In re the Marriage of: Marcia A. Hammond, petitioner, Respondent,

This opinion is nonprecedential except as provided by
Minn. R. Civ. App. P. 136.01, subd. 1(c).

STATE OF MINNESOTA
IN COURT OF APPEALS
A20-0813

In re the Marriage of:
Marcia A. Hammond, petitioner,
Respondent,

vs.

Jeffrey Lyle Buchanan,
Appellant.

Filed April 5, 2021
Affirmed
Ross, Judge

Hennepin County District Court
File No. 27-FA-255601

Rebecca A. Chaffee, Brian Linnerooth, Best & Flanagan LLP, Minneapolis, Minnesota
(for respondent/cross-appellant)

Amy D. Joyce, William R. Skolnick, Samuel M. Johnson, Skolnick & Joyce, P.A.,
Minneapolis, Minnesota (for appellant/cross-respondent)

Considered and decided by Ross, Presiding Judge; Connolly , Judge; and Smith,
Tracy M., Judge.
NONPRECEDENTIAL OPINION
ROSS, Judge
Jeffrey Buchanan and Marcia Hammond’s marriage ended in 2001 af ter they
stipulated to a judgment and decree that required Buchanan to pay permanent spousal
maintenance. Buchanan moved to modify the maintenance obligation, juxtaposing his
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alleged decreased income and increased expenses against Hammond’s alleged increased
income and unreasonable expenses. Because Buchanan has not shown that the district court
clearly erred in its factual findings and therefore has also not show n a substantial change
in circumstances, we affirm the district court’s refusal to modify spousal maintenance.
FACTS
Marcia Hammond and Jeffrey Buchanan divorced in 2001 after an 11- year
marriage. At the time of the divorce, they had one minor child, now an adult. The parties
stipulated to a judgment and decree dissolving the marriage. The stipulation states that
Hammond was a homemaker with no income, and Buchanan earned $400,000 a year “not
including return on the business asset.”
The stipulated judgment and decree outlined the parties’ expenses and terms of the
divorce. It stated that Hammond’s reasonable monthly budget for herself and for the minor
child, who would reside primarily with her, was $15,989. It stated that Buchanan’s
reasonable monthly budget was $18,000. The parties also stipulated spousal-maintenance
and child-support obligations. They agreed that Buchanan would pay Hammond $1,570 in
monthly child support until 2007 and $12,200 in permanent monthly spousal maintenance.
Spousal maintenance was subject to a cost-of -living increase, which, by 2018, resulted in
a $15,632 monthly spousal-maintenance obligation.
The stipulated decree also divided the marital property . The property included
Buchanan’s company, JL Buchanan Inc., worth $1,350,000 at the time of the dissolution.
Buchanan possessed a nonmarital interest in one third of the company, and the other two
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thirds were marital property. Buchanan received the entire company and Hammond
received $450,000 for her share.
Buchanan sold the company in August 2016, but the record does not include the
terms. He continued working as a consultant earning a $120,000 salary until his retirement
at the end of 2017. He was 66 years old. Since retiring , Buchanan’s income has derived
from investment proceeds and retirement benefits.
Buchanan moved in 2018 to modify spousal maintenance based on alleged
substantial changes in circumstances. He said that his current income was $425,830
annually from a 4% return on his “approximately $10 million” of capital investments. He
also said that he could no longer m eet his reasonable monthly expenses, which he
maintained had increased from $18,000 in 2001 to $35,505 in 2018. Buchanan also argued
that Hammond was voluntarily unemployed, m aintained unnecessary expenses, and
squandered the money she received in the divorce.
The district court denied Buchanan’s motion to modify , and he appealed. We
remanded the case to the district court to make specific findings supporting its decision.
Hammond v. Buchanan, A18-1623, 2019 WL 5304175, at *2 (Minn. App. Oct. 21, 2019).
On remand, the district court found that Buchanan’s income at the time of the divorce was
at least $400,000 and that, although the record suggested that it was higher, the parties did
not submit evidence allowing the district court to determine how much higher it was. It
found that Buchanan had a 2018 net worth of $12,174,141, which included $8,499,871 in
publically traded investments, $475,979 in cash, $560,000 in commercial rental propert y,
$2,134,629 in retirement assets, $563,347 in “personal property,” and $1,400,000 in
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personal residential real estate. The district court found that Buchanan could earn a 4%
annual return on $12 million, or $480,000 annually.
The district court also made findings of Buchanan’s expenses. It found that he failed
to present credible evidence supporting his claimed expenses. It observed that he offered
no evidence or information showing the categories of his expenses during the marriage,
preventing it from comparing his pre-divorce and current expenses to assess
reasonableness.
The district court made findings about Hammond’s income and expenses also. It
found that, at the time of the divorce, her monthly income was $14,393 based on her return
on investment and spousal maintenance. And it found that, including spousal maintenance,
a return on investment, and social security, her monthly income in 2018 was $15,978. The
district court refused to impute any earned income to Hammond, observing that the
stipulated decree afforded her with permanent spousal maintenance at a fixed amount with
no assumption or condition of her employment, and it also found it “not reasonable at 69
to expect her to now find paying employment.” The district court found that Hammond had
not squandered her assets and that her in come did not include retirement-account
distributions that she was not yet required to take. Regarding monthly expenses, the district
court found that her expenses at the divorce were between $12,846 and $14,419 and that
they were currently $15,178.
Based on these findings, the district court repeated its denial of Buchanan’s motion
to modify spousal maintenance. It specifically concluded that the relevant circumstances
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had not substantially changed and that, even if they had, the change did not render the
original maintenance obligation unreasonable or unfair.
Buchanan again appealed. Hammond filed a conditional related appeal on the issues
of her claims that Buchanan should have to post security for the spousal- maintenance
obligation and to pay attorney fees.
DECISION
Buchanan presents four clear-error arguments challenging the district court’s denial
of his motion to modify spousal maintenance. He argues first that the district court wrongly
found that his income did not substantially decrease. He argues second that the district
court wrongly found that his reasonable expenses did not substantially increase. He argues
third that the district court wrongly found that Hammond’s monthly budget was reasonable.
And he argues fourth that the district c ourt wrongly found that Hammond’s income had
not substantially increased. We review the district court’s decision on whether to modify
an existing maintenance award for an abuse of discretion. Hecker v. Hecker , 568 N.W.2d
705, 710 (Minn. 1997). A district court abuses its discretion if the record does not support
its factual findings or it improperly applies the law. Dobrin v. Dobrin, 569 N.W.2d 199,
202, n.3 (Minn. 1997). We review the district court’s underlying factual findings for clear
error. Peterka v. Peterka , 675 N.W.2d 353, 357 (Minn. App. 2004). For the reasons that
follow, none of Buchanan’s arguments persuade us to reverse.
I
We first address whether the district court clearly erred by finding that Buchanan’s
income did not substantially decrease from 2001 to 2018. Maintenance modification could
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be appropriate if Buchanan’s income at the time of the motion substantially decreased from
his income at the time of the maintenance award. See Minn. Stat. § 518A.39, subd. 2(a)
(2020). Buchanan argues that the district court misinterpreted his income after the divorce
and failed to account for inflation, asserting that his current gross income is $493,030 (not
$400,000 as found by the district court) contrasted with $700,000 at the time of the divorce.
Buchanan builds his declined-income argument on his contention that the district
court did not account for language in the judgment and decree, which stated that his income
at the time was $400,000, expressly “not including return on the business asset.” Although
the stipulation did not specify what, if any, return he was making “on the business asset,”
he maintains now that the district court should have surmised that it was $300,000. It should
have done so, he contends, because his monthly expenses at the time of the dissolution
were $18,000 and he agreed to pay $13,770 in monthly spousal maintenance an d child
support from his “after-tax disposable income. ” He reasons that his reported monthly
expenses combined with his spousal-maintenance and child-support obligations amount to
$381,000 in annual expenses, and that the district court should have worked backwards
applying a 2001 federal tax rate of 39.1% and a 2001 Minnesota tax rate of 7.85% to
determine his 2001 income. This formula, he maintains, requires a $700,000 income
finding, comprised of $400,000 in salary and what must have been $300,000 in re turn on
the business asset.
We have reviewed the record and do not see that he presented this argument plainly
to the district court. This presents a difficulty on appeal because it was Buchanan’s burden
to prove a substantial change in circumstances. Youker v. Youker , 661 N.W.2d 266, 269
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(Minn. App. 2003), review denied (Minn. Aug. 5, 2003); cf . Minn. Stat. § 518A.39,
subd. 2(a). Having elected to be silent on the amount of any “return on the business asset”
when he entered the stipulation, Buchanan’s argument rests on assumptions rather than
established facts. Although one might accept the assumptions Buchanan urges, the
assumptions are neither evidence nor are so certain that we can spot any clear error in the
district court’s not basing its findings on them. Besides the stipulated facts in the judgment
and decree, Buchanan submitted no evidence of his 2001 income. Perhaps the parties
settled on the stipulated maintenance and support amounts based on these assumptions
Buchanan now asserts, but perhaps they arrived at the amount based on entirely different
factors. The sparse record affords mostly guesswork. As a result, the district court was not
bound even to find a positive return from the business, let alone a return so substantial that
it resulted in $700,000 in income. Although the testimony might have supported a different
finding, given our deferential review of factual findings, we cannot say that the district
court clearly erred by finding that Buchanan earned $400,000 in 2001.
Buchanan’s argument about his 2018 income is no more compelling than his
argument about his 2001 income. He contends that he earned $444,000 in 2018 and that
the district court overstated his income by misinterpreting his JP Morgan financial
statement and improperly increasing his investible liquid assets. He says that the district
court inflated his investment funds by inappropriately including his $1.4 million home and
miscalculating income from his $560,000 commercial rental propert y, which he alleged
was $13,200 in 2018. The argument stands on unsteady ground, because we defer to the
district court’s credibil ity assessment, Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn.
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1988), and the district court f ound incredible Buchanan’s self -created spreadsheet
reflecting the 2018 $13,200 return. Rejecting Buchanan’s spreadsheet representations, the
district court instead imputed a 4% annual return on his $560,000 commercia l rental
property, or $22,400. The record does not show that this approach clearly misstates the
actual amount of the investment -property return. We add that accepting Buchanan’s
$444,000 income assertion results in a $44,000 increase from his $400,000 2001 income.
This 11% increase over a 17- year period would be insufficient to lead us to reverse the
district court’s finding of no substantial change in circumstances.
Buchanan also wrongly contends that the district court improperly found an increase
in his liquid assets based on his home. Contrary to his contention, the district court did not
impute an investment return from his asset but rather subtracted Buchanan’s equity in the
$1.4 million home from his 2018 capital base.
Finally, we reject Buchanan’s argument that the district court was bound to apply
inflation to find that his 2018 income is substantially less than his 2001 income. Inflation
operates as an “undiscriminating influence” on both partie s, “is already reflected in each
person’s income and expenses, and to consider it again as a separate factor gives it undue
emphasis and distorts the actual circumstances of the parties.” Heaton v. Heaton ,
329 N.W.2d 553, 555 (Minn. 1983). We turn from Buchanan’s argument about his income
to his argument about his expenses.
II
Buchanan’s arguments about his expenses are also unconvincing. He maintains that
the district court clearly erred by finding that his reasonable expenses in 2018 were
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substantially greater than his 2001 expenses. The district court could modify Hammond’s
spousal-maintenance obligation if his expenses increased and made the terms of the
original maintenance order unreasonable and unfair. Minn. Stat. § 518A.39, subd. 2(a)(2).
“The purpose of a maintenance award is to allow the recipient and the obligor to have a
standard of living that approximates the marital standard of living, as closely as is equitable
under the circumstances.” Peterka, 675 N.W.2d at 358. The determination of a party’s
reasonable expenses is a fact-specific inquiry requiring the district court to assess the
marital standard of living. Lee v. Lee , 775 N.W.2d 631, 642 (Minn. 2009). We therefore
review the district court’s factual findings regarding the credibility and reasonableness of
proposed budgets for clear error. See Melius v. Melius, 765 N.W.2d 411, 417 (Minn. App.
2009) (citing Nelson v. Nelson, 189 N.W.2d 413, 415 (Minn. 1971) (articulating clear-error
standard of review)). Because Buchanan did not demonstrate how the 97.5% increase in
expenses he maintains was commensurate with the marital standard of living and because
he did not submit sufficient information to allow the district court to assess his reasonable
needs or whether they grew, the district court did not clearly err by finding that his
reasonable expenses did not increase.
Buchanan stipulated that his reasonable monthly expenses at the time of the divorce
were $18,000, which he asserted by affidavit had increased to about $35,550 in 2018. He
also submitted a “personal cash flow model” showing categorized expenses from 2015 to
2017. Again, we defer to the district court’s credibility assessments, Sefkow, 427 N.W.2d
at 210, and the district court did not find the affidavit credible. The district court was
concerned by the lack of supporting evidence for Buchanan’s assertions and the fact that
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he relied only on his self-created, beginning-of-year projection rather than an end-of-year
report with proof of expenditures. Because Buchanan did not provide sufficient evidence
for the district court to determine or compare his reasonable expenses, he cannot now
contest the district court’s determination. See Eisenschenk v. Eisenschenk, 668 N.W.2d
235, 243 (Minn. App. 2003), review denied (Minn. Nov. 25, 2003). We conclude that the
district court did not clearly err by finding that Buchanan did not prove a substantial
increase in his reasonable expenses. This leads us to Buchanan’s argument about
Hammond’s expenses.
III
Buchanan contends t hat the district court incorrectly accepted as reasonable
Hammond’s expense budget. The district court could modify spousal maintenance if it
found that Hammond’s reasonable expenses substantially decreased so as to render the
terms of the extant maintenance order unreasonable and unfair. Minn. Stat. § 518A.39,
subd. 2(a). Buchanan maintains that the district court improperly credited Hammond’s
“inflated and unreasonable” expenses. The argument does not compel reversal.
Buchanan argues that Hammond’s budget wrongly included payment of her
post-marriage credit-card debt as an expense and included expenses she pays for her child.
The district court did not merely accept Hammond’s proposed budget of expenses, it
modified it and found the modified budget reasonable under the marital standard of living.
It accurately recognized that the judgment and decree only generally assigned Hammond
$15,989 in monthly expenses, including child-related expenses, without specifying
particular expense categories. The district court recognized that Hammond’s maintenance-
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based budget must be reduced to account for expenses she previously incurred for her
now-adult son. See Reif v. Reif, 410 N.W.2d 414, 416 (Minn. App. 1987) (providing that
expenditures for adult children cannot be considered part of an obligee’s need for
maintenance). It subtracted from Hammond’s overall budget $1,570 in child-support
payments along with an additional estimated amount she would have spent as her share of
child-related costs. It found that Hammond’s reasonable needs at the time of the divorce
were between $12,846 and $14,419. Buchanan does not dispute this finding. The district
court also credited a report by a financial advisor who reviewed Hammond’s bank and
credit-card account statements for 2017 and categorized Hammond’s 2017 expenses. The
district court also credited a 2018 proposed budget for Hammond that a financial analyst
prepared.
Buchanan challenges as unreasonable certain particulars in her budget. He takes
issue with her monthly pay ments of $320 in storage fees, $375 in monthly out-of-plan
therapy costs, $1,040 in automobile expenses, and $600 in credit-card interest payments.
The district court analyzed each expense c ategory, assessing reasonableness. We are in a
difficult position on appeal to second-guess those discretionary decisions. This is
particularly so where, as here, our point of comparison is a stipulation that includes no
expense categories at all. We emphasize that the question of reasonableness of expenses
does not rest on a general societal standard, but on the parties’ standard of living in the
marriage. The way the spousal- maintenance statute is written, “the long-standing affluent
lifestyle of the parties is an appropriate factor for the district court to consider.”
Chamberlain v. Chamberlain, 615 N.W.2d 405, 412 (Minn. App. 2000), review denied
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(Minn. Oct. 25, 2000). And Buchanan does not contest the district court’s finding that the
parties enjoyed an affluent lifestyle, including many “expensive luxuries,” such as a $1.4
million home, numerous luxury cars, and other expenses for which they incurred tens of
thousands of dollars in credit-card debt. That Buchanan stipulated to Hammond’s
uncategorized $15,989 in monthly expenses in 2001 supports the district court’s
marital-living-standard assessment and its conclusion that $15,178 in 2018 expenses is
consistent with that standard.
We reach this conclusion over Buchanan’s characterization of Hammond’s
admissions about what she had spent on her son before he reached adulthood. He says that
she admitted spending for her son 25% to 30% of her bill for groceries, out- of-pocket
medical expenses, fitness costs, and clothing. Buchanan admitted to spending 25% of her
grocery budget ($250) on her son and 25% of her acupuncture expenses (less than $40) on
her son, but she did not admit to spending 25% of her out-of -pocket medical expenses on
him. She instead testified that her reported therapy expenses include only her personal
expenses. And although she said that she bought clothes for him , she did not say that the
cost was 25% of her clothing budget. Buchanan identifies no evidence from which we can
hold that the district court’s calculations on these items constitutes clear error. We add that
his own reported 97.5% increase in his expenses over 2001—which he proffered as
reasonable under the marital standard of living—undermines his argument that
Hammond’s roughly 18% increase is excessive under the same marital-living standard. We
turn finally to Hammond’s income.
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IV
Buchanan argues that the district court clearly erred by failing to impute extra
income based on Hammond having “squandered” her assets since the divorce and failing
to consider her retirement-account distributions as part of her income. The district court
could have modified spousal maintenance if it found that Hammond’s income substantially
increased after the maintenance award. Minn. Stat. § 518A.39, subd. 2(a). But our review
informs us that the record supports the district court’s relevant factual findings.
The record supports the district court’s finding that Hammond’s 2001 income was
$14,393, based on $12,200 in spousal maintenance and $2,193 in investment income.
Hammond received $658,000 in liquid assets from the 2001 divorce, representing about
half of the $2,029,854 in marital assets minus $347,880 of equity in the marital home.
Although the district court listed her equity in the marital home as $341,888 instead of
$347,880, this finding is not clearly erroneous because Hammond averred in her affidavit,
which the district court found credible, that the home had unexpected mold and stucco
expenses. The district court based its finding of $2,193 in monthly investment income on
a 4% annual rate of return on her $658,000 in capital at the time of the divorce, the same
return rate it adopted for Buchanan’s investment income.
The record also supports the district court’s finding that Hammond’s income in 2018
was $19,410, based on $15,632 in spousal maintenance, $2,413 in investment income, and
$1,365 in Social Security income. It based the investment income again on a 4% return rate
on $724,003 in liquid assets. Although her investable assets would have increased to a
larger amount than that, Hammond testified by affidavit that she spent funds to prepare the
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marital house for sale, that she sold it in 2011 at a $125,000 loss, and that she had to borrow
money to pay taxes. On the evidence the district court found credible, the district court
reasonably declined to impute additional income to Hammond.
Buchanan’s 2001 and 2018 incomes reflect an increase of $1,585 monthly without
considering her increased spousal maintenance, or about 11%. The district court
appropriately included no retirement income from her IRA or 401(k) accounts, because she
was 69 years old at the time of Buchanan’s motion and she was not required to begin taking
withdrawals until December 2020, after the district court decided Buchanan’s motion. See
26 I.R.C. § 401(a)(9)(C)(i) (2018) (providing that person who reaches age 70, 1/2 in 2018
must take their first required minimum withdrawal by April 2019). The district court did
not clearly err in its findings related to Hammond’s income.
Conclusion
Because Buchanan has not identified any clear error in the district court’s findings
as to either parties’ income and expenses or as to the alleged substantial change in
circumstances, we hold that the district court did not abuse its discretion by denying
Buchanan’s motion to modify spousal maintenance. And because we do not disturb the
spousal-maintenance order, we need not address Hammond’s conditional related appeal.
Affirmed.