author: LANCASTER, Justice.

text:
    STATE of Minnesota, Respondent, v. Brian Keith PIPPITT, Appellant.
    No. C4-01-775.
    Supreme Court of Minnesota.
    June 13, 2002.

      Melissa Sheridan, Asst. State Public Defender, St. Paul, MN, for appellant.
    Mike Hatch, Attorney General, Kelly O’Neill Moller, Asst. Attorney General, St. Paul, MN, Bradley C. Rhodes, Aitkin County Attorney, Aitkin, MN, for respondent.
   OPINION

LANCASTER, Justice.

A jury found appellant Brian Keith Pip-pitt guilty of first-degree murder in violation of Minn.Stat. § 609.185(1) (2000), and first-degree murder while committing burglary in violation of Minn.Stat. § 609.185(8) (1996), for his role in the death of Evelyn Malin. The district court entered convictions for both crimes and imposed two concurrent life sentences. Pippitt raises six issues in this direct appeal: first, whether the evidence was sufficient to support his convictions; second, whether he is entitled to a new trial because of errors in the jury instructions; third, whether the district court abused its discretion by refusing to admit a letter into evidence; fourth, whether newly-discovered evidence entitles him to a new trial; fifth, whether the state withheld exculpatory information from the grand jury and misled the grand jury to obtain an indictment; and sixth, whether one of his convictions and sentences must be vacated. We affirm in part and vacate in part.

Evelyn Malin owned and operated the Dollar Lake Store in Aitkin County from 1945 until her death in 1998. The Dollar Lake Store was a small convenience store that sold cigarettes, beer, soda, candy, and other items. Malm’s residence was attached to the store and consisted of a kitchen, a bedroom, and a living room that she used for storage. A curtain separated the store from the kitchen. A trap door in the kitchen led to a basement she used for additional storage.

Malin was 84 years old when she died. She was deaf in one ear and wore a hearing aid in her other ear. She walked with the assistance of two canes and could not walk down stairs. Because of her physical frailty, Malta’s daughter, Norma Horner, and Horner’s friend, Jerry Horseman, helped Malta open and close the store every day. Horner and Horseman usually arrived at 8:30 a.m. and returned at 10:00 p.m.

On February 24, 1998, Horner stopped by the store at 8:30 a.m. to help Malta open the store. Horner and Horseman went to the store that evening between 7:00 p.m. and 7:30 p.m., and left between 8:00 p.m. and 8:15 p.m. At approximately 9:00 p.m., Horner called Malin and Malin stated that she was not feeling well and was going to go to bed early. Malin told Horner that she and Horseman did not have to return to the store that evening.

The next morning, Horner and Horseman arrived at the store at 8:30 a.m. Because the store’s open sign was not illuminated and newspapers were still on the steps, they assumed that Malin had overslept. While walking to the back door, they noticed that a screen had been removed from a ground-floor window and that panes of glass had been broken or removed from a basement window. Hor-ner knocked on the back door and yelled in an effort to wake Malta. When Malin did not respond, Horner told Horseman to return to Horner’s cabin and call 911. Hor-ner continued her efforts to wake Malin.

Officers from the Aitkin County Sheriffs Office arrived at the store a few minutes after 9:00 a.m. The front and back doors were locked. The frame around the screen that had been removed from the ground-floor window displayed freshly exposed wood. One of the officers kicked in the back door and the officers searched Malin’s house and store. An officer found Malin’s body in her bedroom, lying in a pile of blankets and clothes. A mattress had been thrown over her. Malin’s ankle was cold and she did not have a pulse. The officers left the building and secured the scene.

That afternoon, a team from the Minnesota Bureau of Criminal Apprehension arrived to investigate Malin’s death. The team observed pry marks on wood from the basement window and determined that the basement window was the point of entry. The team concluded that Malin had died at least 12 hours but probably less than 36 hours before 6:30 p.m. on February 25. Two days later, Malin’s son walked through the store and noticed that beer, cigarettes, and money were missing.

The medical examiner who performed an autopsy on Malin testified that she displayed injuries associated with manual strangulation and blunt force trauma. Malin had been struck with sufficient force to cause internal injuries to her head. She also displayed defense-type injuries in her upper extremities. The examiner concluded that manual strangulation was the primary cause of Malin’s death and that blunt force trauma could have been a contributing factor in her death.

Approximately one year after Malin’s death, the investigation focused on a group of individuals, among them Raymond Mis-quadace (Raymond). During the second of four interviews, Raymond confessed and implicated Pippitt, Keith Misquadace (Keith), Neil King, and Donald Hill in Ma-lin’s death. Raymond reached a plea agreement under which the charge against him was reduced from murder to manslaughter, and he agreed to serve 58 months in prison and to testify if called by the state. Hill also confessed to Malin’s murder and confirmed that the individuals identified by Raymond were involved in her death.

The state called Raymond to testify at Pippitt’s trial. Raymond testified that Pippitt, Keith, and King picked up Raymond and Hill in a two-door car from a house in East Lake between 3:00 p.m. and 4:00 p.m. on February 24, 1998. They planned to go to a party in Cloquet. First, they went to Wanda Misquadace’s (Wanda) house on the Sandy Lake Reservation. They arrived at Wanda’s between 4:00 p.m. and 4:30 p.m., stayed there for approximately one or two hours, and then left for Cloquet. On the way, they stopped at the Village Pump in Tamarack where Pippitt bought beer. They continued to drive to Cloquet. When they arrived in Sawyer, they decided to turn around because they were running out of gas. As they passed the Village Pump, they discussed purchasing more beer, but did not stop. They passed several bars but did not consider stopping at them. They arrived at the Dollar Lake Store at approximately 9:00 p.m. or 10:00 p.m., but it was closed. The five men exited the car and stretched. After a brief discussion, Keith walked to the left side of the store, Hill walked to the right side of the store, and Pippitt walked to the store’s front door. King and Raymond returned to the car. Raymond thought that Keith, Hill, and Pippitt were going to try to enter the store to obtain beer.

A few moments later, Raymond heard a “little thump or crash” and a dog barking. At some point, he noticed the front door open and shadows moving inside the store. Pippitt was no longer standing at the front door. Raymond then saw Pippitt, Keith, and Hill return to the car. Keith and Hill were carrying cigarettes and beer. Pippitt was carrying a bag and a long object. Raymond testified that Keith’s hand was bloody and that he wrapped it in his shirt.

Raymond testified that when the five men drove away from the store, Keith was “jittery” and “hyper” and said that he choked Malin while Pippitt hit her. Raymond testified that Pippitt told the group to be quiet about what had happened at the store. The group arrived at a house on the Sandy Lake Reservation approximately 30 to 45 minutes after leaving the store. According to Raymond, Keith continued to talk about what had happened at the store, stating that they had killed Ma-lin.

The state also called Peter Arnoldi to testify. Arnoldi met Pippitt at the Minnesota Security Hospital in Saint Peter in May 1999. According to Arnoldi, he and Pippitt discussed their cases on a daily basis for the two-and-one-half weeks that they spent at the hospital together. According to Arnoldi, Pippitt claimed that a group went to the store in a van to get some cigarettes, and burglarized the store through a window. Arnoldi also claimed that Pippitt stated someone had called for Pippitt’s assistance to hold Malin down, and that he did so while they choked or suffocated her by stuffing tissue in her mouth. According to Arnoldi, Pippitt claimed the group then stole some cigarettes and beer. Arnoldi and Pippitt also discussed an alibi that Pippitt planned to offer at his trial — that someone would place him at a casino.

At trial, Pippitt attacked the credibility of both Raymond and Arnoldi. Raymond’s uncle testified that Raymond is “not very truthful about anything” and that Raymond would lie under oath to escape trouble. Arnoldi testified that he did not request any deals in exchange for his testimony. The investigating officer who took Arnoldi’s statement testified, however, that Arnoldi requested a transfer out of the Saint Cloud prison in exchange for his statement. The investigating officer requested that Arnoldi be transferred, and Arnoldi was transferred from Saint Cloud to Faribault. Pippitt also attempted to impeach Arnoldi by introducing evidence of Arnoldi’s prior convictions. From 1989 to 1999, Arnoldi had five convictions for theft, one conviction for theft by false representation, four convictions for check forgery, and three convictions for third-degree burglary.

In addition to attacking the credibility of Raymond and Arnoldi, Pippitt presented an alibi. Michael Misquadace (Michael), Pippitt’s nephew, testified that he was with Pippitt on February 24, 1998. Michael and Pippitt went to a pawn shop where Pippitt pawned a cassette, radio, and CD player for $30. They then went to a casino where Michael had an interview at 1:00 p.m. Pippitt spent the afternoon playing blackjack. Michael had another interview at the casino at 5:00 p.m. After Michael’s second interview, Michael and Pippitt picked up Michael’s brother, Brandon, and visited one of Michael’s cousins. Michael, Brandon, and Pippitt then visited Joanne Kruse, Michael’s fiancé, arriving at her parents’ house at approximately 6:30 p.m. Michael and Brandon went inside while Pippitt remained in a van and drank. After “a while,” Michael, Brandon, and Pip-pitt left, purchased some malt liquor, and went to Michael’s grandmother’s house.

Kruse testified that Michael, Brandon, and Pippitt stopped by her house late on February 24, 1998. On cross-examination, she admitted that she had no independent recollection of February 24, 1998, and did not know when they arrived. Kruse’s sister, Shannon Webb, remembered “very vaguely” that Michael, Brandon, and Pip-pitt stopped by her parents’ house in late February 1998. Webb testified they arrived after 10:00 p.m. Webb’s fiancé, Wesley Misquadace, also testified that Michael, Brandon, and Pippitt stopped by Webb’s parents’ house in late February 1998.

The state called Allen Forschen, the casino’s vice-president of security, to testify in rebuttal. Forschen testified that Pip-pitt had been a member of the Grand Advantage Player Club (GAPC) since 1995. The casino issues a card to each GAPC member that allows the casino to record members’ play. Members who use the card when playing obtain benefits from the casino. Forschen did not find any record of Pippitt playing at the casino on February 24,1998.

Pippitt testified in surrebuttal. He testified that he was gambling in the casino on February 24, 1998, and that he usually does not use his GAPC card when he plays blackjack. On cross-examination, Pippitt acknowledged that he gave three statements to investigating officers, but did not inform the officers of his alibi in any of the statements.

The jury found Pippitt guilty of first-degree murder and first-degree murder while committing burglary. The district court entered convictions for both crimes and imposed two concurrent life sentences. This case presents Pippitt’s direct appeal from the judgments of conviction.

I.

Pippitt claims the evidence is insufficient to support his first-degree murder convictions because it consists of only testimony given by an accomplice and a jailhouse informant. When considering a sufficiency of the evidence challenge, we review the evidence presented at trial to determine whether the jury could reasonably have found the defendant guilty of the crime charged. State v. Vick, 632 N.W.2d 676, 690 (Minn.2001); State v. Pilcher, 472 N.W.2d 327, 334-35 (Minn.1991). We take the evidence in the light most favorable to the state and assume that the jury believed the state’s witnesses and disbelieved any contradictory evidence. State v. Voorhees, 596 N.W.2d 241, 252 (Minn.1999); State v. Merrill, 274 N.W.2d 99, 111 (Minn.1978). The assumption that the jury believed the state’s witnesses is particularly appropriate when resolution of the case depends on conflicting testimony, as it is the function of the jury to evaluate the credibility of the witnesses. State v. Pieschke, 295 N.W.2d 580, 584 (Minn.1980); see also State v. Miles, 585 N.W.2d 368, 373 (Minn.1998).

To convict Pippitt of first-degree premeditated murder, the state had to prove beyond a reasonable doubt that he “cause[d] the death of a human being with premeditation and with intent.” Minn. Stat. § 609.185(1). To convict Pippitt of first-degree murder while committing burglary, the state had to prove beyond a reasonable doubt that he “cause[d] the death of a human being with intent to effect the death of the person * * *, while committing or attempting to commit burglary.” Minn.Stat. § 609.185(3).

Raymond’s testimony, particularly as it relates to Keith’s description of what Keith and Pippitt did to Malin, supports the jury’s verdicts. Pippitt maintains that his convictions must be reversed because Raymond is an accomplice and the state failed to corroborate Raymond’s testimony. “A conviction cannot be had upon the testimony of an accomplice, unless it is corroborated by such other evidence as tends to convict the defendant of the commission of the offense * * Minn.Stat. § 634.04 (2000). If a witness could have been indicted and convicted for the crime with which the accused is charged, the witness is an accomplice for purposes of section 634.04. State v. Henderson, 620 N.W.2d 688, 701 (Minn.2001); State v. Jones, 311 Minn. 472, 473, 249 N.W.2d 893, 893 (1977). The state agrees that Raymond is an accomplice for purposes of section 634.04, and we therefore assume that Raymond is an accomplice for purposes of this analysis.

“Corroborative evidence supporting the testimony of an accomplice must be ‘weighty enough to restore confidence in the accomplice’s testimony, confirming its truth and pointing to the defendant’s guilt in some substantial way.’ ” State v. Hooper, 620 N.W.2d 31, 39 (Minn.2000) (quoting State v. Norris, 428 N.W.2d 61, 66-67 (Minn.1988)). We view corroborative evidence in the light most favorable to the verdict and do not require it to establish a prima facie case of the defendant’s guilt. State v. Johnson, 616 N.W.2d 720, 727 (Minn.2000); State v. Adams, 295 N.W.2d 527, 533 (Minn.1980). All inconsistencies in the evidence are resolved in favor of the state. State v. Bergeron, 452 N.W.2d 918, 924 (Minn.1990).

Pippitt contends that Arnoldi’s testimony fails to corroborate the accomplice testimony because it is inconsistent with Raymond’s testimony and the physical evidence. We recognize that there are inconsistencies between Arnoldi’s testimony and the other evidence presented at trial. For example, Raymond testified that the group drove a two-door car to the Dollar Lake Store, whereas Arnoldi testified that Pippitt told him the group drove to the store in a van. In addition, Raymond testified he thought Pippitt, Keith, and Hill were going to enter the store to obtain beer, yet Arnoldi testified that Pippitt stated the group went to the store to obtain cigarettes. Furthermore, Arnoldi testified that Pippitt told him someone stuffed tissue into Malin’s mouth, yet there is no evidence in the record that tissue was found in her mouth.

The state argues that Arnoldi’s testimony regarding Pippitt’s statements about the offense corroborated Raymond’s testimony. Arnoldi’s testimony was consistent with Raymond’s testimony on a number of points. Arnoldi testified, for instance, that Pippitt admitted that he held Malin down while Malin was suffocated or choked. Similarly, Raymond testified that Keith admitted to choking Malin while Pippitt beat her. Raymond testified that Keith and Hill returned to the car with beer and cigarettes, and Arnoldi testified that Pip-pitt admitted the group stole beer and cigarettes.

Physical evidence was also consistent with the testimony of Raymond and Arnol-di. Window panes were removed from a basement window, and Arnoldi testified that Pippitt told him they entered through a window. The autopsy on Malin’s body revealed that manual strangulation was the primary cause of death, consistent with the testimony of both Raymond and Arnol-di. Malin displayed injuries associated with blunt force trauma and defense-type injuries. She had been hit with sufficient force to cause internal injuries to her head. Consistent with the testimony of Raymond and Arnoldi, beer and cigarettes were missing from the store.

Raymond’s testimony is corroborated on the essential issue of how the murder occurred — that Pippitt participated in choking Malin. This corroboration is “weighty enough to restore confidence in the accomplice’s testimony, confirming its truth and pointing to the defendant’s guilt in some substantial way.” Norris, 428 N.W.2d at 66-67. In contrast, the inconsistencies in the testimony of Raymond and Arnoldi— the nature of the vehicle driven to the store and whether the group sought beer or cigarettes — are resolved in favor of the state. See Bergeron, 452 N.W.2d at 924. Accordingly, we conclude that Raymond’s testimony was sufficiently corroborated by Arnoldi’s testimony to support the verdict under section 634.04.

At oral argument before this court, Pip-pitt’s counsel acknowledged that Arnoldi’s testimony, if believed, corroborated Raymond’s testimony. Pippitt nonetheless asks us to completely discount Arnoldi’s testimony, arguing that Arnoldi is not credible. We reject the premise of Pip-pitt’s argument, specifically, that as a matter of law Arnoldi’s testimony was not worthy of belief by the jury. See State v. Folkers, 581 N.W.2d 321, 326 (Minn.1998) (rejecting defendant’s argument that impeachment rendered witness’s testimony unworthy of belief as a matter of law); State v. Stevens, 248 Minn. 309, 313, 80 N.W.2d 22, 26 (1956) (stating that even if jurors believe that a witness knowingly and willfully testified falsely to a material fact, they may still believe witness’s testimony as to other facts).

We acknowledge that Arnoldi’s credibility was seriously called into question through the introduction of evidence of his multiple prior convictions for theft, forgery, and third-degree burglary and through conflicting testimony about his motivation for giving a statement in this case. However, weighing the credibility of witnesses is a function exclusively for the jury. Pieschke, 295 N.W.2d at 584. In this case, the jury heard the impeachment evidence and must have believed Arnoldi’s testimony despite that evidence. Arnoldi’s testimony was the only evidence corroborating Raymond’s account of Pippitt’s participation in Malin’s murder. Given the district court’s instruction to the jury that they must find corroboration, the jury must have found sufficient corroboration in Arnoldi’s testimony. Indeed, the district court instructed the jury that evidence to corroborate the testimony of an accomplice “must do more than merely show that a crime was committed or show the circumstances of the crime,” and that evidence suffices to corroborate an accomplice’s testimony if “it tends to show that the defendant committed a crime and that taken with the testimony of an accomplice you are convinced beyond a reasonable doubt that the defendant committed the crime.” We assume that the jury followed the district court’s instructions. State v. Ferguson, 581 N.W.2d 824, 833 (Minn.1998). Therefore, we may not reject Arnoldi’s testimony as unworthy of belief.

Because it was for the jury to evaluate Arnoldi’s testimony in light of the impeachment evidence, and because that testimony sufficiently corroborated Raymond’s testimony, the evidence was sufficient to support Pippitt’s convictions.

II.

Pippitt claims that he is entitled to a new trial because the district court did not instruct the jury that it could not draw any inference from his failure to testify in his own defense. The state argues that the district court’s instructions were proper, and even if the instructions were erroneous, Pippitt waived his right to appeal on this basis.

In Minnesota, the standard instruction regarding a defendant’s right not to testify is:

The State must convince you by evidence beyond a reasonable doubt that the defendant is guilty of the crime charged. The defendant has no obligation to prove innocence. The defendant has the right not to testify. This right is guaranteed by the federal and state constitutions. You should not draw any inference from the fact that the defendant has not testified in this case.

10 Minn. Dist. Judges Ass’n, Minnesota Practice — Jury Instruction Guides, Criminal, CRIMJIG 3.17 (4th ed.1999). When requested by a criminal defendant who did not testify at trial, a state trial judge must give a no-adverse-inference instruction to the jury. McCollum v. State, 640 N.W.2d 610, 616 (Minn.2002) (citing Carter v. Kentucky, 450 U.S. 288, 305, 101 S.Ct. 1112, 67 L.Ed.2d 241 (1981)).

In this case, Pippitt did not request the district court to instruct the jury that it could not draw an adverse inference from his failure to testify in his own defense. Instead, Pippitt’s counsel asked the district court simply to instruct the jury that Pip-pitt had the right not to testify. The district court asked Pippitt personally whether he wanted such an instruction: “Is it your desire that I give an instruction that advises the jury that you have the right not to testify?” Pippitt answered, “I do.” The district court then stated: “All right. I will give that instruction and then in the manner that I indicated [in the proposed jury instructions].” The proposed jury instructions did not contain an instruction similar to the final sentence of CRIMJIG 3.17. Neither Pippitt nor the state objected to the proposed jury instructions.

Pippitt testified at trial in surrebuttal, claiming that he was gambling in the casino on February 24, 1998. Under these circumstances, instructing the jury on how to consider his failure to testify would have been thoroughly confusing to the jury. Pippitt failed to request such an instruction, but more importantly, he did testify in his own defense. Therefore, we conclude that the district court did not err by failing to instruct the jury that it could not draw any inference from Pippitt’s failure to testify in his own defense.

III.

In his pro se supplemental brief, Pippitt argues that the district court abused its discretion by excluding evidence of a letter allegedly written by Raymond to Joseph Ranberg. When Pippitt questioned Raymond about the letter at trial, Raymond testified he never wrote a letter to Ranberg. Ranberg was not called as a witness. The district court refused to admit the letter because Pippitt failed to establish a foundation and had not disclosed the letter to the state in discovery.

We will not reverse a district court’s evidentiary ruling absent an abuse of discretion. State v. Lindsey, 632 N.W.2d 652, 662 (Minn.2001); State v. Glaze, 452 N.W.2d 655, 660 (Minn.1990). “The requirement of authentication or identification as a condition precedent to admissibility is satisfied by evidence sufficient to support a finding that the matter in question is what its proponent claims.” Minn. R. Evid. 901(a). In this case, Raymond testified that he néver wrote a letter to Ranberg and there is no other evidence regarding the letter. In short, there is no evidence that the letter is what Pippitt claims it to be. Thus, Pippitt failed to establish proper foundation for the letter, and the district court did not abuse its discretion by excluding it.

IV.

In his pro se supplemental brief, Pippitt asserts that he is entitled to a new trial based on newly-discovered evidence. He claims Craig Licari introduced himself to Pippitt in prison as being a former patient with Pippitt and Arnoldi at the Minnesota Security Hospital. Pippitt claims that Licari recounted a conversation between Licari and Arnoldi in which Ar-noldi stated that “[Pippitt] was bummed out about his charge and that he was innocent of his charge.”

Pippitt’s newly-discovered evidence claim is not properly before the court because he did not present it to the district court through either a motion for a new trial or a petition for postconviction relief. See State v. Hodgson, 512 N.W.2d 95, 99 (Minn.1994) (refusing to consider a defendant’s newly-discovered evidence claim on direct appeal from judgment of conviction). Therefore, we decline to address the newly-discovered evidence claim.

V.

Also in his pro se supplemental brief, Pippitt contends that the state withheld exculpatory information from the grand jury and misled the grand jury to obtain an indictment. Pursuant to Minn. R.Crim. P. 17.06, subd. 2, “[a]ll objections to an indictment * * * shall be made by motion as provided by Rule 10.01.” A motion, other than an objection to jurisdiction or a claim that the indictment fails to charge an offense, must be served no later than three days before the omnibus hearing, unless the court extends the deadline for good cause. Minn. R.Crim. P. 10.04, subd. 1, 17.06, subd. 3; State v. Whittaker, 568 N.W.2d 440, 448 (Minn.1997). “Failure to include in a motion all defenses, objections, issues, and requests then available constitutes a waiver thereof, unless the court for good cause shown grants relief from the waiver.” Whittaker, 568 N.W.2d at 448. Pippitt did not raise his objections to the indictment by motion in accordance with the Rules of Criminal Procedure, nor has he attempted to demonstrate good cause to grant relief from his waiver. Accordingly, we need not consider his objections.to the indictment.

VI.

Pippitt argues, and the state agrees, that one of his convictions and sentences should be vacated. We have stated that, pursuant to Minn.Stat. § 609.04 (2000), “[a] defendant cannot legally be convicted of two counts of first-degree murder where both convictions were for the same offense on the basis of the same act involving the same victim.” State v. Ture, 353 N.W.2d 502, 517 (Minn. 1984); see Johnson, 616 N.W.2d at 730. Pippitt cannot legally be convicted of both counts of first-degree murder. We therefore vacate the judgment of conviction and sentence for first-degree murder while committing burglary and affirm the conviction and sentence for first-degree premeditated murder.

Affirmed in part, vacated in part.


source: Caselaw Access Project

author: LANCASTER, Justice. GILBERT, Justice. PAGE, Justice PAUL H. ANDERSON, Justice

license: Public Domain

text:
    In Re the Marriage of Richard Dennis ANTONE, Respondent, v. Debra Kay ANTONE, Petitioner, Appellant.
    No. C8-01-679.
    Supreme Court of Minnesota.
    June 13, 2002.
    Rehearing Denied July 16, 2002.

      A. Larry Katz, Robert W. Due, Katz & Manka, Ltd., Minneapolis, for appellant.
    Daniel J. Goldberg, Messerli & Kramer, P.A., Minneapolis, for respondent.
    Michael D. Dittberner, Edina, for ami-cus curiae Family Law Section, Minnesota State Bar Association.
   OPINION

LANCASTER, Justice.

This is an appeal from a court of appeals’ decision affirming a trial court’s amended judgment dissolving the parties’ marriage. Debra Kay Antone (appellant) claims the trial court erred by failing to recognize a marital interest in the appreciation of 18 rental properties, by failing to recognize a marital interest in the marital homestead, and by concluding that Richard Dennis Antone (respondent) had a nonmarital interest in a business started during the marriage. Because the trial court erred in its disposition of the rental properties, the marital homestead, and the business, we reverse and remand.

Appellant and respondent were married in 1986. Almost 12 years later, respondent petitioned for dissolution. In November 2000, the trial court entered a judgment dissolving the parties’ marriage. The parties received joint legal custody of their two children. Appellant received sole physical custody of the children subject to visitation by respondent. Respondent was ordered to pay child support and spousal maintenance to appellant. The trial court awarded seven rental properties acquired during the marriage, 18 rental properties acquired before the marriage, and the capital stock and assets in Empire Products, Inc. (EPI) to respondent. The trial court ordered the homestead to be sold, and respondent was ordered to pay appellant $803,376 from the proceeds of the sale. We turn to the trial court’s division of the property at issue in this appeal.

The 18 rental properties

Respondent acquired 18 rental properties before his marriage to appellant. Those properties consisted of a 12-unit apartment building, a triplex, and 16 single-family houses. Each property had an outstanding mortgage balance at the time of the marriage.

The trial court did not determine the fair market value of the properties at the time of the marriage. The parties stipulated to the fair market value at the time of the dissolution of one of the properties, and the trial court adopted the valuations submitted by appellant’s appraiser of the remaining 17 properties. The trial court determined the properties’ mortgage balances both at the time of the marriage and at the time of the dissolution.

Respondent used a management company to manage the properties. He instructed the company not to improve the properties and authorized it to make only the minimum amount of repairs necessary to maintain them. This prompted the trial court to conclude that market forces, rather than marital efforts, caused the properties to appreciate.

The trial court concluded that the rental income generated by the properties constituted marital income. The parties used the rental income to reduce the mortgage balances during the marriage. The trial court concluded that the amount by which the mortgage balances were reduced during the marriage was marital equity and that the remaining equity in the properties was respondent’s nonmarital property.

The marital homestead

In 1978, respondent acquired what would become the marital homestead for $153,000. Although the trial court acknowledged that the parties’ antenuptial contract valued the homestead at the time of the marriage at $375,000, the trial court did not state whether it adopted that value. When the parties married, the homestead was subject to a $93,000 mortgage. During the marriage, the parties refinanced the homestead. At the time of the dissolution, the homestead was subject to a first mortgage with a balance of $138,000, a second mortgage with a balance of $44,000, and a home equity line of credit secured by a third mortgage with a balance of $99,000. Because the mortgage balances increased during the marriage, the trial court concluded there was no marital equity in the homestead.

Although the trial court did not determine the exact value of the homestead at the time of the dissolution, the trial court found that it was worth more than $680,000 at dissolution. The trial court found that market forces caused the homestead’s appreciation and there were no additions or other capital improvements during the marriage that would have increased the homestead’s value. Because there was no marital equity in the homestead and no marital efforts contributed to the homestead’s increased value, the trial court concluded that the homestead was entirely respondent’s non-marital property.

The trial court found that neither party could afford to continue living in the homestead and ordered it be sold. The trial court ordered the proceeds of the sale be paid in the following order: (1) costs of sale; (2) all encumbrances presently of record; (3) to appellant in the amount of $803,376; and (4) all remaining proceeds to respondent.

Filters Corporation, Inc. and Empire Products, Inc.

In 1975, respondent and Greg Anderson purchased Filters Corporation, Inc. (FCI) as equal partners from Anderson’s parents. FCI was primarily a military contractor that manufactured fabric bags to hold explosive charges for tank shells.

In 1993, FCI invested in a new business venture to manufacture underwear for incontinent people. The underwear business experienced substantial losses. Because of the losses, FCI ceased operations. In 1995, respondent and Anderson formed EPI, each owning 50%. Like FCI, EPI was a military contractor.

In 1997, respondent purchased Anderson’s 50% interest in EPI. The trial court concluded that this purchase created a marital interest in half of the EPI stock. Respondent claimed that his remaining interest in EPI was nonmarital property that he traced to the 50% interest in FCI he owned at the time of the marriage. The trial court found that EPI made the same products for the same customers as FCI had before the marriage, that there was no marital effort to create new products or to change how the business operated, and that no marital interest was created by the change in corporate form from FCI to EPI because it was not an arm’s-length transaction and no consideration was paid. The trial court concluded that respondent had a nonmarital interest in 50% of EPI.

Respondent moved for amended findings of fact and conclusions of law. The trial court denied respondent’s motion. Appellant moved for amended findings of fact and conclusions of law or a new trial, and for a stay of the sale of the homestead. The trial court granted appellant’s motion in part, amending its conclusions of law to require respondent to satisfy any difference if the proceeds of the homestead’s sale were insufficient to pay appellant $803,376, and denied the remainder of appellant’s motion.

Appellant appealed and respondent filed a notice of review to examine the spousal maintenance provision. The court of appeals affirmed. The court of appeals rejected appellant’s argument that the trial court erred by failing to use the formula we adopted in Schmitz v. Schmitz, 309 N.W.2d 748 (Minn.1981), to divide the marital and nonmarital interests in the 18 rental properties. The court of appeals stated that use of Schmitz is a presumptive, but not mandatory, method to determine the marital and nonmarital interests in an asset. The court of appeals held that the trial court had adequately considered the facts and the law to hold that the market-related appreciation was respondent’s nonmarital property. The court of appeals also affirmed the trial court’s holding that the appreciated value of the homestead was respondent’s nonmarital property. The court of appeals deferred to the trial court’s conclusion that appellant had not submitted any credible evidence that the homestead had been improved during the marriage. Finally, the court of appeals held that the record supported the trial court’s findings of fact and affirmed the trial court’s holding that respondent had a 50% nonmarital interest in EPI.

I.

A trial court has broad discretion in evaluating and dividing property in a marital dissolution and will not be overturned except for abuse of discretion. Maranda v. Maranda, 449 N.W.2d 158, 164 (Minn.1989). We will affirm the trial court’s division of property if it had an acceptable basis in fact and principle even though we might have taken a different approach. Servin v. Servin, 345 N.W.2d 754, 758 (Minn.1984). We defer to the trial court’s findings of fact and will not set them aside unless they are clearly erroneous. Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn.2001). Whether property is marital or nonmarital, however, is a question of law subject to de novo review. Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997).

All property acquired by either spouse during the marriage is presumed to be marital property, without regard to the form of ownership. Minn.Stat. § 518.54, subd. 5 (2000); Olsen, 562 N.W.2d at 800. To overcome the presumption that property is marital, a party must demonstrate by a preponderance of the evidence that the property is nonmarital. Olsen, 562 N.W.2d at 800; see also Minn.Stat. § 518.54, subd. 5. Nonmarital property includes property “acquired before the marriage,” property that is “acquired in exchange for” property acquired before the marriage, and “the increase in value of property” acquired before the marriage. Minn.Stat. § 518.54, subd. 5(b)-(c) (2000).

II.

We first address the trial court’s division of the 18 rental properties that respondent acquired before the marriage. Each property was subject to a substantial mortgage at the time of the marriage. Appellant concedes that the net equity at the time of the marriage is respondent’s nonmarital property. Appellant also concedes that a portion of the appreciation during the marriage is respondent’s nonmarital property. In addition, the trial court found, and respondent concedes, that the amount by which the mortgage balances were reduced during the marriage is marital property. Thus, the issue before us is whether the trial court properly characterized all of the market-related appreciation during the marriage as respondent’s nonmarital property.

Appellant argues that the formula we adopted in Schmitz and its progeny is the proper method to determine the marital and nonmarital interests of appreciation of rental properties acquired before the marriage whose mortgages were reduced during the marriage with marital income. Respondent contends that the Schmitz formula applies only to property acquired during the marriage. For property acquired before the marriage, respondent maintains that appreciation due to marital efforts is marital, whereas appreciation due to market forces is nonmarital. Respondent further argues that even if the Schmitz formula was applicable to the 18 rental properties, its use by the trial court is discretionary.

In Schmitz, a husband and wife purchased a duplex during their marriage. 309 N.W.2d at 748. They lived in one unit of the duplex and rented the other unit. Id. at 748-49. They made the down payment using the husband’s nonmarital funds and made mortgage payments using rental income from the unit in the duplex. Id. In an action for dissolution of the marriage, the husband argued that the duplex constituted nonmarital property because it was acquired in exchange for a down payment derived from his nonmarital funds. Id. at 750. He maintained, therefore, that he was entitled to the entire increase in equity. Id. We rejected his argument, holding that the duplex was, in part, a marital asset even though the down payment was made with nonmarital funds. Id. We approved the analysis of Woosnam v. Woosnam, 587 S.W.2d 262 (Ky.Ct.App.1979), and affirmed the trial court’s division of the duplex in Schmitz because of its “minimal discrepancy [from the result that would have been reached had the trial court strictly applied the Woosnam formula] in an area of law committed in large part to the discretion of the trial court.” Schmitz, 309 N.W.2d at 750. We have summarized the Schmitz formula as follows:

The present value of a nonmarital asset used in the acquisition of marital property is the proportion the net equity or contribution at the time of acquisition bore to the value of the property at the time of purchase multiplied by the value of the property at the time of separation. The remainder of equity increase is characterized as marital property

Brown v. Brown, 316 N.W.2d 552, 553 (Minn.1982).

Although we stated in Brown that the Schmitz formula is one “by which a trial court might correctly apportion the increase in equity between marital and non-marital assets,” we reversed the trial court’s division of the homestead. Brown, 316 N.W.2d at 553. On remand, we instructed the trial court to reexamine its property distribution in accordance with the Schmitz formula. Brown, 316 N.W.2d at 553; cf. Kelly v. Kelly, 371 N.W.2d 193, 197 (Minn.1985) (affirming trial court’s division of homestead because it showed “due allowance” for the guidelines established in Schmitz).

Respondent contends that we limited the applicability of the Schmitz formula to property acquired during the marriage with nonmarital funds in Nardini v. Nardini, 414 N.W.2d 184 (Minn.1987). We disagree. In Nardini, we held:

[T]he increase in the value of nonmarital property attributable to the efforts of one or both spouses during their marriage, like the increase resulting from the application of marital funds, is marital property. Conversely, an increase in the value of nonmarital property attributable to inflation or to market forces or conditions, retains its nonmarital character.

Id. at 192. We illustrated how to apply our holding in a lengthy hypothetical. The hypothetical involved real property that was owned by the husband and subject to a mortgage at the time of the marriage. Id. at 192-93. During the marriage, the husband and wife used marital funds to reduce the mortgage balance. Id. at 193. We stated that “[i]nasmuch as the real property comprised both marital and non-marital interests, the interests should be apportioned according to the [Schmitz ] formula.” Nardini, 414 N.W.2d at 193.

Thus, the Schmitz formula may be used to determine marital and nonmarital interests in property acquired during the marriage with a nonmarital down payment, 309 N.W.2d at 750, as well as property acquired before the marriage, Nardini, 414 N.W.2d at 193. For property acquired before the marriage, the formula uses the time of the marriage instead of the time of the purchase. Thus,

[t]he present value of a [nonmarital interest in property acquired before the marriage] is the proportion the net equity * * * at the time of [the marriage] bore to the value of the property at the time of [the marriage] multiplied by the value of the property at the time of separation. The remainder of equity increase is characterized as marital property * * *.

See Brown, 316 N.W.2d at 553.

Application of the Schmitz formula to property acquired before the marriage is consistent with section 518.54, subd. 5. The formula recognizes that the net equity at the time of the marriage is nonmarital property because it was “acquired before the marriage.” See id., subd. 5(b). Assuming the property appreciates during the marriage, the formula also recognizes that the increase in value of the property acquired before the marriage — that is, the net equity at the time of the marriage — is nonmarital property.

In this case, respondent owned 18 rental properties at the time of the marriage. They consisted of a triplex, a 12-unit apartment building, and 16 single-family houses. Each was subject to a mortgage at the time of the marriage. Marital equity in the properties was created because the parries used marital funds to reduce the mortgage balances during the marriage. The trial court’s characterization of all of the market-related appreciation during the marriage as respondent’s nonmari-tal property ignores the fact that those same market forces caused the marital equity to appreciate. The dissent also fails to distinguish between the marital and nonmarital interests in the properties, even though the parties agree that the equity created by paying down the mortgages during the marriage was marital property. By the dissent’s reasoning, the appreciation of that marital property would be awarded to the holder of the nonmarital portion of the properties, depriving the marital estate of any return on its investment. We therefore conclude that the trial court should have applied the Schmitz formula to apportion the marital and nonmarital interests in the 18 rental properties.

We hold as a matter of law that a portion of the market-related appreciation during the marriage is marital property. We remand to the trial court to determine the properties’ values at the time of the marriage and to apply the Schmitz formula to determine the marital and nonmarital interests.

III.

We now turn to the trial court’s division of the marital homestead. Appellant contends that respondent withdrew his nonmarital equity by refinancing the homestead. Appellant asserts the trial court erred by failing to apply the Schmitz formula after accounting for respondent’s withdrawal of his nonmarital equity. Respondent argues that there was no marital equity created in the homestead because the mortgage balances increased during the marriage. Respondent maintains that there is no basis in fact or law for appellant’s assertion that respondent withdrew his nonmarital equity from the homestead.

We reject appellant’s argument that respondent withdrew his nonmarital equity in the homestead by refinancing the homestead. As already noted, property obtained by either spouse during the marriage is presumed to be marital property. Minn.Stat. § 518.54, subd. 5; Olsen, 562 N.W.2d at 800. To overcome this presumption, “a party must demonstrate by a preponderance of the evidence that the property is nonmarital.” Olsen, 562 N.W.2d at 800; see also MinmStat. § 518.54, subd. 5. The trial court did not make findings as to how the parties used the proceeds from the refinanced first mortgage and the second mortgage. The trial court found that the debt secured by the home equity line of credit was marital. Appellant concedes that she does not know how the proceeds from the additional encumbrances were used. Thus, appellant failed to demonstrate by a preponderance of the evidence that the loan proceeds were used by respondent for nonmarital purposes.

We also reject the trial court’s conclusion that there was no marital equity in the homestead because the mortgage balances increased during the marriage. By refinancing the homestead during the marriage, the marital estate effectively borrowed against its interest in the homestead. We reverse the court of -appeals’ decision affirming the trial court’s disposition of the marital homestead. We remand to the trial court to determine the fair market value of the homestead at the time of the marriage and at dissolution, and to apply the Schmitz formula to determine the marital and nonmarital interests in the homestead.

IV.

We now address the trial court’s disposition of EPI. The parties agree that the trial court properly concluded that respondent’s purchase in 1997 of Anderson’s interest in EPI created a marital interest in 50% of the EPI stock. Appellant argues the trial court erred by concluding that respondent’s remaining 50% interest in EPI is respondent’s nonmarital property. In the alternative, appellant argues that, even if respondent had traced the 50% interest in EPI to his nonmarital interest in FCI, the trial court failed to acknowledge that the appreciation in the value of respondent’s interest during the marriage is marital property. In response, respondent argues that the trial court did not err by concluding that respondent’s remaining interest in EPI was nonmarital property.

The trial court described how FCI ceased operations and the formation of EPI:

In 1993 through 1995, [FCI] invested in a new business venture to manufacture incontinent underwear. The company took on a number of additional investors as stockholders and lenders. The underwear business however never made money and conversely experienced substantial losses. The underwear venture was eventually discontinued by the company. As part of the winding up of the affairs of this business venture, FCI ceased doing business and a new corporation, EPI[,] was created in 1995. Mr. Anderson and [respondent] remained the equal owners of the new corporation and EPI continued the military contractor business. The other shareholders in FCI who had invested in the underwear business had no interest in EPI.

The trial court explained its decision that respondent had a 50% nonmarital interest in EPI:

[Appellant] asserted that FCI became insolvent and was completely liquidated and that EPI was created as an entirely new company. The evidence presented by [respondent] established that the company is presently making the same products for the same customers that FCI had in 1986 prior to the parties’ marriage. There was therefore no marital effort that went into creating new products or any changes in the way the business is run. Nor did the change in corporate form from FCI to EPI create any marital interest, as this change did not constitute a purchase since it was not an arm’s length transaction and no consideration was paid. Nor did the coming and going of the other shareholders for the underwear business and the debt for the underwear venture that was assumed by EPI and later paid off create any marital interest as the former business has remained unchanged.

Appellant contends that the trial court’s finding that the formation of EPI was a “change in corporate form from FCI” is clearly erroneous. We agree.

The record reveals that respondent and Anderson purchased FCI as equal partners from Anderson’s parents in 1975. Approximately 20 people invested in FCI’s underwear venture. One of the investors invested and loaned a total of approximately $1 million, taking a secured interest in FCI’s assets, including its receivables, inventory, and equipment. The underwear business experienced significant losses that ultimately caused FCI to become insolvent. When FCI was liquidated in 1995, its secured creditors were repaid. Its unsecured creditors were not fully repaid.

After FCI’s liquidation, Anderson and respondent formed EPI. Anderson and respondent each invested $10,000 in EPI and loaned $10,000 to EPI. EPI used Anderson’s and respondent’s capital contributions, as well as a bank loan, to purchase equipment from a secured creditor of FCI. EPI continued the military subcontractor business that FCI established.

Based on our review of the record, we conclude that the trial court’s finding that there was “a change in corporate form from FCI to EPI” is clearly erroneous. After experiencing substantial losses from its expansion into the underwear business, FCI was insolvent and was liquidated in 1995. FCI’s secured creditors were repaid, but its unsecured creditors were not. After FCI’s liquidation, EPI was formed, in part, with respondent’s capital contribution. EPI used Anderson’s and respondent’s capital contributions as well as bank financing to purchase equipment from a secured creditor of FCI. Thus, there was no “change in corporate form” from FCI to EPI.

We conclude that the evidence is insufficient to rebut the presumption that respondent’s interest in EPI is marital. Although EPI continued the military subcontractor business started by FCI, EPI was formed as an entirely new business. Without respondent’s capital contribution during the marriage, respondent would not have had any interest in EPI. Respondent failed to demonstrate by a preponderance of the evidence that 50% of EPI’s stock is his nonmarital property.

Reversed and remanded.

GILBERT, Justice.

While I concur with the majority’s analysis as to the parties’ homestead property and the EPI Corporation, I disagree with its conclusion that the trial court should have applied the Schmitz formula to apportion the marital and nonmarital interests in the 18 rental properties acquired by respondent prior to the marriage. The majority breaks new ground, unsupported by either the Minnesota Statutes or this court’s previous decisions, by holding that almost all of the purely market-related passive appreciation of nonmarital property during the marriage is marital property.

The majority disregards unambiguous statutory language defining increase in value of nonmarital property owned before, during, or after marriage as being nonmarital in favor of its concern for not “depriving the marital estate of any return on its investment,” i.e., a return on the principal reduction in the mortgages on the 18 nonmarital properties. This sweeping language may affect not only prior owned property identified in Minn.Stat. § 518.54, subd. 5(b) (2000), but also the property excluded under a valid antenup-tial contract under subdivision 5(e) of the same statute. While the majority may consider this to be good policy, it is up to the legislature to set that policy. Where a statute is unambiguous, we should honor its plain meaning. Burkstrand v. Burkst-rand, 632 N.W.2d 206, 210 (Minn.2001). However, the majority avoids performing any appropriate statutory analysis and does not even find the statute at issue to be ambiguous, yet ignores the statute’s clear intent, thereby amending the statute by judicial fiat.

Under Section 518.54, subdivision 5, nonmarital property can be “acquired by either spouse before, during, or after the existence of their marriage.” The majority focuses solely on the language about property acquired before the marriage. However, the statute clearly provides for the acquisition of nonmarital property during the marriage, specifically including the increase in value of nonmarital property acquired before marriage within the definition of nonmarital property. Id., subd. 5(b)-(c). The majority then transforms a decrease of mortgage indebtedness on nonmarital property paid solely from passive income to modify section 518.54, subdivision 5(c), and capture a portion of the increase in value of the nonmarital property, even though the legislature has defined this increase in value as nonmarital property. The legislature did not provide that a decrease of mortgage indebtedness on nonmarital property could be used to convert a portion of the increase in value of nonmarital property to marital property. Interestingly, nowhere in the statute is the marital estate return on investment rationale ever mentioned, rather it is an unsupported result that the majority has created without any authority. The majority’s holding applying the Schmitz formula would appear to apply with equal force to property that has otherwise been excluded by a valid antenuptial contract where there are decreased mortgage balances and increases in market value.

The facts in this case are dramatically different than those presented in Schmitz v. Schmitz, 309 N.W.2d 748 (Minn.1981), Nardini v. Nardini, 414 N.W.2d 184 (Minn.1987), or any of the other cases cited by the majority. In order to reach the desired result, the majority equates the pay down of mortgage balances with the acquisition of property subsequent to marriage. However, it is undisputed that respondent acquired all 18 properties before his marriage to appellant. (The seven other rental properties acquired after the marriage were treated as marital.) Furthermore, it is undisputed that these 18 properties increased in value during the marriage solely as the result of market forces. Accordingly, any increase in value for these 18 nonmarital properties during the marriage should remain nonmarital.

The majority states that Nardini supports transforming these statutorily defined nonmarital assets into marital assets. However, unlike Nardini, where there was no dispute that the value of the stock at dissolution was “attributable to the efforts of the marital partners over the course of more than 30 years of marriage,” 414 N.W.2d at 194, none of the increased value of the 18 properties in this case can be attributed to either marital effort or labor. In fact, the record makes clear, and the trial court found, that both respondent and appellant chose not to spend any of their marital funds or exert any personal labor on improving any of the 18 properties. Instead, a professional property management company rented and maintained the properties and passive market forces led to all of the increased value of the nonmar-ital properties. As a result, these properties retained their nonmarital character and the Schmitz formula should not apply. There was also no commingling of funds between marital and nonmarital accounts, transfers of titles between spouses, or new acquisitions in this asset group.

The majority also cites to dicta from Nardini in support of its conclusion that the Schmitz formula should apply. However, the majority fails to adhere to the unambiguous holding of Nardini: “[A]n increase in the value of nonmarital property attributable to inflation or to market forces or conditions, retains its nonmarital character.” 414 N.W.2d at 192. The 18 nonmarital properties increased in value solely as a result of market forces or conditions, thereby retaining their nonmarital character. Furthermore, Schmitz involved a homestead property acquired after marriage and held in joint tenancy by both spouses. 309 N.W.2d at 748. Rent from the duplex in Schmitz was commingled and both parties worked to maintain the property. See id. The accretions from assets that were not commingled or improved upon by the efforts of both parties were held to be nonmarital. Id. at 750.

The majority boldly states as to undisputed nonmarital property that “[w]e hold as a matter of law that a portion of the market-related appreciation during the marriage is marital property.” This proposition is not supported by any citation to our case law or statutory authority. The majority opinion also imports a “net equity” concept into its rationale to modify both the definition of nonmarital property acquired before the marriage and the increase in value of that property. It relies on the formula used in Schmitz, but fails to acknowledge that the Schmitz property was acquired after marriage in joint tenancy by both spouses and the nonmarital equity from the sale of another property was used to acquire a new homestead property in both spouses’ names. The majority, without explanation, simply equates a mortgage principal pay down from passive rental income generated from the non-marital properties to be equivalent to an acquisition of a new property after marriage. The majority then states that the “trial court’s characterization of all of the market-related appreciation during the marriage as respondent’s nonmarital property ignores the fact that those same market forces caused the marital equity to appreciate.” It is unclear what the majority means by this, especially since this proposition is also not accompanied by any citation to any authority.

As the majority points out, we are to affirm a trial court’s division of property in a marriage dissolution if such division had an acceptable basis in fact and principle even though we might have taken a different approach. Servin v. Servin, 345 N.W.2d 754, 758 (Minn.1984). Based on the unambiguous statutory language, the trial court correctly applied the law. At the same time, even if the majority’s approach were acceptable, it certainly cannot be construed as the only acceptable approach. The record shows that the trial court carefully considered both the factual and legal components in ruling that the increase in the value of the 18 properties was due solely to passive, market forces. The trial court’s findings as to these properties were based on this careful consideration, giving full credit to appellant for the reduction in mortgage balances. The trial court was well within the broad discretion afforded to it in dividing the parties’ property. While the majority believes that the trial court should have taken a different approach, the trial court was without authority to do so and its conclusion that the passive appreciation of respondent’s non-marital property remained nonmarital was not an abuse of discretion. Accordingly, I would affirm the court of appeals as to the 18 nonmarital properties.

PAGE, Justice

(concurring in part and dissenting in part).

I join in the concurrence and dissent of Justice Gilbert.

PAUL H. ANDERSON, Justice

(concurring in part and dissenting in part).

I join in the concurrence and dissent of Justice Gilbert.

      . The dissent refuses to acknowledge that the equity acquired during the marriage is marital property. Instead, the dissent repeatedly characterizes this amount as "a decrease of mortgage indebtedness on nonmarital property.” The trial court concluded, and respondent does not dispute, that this amount is marital property. The dissent also refuses to acknowledge that the rental income from the properties is marital income. Instead, the dissent characterizes it as "passive income." The trial court concluded that the rental income is marital income. Respondent did not challenge that conclusion on appeal.


text:
    Jason J. STOUT, Respondent, v. AMCO INSURANCE COMPANY, Petitioner, Appellant, Andrew Pangrac et al., Defendants.
    No. CX-01-246.
    Supreme Court of Minnesota.
    June 13, 2002.
    Rehearing Denied July 12, 2002.

      George C. Hottinger, Erstad & Riemer, P.A., Minneapolis, MN, for appellant.
    Steven R. Peloquin, Peloquin & Minge, P.A., New York Mills, MN, for respondent.
   OPINION

LANCASTER, Justice.

Jason Stout sustained injuries to his knees when a car insured by AMCO Insurance Company hit him. Stout was billed $25,638.73 by medical service providers for the treatment of his injuries. The amount billed was discounted pursuant to Medicaid and MinnesotaCare fee schedules, leaving a balance of $12,471.44. The parties agree that, under the Minnesota No-Fault Automobile Insurance Act, Minn.Stat. §§ 65B.41-.71 (2000), AMCO must reimburse Stout’s loss. The sole issue on appeal is whether Stout’s loss is equal to the amount originally billed or the post-discount balance. The district court and the court of appeals concluded that Stout was entitled to the amount originally billed. We affirm.

I.

Stout was hit by a car in July 1993, as he walked near a gas station in Wadena, Minnesota. Stout’s legs were pinned between the car’s front bumper and a metal guardrail, causing injuries to both of his knees. At the time of the accident, Stout did not have health insurance. He later applied for and received medical assistance benefits from the Department of Human Services (DHS) in the form of Medicaid and MinnesotaCare. The car that struck Stout was insured by AMCO. The limit of medical expense loss payable under AMCO’s no-fault automobile insurance policy was $20,000.

In a letter dated April 25, 1995, Stout notified the car owner of his claims arising from the accident. AMCO was placed on notice of Stout’s claims in late April or early May 1995, when it received a copy of Stout’s letter. In May 1995, Stout submitted an application for no-fault benefits to AMCO. AMCO denied Stout’s claim for benefits in November 1995, on the grounds that Stout’s injuries were the result of an intentional act by the driver of the car rather than an accident, and that the car was not being used for transportation purposes when the accident occurred.

In February 1996, DHS notified AMCO that it had paid medical assistance benefits on Stout’s behalf. DHS also filed a lien in the amount of $1,054.90, the amount it had paid to Stout’s medical service providers up to that point, against any person or entity liable for damages arising out of the accident.

AMCO commenced a declaratory judgment action seeking confirmation of its denial of coverage. In July 1998, the district court entered an order granting judgment in favor of Stout and requiring AMCO to provide Stout “with all no-fault benefits to which he may be entitled.” AMCO appealed the district court’s order and the court of appeals affirmed.

In February 1999, while AMCO’s appeal of the district court’s order was pending in the court of appeals, Stout commenced the present action against AMCO to recover basic economic loss benefits and statutory interest under AMCO’s no-fault automobile insurance policy and the Act. Approximately nine months later, Stout underwent arthroscopic surgery on his left knee. Prior to this surgery, most of Stout’s medical treatment had been directed toward his right knee. AMCO, acting on the expert opinion of an orthopedic surgeon it hired to review Stout’s medical records, took the position that the injury to Stout’s right knee was caused by the accident, but the injury to his left knee was not.

In July 2000, AMCO issued a check to Stout in the amount of $4,831.27. The parties agree that this payment covered all of the medical expenses paid by the DHS and Stout for the treatment of Stout’s right knee. It did not, however, cover the difference between the amount billed and the post-discount amount paid for the treatment of Stout’s right knee, nor did it cover any of the medical expenses, either billed or paid, for the treatment of his left knee.

The next month, a jury trial was held on the factual issue of whether the accident was the cause of the injuries to Stout’s left knee. The jury returned a special verdict in the affirmative. The remaining issues in the case, including the amount of Stout’s loss, were submitted to the district court for decision. Stout argued that his loss was equal to the amount originally billed by the medical service providers. AMCO disagreed, arguing that the amount originally billed overstated Stout’s loss by ignoring the discounts his health insurer obtained pursuant to Medicaid and Minne-sotaCare fee schedules.

The district court found that the amount billed for the treatment of Stout’s right knee was $9,184.90, and that the amount billed for the treatment of his left knee was $16,453.83. Thus, the total amount billed for the treatment of Stout’s knees was $25,638.73. The amount billed was ultimately discounted by $13,167.29 pursuant to Medicaid and MinnesotaCare fee schedules, leaving a balance of $12,471.44. Stout’s health insurer paid $5,328.72 of this balance, and Stout paid $2,627.72. The remaining balance of $4,515 had not been paid as of the date of the district court’s order.

The district court concluded that Stout was entitled under the Act to the amount originally billed, subject only to the $20,000 coverage limit on medical expenses payable under AMCO’s no-fault automobile insurance policy. The district court ordered AMCO to reimburse Stout’s medical expense loss in the amount of $15,168.73. This amount was calculated by subtracting AMCO’s July 2000 payment of $4,831.27 from the policy’s $20,000 coverage limit. The district court gave three reasons for its conclusion. First, it noted that AMCO’s failure to promptly reimburse Stout violated one of the “primary purposes” of the Act, “to encourage prompt payment by the insurer of medical expenses * * * to individuals who are injured in automobile accidents so as to relieve the economic distress otherwise experienced by [those] individuals.”

Second, the district court cited Minn. Stat. § 65B.54, subd. 1 (2000), which provides that “[b]asic economic loss benefits are payable monthly as loss accrues. Loss accrues * * * as * * * medical * * * expense is incurred.” The district court concluded that, under the plain language of this section, the “amount or dollar value of the medical expense which is incurred by a patient is the amount reflected in the medical service provider’s initial billing statement, not the amount which the service provider might ultimately decide to accept in payment of the bill.”

Third, the district court relied on Wallace v. Tri-State Insurance Co., 302 N.W.2d 337, 339-40 (Minn.1980), and Hoeschen v. Mutual Service Casualty Insurance Co., 359 N.W.2d 677, 680 (Minn. App.1984), rev. denied (Minn. Mar. 6, 1985), for the proposition that a no-fault insurer cannot reduce the amount of benefits payable to an insured based on payments made by other parties. Applying Wallace and Hoeschen to the facts of this case, the district court stated:

AMCO cannot fairly use amounts paid or reductions obtained by Medicaid or Minnesota Care in determining the amount of benefits which it has an obligation to pay. The windfall, if there is one, goes to the injured person to whom or for whom the benefits were supposed to be paid in the first place.

AMCO appealed and the court of appeals affirmed. AMCO argued that the district court erred by equating Stout’s loss with the amount originally billed and that Stout did not have standing to recover the amount of the discounts. The court of appeals rejected AMCO’s first argument for the same reasons articulated by the district court. The court of appeals also rejected AMCO’s standing argument, reasoning that Stout had a personal stake in recovering all benefits to which he was entitled under the Act.

In March 2001, AMCO issued a second check to Stout. The check covered the post-discount amount paid by the DHS and Stout for the treatment of Stout’s left knee. The check also covered the $4,515 outstanding balance. Thus, AMCO has reimbursed Stout for all post-discount amounts paid for Stout’s medical treatment. AMCO has not, however, reimbursed Stout for the amount of the discounts.

II.

There is no dispute that the Act grants Stout a right to recover basic economic loss benefits, see MinmStat. § 65B.46, subd. 1 (2000), and that, as the no-fault insurer of the car that hit Stout, AMCO is the proper source of those benefits, see Minn.Stat. § 65B.47, subd. 4(c) (2000). The function of basic economic loss benefits is to reimburse the injured person “for all loss suffered through injury arising out of the maintenance or use of a motor vehicle.” Minn.Stat. § 65B.44, subd. 1 (1998). Thus, Stout is entitled to basic economic loss benefits only to the extent that he has suffered a “loss.” According to Stout, his loss is $25,638.73, the amount originally billed by his medical service providers for the treatment of his injuries. In response, AMCO argues that Stout’s loss is $12,471.44, the amount actually paid in full satisfaction of Stout’s medical bills. The difference between the figures offered by the parties is $13,167.29, which represents the amount by which Stout’s medical bills were discounted pursuant to Medicaid and MinnesotaCare fee schedules. The narrow legal issue presented by this case, then, is whether the discounts obtained by Stout’s health insurer are included in the amount of Stout’s loss.

To decide this issue, we must interpret and apply the relevant provisions of the Act. Statutory interpretation is a question of law subject to de novo review. Burkstrand v. Burkstrand, 632 N.W.2d 206, 209 (Minn.2001); Whetstone v. Hossfeld Mfg. Co., 457 N.W.2d 380, 382 (Minn. 1990). Similarly, we are not bound by the lower courts’ conclusions in applying a statute to undisputed essential facts. Watson v. United Servs. Auto. Ass’n, 566 N.W.2d 683, 688 (Minn.1997); Meister v. W. Nat'l Mut. Ins. Co., 479 N.W.2d 372, 376 (Minn.1992).

In general terms, the Act is a comprehensive and highly-detailed statutory scheme that governs the compensation of persons injured in automobile accidents. The Act is silent as to whether the amount of loss suffered by an injured person excludes the discounts that health insurers are able to obtain from medical service providers. It appears to us that such discounts have become common, and the legislature may decide that this area of the law would benefit from its attention. In the meantime, we must decide the issue based on the provisions of the Act that set forth the nature of basic economic loss benefits and describe the concept of loss.

With the sole exception of workers’ compensation benefits, basic economic loss benefits are primary with respect to any other benefits “which any person receives or is entitled to receive from any other source as a result of injury arising out of the maintenance or use of a motor vehicle.” Minn.Stat. § 65B.61, subd. 1 (2000). To preserve no-fault insurers’ status as the primary source of benefits for those injured in automobile accidents, the Act generally prohibits no-fault insurers from coordinating basic economic loss benefits with benefits provided by any other legal entity. Id., subd. 3. In other words, a no-fault insurer has a duty to provide basic economic loss benefits to reimburse an injured person’s loss even when the injured person is entitled to compensation for the same loss from a different source.

Again, the amount of basic economic loss benefits to which Stout is entitled depends on the loss he suffered. Minn.Stat. § 65B.44, subd. 1. The Act defines the term “loss” as “economic detriment resulting from the accident causing the injury, consisting only of,” among other things, “medical expense.” Minn.Stat. § 65B.43, subd. 7 (2000). The Act further provides that “[l]oss accrues not when injury occurs, but as * * * medical * * * expense is incurred.” Minn.Stat. § 65B.54, subd. 1.

Under section 65B.54, subd. 1, the amount of the loss that accrued to Stout is equal to the medical expense he incurred. Our decision in Collins v. Farmers Insurance Exchange, 271 Minn. 239, 135 N.W.2d 503 (1965), is instructive on the question of how to calculate the medical expense incurred by Stout in this case. Collins involved an action by the insured to recover medical expenses under an automobile liability insurance policy that provided up to $5,000 of coverage for “ ‘reasonable [medical] expenses actually incurred.’ ” Id. at 240-41, 135 N.W.2d at 504-05. The insured’s medical service providers billed him in excess of $5,000. Id. at 241, 135 N.W.2d at 505. After the insurer denied the insured’s claim, the amount billed was reduced to $2,250 as part of a settlement agreement between the insured and his medical service providers. Id., 135 N.W.2d at 505. The insurer asserted that the expense incurred was the amount actually paid by the insured pursuant to the settlement, rather than the amount that was originally billed. Id. at 244, 135 N.W.2d at 507. We stated that the “well[-]fixed and delineated” definition of “incur” is “ ‘to become liable for,’ as distinguished from actually ‘pay for.’ ” Id., 135 N.W.2d at 507; see Schmitt v. Emery, 215 Minn. 288, 292, 9 N.W.2d 777, 780 (1943) (stating that “to incur an expense means to become hable therefor or subject thereto”). Applying this definition, we rejected the insurer’s argument and held that the insured became liable for, and therefore incurred, the amount originally billed, and “not the amount he paid as a result of a collateral transaction.” Collins, 271 Minn, at 244, 135 N.W.2d at 507.

Like the insurer in Collins, AMCO argues that the medical expense incurred by Stout is limited to the amount actually paid in satisfaction of his medical bills. As demonstrated in Collins, however, an injured person incurs medical expense as he or she receives bills for medical treatment. See id., 135 N.W.2d at 507. A reduction in the amount billed, whether obtained pursuant to a settlement agreement or a health insurer’s fee schedule, does not modify the amount of medical expense incurred. We therefore conclude that the medical expense incurred by Stout is the full amount reflected on his medical bills, and not the amount that was paid in satisfaction of those bills as the result of collateral transactions involving Stout’s health insurer. See id., 135 N.W.2d at 507. Thus, the amount the loss that accrued to Stout is $25,638.73.

Having calculated the loss that accrued to Stout, we next address AMCO’s argument that the discounts obtained by Stout’s health insurer decreased the amount of his loss. We begin by noting that there is no language in the Act providing that loss, once accrued, can be reduced through the involvement of the injured person’s health insurer. In addition, reducing Stout’s loss on the basis of discounts obtained by his health insurer would be inconsistent with the Act’s designation of basic economic loss benefits as primary and would violate the Act’s prohibition of the coordination of benefits. See Minn.Stat. § 65B.61, subds. 1, 3 (2000). We held in Wallace that a no-fault insurer impermissibly coordinates benefits when it refuses to pay medical bills that have already been paid by the injured person’s health insurer. 302 N.W.2d at 338-40. AMCO maintains that Wallace is not controlling because the amount at issue in this case was discounted, rather than paid.

AMCO’s interpretation of both section 65B.6I, subd. 3, and Wallace focuses on the form of the transaction between the injured person’s health insurer and the medical service provider. If a health insurer reduces an injured person’s medical bills by paying the provider, then a no-fault insurer cannot reduce the benefits payable to the injured person without running afoul of the Act. According to AMCO, if the bills are reduced by any other means, however, then a no-fault insurer would be permitted to reduce the benefits payable to the injured person. Although the forms of the two transactions may differ, we find it more important that, from the standpoint of the no-fault insurer, their substance is the same. In either case, the no-fault insurer attempts to reduce its obligation to provide basic economic loss benefits on the ground that another source of benefits has stepped in and decreased the amount of the injured person’s medical bills — whether by paying them, obtaining discounts, or some other means. Thus, we are not persuaded that the distinction between this case and Wallace is a meaningful one, and we therefore conclude that AMCO’s failure to reimburse Stout for the discounted portions of his medical bills violates section 65B.61, subd. 3.

Our holding on this point effectuates the Act’s purpose of ensuring prompt payment of benefits to those injured in automobile accidents. Minnesota Statutes § 65B.42(1) (2000) states that one of the purposes of the Act is

[t]o relieve the severe economic distress of uncompensated victims of automobile accidents within this state by requiring automobile insurers to offer and automobile owners to maintain automobile insurance policies * * * which will provide prompt payment of specified basic economic loss benefits to victims of automobile accidents without regard to whose fault caused the accident.

Similarly, section 65B.42(3) states that another purpose of the Act is “[t]o encourage appropriate medical and rehabilitation treatment of the automobile accident victim by assuring prompt payment for such treatment.” By holding that Stout is entitled to the full amount reflected on his medical bills, we remove the incentive for no-fault insurers to delay the payment of meritorious claims in the hope that the injured person’s health insurer will step in and pay his or her medical bills at a discounted rate. Although the Act contains a provision adding 15% per year to all overdue payments, Minn.Stat. § 65B.54, subd. 2 (2000), this provision, by itself, would do little to deter a no-fault insurer from delaying payment when, as here, the amount of the discounts is greater than 15% of the remaining balance.

AMCO’s no-fault insurance policy limits coverage for medical expense loss to $20,000. Because Stout’s medical expense loss is $25,638.73, AMCO must provide basic economic loss benefits to Stout up to. the policy limit of $20,000. Given that Stout’s medical service providers accepted $12,471.44 in full satisfaction of their claims, the remaining $7,528.56 of basic economic loss benefits will go directly to Stout.

AMCO asserts that our holding unjustly provides Stout with a windfall. While it is true that our holding results in a windfall for Stout, it is also true that a holding in AMCO’s favor would result in a windfall for AMCO. Had AMCO promptly reimbursed Stout’s loss, it would have paid the policy limit of $20,000. Thus, if we accepted AMCO’s argument that it is obligated to pay only $12,471.44, AMCO would experience a windfall of $7,528.56.

Under our case law, if there is to be a windfall either to an insurer or to an insured, the windfall should go to the insured. Wallace, 302 N.W.2d at 340; Van Tassel v. Horace Mann Mut. Ins. Co., 296 Minn. 181, 187, 207 N.W.2d 348, 352 (1973). We explained the reason for this rule in Van Tassel, stating that “it seems more just that the insured who has paid a premium should get all he paid for rather than that the insurer should escape liability for that for which it collected a premium.” 296 Minn, at 187, 207 N.W.2d at 352. The situation here is somewhat different because Stout is seeking to recover benefits under a policy for which he did not pay a premium. Nevertheless, the owner of the car that hit Stout did pay a premium to AMCO in exchange for a no-fault automobile insurance policy, and that policy obligates AMCO to provide coverage for loss suffered by uninsured pedestrians injured in accidents involving the car. Echoing our statement in Van Tassel, “it seems more just” that, if there is to be a windfall, it should go to Stout rather than AMCO.

Affirmed.

      . The no-fault automobile insurance policy’s definition of "eligible insured person” included pedestrians sustaining bodily injury as a result of an "accident” involving the insured motor vehicle.

      . Under the Act, an injured person is entitled to basic economic loss benefits for loss suffered through “injury arising out of the maintenance or use of a motor vehicle.” Minn. Stat. § 65B.44, subd. 1 (1998). In determining whether an accident arises out of the maintenance or use of a motor vehicle, we have stated that one of the factors to consider is whether the vehicle was being used for transportation purposes. Cont’l W. Ins. Co. v. Klug, 415 N.W.2d 876, 878 (Minn.1987); Classified Ins. Corp. v. Vodinelich, 368 N.W.2d 921, 923 (Minn. 1985).

      . Stout’s complaint also named the driver of the car and the owner of the car as defendants.

      . Section 65B.46, subd. 1, states that “[i]f the accident causing injury occurs in this state, every person suffering loss from injury arising out of maintenance or use of a motor vehicle * * * has a right to basic economic loss benefits.”

      . Section 65B.47, subd. 4(c), states that "[t]he security for payment of basic economic loss benefits applicable to injury to a person not otherwise covered [by a plan of reparation security] who is not the driver or other occupant of an involved motor vehicle is the security covering any involved motor vehicle.”

      . Of course this rule would not apply if the amount reflected on the bill was unreasonable or the result of an error by the medical service provider.