This opinion will be unpublished and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
A14-0864
In re the Marriage of:
Carrie Marie Lauderdale, petitioner,
Respondent,
vs.
Scott James Lauderdale,
Appellant.
Filed May 26, 2015
Affirmed in part, reversed in part, and remanded
Klaphake, Judge*
Scott County District Court
File No. 70-FA-12-6417
A. Larry Katz, Corwin R. Kruse, Katz & Manka, Ltd., Minneapolis, Minnesota (for
respondent)
Jana Aune Deach, Moss & Barnett, Minneapolis, Minnesota (for appellant)
Considered and decided by Larkin, Presiding Judge; Rodenberg, Judge; and
Klaphake, Judge.
UNPUBLISHED OPINION
KLAPHAKE, Judge
In this marital dissolution action, appellant Scott James Lauderdale challenges a
district court order denying his motion to amend the decree and awarding permanent
*
Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to
Minn. Const. art. VI, § 10.
spousal maintenance and attorney fees to appellant Carrie Marie Lauderdale. Because
the district court did not abuse its discretion by awarding respondent permanent spousal
maintenance and attorney fees, but did abuse its discretion in valuing the marital estate,
we affirm in part and reverse in part. We remand for a corrected valuation and
reconsideration of the equitable division of marital property.
DECISION
Spousal maintenance. This court reviews a district court’s maintenance award for
abuse of discretion, which occurs if the district court’s findings of fact are unsupported
by the record or if the district court incorrectly applies the law. Dobrin v. Dobrin, 569
N.W.2d 199, 202 (Minn. 1997). A district court’s findings of fact, including the court’s
determination of income for maintenance purposes, must be upheld unless they are
clearly erroneous. Peterka v. Peterka, 675 N.W.2d 353, 357 (Minn. App. 2004). Minn.
Stat. § 518.552, subd. 1 (2014) allows a court to award spousal maintenance if the spouse
seeking maintenance lacks sufficient property or is unable to provide self-support through
appropriate employment, in light of the standard of living established during the
marriage. The district court must determine whether the maintenance is temporary or
permanent “as the court deems just,” after considering all relevant factors. Minn. Stat.
§ 518.552, subd. 2 (2014). Relevant factors include (a) the financial resources of the
party seeking maintenance, including marital property apportioned to that spouse and the
party’s ability to meet needs independently; (b) the time necessary to become self-
supporting; (c) the marital standard of living; (d) the duration of the marriage; (e) the loss
of employment benefits and opportunities foregone by the party seeking maintenance;
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(f) the age, physical condition, and emotional condition of the party seeking maintenance;
(g) the ability of the party from whom maintenance is sought to meet the needs of both
parties; and (h) the contribution of each party in the acquisition of marital property. Id.
If the court is uncertain whether the relevant factors support an award of temporary or
permanent maintenance, the court “shall order a permanent award leaving its order open
for later modification.” Minn. Stat. § 518.552, subd. 3 (2014).
Appellant argues that the district court abused its discretion by awarding
respondent permanent maintenance. The district court did not explicitly state why it
chose a permanent award but noted that respondent is employed as a teacher with no
plans to retire and has a monthly budgetary shortfall. These findings recognize that
respondent’s income is insufficient to meet her needs for the foreseeable future. In the
order denying appellant’s motion to amend the award to a temporary award, the court
stated that “where there is uncertainty, Courts are directed to order permanent
maintenance leaving [the] order open for future modification.” This statement reflects
the court’s resolution of this issue in favor of a permanent award of maintenance,
according to the statutory mandate. The district court did not abuse its discretion by
making an award of permanent maintenance.
Attorney fees. A district court shall award need-based attorney fees in a marriage
dissolution proceeding to either party if the court finds “(1) that the fees are necessary for
the good faith assertion of the party’s rights in the proceeding and will not contribute
unnecessarily to the length and expense of the proceeding;” (2) that the party from whom
they are sought has the means to pay them; and (3) that the party awarded fees does not
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have the means to pay them. Minn. Stat. § 518.14, subd. 1 (2014). “Conclusory findings
on the statutory factors do not adequately support a fee award.” Geske v. Marcolina, 624
N.W.2d 813, 817 (Minn. App. 2001). However, a fee award may be upheld where
“review of the order reasonably implies that the district court considered the relevant
factors and where the district court was familiar with the history of the case and had
access to the parties’ financial records.” Id. (quotations omitted). This court reviews an
award of need-based attorney fees for abuse of discretion. Gully v. Gully, 599 N.W.2d
814, 825 (Minn. 1999).
A district court may also award conduct-based attorney fees “against a party who
unreasonably contributes to the length or expenses of the proceeding.” Minn. Stat.
§ 518.14, subd. 1. Conduct-based attorney fees are also reviewed for abuse of discretion.
Sharp v. Bilbro, 614 N.W.2d 260, 264 (Minn. App. 2000), review denied (Minn. Sept. 26,
2000). Because the standards for making need-based and conduct-based fee awards are
different, fee awards must indicate the statutory basis for the award. Geske, 624 N.W.2d
at 816.
The district court ordered appellant to pay $40,000 of respondent’s attorney fees.
The court based its award on both “need and conduct” but did not apportion the statutory
grounds for the award. The court also found that (1) respondent had incurred $82,099.50
in reasonable and necessary legal fees; (2) respondent lacked the income or assets to pay
her attorney fees without depleting assets awarded to her; (3) appellant had substantially
greater income and assets to contribute to attorney fees than respondent; and
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(4) appellant’s failure to provide substantiated and credible financial records had
unreasonably contributed to the length of the proceeding.
Appellant first argues that the court’s findings are insufficient to support its award.
We disagree. The district court made the findings required by Minn. Stat. § 518.14,
subd. 1. Although the findings were concise, they were adequate to support the award of
need-based attorney fees and were buttressed by other findings on appellant’s means and
respondent’s need. See Geske, 624 N.W.2d at 817 (holding that a lack of specific
findings on the factors in Minn. Stat. § 518.14, subd. 1 is not fatal to an award where
review of the order shows that the district court considered the relevant factors). The
district court carefully analyzed the income and budgets submitted by both parties. The
court found that appellant’s budget was not credible because of inconsistencies. In
contrast, the court found that respondent’s proposed budget “accurately reflected the
marital standard of living,” but was nevertheless “unreasonable, given that the marriage is
over.” The court reduced both appellant’s and respondent’s budgets accordingly.
At the time of the trial, Respondent had been a teacher for 24 years and earned a
gross annual income of $77,500. Since 2003, appellant has been a real estate investor
who buys foreclosed properties to renovate and sell. Appellant did not draw a salary
from his real estate businesses, but instead used the business bank accounts for both
personal and business expenses. The district court reasonably decided to calculate
appellant’s income by applying the formula in Minn. Stat. § 518A.30 (2014), for
determining income from self-employment, which yielded a monthly income amount of
$37,663.18. The court then reduced appellant’s monthly income to $15,000, the
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maximum amount allowed in the child support guidelines, which resulted in an annual
income of $180,000. The disparity in the two parties’ incomes, in addition to the high
amount of fees owed by respondent, adequately supports the district court’s findings on
respondent’s need for attorney fees and appellant’s ability to pay them.
Appellant also argues that the district court erred in awarding fees because of
respondent’s failure to move for attorney fees or to provide an affidavit from her attorney
enumerating the work performed as required by Minn. R. Gen. Pract. 119. A district
court may waive the requirements of rule 119 when “the court is familiar with the history
of the case and has access to the parties’ financial information.” Gully, 599 N.W.2d at
826. Here, the same district court judge was assigned to this case from its inception and
had access to the financial information from both parties. In its order denying appellant’s
motion to amend the findings, the district court stated, “This court dealt with these parties
for nearly two years and during this time had ample opportunity to observe the demeanor
and actions of [appellant] and to examine the files, records and proceedings.” As in
Gully, we conclude that the district court’s familiarity with the history of this case
justified its decision to waive strict compliance with the requirements of rule 119. Id.
Finally, appellant argues the district court erred by failing to distinguish need-
based and conduct-based in the attorney fee award. While the district court erred by
failing to make this determination, respondent’s need alone could have supported the
entire award. In Beck v. Kaplan, the supreme court affirmed an award of $53,000 in
need-based attorney fees when payment of fees would have required one party to deplete
the party’s limited assets, and the parties had very disparate financial circumstances. 566
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N.W.2d 723, 727 (Minn. 1997). Likewise here, the district court found that respondent
could not pay attorney fees without “spending down the assets awarded to her,” and that
appellant’s income was much greater than respondent’s. Thus, the district court’s failure
to apportion the amounts of fees awarded according to the statutory basis for awarding
them was harmless error. See Minn. R. Civ. P. 61 (stating that the court must disregard
any error or defect that does not affect the substantial rights of the parties); Midway Ctr.
Assocs. v. Midway Ctr., Inc., 306 Minn. 352, 356, 237 N.W.2d 76, 78 (1975).
Valuation of marital estate. In the property division, a large portion of
appellant’s award consisted of interests in his real estate businesses. To compute the
values of these businesses, the district court subtracted amounts due for outstanding
mortgages and investor promissory notes from the values of the subject real estate
properties. Although appellant proposed that the court also subtract interest owed on the
investor notes from the property values, the court declined to do so because it concluded
that the interest rates were usurious. Under Minn. Stat. § 334.011, subd. 2 (2014).
A district court has broad discretion in evaluating and dividing property in a
marital dissolution, and its decision will not be overturned absent an abuse of discretion.
Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002). A district court’s valuation of a
property item will not be set aside unless clearly erroneous on the record as a whole.
Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001). The district court’s valuation
determination need not be exact—only “within a reasonable range of figures.” Johnson
v. Johnson, 277 N.W.2d 208, 211 (Minn. 1979). Appellant argues that the district court
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abused its discretion by failing to include the interest he owed on investor notes in
valuing assets.
As an initial matter, we note that loans greater than $100,000 are not subject to the
usury statute, and two of the investor notes were greater than $100,000. Minn. Stat.
§ 334.01, subd. 2 (2014). The district court abused its discretion by failing to include the
interest owed on these notes in its valuation of the properties. Further, as to the investor
notes less than $100,000, we also conclude that the district court abused its discretion by
relying on the usury statute to exclude substantial amounts of interest from the valuation
of appellant’s businesses. The Minnesota usury statute is “intended to protect the weak
and necessitous from being taken advantage of by lenders who can unilaterally establish
the terms of the loan transaction.” Trapp v. Hancuh, 530 N.W.2d 879, 884 (Minn. App.
1995). The record shows that neither appellant nor respondent were taken advantage of
in negotiating the investor notes. Additionally, the record shows that both parties
benefitted from the success of the businesses, which was due in part to increased capital
made accessible via the investor notes. Because the investor notes both increased the
value of the marital estate and contributed to the income that the district court attributed
to appellant, an equitable distribution of property cannot be made without accounting for
the unpaid interest on the notes. Therefore, we remand for the district court to include the
interest owed on the investor notes in the valuation of the businesses and in its property
division.
Confession of judgment. One of the debts at issue in the dissolution was a
“confession of judgment” in the amount of $26,250 for forgiveness of mortgage debt
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resulting from the short sale of the marital homestead. When the parties separated, the
home was encumbered by several mortgages that, in total, were greater in value than the
home itself. Appellant stopped making payments on the mortgages when the parties
separated, causing delinquencies. As a condition of agreeing to a short sale, Bremer
Bank, one of the mortgagees, agreed to forgive $286,642.75 of debt if appellant signed
the confession of judgment.
In its dissolution decree, the district court did not allocate responsibility for the
confession of judgment to either party, but retained jurisdiction over the confession of
judgment until it was paid. In the order denying appellant’s motion to amend, the district
court held that the confession of judgment was not a marital debt. Appellant argues that
the confession of judgment should have been treated as a marital debt. We agree.
“All property acquired by either spouse subsequent to the marriage and before the
valuation date is presumed to be marital property regardless of whether title is held
individually . . . .” Minn. Stat. § 518.003, subd. 3b (2014). In dissolution proceedings,
marital debts are divided in the same manner as marital assets. Korf v. Korf, 553 N.W.2d
706, 712 (Minn. App. 1996). Upon marital dissolution, a district court has the discretion
to award debts to one party only. Lenz v. Lenz, 409 N.W.2d 68, 69 (Minn. App. 1987).
Here, the confession of judgment was so closely associated with the parties’ marital home
that it must be considered a marital debt. The home and the mortgages to finance the
home were acquired during the parties’ marriage. The confession of judgment was
mandated by Bremer Bank as a condition for forgiveness of nearly $290,000 in marital
debt, and both parties benefitted from appellant’s signing the confession of judgment. In
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light of these facts, the district court erred by classifying the confession of judgment as
non-marital property.
The confession of judgment and the interest owed on the investor notes must be
included in the marital property before the court can make an equitable division of that
property. Therefore, we remand for the district court to re-value the marital estate and
reconsider the equitable property division. The district court may either make its decision
on the existing record or reopen the record, to the extent that it is necessary to do so.
Affirmed in part, reversed in part, and remanded.
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