Parenting Time after One Parent Moves

Parenting Time after One Parent Moves

A move by the custodial parent can cause havoc with visitation schedules, as demonstrated by the Minnesota Court of Appeals in a recent decision, In re Custody of D.M.D., A12-1975 (Minn. Ct. App. Dec. 9, 2013). In this case, the Court of Appeals upheld a decision by the district court to modify the parenting time, decreasing the father’s parenting time during the school year, without holding an evidentiary hearing.

This case involved parents who never married but entered into an agreement for joint legal custody and joint physical custody when the child was about ten years old. The parents had parenting time on alternate weeks, a system that worked well when they both lived in the same metropolitan area. Unfortunately for the father, the agreement did not stipulate that the parents would remain in the same metropolitan area and said nothing about a move by one parent or the other.

Two years later, after notifying the father, the mother relocated to a town about seventy miles away from the metropolitan area and enrolled the child in school at that location. According to the mother, she moved because she could not find affordable housing suitable for her child and their dog in the metropolitan area.

The father moved to change the parenting time during the school year, arguing that he could not afford to drive the seventy miles to visit the child frequently.

The district court modified the parenting time during the school year so that the father had the first three weekends of every month; the parents continued to alternate weeks during the summer. The Court of Appeals held that this change was necessitated by the child’s move to another school district seventy miles away from the father. It was no longer practicable for the parents to have the child on alternating weeks during the school year; the court found that the new school district was too far for the child to live with the father during the school week.

The Court of Appeals noted that the modification of the school year schedule, from alternating weeks to three weekends per month, was a substantial change in parenting time, but held that a hearing was not necessary, as there was not even a suggestion of any actual harm to the child.   In Braith v. Fischer, 632 N.W.2d 716, 721 (Minn. Ct. App. 2001), the court had held that an evidentiary hearing is required for substantial modifications of visitation if there is a prima facie showing that visitation would likely endanger the child, either physically or emotionally. Because there was no such showing of harm in this case, and the purpose of the district court order was to accommodate the child’s school schedule and not to thwart the father’s visitation with his child, there was no need for an evidentiary hearing in this case.

This decision makes clear the importance of obtaining good legal advice in drafting an agreement regarding custody. The court noted that the decision might have been otherwise had the agreement contained a stipulation requiring the parties to remain in the same metropolitan area absent court approval. By the time the case was heard by the district court, the child had already begun school in the new school district, and by the time the case was heard by the Court of Appeals, the child had already been attending school in the new school district for more than a year (fourteen months).

Anyone who needs a child custody or parenting time agreement should consult with an experienced family law attorney before entering into such an agreement.

ALLOCATING THE VALUE OF THE FAMILY HOMESTEAD

ALLOCATING THE VALUE OF THE FAMILY HOMESTEAD

One contentious issue that arises in divorce proceedings is the division of the value of the homestead, the family home.   While often, the parties purchase the homestead during the marriage with marital property, allowing for an even 50/50 division, there many instances in which one party already owns a home at the time of the marriage, so there is nonmarital equity in the home from the outset.

In Mahowald v. Mahowald, A12-2243 (Minn. Ct. App. Sept. 9, 2013), the Minnesota Court of Appeals upheld the district court’s award of a portion of the current value of the homestead based on her premarital interest in the homestead to the wife. Before the parties were married in 1991, the wife had $7,400 in equity in the home, which amounted to 17.6% of the value of the home. The homestead at issue in Mahowald had been improved by the parties over the course of the marriage; they had added new siding, remodeled the kitchen, and added a new garage/shop. These improvements were marital property.

The district court calculated that 20% of the value of the homestead was attributable to the improvements made during the course of the marriage and, therefore, was marital property. Therefore, the court deducted the 20% of the value of the homestead first, leaving 80%, and then calculated the nonmarital portion owned by the wife as 17.6% of the balance (80%), or 14.08% of the total value of the homestead.

The court rejected the husband’s claim that nonmarital interest had been extinguished when the parties refinanced the home three times, relying on the Minnesota Supreme Court’s decision in Antone v. Antone and Minn. Stat. 518.003, subd. 3 (2013).

In Antone, the Minnesota Supreme Court held that a portion of the increased value of a home attributable to market forces is marital property and rejected the argument that refinancing eliminated marital property. The court explained the so-called “Schmitz rule,” as follows: “The present value of a nonmarital asset used in acquisition of marital property is the proportion the net equity or contribution at the time of acquisition bore to the value of the property at the time of purchase multiplied by the value of the property at the time of separation. The remainder of equity increase is characterized as marital property.” In applying this rule to the facts in Antone, the court said that the net equity at the time of the marriage is nonmarital property as it was acquired before the marriage. Then, when the parties used marital property to pay the mortgage, they created marital equity. The court held that refinancing the homestead did not amount to withdrawing nonmarital equity in the homestead. Thus, the case was remanded to the trial court to determine (1) the fair market value of the homestead on the date of the marriage and also at the dissolution of the marriage and (2) to apply the “Schmitz formula” to determine the marital and nonmarital interests in the homestead.

Anyone who has nonmarital funds invested in a homestead should consult with an experienced family law attorney before entering into a property settlement.

Myhre v. Myhre

Myhre v. Myhre

In Myhre v. Myhre, A12-2276 (Minn. Ct. App. Nov. 12, 2013), the Minnesota Court of Appeals made clear that district courts may reject parties’ stipulated facts but only if the parties are given an opportunity to litigate those facts and that district courts have discretion to choose which expert to accept in valuing businesses.

Rejecting Stipulated Facts without Giving Parties an Opportunity to Litigate those Facts Is an Abuse of Discretion

To reduce the issues to be tried before the court, the parties may enter into stipulations regarding facts. Once the facts are stipulated, the parties cannot withdraw the stipulation without consent from the other party or a judicial finding of good cause for withdrawing the stipulation. However, the parties’ stipulations are not binding on the court; the court may reject the stipulated facts altogether or just in part. If the court rejects the stipulation, the parties are entitled to litigate their claims. Thus, the Minnesota Court of Appeals held that the trial court abused its discretion in rejecting the parties’ stipulation that the mother’s income was $50,000 annually and calculating spousal maintenance and child support, finding that the mother’s income was lower than the stipulated income.

The court held that, before reaching a finding that the stipulation as to the mother’s income was not fair and reasonable, the court needed to provide both parties with notice, either before or during the trial, that it was considering evidence outside the stipulation regarding the mother’s income and give them the opportunity to litigate the issue by presenting evidence and arguing the issue.

The court also hold that the district court did not make sufficient findings of fact to show it had properly considered the statutory criteria in setting the amount of spousal maintenance. Minn. Stat. 518.552 (2013). Thus, the court must consider the party’s actual or reasonably anticipated income as well as the party’s reasonable expenses. In this case, the court had rejected the parties’ stipulation as to the mother’s income without making a finding as to her actual or reasonably anticipated income. Further, the absence of such a finding leaves the parties without a baseline to use in the future if either party seeks to modify the maintenance award.

Strangely enough, although the district court had rejected the parties’ stipulation as to the mother’s income for the purpose of calculating spousal maintenance, it relied on the stipulation in calculating child support. The Minnesota Court of Appeals held that such use of the stipulation was an abuse of discretion; the district court can accept the stipulation in whole or in part, but it cannot reject the same stipulated fact for one purpose and use it for another. Further, the court also held that, in calculating parental income for the purpose of child support, the district court is required to include spousal maintenance as income for the spouse receiving maintenance.

 

The District Court Acted within Its Discretion in Accepting an Expert’s Valuation of a Business

The Minnesota Court of Appeals affirmed the district court’s findings in valuing the father’s business, holding that the findings of fact regarding valuing an asset will only be set aside if clearly erroneous. The district court had accepted the valuation prepared by a neutral expert, who had been retained by both parties. The father had subsequently retained a second neutral expert, who valued the business at a lower amount.   The first expert had included income from 2010, which was significantly higher than other years and included a growth rate for the business. The court held that the district court acted within its discretion in accepting the first expert’s valuation, as both experts had given reasoned explanations for the valuation.