In re the Marriage of: Kathryn R. Rauworth, n/k/a Kathryn R. Kendall v. Barry L. Rauworth

This opinion will be unpublished and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
A13-2104

In re the Marriage of: Kathryn R. Rauworth,
n/k/a Kathryn R. Kendall, petitioner,
Respondent,

vs.

Barry L. Rauworth,
Appellant.

Filed February 2, 2015
Affirmed in part, reversed in part, and remanded
Hooten, Judge

Dakota County District Court
File No. 19HA-FA-12-1048

Mark A. Olson, Olson Law Office, Burnsville, Minnesota (for respondent)

Kay Nord Hunt, Marc A. Johannsen, Lommen Abdo, P.A., Minneapolis, Minnesota (for
appellant)

Considered and decided by Hooten, Presiding Judge; Rodenberg, Judge; and Kirk,

Judge.

UNPUBLISHED OPINION

HOOTEN, Judge

On appeal from an amended judgment and decree in a dissolution action,

appellant-husband challenges the district court’s increase of his spousal maintenance

obligation and the retroactive award of increased maintenance. On related appeal,
respondent-wife challenges the district court’s designation of certain assets as husband’s

nonmarital property, its denial of her claims that husband improperly disposed of marital

assets, and its denial of her requests for permanent maintenance and attorney fees. We

affirm in part, reverse in part, and remand to the district court for further proceedings.

FACTS

Appellant Barry Lee Rauworth and respondent Kathryn Ruth Rauworth, now

known as Kathryn Kendall, were married on September 12, 1987. The parties separated

and began living apart on November 1, 2010. After a lengthy and partially successful

attempt at reaching a collaborative settlement, Kendall filed a petition for dissolution of

the marriage on October 23, 2012. The remaining disputes between the parties centered

on spousal maintenance, identification and division of marital property, and attorney fees.

In February 2013, less than five months after the dissolution petition was filed, a trial was

held at which the parties, Kendall’s mother, and Kendall’s financial expert testified.

Both parties testified as to their past and current income from employment.

Kendall testified that she had worked part-time while caring for the couple’s two children

and was currently employed full-time as a graphic designer. Rauworth, a products

development engineer, worked full-time throughout the marriage, with the exception of a

three-month gap when he changed employers. In addition to his yearly salary, Rauworth

received a benefits package and periodic bonuses from his current employer. Kendall’s

financial expert testified and submitted a report on the historical cash flow for each of the

parties. The report also calculated the tax consequences of various potential spousal

maintenance scenarios.

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 When the parties separated, Kendall left the marital home in Norwood Young

America and moved in with her mother in Hastings. She testified that Rauworth

remained in control of the majority of the marital funds after the separation. She

expressed concern as to Rauworth’s excessive post-separation spending habits. She

claimed that Rauworth had not told her about his use of the marital funds, including over

$100,000 in withdrawals from a jointly-owned investment account. She further testified

that Rauworth had forged her signature on a tax refund check and deposited the check

into his own account without notifying her. In response to Kendall’s claims, Rauworth

explained that he had used marital assets, including funds he withdrew from the

investment account, to pay all the household expenses and debts of the couple after

separation, including the mortgage for the marital home, insurance, back taxes, a college-

education loan, and the costs associated with the parties’ participation in the collaborative

settlement process. Both parties also submitted proposed monthly expense budgets to the

district court, based on claimed future expenses.

Rauworth also testified as to a $47,9511 check he had received during the marriage

due to his role as a partner with RMR Enterprises. This partnership is managed by their

brother, and obtains income from crop sharing on land held by the partnership. He

testified that he had received the $47,951 distribution check from RMR as proceeds from

the partnership’s decision to cash in a life insurance policy the partnership had taken out

1
The district court refers to the amount of this check as $46,362.79, but the transcript and
exhibits show a distribution amount of $47,951.

3
for Rauworth’s mother. Rauworth testified that he had not yet cashed the check and

claimed that this check remained an asset of RMR.

After trial, the district court ordered Rauworth to pay $1,800 per month of

rehabilitative spousal maintenance, beginning on May 1, 2013 and ending on April 30,

2025. The district court further concluded that the $47,951 check from RMR and a

$1,000 life insurance policy are the nonmarital property of Rauworth, that Rauworth did

not improperly dispose of marital funds from either the investment account or the tax

refund check, and that neither party was entitled to attorney fees. The district court then

divided the marital property accordingly, awarding each party approximately $800,000 in

marital assets.

Kendall moved for amended findings under Minn. R. Civ. P. 52.02 or a new trial

under Minn. R. Civ. P. 59.01. Rauworth contested the motion. The district court granted

the motion for amended findings in part and entered an amended judgment and decree,

pursuant to an order detailing its amendments. Among other changes, the district court

increased the amount of monthly spousal maintenance to $2,370, in light of “the tax

consequences of spousal maintenance.” The district court also made its maintenance

award retroactive to November 1, 2012. This appeal by Rauworth and a related appeal

by Kendall followed.

DECISION

I.

Rauworth challenges the district court’s decision to amend its judgment and

decree, claiming that the district court erred both by increasing his spousal maintenance

4
obligation and making his obligation retroactive. On related appeal, Kendall challenges

the duration of the maintenance award, claiming that the district court should have

awarded permanent maintenance.

A. Increase in Spousal Maintenance

Rauworth first argues that the district court abused its discretion when it increased

his spousal maintenance obligation in the amended judgment and decree because such

increase was based upon evidence which was outside of the trial record. Rauworth

contends that this new evidence, a financial worksheet attached by Kendall to her rule

52.02 motion, is not only outside of the record but also inaccurate and speculative.

Rule 52.02 allows a party to move the district court for amendment of the district

court’s findings or judgment, and “may be made on the files, exhibits, and minutes of the

court.” Minn. R. Civ. P. 52.02. When considering a rule 52.02 motion, the district court

is required to “apply the evidence as submitted during the trial of the case, and may

neither go outside the record, nor consider new evidence.” Zander v. Zander, 720

N.W.2d 360, 364 (Minn. App. 2006) (quotations omitted), review denied (Minn. Nov. 14,

2006). “The purpose of a motion to amend,” under rule 52.02, “is to permit the trial court

a review of its own exercise of discretion.” Stroh v. Stroh, 383 N.W.2d 402, 407 (Minn.

App. 1986). Accordingly, we review the district court’s decision on such motions under

an abuse of discretion standard. Zander, 720 N.W.2d at 364.

Kendall’s motion for amended findings argued that the district court failed to

consider the tax consequences of her receipt of spousal maintenance. The attachment to

her motion set forth the tax consequences of an increased maintenance amount and

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indicated that Kendall needed to receive another $570 in order to receive a net monthly

spousal maintenance amount of $1,800. In response to Kendall’s motion to amend, the

district court increased the maintenance obligation to $2,370 in its amended judgment

and decree, the exact increase proposed by Kendall. The district court explained:

The Court agrees with [Kendall] that it overlooked the
tax consequences when determining the amount of the
spousal maintenance award. . . . The net or take-home
income of a spouse does include the tax consequences of all
income, including spousal maintenance. When taking into
consideration the tax consequences that are associated with
the spousal maintenance, [Kendall’s] reasonable monthly
needs, and her income, the J&D will be amended to reflect
[the] fact that $2,370 in spousal maintenance is necessary for
[Kendall] to meet her reasonable needs.

District courts are allowed to consider the tax consequences of maintenance

awards when evidence of those consequences is presented at trial. See Kampf v. Kampf,

732 N.W.2d 630, 634–35 (Minn. App. 2007), review denied (Minn. Aug. 21, 2007). This

discretion is not unlimited, as the district court must have a “reasonable and supportable

basis for making an informed judgment as to the probable liability.” Maurer v. Maurer,

623 N.W.2d 604, 608 (Minn. 2001) (quotation omitted). The district court acts within its

discretion so long as its tax calculation does not “fall outside a reasonable range of

figures.” Id. at 609 (quotation omitted).

The issue, then, is whether there is evidence in the record that would support the

increase of Kendall’s spousal maintenance to cover for the tax consequences in the

amended judgment and decree. While the attachment to Kendall’s motion to amend was

not part of the trial record and, to the extent it contains information not otherwise

6
properly before the district court, cannot be considered by the district court, Zander, 720

N.W.2d at 364, there is no indication that the district court relied only upon this post-trial

submission in calculating the increase in Kendall’s maintenance. There were sufficient

facts in the trial record, outside of Kendall’s post-trial motion, to support the district

court’s decision. In the original judgment and decree, the district court found that, with a

reasonable monthly budget of $4,383 per month and a net monthly income of

approximately $2,500 per month, Kendall was left with a shortfall of $1,883 each month.

Based on these findings, the district court had originally awarded Kendall monthly

spousal maintenance of $1,800. One of the scenarios provided at trial by Kendall’s

financial expert was a hypothetical spousal maintenance payment of $2,300 per month,

leaving Kendall with an after-tax monthly cash flow of $4,221 per month, $162 short of

Kendall’s reasonable monthly budget. This scenario, which took into account these tax

ramifications, supports the district court’s amended maintenance award of $2,370.

This relatively modest increase of $570 per month in spousal maintenance also

does not unduly prejudice Rauworth, who earns a gross income of $8,567 per month plus

bonuses. Under the amended judgment and decree, his net monthly income was

approximately $6,200 and his reasonable monthly expenses were $4,383, the same as

Kendall’s expenses, leaving a surplus of $1,817. Rauworth will also be able to deduct

this additional maintenance of $570 for income tax purposes, thereby decreasing his

income tax liability. See 26 U.S.C. § 215(a) (2012). Because its decision was supported

by the record without considering Kendall’s post-trial submissions, the district court did

not abuse its discretion by increasing Rauworth’s spousal maintenance obligation.

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 B. Retroactivity of Spousal Maintenance

Rauworth claims that the district court erred by amending its judgment and decree

to make its spousal maintenance award retroactive to November 1, 2012. We agree.

The record shows that Kendall improperly raised this issue for the first time in her

motion for amended findings or a new trial. In its original judgment and decree, the

district court ordered maintenance payments to commence on May 1, 2013. Kendall’s

motion for amended findings or a new trial subsequently asked the district court to amend

its conclusions of law to make maintenance retroactive to November 1, 2012. A new

issue is raised “too late” when first raised in either a motion for amended findings, Allen

v. Central Motors, 204 Minn. 295, 297, 283 N.W. 490, 492 (1939), or a motion for a new

trial, Antonson v. Ekvall, 289 Minn. 536, 539–39, 186 N.W.2d 187, 189 (1971).

A proposed starting date for maintenance was not addressed in the pleadings.

Kendall’s petition for dissolution failed to explicitly request a maintenance award

commencing from the date of that petition. General language in the pleadings is only

sufficient to raise an issue if it “would alert anyone to a claim” based on that issue. See

Antonson, 289 Minn. at 539, 186 N.W.2d at 189. Kendall’s broad request for

maintenance was insufficient to put Rauworth on notice that she would be requesting not

only prospective maintenance, but also retroactive maintenance for the period of the

dissolution proceeding. Furthermore, after filing her petition, Kendall could have moved

the district court for temporary maintenance during the dissolution proceeding under

Minn. Stat. § 518.131, subd. 1(b) (2014). She failed to do so.

8
 This issue was also not litigated at trial. Evidence provided by Kendall as to her

monthly living expenses was not based on her then-current budget while living with her

mother. The issue of whether to make maintenance retroactive “was not within the

pleadings nor . . . litigated by consent” if raised for the first time after the trial record had

closed. See Allen, 204 Minn. at 297, 283 N.W. at 492. While Kendall did recommend

November 1, 2012 as the starting date for maintenance, this recommendation came in a

post-trial submission that did not bring the issue and any necessary accompanying

evidence before the district court in a timely fashion.

Therefore, a claim for retroactive maintenance was not properly before the district

court in this proceeding, and the district court abused its discretion by making its

maintenance award retroactive upon a motion for amended findings or a new trial.

Accordingly, we reverse the award of maintenance for the months the dissolution action

was pending and remand for the district court to subtract these amounts from Rauworth’s

obligation to Kendall.2

C. Permanent Maintenance

Kendall claims that the district court erred by not awarding her permanent

maintenance. She contends that the district court erred as a matter of law by finding that

her financial situation would improve at the time of retirement, but then finding that her

2
It is therefore unnecessary for us to determine whether the district court erred by
amending its spousal maintenance award to run in excess of 12 years, as our reversal
restores the initial 12-year period ordered by the district court and supported by its
findings.

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potential employment pay increases were uncertain. She further argues that there was no

evidence in the record showing that she would become self-supporting in the future.

“[A] district court must order permanent maintenance if the court is uncertain that

the spouse seeking maintenance can ever become self-supporting.” Maiers v. Maiers,

775 N.W.2d 666, 668 (Minn. App. 2009) (quotation omitted). Courts are further

instructed not to favor a temporary award over a permanent award “where the factors . . .

justify a permanent award,” and “shall” order a permanent award even if “there is some

uncertainty as to the necessity of a permanent award.” Minn. Stat. § 518.552, subd. 3

(2014). The burden of proof is on the spouse seeking maintenance under section

518.552. Dobrin v. Dobrin, 569 N.W.2d 199, 202 (Minn. 1997). We review an award of

temporary maintenance for abuse of discretion. Id.

Kendall appears to be conflating the district court’s uncertainty as to her future

salary with its finding as to her future entitlement to retirement benefits. The district

court’s uncertainty as to her potential salary increases was used to justify its finding as to

her monthly income for purposes of calculating the necessary amount of maintenance.

But the district court was not uncertain about the needed duration of the maintenance

award. It explicitly found that a “twelve-year award will allow [Kendall] to bridge the

gap between now and retirement, [when] she will be able to supplement her income and

live off the substantial retirement funds that are being award[ed] to her.”

The award of retirement funds was relevant to a statutory factor the district court

was directed to examine: the party’s financial resources and “ability to meet needs

independently.” Minn. Stat. § 518.522, subd. 2(a). The district court is vested with

10
significant discretion in determining a party’s financial independence, as the maintenance

statute contains “no directives for how a district court is to evaluate a ‘party’s ability to

meet needs independently.’” See Rauenhorst v. Rauenhorst, 724 N.W.2d 541, 545 n.2

(Minn. App. 2006) (quoting Minn. Stat. § 518.552, subd. 2(a) (2004)). Kendall received

nearly $600,000 of retirement account funds in the dissolution. While Kendall testified at

trial as to the taxes and penalties she would incur for a current withdrawal of those funds,

nothing in the record indicates why she could not receive normal distributions from these

substantial retirement accounts once she reached retirement age. Moreover, if at the time

of retirement she cannot meet her expenses, she can move to modify her maintenance

award at that time.

The district court’s finding that Kendall would gain financial independence due to

her access to substantial retirement funds upon reaching retirement age is supported by

the record. Its conclusion that an award of rehabilitative maintenance would be fair and

just was therefore within its discretion.

II.

Kendall argues that the district court abused its discretion by ruling certain

property to be the nonmarital property of Rauworth: an RMR Enterprises check for

$47,951, and a life insurance policy. Property acquired by spouses during marriage is

presumed to be “marital property.” Minn. Stat. § 518.003, subd. 3b (2014). The spouse

seeking to overcome this presumption bears the burden of proving the asset is nonmarital

by a preponderance of the evidence. Kerr v. Kerr, 770 N.W.2d 567, 569 (Minn. App.

2009). “Nonmarital property” includes property that was received by one spouse but not

11
the other as a gift or by inheritance, acquired before the marriage, or acquired in

exchange for other nonmarital property. Minn. Stat. § 518.003, subd. 3b(a)–(c).

“Whether property is marital or nonmarital is a question of law, but reviewing courts

defer to the district court’s findings of fact unless they are clearly erroneous.”

Chamberlain v. Chamberlain, 615 N.W.2d 405, 412–13 (Minn. App. 2000), review

denied (Minn. Oct. 25, 2000).

A. RMR Distribution Check

We first address the $47,951 distribution check from RMR Enterprises. It is

undisputed that Rauworth’s partnership interest in RMR is his nonmarital asset. The

distribution check, which at the time of trial had not been cashed by Rauworth, included

both his regular share of RMR profits and his share of the value of a life insurance policy

taken out on Rauworth’s mother which RMR had later traded in for cash. Rauworth

testified that RMR purchased the policy after the parties’ marriage in order to pay for any

potential inheritance taxes that would result if Rauworth’s mother passed away.

Rauworth also testified that RMR paid the policy premiums with partnership income.

The district court concluded that:

[Kendall] claims that this check is “marital in nature;”
however, she does not provide any explanation why this is
marital other than to state that the parties paid taxes on this
distribution in their 2011 joint tax returns. This is
insufficient. Neither party contributed to the purchase, the
acquisition, or the preservation of, those funds received from
RMR Enterprises. These funds are an asset of the partnership
received from the inheritance and therefore remain
[Rauworth’s] non-marital property.

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Kendall challenges this aspect of the district court’s ruling, arguing that the district court

erred by wrongly placing the burden of proof on her. Kendall further argues that

distribution of this check to Rauworth constituted “income” received from RMR and

therefore that the funds represented by the check are marital property. On appeal,

Rauworth asserts, as he did at trial, that he left the associated funds “within” RMR and

therefore that they are his nonmarital property.

It is undisputed that Rauworth received the 2011 RMR distribution check during

the marriage. Therefore, it is presumed that the funds represented by that check are

marital property. Minn. Stat. § 518.003, subd. 3b. Because the funds are presumptively

marital, Rauworth had the burden to show that they were, in fact, nonmarital. Kerr, 770

N.W.2d at 569. Further, this also means that the district court’s determination that the

funds are Rauworth’s nonmarital property because Kendall failed to “provide any

explanation why [the funds are] marital” is based on an incorrect identification of which

party had the burden of showing the nature of those funds.

While not clear, it appears that Rauworth’s refusal to cash the 2011 RMR

distribution check is an attempt to keep the associated funds separate from the marital

estate, and ensure that those funds are treated as his nonmarital property. On this record,

however, we must conclude, as a matter of law, that the funds represented by the 2011

RMR distribution check are marital.

13
 Generally, gross income “includes any form of periodic payment to an individual.”

Minn. Stat. § 518A.29(a) (2014).3 The cyclic or periodic nature of the receipt of funds is

critical to classifying that receipt of funds as “income.” Duffney v. Duffney, 625 N.W.2d

839, 843 (Minn. App. 2001). Here, Rauworth testified that during the marriage he

received annual payments from RMR as his shares of the rental income earned by RMR,

and that he would place these payments into the parties’ joint bank accounts and use the

funds for marital expenses. The 2011 distribution check was thus one in a series of

payments that Rauworth received from RMR during the marriage, and is distinguishable

from other RMR distribution checks only because it represented both his usual share of

rental income and his share of the cash proceeds of the life insurance policy on his

mother. Because the 2011 distribution check was one of a series of periodic payments to

Rauworth during the marriage, it was “income.”

Income generated by a nonmarital asset during a marriage usually is marital. See

Gottsacker v. Gottsacker, 664 N.W.2d 848, 854 (Minn. 2003) (“If the interest is ‘income’

from the nonmarital asset, it is marital income.”); Nardini v. Nardini, 414 N.W.2d 184,

194 (Minn. 1987) (stating that cash distributions received during a marriage are typically

“considered a return on the investment or income and, therefore . . . [are] marital

property.”). In the case of a closely-held corporation’s earnings that are retained by the

corporation and not distributed to its interest holders, Gottsacker directs courts to

determine, on a case-by-case basis, whether the retained earnings are income to an

3
While these definitions are contained within the child support chapter of the Minnesota
Statutes, they are also applicable to proceedings under chapter 518. See Minn. Stat.
§ 518A.26, subd. 1 (2014).

14
interest-holder spouse. Gottsacker, 664 N.W.2d at 856–57. Courts do so by looking at

the degree of control the interest-holder spouse has over whether the corporation

distributes funds, and to determine whether any retention of funds by the corporation is to

shield those funds from the other spouse or because the interest-holder spouse has no

ability to require funds to be distributed. Id.

Here, there are no retained earnings at issue. While Rauworth apparently lacked

control over whether RMR chose to distribute the cash proceeds of the life insurance

policy, RMR did distribute the proceeds of the insurance policy. And once the

distribution check was in Rauworth’s possession, he, not RMR, controlled those funds.

See Robert v. Zygmunt, 652 N.W.2d 537, 543 (Minn. App. 2002) (stating that amounts

distributed by a closely held corporation belonged to the person to whom those funds

were distributed once they were “severed from other corporate assets and distributed as

dividends”), review denied (Minn. Dec. 30, 2002). Therefore, even if Rauworth is

correct in asserting that his refusal to cash the 2011 distribution check means that the

funds represented by that check are still “within” RMR, he has control of those funds.

Finally, the record is otherwise void of any attempt or argument by Rauworth to

rebut the presumption of marital property and show that the funds represented by the

2011 RMR distribution check are his nonmarital property. Thus, on this record,

Rauworth failed to show that the funds represented by the 2011 RMR distribution check

should be deemed his nonmarital property, and as a result the funds represented by this

check are marital property that should have been divided between the parties. We reverse

and remand this issue for the district court to equitably divide the $47,951 check. If the

15
district court’s ruling on remand requires that other aspects of the property division be

adjusted to achieve an equitable property distribution, the district court shall have the

discretion to adjust the property division accordingly.

B. Life Insurance Policy

We next address the Washington life insurance policy. The district court ruled

that this $1,000 life insurance policy with a cash surrender value of $560.24 is

Rauworth’s nonmarital property. Kendall challenges this ruling, arguing that Rauworth

failed to produce any documentation showing when the policy was created or how it was

funded, and therefore he failed to show that the policy was his nonmarital asset. On this

record, even if we assume that the district court erred by treating the Washington life

insurance policy as Rauworth’s nonmarital property, the effect of any such error is de

minimis; each party was awarded substantial retirement account funds and retained other

sizable life insurance policies. Therefore, while we grant the district court discretion on

remand to address whether and to what extent the property is marital property, we decline

to require it to do so. See Risk ex rel. Miller v. Stark, 787 N.W.2d 690, 694 n.1 (Minn.

App. 2010) (declining to remand for district court failure to account for $400 of value

when classifying property), review denied (Minn. Nov. 16, 2010); Wibbens v. Wibbens,

379 N.W.2d 225, 227 (Minn. App. 1985) (declining to remand for district court error in

calculating child support to account for a cost-of-living increase worth $120).

III.

Kendall asserts that after the parties separated, Rauworth disposed of funds in a

jointly owned investment account by using that account to pay off credit card debt that

16
Rauworth accumulated through excessive and frivolous expenditures. She claims that the

district court erred in determining that most of Rauworth’s withdrawals from the account

were in the normal course of living. Kendall further contends that the district court erred

in finding that she had not proven her claim that Rauworth forged her name on a 2010 tax

refund check and improperly expended the funds.

The district court “shall” require one party to compensate the other when that

party transfers, encumbers, conceals, or disposes of marital assets, unless the assets are

expended “in the usual course of business or for the necessities of life.” Minn. Stat.

§ 518.58, subd. 1a (2014). The burden of proof is on the party asserting the wrongful

disposition of marital assets. Id. “A [district] court has broad discretion in evaluating

and dividing property in a marital dissolution and will not be overturned except for abuse

of discretion.” Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002).

A. Investment Account

The district court did not err in finding that Kendall failed to prove that Rauworth

disposed of funds in their investment account. Rauworth testified and provided exhibits

documenting his use of the withdrawn account funds. This included the payment of taxes

and mediation fees, expenses associated with his attempts to reconcile with Kendall,

attorney fees, and costs related to preparing the marital home for sale. Rauworth also

continued to pay costs associated with the parties’ adult children. Kendall presented a list

of charges from Rauworth’s credit card that she claims indicated excessive spending,

mostly for restaurants and vacation expenses. However, she testified at trial that the

parties did not live within a budget during marriage, frequently eating out at restaurants

17
and going on vacations. Kendall also spent marital funds in a similar manner, taking

several trips while the parties were separated. The evidence supports the district court’s

determination that many of the expenses Kendall disputes were consistent with the level

of spending the parties enjoyed during the marriage. Further, the district court did not

blindly endorse appellant’s spending habits; it shifted $11,117.30 to Kendall based on

Rauworth’s use of marital funds for an online dating service and legal fees. The evidence

supports the district court’s conclusion that the funds withdrawn from the investment

account were not used by Rauworth in violation of Minn. Stat. § 518.58, subd. 1a.

B. 2010 Tax Refund

Kendall also claims that the district court erred in finding she had failed to prove

that Rauworth improperly disposed of a 2010 tax refund check. The record shows that

the check was deposited into a bank account controlled solely by Rauworth. But, as

noted by the district court, Kendall failed to provide any evidence as to how those funds

were subsequently spent. Kendall had the burden of proof in alleging wrongful use of

those funds. See Minn. Stat. § 518.58, subd. 1a. Because she failed to provide evidence

showing that Rauworth improperly disposed of the funds, the district court did not err in

finding her claim to be unsubstantiated.

In Griepp v. Griepp, this court upheld a district court’s determination that the

disposition of tax refund monies was not proven when there was no basis in the record to

conclude that the refunds were not spent on living expenses. 381 N.W.2d 865, 869

(Minn. App. 1986). Kendall attempts to distinguish Griepp because the tax refund

amount is known here, whereas the refund check stub was absent from the record in

18
Griepp. Id. However, certainty as to the amount of the refund check is not instructive as

to how Rauworth spent the funds. As in Griepp, the lack of evidence in support of

Kendall’s claim shows the district court did not err in declining to find Rauworth had

improperly disposed of the funds.

IV.

Kendall challenges the district court’s decision not to award attorney fees to either

party, contending that the district court erred in denying her attorney fees request.

Attorney fees can be awarded by the district court in marital dissolution proceedings,

based on either need or conduct of the parties. Need-based fees “shall” be awarded by

the district court if it 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 fees, costs, and
disbursements are sought has the means to pay them; and
(3) that the party to whom fees, costs, and
disbursements are awarded does not have the means to pay
them.

Minn. Stat. § 518.14, subd. 1 (2014). The district court “may” also award conduct-based

fees and costs “against a party who unreasonably contributes to the length or expense of

the proceeding.” Id. “An award of attorney fees under [section 518.14] rests almost

entirely within the discretion of the trial court and will not be disturbed absent a clear

abuse of discretion.” Schallinger v. Schallinger, 699 N.W.2d 15, 24 (Minn. App. 2005)

(quotation omitted).

19
 Kendall claims that the district court should have awarded need-based fees. Given

our deference to the district court and the circumstances of this case, Kendall’s arguments

are unpersuasive. The district court found that the parties’ income and property were

“sufficient to provide for their reasonable needs” in denying need-based attorney fees.

This finding is supported by the record. Kendall has a full-time job, received nearly

$800,000 worth of marital property as a result of the dissolution, and will continue to

receive substantial spousal maintenance payments from Rauworth until 2025. The

district court specifically found that the first statutory factor, lack of means to pay fees,

was not present, and Kendall has not shown how the district court abused its discretion in

thereby refusing to award need-based attorney fees.

Kendall also claims that the district court erred and should have awarded conduct-

based fees. The district court found that neither party was entitled to conduct-based

attorney fees because the length of the process was actually tied to the collaborative law

process, not litigation, and neither party “acted in bad faith” or “contributed to the delay

or expense of this matter.” Kendall cites numerous actions by Rauworth that she

contends delayed the proceedings, including untimely discovery responses and his

wrongful use of marital assets. However, the parties agreed to an informal exchange of

discovery after the initial case-management conference and shortly before trial, and

Kendall had an opportunity to examine those documents before trial. No motions were

brought by either party that served to delay the case or increase its expense. Trial in this

case was completed less than six months after the dissolution petition was filed. The

record supports the district court’s finding that neither party unreasonably delayed the

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proceedings. As a result, the district court’s decision not to award Kendall conduct-based

attorney fees was not an abuse of discretion.

In sum, we affirm the district court’s decision to increase the amount of spousal

maintenance and make the maintenance award temporary. We also affirm the district

court’s determination that Kendall did not prove improper use of marital assets by

Rauworth, and that neither party should be awarded attorney fees. We reverse the district

court’s decision to order retroactive spousal maintenance from the date of the dissolution

petition filing and its determination that the RMR distribution is nonmarital property.

Accordingly, we remand these issues to the district court for further proceedings

consistent with this decision.

Affirmed in part, reversed in part, and remanded.

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