In re the Marriage of: Lynn Desiree Wallace v. Christopher Michael Wallace ( 2014 )

This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2012).
STATE OF MINNESOTA
IN COURT OF APPEALS
A13-2167
In re the Marriage of:
Lynn Desiree Wallace, petitioner,
Respondent,
vs.
Christopher Michael Wallace,
Appellant.
Filed October 6, 2014
Reversed and remanded
Johnson, Judge
Washington County District Court
File No. 82-FA-11-6803
Lynn Desiree Wallace, Naples, Florida (pro se respondent)
Mark Z. Hanno, Oakdale, Minnesota (for appellant)
Considered and decided by Johnson, Presiding Judge; Hooten, Judge; and Harten,
Judge.

Retired judge of the Minnesota Court of Appeals, serving by appointment
pursuant to Minn. Const. VI, § 10.
UNPUBLISHED OPINION
JOHNSON, Judge
Lynn Desiree Wallace and Christopher Michael Wallace were married for
approximately three years before their marriage was dissolved. On appeal from the
judgment dissolving the marriage, Christopher challenges the district court’s conclusion
that some of the funds in two bank accounts are non-marital property belonging to Lynn.
We conclude that the non-marital property in the bank accounts when the parties were
married was commingled with marital property acquired during the marriage and was not
traced to any other property. Accordingly, the district court erred by deeming some of
the funds in the two accounts to be non-marital property and awarding those funds to
Lynn. Therefore, we reverse and remand.
FACTS
The parties were married in April 2010. Lynn petitioned for dissolution of the
marriage in November 2011. The matter was tried on two days in September 2012.
At trial, Lynn sought an award of non-marital property consisting of a portion of
the funds in a checking account and a savings account at Wells Fargo Bank. Both
accounts belonged to Lynn before the marriage. Lynn testified that the wages she earned
during the marriage were deposited into the checking account, which she used to pay the
couple’s monthly bills. She also testified that when the balance of the checking account
was low, she would “borrow money” from the savings account and later would “repay”
the savings account with money she earned during the marriage. The parties stipulated to
the admission of exhibits consisting of monthly statements for the two accounts. The
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exhibits show the balances of the accounts in April 2010, the amounts that Lynn
deposited into the accounts during the marriage, the amounts that the parties withdrew
from the accounts during the marriage, the daily balances of the accounts throughout the
marriage, and the balances of the accounts at the end of the marriage.
At the conclusion of the trial, the district court requested proposed orders and
briefing on the “premarital claims,” among other issues. Lynn submitted a letter brief
and a proposed judgment outlining her non-marital claims in the balances of the Wells
Fargo accounts. She argued that a portion of the funds in each account should be deemed
non-marital based on the amounts of the beginning balances, deposits, withdrawals, and
ending balances. Specifically, Lynn argued that $2,137.77 of the funds in the checking
account and $20,076.91 of the funds in the savings account should be deemed non-
marital. Christopher simultaneously submitted a memorandum in which he argued that
Lynn “extensively co-mingled marital and nonmarital moneys” in such a way that
“rendered the original funds virtually untraceable.” Consequently, Christopher argued
that none of the funds in either account should be deemed non-marital. In March 2013,
the district court issued a judgment in which it essentially adopted Lynn’s proposal and
concluded that she is entitled to $1,182.27 of the funds in the checking account and
$20,076.91 of the funds in the savings account.
In April 2013, Christopher moved to amend the judgment. In a supporting
memorandum, Christopher accepted the district court’s premise that the funds in the
accounts could be deemed partially marital and partially non-marital and argued that the
district court should deem a lesser portion of each account to be non-marital.
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Specifically, Christopher argued that the district court should deem 3% of the ending
balance of the checking account and 35% of the ending balance of the savings account to
be non-marital. This method would result in non-marital interests of only $132.15 in the
checking account and only $9,632.67 in the savings account. In September 2013, the
district court denied Christopher’s motion. The district court made minor changes in the
amount of Lynn’s non-marital interest in the checking account to correct a clerical error.
The district court ultimately concluded that $1,682.27 of the funds in the checking
account and $20,076.91 of the funds in the savings account are non-marital funds
belonging to Lynn. Christopher appeals.
DECISION
Christopher argues that the district court erred by concluding that some of the
funds in the two bank accounts are non-marital assets belonging to Lynn. He contends
that because Lynn commingled the initial non-marital balance of each account with
money she earned during the marriage, and because she has not traced those non-marital
funds, all of the funds in both accounts are marital property. In short, Christopher renews
the argument that he presented to the district court before the issuance of the original
judgment. Lynn did not file a responsive brief. The matter is submitted for decision
despite the absence of a responsive brief. See Minn. R. Civ. App. P. 142.03.
In general, property that is acquired by a married person during the marriage is
subject to a rebuttable presumption that the property is marital property. Minn. Stat.
§ 518.003, subd. 3b (2012); Baker v. Baker, 753 N.W.2d 644, 649 (Minn. 2008); Risk ex
rel. Miller v. Stark, 787 N.W.2d 690, 696 (Minn. App. 2010), review denied (Minn.
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Nov. 16, 2010). Property that was “acquired before the marriage,” however, is presumed
to be non-marital property. Minn. Stat. § 518.003, subd. 3b. Upon the dissolution of a
marriage, non-marital property generally is awarded to the party to whom it belongs, and
marital property is divided equitably between the parties. Minn. Stat. § 518.58, subd. 1
(2012); Lee v. Lee, 775 N.W.2d 631, 636 (Minn. 2009).
If a married person with property acquired before the marriage wishes to maintain
the non-marital character of that property, he or she must either keep the non-marital
property separate from marital property or, if the non-marital property is “commingled
with marital property,” must trace the non-marital property to another asset. Olsen v.
Olsen, 562 N.W.2d 797, 800 (Minn. 1997). If a party cannot adequately trace non-
marital property, the district court must characterize the property as marital. Wopata v.
Wopata, 498 N.W.2d 478, 484 (Minn. App. 1993). If the historical facts are undisputed,
this court applies a de novo standard of review to a district court’s determination whether
property is marital or non-marital. Baker, 753 N.W.2d at 649; Risk, 787 N.W.2d at 696.
In this case, the parties obviously commingled marital property (money from
income Lynn earned during the marriage) with non-marital property (money in the Wells
Fargo accounts at the time they were married). According to the district court’s findings,
more than $230,000 flowed through the checking account during the parties’ relatively
brief marriage. During that same period, the parties deposited approximately $37,000
into, and withdrew approximately $30,000 from, the savings account. Lynn has made no
effort to trace any of the funds that constituted the initial balances of the accounts by
identifying any other particular item of tangible property that was purchased using those
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non-marital funds. In other cases in which a bank account was used to pay ordinary
living expenses and non-marital funds were withdrawn from the account but not traced to
another asset, this court has concluded that the commingling of non-marital and marital
funds converted all funds in the account into marital property. See Haaland v. Haaland,
392 N.W.2d 268, 272 (Minn. App. 1986); Rudbeck v. Rudbeck, 365 N.W.2d 330, 334
(Minn. App. 1985); Linderman v. Linderman, 364 N.W.2d 872, 876-77 (Minn. App.
1985).
As stated above, Lynn did not file a responsive brief. Nonetheless, we have
reviewed her submissions to the district court. In her letter brief, Lynn cited the law
requiring either segregation or tracing and appears to have acknowledged that she did not
conduct a conventional form of tracing. Rather, she relied on what she described as “an
accounting technique” that identified “all deposits and withdrawals during the marriage
and to the extent that withdrawals exceeded deposits, . . . reduced the non-marital interest
in the account by the same amount.” Lynn cited only one case to support her argument,
Griffith v. Griffith, 415 N.W.2d 763 (Minn. App. 1987), review denied (Minn. Feb. 12,
1988). But that opinion provides no support for the accounting technique she suggested.
In Griffith, this court concluded that cash proceeds from the sale of non-marital real
property “were traced, item by item, through detailed evidence at trial.” Id. at 766. We
reasoned that the facts of Griffith are distinguishable from the facts of Haaland, which
we described as a case involving “commingled funds from many sources placed in the
joint account and various disbursements made for a variety of reasons.” Id. (citing
Haaland, 392 N.W.2d 268). The facts of this case are fairly similar to the facts of
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Haaland and distinguishable from the facts of Griffith. Thus, we conclude that Lynn’s
argument to the district court is not supported by the relevant caselaw.
In the memorandum that Christopher submitted to the district court, he relied on
the well-established caselaw requiring non-marital assets to be segregated or to be traced
to another asset. The district court erred by not relying on the cases cited by Christopher
and the similar cases we have cited above, Haaland, Rudbeck, and Linderman. That
body of caselaw compels the conclusion that all of the funds in the Wells Fargo accounts
are marital property and should be divided equitably. Therefore, we reverse the district
court’s award to Lynn of some of the funds in the Wells Fargo accounts as non-marital
property, and we remand for entry of an amended judgment and decree. See Griffith, 415
N.W.2d at 766.
Reversed and remanded.
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