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.