Grigsby v. Grigsby, C0-01-2264.
| Decision Date | 30 July 2002 |
| Docket Number | No. C0-01-2264.,C0-01-2264. |
| Citation | 648 N.W.2d 716 |
| Parties | In re Cheryl Pete GRIGSBY, Petitioner, Respondent, v. Frederick J. GRIGSBY, Jr., Appellant. |
| Court | Minnesota Court of Appeals |
A. Larry Katz, Susan A. Daudelin, Katz & Manka, Ltd., Minneapolis, MN, for respondent.
Frank R. Berman, Julia A. O'Brien, Frank R. Berman, P.A., Bloomington, MN; and Daniel J. Goldberg, Messerli & Kramer, P.A., Minneapolis, MN, for appellant.
Considered and decided by HALBROOKS, Presiding Judge, KLAPHAKE, Judge, and HANSON, Judge.
In this marital dissolution action, appellant-husband argues that the district court's property division should be reversed because it (a) uses the trial date as the marital property valuation date, (b) includes in the marital estate the benefits of his employment-separation agreement that was signed after the valuation date, (c) fails to adjust for the tax consequences of his employment-separation benefits and his retirement assets, and (d) does not distribute in kind certain investment assets that had suffered a substantial decline in value during the proceedings. In addition, husband argues that the district court abused it's discretion in determining spousal maintenance by amending a finding of fact on husband's monthly expenses without amending a corresponding conclusion of law that impacted his maintenance obligation. We affirm.
Appellant-husband Frederick J. Grigsby, Jr. and respondent-wife Cheryl Pete Grigsby were married for more than fifteen years. In 1998, husband accepted a new job as a human resources executive in California, negotiating an employment agreement that included a provision for severance pay in the event of his involuntary termination. After he moved to California, wife filed a dissolution petition.
On September 25, 2000, the dissolution trial commenced before a special magistrate. At that time, husband intended to resign from his employment position and was negotiating an alternative employment-separation agreement with his employer. Husband did not disclose these negotiations at the trial. Husband resigned effective October 31, 2000. His employment-separation agreement, denominated as a "Settlement and Release Agreement," was signed by husband on October 19, 2000. It contained a variety of terms, including a noncompete clause and a waiver of all employment-related claims against his employer. The agreement, as a whole, was valued at about $1,800,000.
On November 21, 2000, the magistrate reopened the record to take additional evidence with respect to the employment-separation agreement. On May 10, 2001, the district court adopted the magistrate's proposed dissolution judgment that set the marital property valuation date at June 29, 2000, the date of a scheduled pretrial conference, and treated the benefits of husband's employment-separation agreement entirely as marital property. Husband moved to amend the judgment or for a new trial, contending that the employment-separation agreement was made after the valuation date and all benefits should be treated as nonmarital property. On October 24, 2001, the magistrate recommended and the district court ordered the amendment of the judgment to change the valuation date to the later date of the opening of trial on September 25, 2000, and confirmed that all of the benefits of husband's employment-separation agreement were marital property. This appeal followed.
"District courts have broad discretion over the division of marital property, and we will not disturb the division on appeal absent a clear abuse of discretion." Chamberlain v. Chamberlain, 615 N.W.2d 405, 412 (Minn.App.2000) (citation omitted), review denied (Minn. Oct. 25, 2000). To conclude that the district court abused its discretion, the district court's factual findings must be "against logic and the facts on [the] record." Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn.1984) (citation omitted). We will affirm the district court's division of property "if it had an acceptable basis in fact and principle." Servin v. Servin, 345 N.W.2d 754, 758 (Minn.1984) (citations omitted).
Husband argues that the district court improperly changed the marital property valuation date from the date of a scheduled pretrial conference to the date that trial commenced, in part to include in marital property the benefits he received under the employment-separation agreement.
Minn.Stat. § 518.54, subd. 6 (2000). The valuation date is determined as follows:
The court shall value marital assets for purposes of division between the parties as of the day of the initially scheduled prehearing settlement conference, unless a different date is agreed upon by the parties, or unless the court makes specific findings that another date of valuation is fair and equitable.
Minn.Stat. § 518.58, subd. 1 (emphasis added). The district court has broad discretion in setting the marital property valuation date. Desrosier v. Desrosier, 551 N.W.2d 507, 510 (Minn.App.1996).
Originally, the district court determined that June 29, 2000, should be the valuation date, because the court presumed that it was the date when the first "pretrial conference" occurred. When it made that determination, the district court also found that husband had not been candid with the court when he discussed his employment status during the September trial, and that husband was actually negotiating a separation package with his employer at the time of trial. The court found that husband had a duty to disclose these negotiations, which resulted in husband acquiring $1,800,000 an amount more than double the parties' previous estate.
In his motion for amended findings and conclusions, husband argued that the valuation date should be even earlier, proposing December 14, 1999, as the date a pretrial conference was originally scheduled but not held. In its order to amend the judgment, the district court rejected that date and also rejected the June 29, 2000, date previously used. The court specifically found that no "pretrial conference" was ever held in this case and concluded that it was appropriate to use the trial date of September 25, 2000, as the valuation date.1
Because the district court made specific findings that explained its rationale for using the trial date as the valuation date, and because those findings are not clearly erroneous on this record, we hold that the district court did not abuse its discretion in setting the marital property valuation date.
Husband argues that the district court improperly characterized the benefits of his employment-separation agreement as marital property because (1) the benefits were acquired under the October 2000 separation agreement and did not accrue under his 1998 employment agreement, (2) the October 2000 separation agreement was signed after the valuation date, and (3) in any event, the benefits are nonmarital because they are intended to replace husband's income from his postdissolution employment. This argument requires us to first determine what general approach the district court should use to determine whether the benefits of an employment-separation agreement are marital or nonmarital property.
In the absence of specific legislative direction, courts have taken one of two basic approaches to the classification of intangible property rights obtained by a spouse through the settlement of a cause of action. John DeWitt Gregory, The Law of Equitable Distribution, ¶ 3.03[1] (1989); J. Thomas Oldham, Divorce, Separation & The Distribution of Property § 8.01[1] (2000); Grace Ganz Blumberg, Intangible Assets Recognition and Valuation, in 2 Valuation & Distribution of Marital Property § 23.08[1][a] (1998). The first is the "mechanical" approach, which relies primarily on the general statutory definitions of marital and nonmarital property to determine when the benefits were "acquired." If acquired during the marriage and before the valuation date, the benefits are classified entirely as marital. Gregory, supra, at ¶ 3.03[1][3]; Oldham, supra, at § 8.01[1]; Blumberg, supra, at § 23.08[1][c]. The second is the "analytical" approach, which focuses on the purpose of each component of the settlement. To the extent that the settlement is intended to compensate the spouse for labor rendered during the marriage, it is considered marital, and to the extent it is intended to replace earnings from postdissolution labor, it is considered nonmarital. Gregory, supra, at ¶ 3.03[1], [2]; Oldham, supra, at § 8.01[1]; Blumberg, supra, at § 23.08[1][b].
Although there are no published Minnesota decisions dealing specifically with the benefits of employment-separation agreements,2 we can obtain some guidance from Minnesota decisions...
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