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STATE OF MINNESOTA IN COURT OF APPEALS A07-0110 In re the Matter of: Elaine Irene Lee, petitioner, Respondent, vs, Raymond Michael Lee, Appellant. Filed March 25, 2008 Affirmed in part as modified and reversed in part Klaphake, Judge Washington County District Court File No. F3-92-592 Robert L. Weiner, Robert L. Weiner & Associates, 701 Fourth Avenue South, Suite 500, Minneapolis, MN 55415 (for respondent) Timothy W. J. Dunn, 1150 U.S. Bank Center, 101 East Fifth Street, St. Paul, MN 551011808 (for appellant) Considered and decided by Klaphake, Presiding Judge; Minge, Judge; and Schellhas, Judge. SYLLABUS 1. Pension benefits received by a maintenance obligor representing the

premarital portion of the obligor's pension constitute nonmarital property and may not be treated as "future income" available for maintenance. 2. When a dissolution decree awards a maintenance obligee one-half of a

maintenance obligor's pension benefits "accumulated during the marriage" as a division

of marital property, the obligor's receipt of pension benefits in excess of the amount received by the obligee is not "future income" available for maintenance until the obligor has received benefits equal to the value of the original property award. 3. When the district court found "reasonable needs" of each party in a prior

dissolution proceeding and neither party in the current proceeding establishes that these needs have changed, the district court may apply the previously established needs as the current needs of the parties. 4. The district court may not apply a modified maintenance obligation

retroactive to a date that lacks a factual basis in the record. 5. The district court may not order a maintenance obligor to obtain new life

insurance as security for a modified maintenance award without evidence of insurability, cost of insurance, and ability to pay. 6. The district court may award conduct-based attorney fees incurred to

collect previous maintenance arrears judgments. OPINION KLAPHAKE, Judge Appellant Raymond Michael Lee challenges the district court's order modifying a spousal maintenance award, establishing the current needs of the parties, requiring him to obtain life insurance to secure maintenance payments, and awarding respondent Elaine Irene Lee conduct-based attorney fees for her collection of maintenance arrears judgments. Appellant also asserts that the district court abused its discretion by

considering respondent's motions on various maintenance issues and attorney fees when 2

her supporting documents were not timely filed. Appellant further claims that the district court erred by treating his pension benefits as income available to satisfy his maintenance obligation and by failing to terminate his maintenance obligation after his retirement caused a decrease in his income that left his expenses in excess of his income. We reverse the district court's order modifying the amount of the maintenance award and requiring appellant to obtain life insurance to secure maintenance payments, reduce respondent's maintenance award to zero, and modify the district court's order so that it retains jurisdiction over the issue of future maintenance, consistent with this opinion. Finally, we affirm the district court's finding of current needs, its award of conduct-based attorney fees, and its application of procedural rules regarding late filings. FACTS The parties' 25-year marriage was dissolved on June 7, 1993, and the original decree awarded respondent permanent spousal maintenance of $650 per month and allocated equally between the parties appellant's pension benefits derived from three separate plans that had accumulated during the marriage. Subsequently, the court

similarly divided the interest in two defined benefit pension plans that were omitted from the 1993 decree. In June 1994, appellant was laid off from his job as a journeyman electrician and moved to reduce his spousal maintenance obligation. On August 17, 1994, the district court reduced spousal maintenance to $341.08 per month because appellant's sole income was his unemployment compensation. Nearly ten years later, on February 27, 2004, the district court reinstated the original $650 per month maintenance obligation retroactive to 3

the date of its previous order and increased the obligation to $825 per month retroactive to November 1, 2003. At that time, respondent had retired from employment due to medical disability. The court also entered judgment against appellant for maintenance arrears and awarded respondent attorney fees. This court affirmed the February 27, 2004 order. Lee v. Lee, No. A04-1070 (Minn. App. Apr. 26, 2005). Respondent then initiated garnishment proceedings against appellant, incurring further attorney fees. On July 13, 2005, appellant, now retired, moved to terminate spousal maintenance, based on a decrease in his income and an increase in respondent's income. On August 8, 2005, respondent served and filed a responsive motion, without supporting affidavits, seeking maintenance for the duration of her life, security for spousal maintenance, and attorney fees. Both parties later filed affidavits and objections, and the court heard the matter on August 18, 2005. In considering the maintenance issue, the district court included in its calculation of appellant's monthly income available for maintenance all payments that he receives from his pension benefit plans, except $795.64, representing the amount respondent receives from her award of pension benefits, for a net income of $3,227.14. Appellant's income, excluding all pension benefits, was $1,555. The court found respondent's net monthly income, excluding spousal maintenance, was $1,674.14. The court also found that neither party submitted reliable evidence of changes in his or her respective expenses after the February 27, 2004 order and therefore used as current expenses that order's findings of $1,950 for respondent and $2,100 for appellant. The court determined that appellant had suffered a substantial diminution in income, making the original 4

maintenance award unreasonable and unfair. The court found that respondent had a monthly shortfall of $275.14, based on deducting her $1,950 in monthly expenses from her $1,674.14 in net monthly income, while appellant had a monthly surplus of $1,127.14, based on deducting his $2,100 in monthly expenses from his $3,227.14 in net monthly income. The court then "balanc[ed] . . . the parties' surpluses and shortages" to reduce spousal maintenance to $700 per month, making the award retroactive to May 1, 2006. The court also ordered appellant to secure payment of spousal maintenance by obtaining a life insurance policy naming respondent as the beneficiary and ordered him to pay attorney fees for the collection of previous maintenance arrears judgments, but the court denied both parties' motions for attorney fees for the present proceedings. ISSUES 1. Did the district court err in modifying appellant's spousal maintenance

obligation based on a calculation that included appellant's pension benefits as income available to satisfy his maintenance obligation? 2. Did the district court err by using the parties' past expenses to establish

their current needs in determining whether to modify spousal maintenance? 3. Did the district court abuse its discretion by modifying spousal maintenance

retroactive to a date with no factual basis in the record? 4. Did the district court abuse its discretion by ordering appellant to obtain life

insurance to secure the payment of spousal maintenance? 5. Did the district court abuse its discretion in its award of attorney fees?

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6.

Did the district court abuse its discretion by considering respondent's

motion for lifetime spousal maintenance, security for spousal maintenance, and attorney fees, when supporting documents were untimely filed? ANALYSIS I. Spousal Maintenance A district court may modify an order for spousal maintenance upon a showing of a substantial increase or decrease in the gross income or need of either party that makes the terms of the original order "unreasonable and unfair." Minn. Stat.

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