Stageberg v. Stageberg, No. A04-1230.
| Decision Date | 03 May 2005 |
| Docket Number | No. A04-1230. |
| Citation | 695 N.W.2d 609 |
| Parties | In re Jane McNaught STAGEBERG, petitioner, Appellant, v. Mark Nissi STAGEBERG, Respondent. |
| Court | Minnesota Court of Appeals |
Alan C. Eidsness, Timothy Mulrooney, Henson & Efron, P.A., Minneapolis, MN, for appellant.
Robert A. Standke, Standke, Greene & Greenstein, Minnetonka, MN, for respondent.
Considered and decided by HALBROOKS, Presiding Judge; TOUSSAINT, Chief Judge; and HUDSON, Judge.
On appeal from a judgment dissolving the marriage of appellant-wife Jane Stageberg and respondent-husband Mark Stageberg, husband challenges the determination that certain contingency fees his law practice was earning when the marriage was dissolved should be treated as marital property. Wife argues that the district court undervalued these interests. In addition, wife argues that the district court abused its discretion by treating her nonmarital interest in certain property as marital, and she moves to strike portions of husband's brief and appendix. Husband argues that the record does not support the determination that wife has a nonmarital interest in the home and that the district court overvalued the parties' golf-club membership. We reverse the district court's valuation of the marital interest in the contingent fees and the treatment of wife's nonmarital interest in the property distribution and remand for revaluation of the contingency fees and any necessary adjustment of the property distribution. We otherwise affirm the district court and grant wife's motion to strike.
The parties married in September 1990 and separated in June 2002. The marriage produced no children. Wife has been in the private practice of psychology for twenty-two years, having obtained her Ph.D. in psychology in 1982. Wife's clients pay her upon services rendered. Husband is self-employed as an attorney and has practiced almost exclusively in the area of plaintiff's personal-injury cases since 1994.
Wife petitioned to dissolve the marriage, and the district court entered a December 2002 judgment dissolving the parties' marriage but reserving all other issues for settlement or trial. The parties stipulated to the value of most of their assets and the division of their debts. The parties appeared for trial in December 2002 on remaining issues.
At trial, husband produced an exhibit detailing the cases he was handling on a contingency-fee basis as of the July 2002 stipulated valuation date. Wife's expert, Charles T. Hvass, Jr., testified that the exhibit included cases that had settled either before the valuation date with fees received or due to be received by husband at the time of trial, as well as cases that were relatively new and would require considerable post-marital effort. Wife argued that any portion of a contingency fee received after the valuation date as a result of work husband did before the valuation date was a marital asset and that she was entitled to half the recovery.
The district court issued its amended findings and conclusions in January 2004. Wife subsequently moved for amended findings and/or a new trial.
In May 2004, the district court issued a second set of amended findings in which it found that neither party required maintenance from the other but that husband's business was becoming more difficult due to the loss of several key referrals, changing attitudes of juries and insurance companies, and a diminished case volume because of increased competition. Regarding the property settlement, the district court ruled, in relevant part, that (a) while wife traced a nonmarital interest to the parties' homestead, husband would be awarded half of wife's nonmarital interest because not doing so would work an unfair hardship on husband, who had used nonmarital assets to pay off marital debt that had not resulted in acquisition of an asset; (b) while the homestead was purchased before the parties' marriage, the parties purchased it jointly and used marital funds to pay the mortgage and make improvements, creating a marital interest in the homestead and the increase in its value; (c) the parties' golf club membership was worth $35,000 — the cost of a new membership.
In its amended findings, the district court acknowledged that the majority of jurisdictions view contingency fee contracts as having "marital value," but determined that the best way to determine that value is to apply what it called "The Historical Average Income Approach." In this approach, the district court assumed a 40% tax rate and calculated husband's average annual net profit over the past five years (excluding costs). Because husband would resolve some cases each year and take on additional cases, the court then reduced husband's net profit by 50% to reflect the average declining percent of marital effort in the cases that are concluded during the course of a year. The court found that wife was entitled to one-half of the remaining after-tax marital share.1 The district court entered judgment on May 12, 2004. This appeal follows.
With respect to his legal practice, husband's brief and appendix refer to a matter that the parties agreed would "have no impact" on the valuation of his practice and would be "disregarded by the parties and the Court in the determination of the assets and liabilities of the parties." Wife moves to strike these portions of husband's brief and appendix as containing a matter outside the record on appeal. The record on appeal includes the papers filed in the district court, the exhibits, and the transcript of the proceedings, if any. Minn. R. Civ.App. P. 110.01. Appellate courts may not consider matters outside the record on appeal and will strike references to such matters from the parties' briefs. Fabio v. Bellomo, 489 N.W.2d 241, 246 (Minn.App.1992), aff'd 504 N.W.2d 758 (Minn.1993). Here, because the parties agreed that the contested material would not be considered by the district court, they functionally agreed that it was outside the record, and we grant wife's motion to strike.
The district court held that the fees stemming from husband's contingent-fee cases in progress on the valuation date are marital property to the extent that those fees are attributable to work husband did on the cases before the valuation date. Husband challenges the determination that any property interest in these contingent-fee cases is marital. Whether property is marital or nonmarital is a legal question, but a reviewing court defers to the district court's underlying findings of fact. Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn.1997). The extent to which a marital estate can include contingent fees for work in progress on the valuation date in a marital dissolution is a question of first impression for this court.2
Here, husband challenges the district court's determination of contingency fees as marital property arguing that: (1) contingent fees are only an expectation interest, not an enforceable contract right; (2) contingent fees represent future income (or the potential for future income) and cannot be considered a marital asset; and (3) contingent fees are too remote, speculative, and uncertain to be considered a marital asset.
Minn.Stat. § 518.54, subd. 5 (2004).
In Janssen v. Janssen, 331 N.W.2d 752 (Minn.1983), the supreme court addressed "whether a nonvested, unmatured pension [of one of the parties] is marital property which can be divided in a marital dissolution proceeding." Id. at 753. In doing so, Janssen recited the definition of marital property set out above, stated that the definition was "expansive," and noted that "[a] vested pension refers to a pension right which is not subject to a condition of forfeiture if the employment relationship terminates before retirement" and that "[a] matured pension is one to which the employee has an unconditional right to immediate payment." Id. at 753-55 (emphasis in original). In resolving the question, it stated:
[W]hether a nonvested pension right is marital property is substantially answered by our recent opinion in Christensen v. Minneapolis Municipal Employees Retirement Board, 331 N.W.2d 740 (Minn.1983), in which we held that a public employer's promise of a pension to the appellant in that case was binding on the public employer under the principles of promissory estoppel, overruling Gibbs v. Minneapolis Fire...
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