In re the Marriage of: Lana Michelle Kerola v. Greg William Kerola
A16-155
| Minn. Ct. App. | Nov 7, 2016Background
- Marriage dissolved after four years; no children. Each party owned a premarital residence; parties stipulated each would keep his/her premarital home as nonmarital property.
- Greg’s Allina 401(k) valued at $39,418; in 2013 Greg took a ~$10,000 loan from the 401(k) and deposited proceeds into the parties’ joint account to repair preexisting mold/structural damage in Greg’s White Bear Lake home (his premarital home).
- Parties submitted competing expert valuations about which portion of the 401(k) (and the loan) was marital vs. nonmarital; district court adopted respondent Lana’s proposed split and treated the loan/proceeds as nonmarital tied to Greg’s home.
- Greg inherited $54,500 in 2010; after some spending, about $22,000 remained and was ultimately transferred into an account in Lana’s name; Lana withdrew funds after separation and used $8,000 to reimburse herself for paying off a second mortgage on the White Bear Lake home and $13,435 to pay off a secured boat loan.
- District court awarded Greg a nonmarital interest of $13,435 in the Bayliner boat (remaining boat equity $1,565 treated marital) rather than awarding him cash from the inheritance; Greg appeals classification of the 401(k) loan and argues he should have received cash for the inheritance portion.
Issues
| Issue | Plaintiff's Argument (Greg) | Defendant's Argument (Lana) | Held |
|---|---|---|---|
| Whether the 401(k) loan and its proceeds are marital or nonmarital | Loan was taken and spent during the marriage for repairs to the house they lived in, so proceeds are marital | Proceeds benefitted Greg’s premarital (nonmarital) White Bear Lake home; loan should be nonmarital | Court held loan/proceeds nonmarital because they benefitted Greg’s premarital home and parties had stipulated that home was his nonmarital property |
| Whether a loan against an asset during marriage automatically reduces marital portion of that asset | Loan should be treated as against marital interest, increasing Greg’s nonmarital share of remaining 401(k) | Because loan proceeds were spent to benefit nonmarital property, Kerr analogy is inapposite; loan is nonmarital | Court rejected Greg’s Kerr-based argument and affirmed nonmarital designation |
| Whether the district court abused discretion by awarding Greg boat interest instead of cash from inheritance | Lana dissipated Greg’s nonmarital inheritance without consent; he should receive cash return | The inheritance proceeds were converted into an interest in the jointly owned boat; awarding the boat interest gives Greg the nonmarital value in kind | Court held no abuse of discretion: awarding boat interest as the nonmarital asset ‘‘acquired in exchange for’’ the inheritance was acceptable |
| Whether equalizer payment should be adjusted based on these rulings | Greg seeks adjustment if other divisions changed | No other math errors shown | Court refused to adjust the equalizer absent error or prejudice |
Key Cases Cited
- Shirk v. Shirk, 561 N.W.2d 519 (Minn. 1997) (stipulations, once accepted, merge into judgment)
- Burns v. Burns, 466 N.W.2d 421 (Minn. App. 1991) (standard of review: legal conclusions de novo; findings for clear error)
- Baker v. Baker, 753 N.W.2d 644 (Minn. 2008) (burden to overcome presumption that property acquired during marriage is marital)
- Justis v. Justis, 384 N.W.2d 885 (Minn. App. 1986) (division of debt treated like division of assets)
- Schmitz v. Schmitz, 309 N.W.2d 748 (Minn. 1981) (formula for allocating increase in value between marital and nonmarital components)
- Kerr v. Kerr, 770 N.W.2d 567 (Minn. App. 2009) (refinancing/homestead equity allocation — distinguished in this case)
- Antone v. Antone, 645 N.W.2d 96 (Minn. 2002) (broad discretion in property division; need only be just and equitable)
- Melina v. Chaplin, 327 N.W.2d 19 (Minn. 1982) (issues not briefed are forfeited)
- Loth v. Loth, 35 N.W.2d 542 (Minn. 1949) (reversal requires showing significant prejudice)