In re the Marriage of:

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2018).

STATE OF MINNESOTA
IN COURT OF APPEALS
A18-1876

In re the Marriage of:

Beatrice De Ann Steele,
Respondent,

vs.

Steven Paul Steele,
Appellant.

Filed October 7, 2019
Affirmed in part, reversed in part, and remanded
Jesson, Judge

Freeborn County District Court
File No. 24-FA-16-905

Kent Spellman, Albert Lea, Minnesota (for respondent)

Rebecca A. Chaffee, Best & Flanagan LLP, Minneapolis, Minnesota (for appellant)

Considered and decided by Jesson, Presiding Judge; Worke, Judg e; and Bratvold,
Judge.
U N P U B L I S H E D O P I N I O N
JESSON, Judge
After nearly 30 years of marriage, during which time they accu mulated property
valued in excess of $2.5 million, appellant Steven Paul Steele (husband) and respondent
Beatrice De Ann Steele (wife) dissolved their marriage. Husban d challenges the district

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court’s discovery sanction preventing him from presenting evide nce related to his claims
that most of the property was “n onmarital,” meaning that the pr operty should be allotted
solely to him, rather than distributed between the parties based on equity and fairness. And
husband argues that even with the limited record before it, the district court erred in its
determination of what constituted marital property. We conclude that the district court did
not abuse its discretion in sanctioning husband and did not err by classifying the majority
o f t h e p a r t i e s ’ e s t a t e a s m a r i t a l p r o p e r t y . B u t b e c a u s e t h e d istrict court incorrectly
classified four properties and some farm equipment as marital p roperty rather than
husband’s nonmarital property, and erroneously calculated the r ental value for a separate
piece of property, we affirm in part, reverse in part, and remand.
FACTS
Appellant Steven Paul Steele (husband) married respondent Beatrice De Ann Steele
(wife) in 1984. 1 During the marriage, wife worke d as a machine operator and hu sband
farmed. On the side, husband lent money to people seeking to p urchase residential and
commercial properties who were unable to obtain financing from banks. Although husband
primarily made the loans, his r eading and writing abilities are limited. As a result, wife
assisted with the paperwork of husband’s various business deali ngs and the farming
operations.
Throughout their marriage, husba nd and wife accumulated a signi ficant estate,
valued in excess of $2.5 million. Their assets include ownersh ip interests in 21 real

1 The parties share no joint children.

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properties (some as a result of bequests), ten vehicles, severa l pieces of farm equipment,
and numerous bank accounts, investments, and retirement accounts.
After nearly 30 years together, in 2013, husband and wife sepa rated. Three years
later, in June 2016, wife commenc ed the dissolution proceeding. Beginning early in the
proceedings, husband asserted that much of the estate was his nonmarital property. But as
discovery progressed, attempts to compile evidence to assess husband’s nonmarital claims
proved difficult. The district court extended initial discovery deadlines by six months, and
by another two months after the parties agreed on an appraiser to value the real property.
And based on a stipulation betwee n the parties, the district co urt ordered that “[a]ll
documents, evidence, or information not disclosed by parties by June 12, 2017 shall be
excluded from trial, including but not limited to all nonmarita l claims asserted by either
party.”
On the June 12 discovery deadline date, the parties appeared for a hearing to discuss
wife’s motion requesting the appointment of a receiver 2 and other relief. Husband’s
attorney also requested the appointment of a receiver, without husband’s consent, due to
the size of the marital estate as well as the challenges of obt aining information from his
client. And wife requested that the district court compel husb and to fully and completely
respond within 30 days to her request for interrogatories and the production of documents,
many of which related to husband’s nonmarital claims. The dist rict court issued an order

2 A receiver is “a person appointed by the court as the court’s agent, and subject to the
court’s direction, to take possession of, manage, and, if authorized by this chapter or order
of the court, dispose of receivership property.” Minn. Stat. § 576.21(p) (2018).

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asking the parties to submit the name of a person mutually acce ptable to both parties to
serve as receiver within ten days. The district court further directed husband to fully and
completely respond to wife’s discovery requests within 30 days from the order.
When husband failed to comply within 30 days, the district cour t issued an order
prohibiting husband from introducing any evidence at trial that he did not disclose to wife
or that conflicted with wife’s evidence. Further, based on his failure to comply with
discovery demands and court orders, the district court ordered that “[husband] is prohibited
from introducing any evidence related to nonmarital claims at the time of trial.”
Two months later, a three-day trial began on the issues of spousal maintenance and
property division. At the time of the trial, the last joint ta x return filed was from 2012,
showing the parties’ annual income as $16,742 and the net income from farming operations
as $192,782. According to wife, she filed a separate 2016 tax return, indicating that she
received $1,247 per month in social security payments, and $366 per month from her
pension. Wife also testified about putting money into the part ies’ homestead, assisting
with the farming operations, trying to keep records of loans th at husband made, and
attempting to collect rent from debtors. Wife submitted severa l exhibits, including deeds
for properties, bank statements , debt information, and several exhibits regarding four
properties that were conveyed b y husband’s father’s will to hus band’s mother, with the
remainder interest to husband and brother.
After the second day of trial—and after wife rested her case—hu sband’s attorney
requested to have husband’s nonmarital claims considered. Spec ifically, he asked for a
continuance to allow husband to present evidence, third-party t estimony, and expert

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testimony as to his nonmarital claims because it was “unjust and inequitable” to not allow
him to do so.
The district court denied husband’s request. In doing so, the district court explained
that over 17 months passed between the commencement of the dissolution proceeding and
the court’s discovery sanction. And the district court noted that no discovery was presented
regarding his nonmarital claims between June 2016 and the end of October 2017. But the
district court stated that it would give husband some “latitude . . . to talk about some
equity.”
Husband then presented his case. Regarding his income, husband testified that he
received approximately $900 per month in social security payments. But he testified that
the money he received from his pe nsion, wages, and IRA distribu tions was not income.
And husband testified that he expected a loss from farming in 2018. But he acknowledged
that there were some years during which he did not complete tax returns (2013 through
2017) that he may have had a gain. Throughout his testimony, husband maintained that all
assets were his nonmarital prope rty, and wife should receive no thing. Husband asserted
that he bought the real property at issue with money his father gave him, but presented no
other evidence to support his claim.
The district court denied husband any award of nonmarital property, finding that the
entire estate was marital prope rty. Accordingly, the district court distributed the estate
between the parties. In doing so, the district court found that the division of assets provided
a sufficient basis for each party to support themselves and did not award wife spousal
maintenance. Husband appeals.

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D E C I S I O N
Husband first challenges the district court’s discovery sanction prohibiting him from
presenting evidence supporting his nonmarital claims. Second, husband alleges that the
district court erred by classifying all of the property as marital property and that the division
of marital property is unfair and inequitable. We address each argument in turn.
I. The district court did not ab use its discretion by preventin g husband from
introducing evidence regarding nonmarital property claims as a sanction.

Husband contends that the distri ct court abused its discretion when it sanctioned
him for failing to comply with discovery orders by preventing h im from presenting
evidence related to his nonmarital property claims. We review the district court’s
discovery-related orders for an abuse of discretion. Shetka v. Kueppers, Kueppers, Von
Feldt & Salmen, 454 N.W.2d 916, 921 (Minn. 1990).
Rule 37 of the Minnesota Rules of Civil Procedure empowers district courts to issue
orders compelling discovery and im pose sanctions if those order s are not followed.
Minn. R. Civ. P. 37.01, .02. In cases where a party fails to comply with a discovery order
the district court may issue “[a]n order refusing to allow the disobedient party to support
or oppose designated claims or de fenses, or prohibiting that pa rty from introducing
designated matters in evidence.” Minn. R. Civ. P. 37.02(b)(2); see also Minn. R. Civ. P.
16.06 (“If a party or party’s attorney fails to obey a scheduli ng or pretrial order . . . the
court, upon motion or upon its own initiative, may make such orders with regard thereto as
are just, including any of the orders provided in Rule 37.02(b)(2), (3), (4).”).

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Here, after husband failed to comply with wife’s initial discov ery requests, wife
filed a motion to compel discovery. In response, the district court issued an order—based
on the parties’ stipulation—stating that “[a]ll documents, evid ence, or information not
disclosed by parties by June 12, 2017 shall be excluded from trial, including but not limited
to all nonmarital claims asserted by either party.” And when husband did not comply with
this order, the district court issued a second order directing husband to fulfill his discovery
obligations within 30 days. When husband again failed to produce the requested discovery,
the district court sanctioned hu sband by prohibiting him from p resenting any evidence,
which had not already been disclosed, in support of his nonmarital property claims.
This sanction falls squarely within the district court’s discretion. Husband failed to
comply with two discovery orders issued by the district court, including one order based
on a stipulation between the parties. The order based on the stipulation clearly stated that
not complying with discovery requests and deadlines would result in the exclusion of any
nonmarital property claims. Because husband failed to comply w ith the district court’s
d i s c o v e r y o r d e r s , a n d b e c a u s e t h e p e n a l t y f o r n o n c o m p l i a n c e w a s clearly outlined, the
district court did not abuse its discretion by sanctioning husb and. See Minn. R. Civ. P.
37.02(b).
Still, husband argues that any fa ilure to produce discovery wa s excusable neglect.
Excusable neglect is a basis for relief for clients when they s uffer from the negligence of
their attorneys. See Parker v. O’Phelan, 414 N.W.2d 534, 537 (Minn. App. 1987), aff’d,
428 N.W.2d 361 (Minn. 1988). Minnesota Rule of Civil Procedure 6.02 allows a court to
extend the deadlines for completion of an act “upon motion” mad e after the expiration of

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the specified time period “where t he failure to act was the res ult of excusable neglect.”
Four elements are required to establish excusable neglect: (1) there is a reasonable defense
on the merits; (2) there is a reasonable excuse for the failure to file; (3) the party acted with
due diligence after notice; and (4) no substantial prejudice re sults to other parties. Lake
Superior Ctr. Auth. v. Hammel, Green & Abrahamson, Inc. , 715 N.W.2d 458, 471
(Minn. App. 2006), review denied (Minn. Aug. 23, 2006). We review a district court’s
application of this doctrine for an abuse of discretion. Id.
Here, the district court addressed only the second element, fi nding that “[d]espite
the benefit of three competent attorneys, there was no compliance with [wife’s] continued
requests for documentation regarding alleged nonmarital assets.” As a result, it concluded
husband lacked a reasonable excuse. We agree. Although husband asserts that his limited
ability to read or write is a reasonable excuse for his noncomp liance with discovery
deadlines and multiple court orders, competent attorneys represented husband throughout
the dissolution proceeding. A s such, husband’s limited ability to read or write is not a
reasonable excuse for failing to comply with discovery deadlines for over 17 months, and
husband has not demonstrated exc usable neglect. Accordingly, w e conclude that the
district court did not abuse its d iscretion when it prevented h usband from introducing
evidence to support his nonmarital property claims as a discovery sanction.
II. The district court erred in certain aspects of its classifi cation and division of
the marital estate.

Having determined that the district court appropriately exercis ed its discretion by
sanctioning husband for discovery violations, we turn to husban d’s challenges regarding

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the district court’s classification of all assets as marital property and the resulting division
of the marital estate. Specifically, husband argues that even based on evidence introduced
by wife, the district court erroneously awarded wife an interes t in certain nonmarital
property, excluded marital debt, and improperly valued assets. Below, we first evaluate
the district court’s classification of property. We then turn to its allocation of the marital
estate between husband and wife.
Classification of Assets as Marital Property
All property acquired by either spouse during the marriage is presumed to be marital
property, without regard to the form of ownership. Minn. Stat. § 518.003, subd. 3b (2018).
But in some instances, certain property may be classified as nonmarital property. Property
can be appropriately designated as nonmarital property if it me ets one of the following
conditions:
(a) is acquired as a gift, bequest, devise or inheritance made by
a third party to one but not to the other spouse;
(b) is acquired before the marriage;
(c) is acquired in exchange for or is the increase in value of
property which is described in clauses (a), (b), (d), and (e);
(d) is acquired by a spouse after the valuation date; or
(e) is excluded by a valid antenuptial contract.

Id. To overcome the presumption that property is marital, a party must demonstrate, by a
preponderance of the evidence, t hat the property meets the crit eria to be classified as
nonmarital. Olsen v. Olsen , 562 N.W.2d 797, 800 (Minn. 1997); see also Minn.
Stat. § 518.003, subd. 3b. Whether property is marital or nonm arital is a question of law
subject to de novo review. Olsen, 562 N.W.2d at 800.

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Here, the district court found that both husband and wife “mad e actual and
substantial contributions to the acquisition of their marital e state.” And because it found
that the marital estate is “co-own ed by virtue of the actual co ntributions of each party to
the acquisition of the whole and by virtue of the co-ownership property interest granted to
spouses by law,” the district court treated the entire marital estate as marital property.
Husband identifies certain assets that he contends the distric t court incorrectly
classified as marital property. In particular, husband asserts that the homestead, 80 acres
of land, certain third-party properties, farm equipment, and pr operties devised to husband
through his father’s will are nonmarital property.3 We review each of these claims.
Homestead and 80 Acres
Husband argues that he provided wife with discovery by the deadline regarding his
nonmarital claims to the homestead and a piece of property referred to as 80 acres, and that
because he acquired both properties before the marriage, they are his nonmarital property.
Although the record contains som e documentation pertaining to b oth of these properties,
we conclude that husband did not demonstrate by a preponderance of the evidence that the
homestead and the 80 acres were his nonmarital property. Id. The record contains evidence

3 In addition to these assets, in his brief, husband identifies several other pieces of property
as nonmarital property. But husband points to no evidence, oth er than his general
testimony, to support his assert ion that those properties are n onmarital. While husband
explains that the lack of eviden ce regarding his nonmarital claims to these properties is a
result of the district court’s discovery sanction, we note that husband failed to avail himself
of opportunities during discover y to present evidence in suppor t of his claims. And we
have concluded that the discovery sanction was within the distr ict court’s discretion.
Because no evidence su pports husband’s assertion that the other identified properties are
nonmarital, the district court correctly classified them as marital property.

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that both husband and wife signed two quitclaim deeds—one for each property—in 2006,
conveying both properties to a trust for which both husband and wife served as trustees.
And wife testified that she contributed money to improving the homestead and attempted
to assist husband in farming and “keeping track of bookkeeping. ” As such, we conclude
that based on the limited record before it, the district court correctly classified the
homestead and the 80 acres as marital property.
Third-Party Properties
Husband contends that he acquired several properties with his nonmarital resources,
which were titled in third-parties’ names or for which there we re contracts for deed. The
only evidence husband presented regarding these third-party properties was his testimony
that he bought them with funds he received from his father. Hu sband did not present any
documentation to corroborate his testimony. Because the properties were purchased during
the marriage and husband did not establish by a preponderance o f the evidence that the
properties are nonmarital property, the district court appropriately classified the properties
as marital property. See Minn. Stat. § 518.003, subd. 3b (defining marital property as
“property, real or personal, . . . acquired by the parties, or either of them . . . at any time
during the existence of the marriage relation between them”).
Properties and Farm Equipment from Husband’s Father’s Will
The district court awarded wife, as marital property, 50% of th e value of four
properties in which husband had a 50% remainder interest, subje ct to a life estate held by

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his mother.4 Additionally, the district court granted wife 50% of the valu e of husband’s
f a r m e q u i p m e n t . H u s b a n d a r g u e s t h a t t h e s e a w a r d s w e r e i n e r r o r b e c a u s e t h e f o u r
properties and farm equipment were bequests and thus nonmarital property. We agree.
Though husband was precluded from arguing his nonmarital claim s to the district
court, wife submitted evidence that showed the four properties and farm equipment were
husband’s inherited property. Hu sband’s father’s will left “[a ]ll farm machinery and
equipment to sons, [husband] and [brother].” Additionally, the will left the four properties
to husband’s mother “for her lifetime and thereafter to [husband] and [brother] as tenants
in common, in fee simple, absolutely and forever.” Accordingly , the farm equipment left
to husband and brother, and the r eal-property remainder interes t left to husband and
brother, are inheritance. As such, these four pieces of real property and any farm machinery
and equipment previously belo nging to husband’s father are nonm arital property.
Minn. Stat. § 518.003, subd. 3b(a).
Although these properties and th e farm equipment are husband’s nonmarital
property, the district court can still award wife a portion of their value to prevent unfair
hardship. See Minn. Stat. § 518.58, subd. 2 (2018) (stating that the court ma y “apportion
up to one-half of the property otherwise excluded” as nonmarital property to prevent unfair
hardship if it finds that a spouse’s resources, property, and p ortion of marital property are
“so inadequate as to work an unfair hardship”). But the distri ct court did not make any
findings about unfair hardship. Accordingly, we reverse and remand for the district court

4 The parties refer to the four properties as 66346 190th Street , AG 60 deed acres, AG 34
deed acres, and AG 80 deed acres.

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to determine whether including the value of this nonmarital pro perty is warranted to
prevent wife from suffering an unfair hardship.
Allocation of Property
We finally turn to the district court’s distribution of the mar ital estate. When
evaluating and dividing propert y in a marital dissolution, the district court is provided
broad discretion and will not be o verturned except for an abuse o f t h a t d i s c r e t i o n .
Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002) . We affirm the district cour t’s
division of property if it had an acceptable basis in fact and principle even though we may
have taken a different approach. Servin v. Servin , 345 N.W.2d 754, 758 (Minn. 1984).
And we defer to the district court’s findings of fact and will not set them aside unless clearly
erroneous. Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001). Husband challenges
the distribution of the marital estate in three ways: the failu re to include debts in the
equalization of the marital estate, the allocation of a $150,00 0 check to him, and the
valuation of certain properties. We address each argument in turn.
Debts not Included in Equalization of Marital Estate
Husband argues that the district court failed to consider mari tal debts in its
equalization of the division of the marital estate. District courts apportion marital debts as
part of the property division and debts are to be treated in th e sa me manner as marital
assets. Korf v. Korf, 553 N.W.2d 706, 712 (Minn. App. 1996).
Here, husband specifically contends that the unsecured loans f rom his mother,
totaling $238,500, were marital pr operty and, accordingly, shou ld be considered in the
equalization of the marital estate. But the only evidence pres ented to the court regarding

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the loans was husband’s testimon y and handwritten documents bet ween husband and his
mother. Because the district court has broad discretion in the division of debt, and because
the record does not demonstrate that these loans were incurred by both parties, we conclude
that the district court did not abuse its discretion when it al located the obligation for the
unsecured loans from husband’s mother to husband.
$150,000 Check from 2013
Husband argues that the district court abused its discretion by allocating to him a
$150,000 check that was written by husband to himself in 2013. Husband testified that the
check was used to make payments on a piece of marital property known as Julio’s Bar and
Grill. But he presented no evidence supporting his assertion that the money was used for
Julio’s. As such, the district court did not abuse its discret ion in allocating the $150,000
check to husband.
Valuation of Properties
Husband contests the district court’s valuation of the 175 North Broadway property,
Julio’s and its agreed-upon debt, and the rental value of 80 acres for 2014-2016. A district
court’s valuation of an item of property is a finding of fact which we do not set aside unless
it is clearly erroneous on the record as a whole. Maurer, 623 N.W.2d at 606 . And it is
only necessary that the district court’s valuation be “within a reasonable range of figures,”
not an exact valuation. Johnson v. Johnson, 277 N.W.2d 208, 211 (Minn. 1979).
The district court adopted a valuation of the 175 North Broadway property based on
the property’s tax-assessed valu e included on the appraisal doc umentation. Because this
valuation is based in fact, it was not clearly erroneous. See Castonguay v. Castonguay ,

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306 N.W.2d 143, 147 (Minn. 1981) (stating that if a valuation h as an acceptable basis in
fact, this court must affirm the district court).
Similarly, the parties stipulated that Julio’s would be sold fo r $175,000, with the
proceeds used to pay off certain debts. But because the sale did not occur, the district court
used the appraisal value of Julio’s—$145,000—as the valuation a mount and awarded
Julio’s to wife. Again, because t he district court’s valuation is based in fact, the district
court’s reliance on the appraisal valuation was not clearly erroneous and awarding Julio’s
to wife was not an abuse of discretion.5 Id.
But we agree with husband that the district court erroneously d etermined that the
rental value of the 80 acres from 2014-2016 was $45,225. The d istrict court’s order
indicates that this valuation is based on “argument,” and it did not point to any evidence in
the record to substantiate this valuation. Because we do not discern a basis in fact present
in the record for the $45,225 valuation, we reverse and remand on the question of valuation
and allocation of the rental value of the 80 acres from 2014-2016. Id.
In sum, we observe that this case presented the district court w i t h a l e n g t h y
dissolution proceeding and a si zable estate. Because husband f ailed to comply with
discovery orders throughout the proceeding, the district court acted within its discretion by
sanctioning husband. And the district court correctly classified, valued, and distributed the
large majority of the marital estate. But the district court erred by determining that the four

5 To the extent that husband challenges the valuation and alloca tion of certain third-party
properties, which is less than clear, we also conclude that the district court acted within its
discretion in relying on appraisals and testimony when valuing and distributing those
properties.

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inherited properties and the inhe rited farm equipment were mari tal property and by
including them in the equalizatio n of the marital estate value without finding any unfair
hardship. The district court also erroneously determined the r ental value of the 80 acres
because the valuation is not based on facts in the record. Acc ordingly, we reverse and
remand.6
Affirmed in part, reversed in part, and remanded.

6 We leave to the district court’s discretion whether to reopen the record. And we note that
the district court did not award wife spousal maintenance based on a finding that “an
equitable division of all assets shall allow sufficient assets to each party to support
themselves at the present time.” Any changes in property distr ibution on remand may
result in the need to reevaluate the issue of spousal maintenan ce, although we express no
opinion on this issue.