
husband’s right to exercise the option.
Husband is incorrect in arguing that if he is allowed to close on the option, he will
have the right to dispose of the property as he sees fit. In the dissolution action, the
district court found:
22. If either party exercises the option, they will be
required to pay $1,500.00 an acre for the property purchased.
The purchase price for the entire property is $661,500.00
($1,500.00 X 441 acres = $661,500.00).[3]
23. According to the terms of the Option Contract,
[wife] will acquire [husband’s] rights in the Option Contract
as part of this divorce.
24. Given the Court’s finding that any value in excess
of $1,500.00 per acre is [wife’s] nonmarital interest, there is
no net gain or marital property to [husband] should he choose
to exercise an option. [Husband] has not tendered payment
for the property. If he were to buy the property, he would be
required to then immediately sell to [wife] the same property
for his purchase price. As a result, the decision to exercise
the option would result in a zero sum gain in marital assets
for the parties.
3
The reference to 441 acres is to total acres, but the parcel is referred to as 414 acres
because only 414 acres are tillable.
14
In his reply brief, husband states that there is no evidentiary support for the factual
assertion in wife’s brief that wife would likely sell the property to her family members
for $1,500 an acre if husband exercised the option to buy and wife was then awarded the
property in the dissolution. But the district court’s analysis does not assume that wife
would sell the property. The district court’s determination that wife would be allowed to
buy the property from husband for $1,500 an acre is based on the clause in the option
agreement stating that if the parties’ marriage is dissolved, wife shall have the right to
acquire husband’s interest as determined by the court handling the dissolution.
IV.
Husband sought damages because the trusts precluded him from farming the
leased land in 2013. As a general rule, damages in the form of lost profits
may be recovered where they are shown to be the natural and
probable consequences of the act or omission complained of
and their amount is shown with a reasonable degree of
certainty and exactness. This means that the nature of the
business or venture upon which the anticipated profits are
claimed must be such as to support an inference of definite
profits grounded upon a reasonably sure basis of facts.
Cardinal Consulting Co. v. Circo Resorts, Inc., 297 N.W.2d 260, 266 (Minn. 1980)
(quotation omitted). The fact that some damages have occurred must “be established to a
reasonable certainty.” Imperial Developers, Inc. v. Seaboard Sur. Co., 518 N.W.2d 623,
626 (Minn. App. 1994), review denied (Minn. Aug. 24, 1994). “Uncertainty as to the fact
of whether any damages were sustained at all is fatal to recovery. . . .” Cardinal
Consulting Co., 297 N.W.2d at 267 (quotation omitted). “Damages which are remote and
15
speculative cannot be recovered.” Jackson v. Reiling, 311 Minn. 562, 563, 249 N.W.2d
896, 897 (1977).
The district court found that husband could have mitigated his damages by
working as a machinist and farmer earning $17.75 per hour, which equals $36,920 per
year, and that his damages for not being able to farm the leased land in 2013 would be
equal to or less than $36,920 per year. Husband disputes the mitigation finding. Even if
the evidence does not support that finding, the district court found that husband would
have lost money by farming the leased land in 2013. Husband and wife’s tax returns for
years 2005 through 2011 showed an average annual loss of $6,443 per year. Based on
those tax returns and the testimony of husband’s accountant, the district court found that
husband would not have made a profit farming the land in 2013.
Husband argues that the district court erred in relying on the income reported in
his tax returns and should have credited the evidence he presented. But this court defers
to the district court’s determination of the weight and credibility of evidence. Hasnudeen
v. Onan Corp., 552 N.W.2d 555, 557 (Minn. 1996). Also, husband testified:
Q. Do you remember in your deposition when I asked you
historically how you would go about determining your past
profits, losses, and net income that you told me that you
would need to turn to your tax returns in order to be able to
determine that, correct?
A. I believe so.
Q. And you said that your tax returns were the source of the
information that would be accurate, correct, to determine that
information?
A. Yes.
Q. And I guess what I’m getting at here, is just to confirm
that you think that your tax returns are the indicator of how
16
much profit, loss, net profit, income, expenses would be,
correct? Yes or no.
A. Yes.
Because the evidence supports the district court’s finding that husband would not have
made a profit farming the leased land in 2013, we affirm the zero damages award.
Affirmed.
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