Opinion
No. A-07-1102.
Filed June 24, 2008.
SIEVERS and CASSEL, Judges.
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. OF PRAC. 2E.
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
Dion S. Budke appeals from the decision of the district court for Red Willow County dissolving his marriage to Joyce C. Budke and dividing the parties' marital assets and debts. We affirm the district court's decision as modified.
I. FACTUAL AND PROCEDURAL BACKGROUND
Dion and Joyce were married on July 1, 2001, in Madison, Wisconsin. The parties have no children together, but each has children from previous marriages. During the marriage, the parties often lived apart for work reasons. At all times during the marriage, Dion lived in McCook, Nebraska. And at the time of the parties' separation on February 14, 2006, Joyce was living in Colorado. Additional facts will be discussed as necessary in our analysis.
Dion filed a complaint for dissolution of marriage on February 21, 2006. Joyce filed an answer and counterclaim. The divorce decree was filed on September 27, 2007. The district court divided the parties' marital assets and debts, granting each party essentially 50 percent of the net marital estate. Dion now appeals.
II. ASSIGNMENTS OF ERROR
Dion alleges that the district court erred in (1) receiving exhibit 31 in evidence and using any values set forth therein in determining the value of the marital assets and marital liabilities of the parties; (2) not giving Dion credit for (a) the value of the net proceeds from the sale of his premarital home in the amount of $43,536.59, (b) the value of the net proceeds from the sale of a premarital rental house in the amount of $2,715.99, and (c) the value of the downpayments he made on the marital home in the amount of $4,803.63 before determining the value of the net marital estate in accordance with the principles contained in Neb. Rev. Stat. § 42-365 (Reissue 2004); (3) not giving Dion credit for the following postseparation debts: (a) credit card charges that included Joyce's dental bills incurred after the separation and (b) Joyce's 2005 Colorado state income tax liability; (4) not reducing Joyce's premarital assets by an equitable and reasonable amount for her premarital student loan debt paid during the marriage; (5) not giving Dion an equitable and reasonable amount of credit for the expenses paid by Dion after the parties' separation which ultimately benefited Joyce which expenses are reflected in exhibits 33 and 34; and (6) not receiving exhibit 16 in evidence which is a summary of the expenses paid by Dion addressed in the preceding assignment of error.
III. STANDARD OF REVIEW
The division of property is a matter entrusted to the discretion of the trial judge, which will be reviewed de novo on the record and will be affirmed in the absence of an abuse of discretion. Shearer v. Shearer, 270 Neb. 178, 700 N.W.2d 580 (2005). In a review de novo on the record, an appellate court reappraises the evidence as presented by the record and reaches its own independent conclusions with respect to the matters at issue. Id.
IV. ANALYSIS 1. GENERAL LAW REGARDING PROPERTY DIVISION
"The purpose of a property division is to distribute the marital assets equitably between the parties." § 42-365. Equitable property division under § 42-365 is a three-step process. Tyma v. Tyma, 263 Neb. 873, 644 N.W.2d 139 (2002). The first step is to classify the parties' property as marital or nonmarital. Id. The second step is to value the marital assets and marital liabilities of the parties. Id. The third step is to calculate and divide the net marital estate between the parties in accordance with the principles contained in § 42-365. Id. Although the division of property is not subject to a precise mathematical formula, the general rule is to award a spouse one-third to one-half of the marital estate, the polestar being fairness and reasonableness as determined by the facts of each case. Millatmal v. Millatmal, 272 Neb. 452, 723 N.W.2d 79 (2006).
"Property owned by a party at the time of marriage is not marital property." Smith v. Smith, 9 Neb. App. 975, 982, 623 N.W.2d 705, 712 (2001). "With respect to separate property, whether inherited, gifted, or premarital, if it can be identified, it is typically set off to the inheriting spouse, the spouse donee of the gift, or the spouse who brought the property into the marriage." Id. "An exception to the rule applies where . . . the spouse not owning the property prior to the marriage . . . has significantly cared for the property during the marriage." Tyler v. Tyler, 253 Neb. 209, 213, 570 N.W.2d 317, 319 (1997). The burden of proof to show that property is a nonmarital asset remains with the person making the claim. Schuman v. Schuman, 265 Neb. 459, 658 N.W.2d 30 (2003). See Heald v. Heald, 259 Neb. 604, 611 N.W.2d 598 (2000).
2. EXHIBIT 31
Dion argues that the district court erred in receiving exhibit 31 (Joyce's version of the property statement) in evidence and using any values set forth therein in determining the value of the marital assets and marital liabilities of the parties. Dion argues that he did not receive the property statement from Joyce until the day before trial, at which time there was not sufficient time to make the changes she requested.
On August 20, 2007, the district court and the parties' attorneys had a telephone conference call to discuss the issue of the property statement. Dion's counsel informed the participants that she was in the process of updating the property statement and would have it to Joyce's counsel by noon on August 21. Just before noon on August 21, Dion's counsel e-mailed Joyce's counsel the property statement requesting that she provide her comments at her earliest convenience so that they could be incorporated into the document. Having not heard from Joyce's counsel, Dion's counsel filed exhibit 1 (his version of the property statement) by fax to the court, and such was file stamped on August 29, 2007, at 2:07 p.m. At approximately 2:30 p.m., Dion's counsel received an e-mail from Joyce's counsel that contained the changes she wanted made to the property statement. Dion's counsel responded back, stating there was not sufficient time to make the requested changes. At trial on August 30, the district court received exhibit 31 (Joyce's version of the property statement) over Dion's objection. The district court stated:
It's my feeling that Property Statements are given for — or prepared in the order requiring those is for my use and the use of the attorneys to ease the presentation of evidence at the trial. You still have to prove up all those values, all those assets. Just offering and receiving a Property Statement doesn't do that in my opinion. This may be a good lesson for the Court that I may become a stickler on the ten day rule. But, be that as it may, I'll receive Exhibit 31.
The 10-day rule referenced by the district court can be found in the Rules of Dist. Ct. of 11th Jud. Dist. 11-4 (rev. 2002), which rule sets out time guidelines for submitting property statements to the opposing party and to the court. Rule 11-4 provides:
D. PROPERTY STATEMENT: Both parties shall submit a combined exhibit listing all of the assets and liabilities of the marriage on a form prescribed by the court
. . . In addition, however, the petitioner shall first prepare the exhibit by placing the petitioner's values on the property statement. The exhibit shall then be submitted to the respondent who shall place values on the exhibit and return it to the petitioner. The petitioner shall submit the exhibit to the respondent no less than thirty (30) days prior to trial and the respondent shall return it to the petitioner no less than twenty (20) days prior to trial. The joint property exhibit, signed by counsel and the parties, shall be filed with the clerk of the district court no less than ten (10) days before trial. A copy of the exhibit shall also be sent to the judge no less than ten (10) days before trial.
It is clear from our record that Dion did not comply with rule 11-4(D), having sent his version of the property statement to Joyce less than 10 days before trial rather than the 30 days required by such rule. As a result, Dion did not allow Joyce the 10-day response time as provided in rule 11-4. Therefore, Dion has little ground to complain that Joyce was untimely in her response. Dion was not prejudiced by the district court's receiving exhibit 31 into evidence because Dion's values were in evidence as exhibit 1, and when values are in conflict, the court still has to decide between the two exhibits in conjunction with other evidence of value. After our de novo review of the record, we find that the district court did not abuse its discretion in receiving exhibit 31 at trial, and this assignment is without merit.
3. DION'S PREMARITAL ASSETS
Dion argues that the district court erred in not giving Dion credit for (a) the value of the net proceeds from the sale of his premarital home in the amount of $43,536.59, (b) the value of the net proceeds from the sale of his premarital rental house in the amount of $2,715.99, and (c) the value of the downpayments he made on the marital home in the amount of $4,803.63 before determining the value net marital estate in accordance with the principles contained in § 42-365.
(a) Premarital Home
The evidence shows that Dion had $43,536.59 in proceeds from the sale of his premarital home. And Dion testified generally that he put this money into the parties' joint checking account and that such moneys were used to remodel and update the marital home, for move-in costs, and for ongoing expenses. This presents a tracing issue, and despite Dion's testimony, we are not able to clearly trace his premarital home proceeds, or any particular portion thereof, to any assets owned at the time of trial. Additionally, the parties had no joint bank accounts, stocks, bonds, et cetera, that could be attributable to Dion's premarital house proceeds. Thus, we cannot say that the district court erred in implicitly concluding that Dion had not met his burden of proof on this tracing issue.
(b) Rental Home
The evidence shows that Dion received $2,715.99 in proceeds from the sale of his rental home in October 2005 for which he claims a premarital credit. The first problem with Dion's argument is that the home was sold 4 years into the marriage, and Joyce testified that the mortgage payments due on the property were paid from joint assets because the property was not always rented out. Regardless, Dion testified that the $2,715.99 in proceeds went into the parties' joint checking account. Thus, the second problem with Dion's argument is that we lack the proof necessary for tracing as we did with the proceeds of Dion's premarital home. Dion has not met his burden to show that the proceeds from the sale of his rental home should be set aside as his nonmarital property.
(c) Downpayment
Dion testified that he put paid two $500 payments (earnest money) and the $3,803.68 balance of the downpayment at closing, for a total of $4,803.68 toward the parties' marital home. However, Dion failed to provide any documentary evidence that the $4,803.68 was paid out of his premarital funds. To the contrary, Joyce testified that she was not sure whose money was used to pay the $1,000 earnest money because the parties' had put their money together. Additionally, Joyce testified that the remainder of the downpayment was made from the sale of her premarital Ford Taurus and premarital cash on hand. The evidence was in conflict, and we cannot say that the trial court was clearly wrong in concluding that Dion had not met his burden to show that the $4,803.68 proceeds should be set aside as his nonmarital property.
4. POSTSEPARATION DEBT (a) Credit Card Charges
Dion argues that he should receive a credit for the charges Joyce made on the parties' credit card in the approximate amount of $3,000. He claims those charges were attributable in large part to Joyce's dental bills. "A marital debt is "one incurred during marriage and before date of separation by either spouse or both spouses for joint benefit of parties" and "the burden of proof to show that property is nonmarital remains with the person making the claim." McGuire v. McGuire, 11 Neb. App. 433, 448, 652 N.W.2d 293, 305 (2002).
The district court found, and Dion testified, that the parties separated for good on February 14, 2006. Exhibit 39, the credit card statement in question, is for charges made January 23 through February 22, 2006. And of those charges, less than $100, a nominal amount in the entire scheme of the property division, can be attributed to purchases made in Colorado after February 14. The fact that the credit card bill was paid after the date of separation does not change the fact that the majority of the charges were incurred prior to the separation, and thus according to McGuire, supra, are marital debt. Dion argues that the charges were not for his benefit and thus should not be marital, but we are not persuaded. A spouse's health, including dental health, is an inherent benefit to the other spouse. The district court did not abuse its discretion in finding that the credit card debt was marital debt.
(b) Colorado Tax Liability
Dion argues "[w]ith regard to the parties' 2005 income taxes, Dion paid Joyce's Colorado income tax liability in the amount of $327 and $750 for her federal tax liability." Brief for appellant at 26. "Income tax liability incurred during the marriage is one of the accepted costs of producing marital income, and thus, we hold that income tax liability should generally be treated as a marital debt." Meints v. Meints, 258 Neb. 1017, 1023, 608 N.W.2d 564, 569 (2000). As stated previously, the parties did not separate until February 2006; thus, the 2005 tax liabilities were incurred during the marriage and were marital debt. Dion is not entitled to a credit for paying the 2005 tax liabilities, and thus there was no abuse of discretion by the district court. This assignment is without merit.
5. JOYCE'S STUDENT LOAN DEBT
Dion argues that the district court erred in not reducing Joyce's premarital assets by an equitable and reasonable amount of premarital student loan debt paid during the marriage. The evidence shows that Joyce brought $16,592 of student loan debt into the marriage. In Gangwish v. Gangwish, 267 Neb. 901, 678 N.W.2d 503 (2004), when married, the wife owed $12,399.43 in student loans, all of which were paid off with marital funds during the marriage. However, in its decree, the Gangwish trial court accounted for only $7,000 of the $12,399.43 debt that the wife brought into the marriage and the husband argued that the trial court erred by failing to deduct the remaining $5,399.43 from the wife's award. The Nebraska Supreme Court agreed that the wife's award should have been reduced by the total student loan debt that she brought into the marriage because that debt was paid off with marital assets, but did not correct the small mistake given that the marital estate was well over $1 million.
With respect to the her student loans, Joyce argues that Gangwish, supra, is inapplicable because Dion failed to prove the amount of premarital student loan debt that was paid off during the marriage. The Gangwish court said that reduction of the wife's share of the property by the total student loan debt that she brought into the marriage was required "because that debt was paid off with marital assets." Id. at 905, 678 N.W.2d at 509. The Supreme Court cited no other reason for the reduction than the payment from marital funds. In short, the reduction in the debtor's property distribution award upon dissolution flows from the payment of such premarital debt by marital funds. While Dion claimed that $14,994.64 was paid, Joyce testified to a lesser amount. In Joyce's brief, she admits that "$9,500 in principal and interest was paid during the course of the marriage." Brief for appellee at 22. Under Gangwish, this is an admission against her interest.
In a review de novo on the record, where the credible evidence is in conflict on a material issue of fact, the appellate court considers and may give weight to the circumstances that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another. Heald v. Heald, 259 Neb. 604, 611 N.W.2d 598 (2000).
By affording no reduction for such payments, the district court implicitly found Dion's testimony unpersuasive. We give weight to this finding. However, the court should have provided credit at least for the amount of payments admitted by Joyce, i.e., $9,500, and we make the appropriate change in the property division.
6. POSTSEPARATION EXPENSES FOR MARITAL HOME
Dion argues that the district court erred in not giving him an equitable and reasonable amount of credit for the expenses paid by him subsequent to the parties' separation which ultimately benefited Joyce, which expenses are reflected in exhibits 33 and 34. Specifically, Dion argues that he should get a credit for the $48,586.09 he paid after the parties separated. Such amount includes $1,500 monthly mortgage payments along with utilities, insurance, lawn care and landscaping, painting, driveway repair, foundation repair, roof repair, and plumbing repair for the house.
After the parties' separated, Dion continued to live in the marital home and Joyce maintained an apartment in Colorado. Logic dictates that each party should generally be responsible for paying the mortgage or rent associated with their respective postseparation residences. Therefore, Dion is not entitled to a credit for the $1,500 monthly mortgage payments he made on the marital home after the separation date. Furthermore, he is not entitled to a credit for moneys paid for utilities, insurance, lawn care and landscaping, painting, or plumbing repair, as such are the incidental expenses of maintaining a residence. Such expenses were for Dion's benefit, as he alone occupied the residence. However, we do find that Dion is entitled to a credit for the $2,650 paid to Clapp's Construction for repairs made to the driveway, foundation, and roof. There is evidence that the work was done and that payment was made by Dion. Furthermore, the repairs were of such a nature that they facilitated the sale of the home — which was to the benefit of both parties. Therefore, we give Dion a credit for $2,650.
7. EXHIBIT 16
Dion argues that the district court erred in not receiving into evidence exhibit 16 which is a summary of the expenses paid by Dion addressed in the preceding assignment of error. In proceedings where the Nebraska Evidence Rules apply, the rules control the admissibility of evidence; judicial discretion is involved only when the rules make discretion a factor in determining admissibility. Japp v. Papio-Missouri River Natural Resources Dist., 273 Neb. 779, 733 N.W.2d 551 (2007). When the Nebraska Evidence Rules commit the evidentiary question at issue to the discretion of the trial court, we review the admissibility of evidence for an abuse of discretion. Id. Exhibit 16 was basically a summary of the receipts found in exhibits 33 and 34. Because the evidence from exhibit 16 was already in the record via exhibits 33 and 34, Dion was not prejudiced and the district court did not abuse its discretion by not receiving exhibit 16 into evidence. This assignment is without merit.
8. CALCULATION AND DIVISION OF MARITAL ESTATE
We have attached a summarized version of our changes to the property division as appendix A to this opinion. Based on our calculation, of the $107,334.52 in marital home proceeds being held by the district court for Red Willow County, Dion should receive $47,990.12 and Joyce should receive $59,334.40.
V. CONCLUSION
We find that Joyce's award should be reduced by $9,500 for her premarital student loan debt paid during the marriage.
We find that Dion should be given a credit for the $2,650 he paid to Clapp's Construction for repairs made to the driveway, foundation, and roof of the marital residence that was later sold.
After our recalculation, we find that of the $107,334.52 in marital home proceeds being held by the district court for Red Willow County, Dion should receive $45,243.12 and Joyce should receive $62,091.40. Although there is no mention of interest by the district court, we assume that the home sale proceeds were being held in an interest-bearing account. Each party would be entitled to a proportional share of such interest earned while the funds have been held pending final resolution. Therefore, Joyce is awarded 57.85 percent of the interest and Dion is awarded 42.15 percent of the interest.
Except as otherwise noted in this opinion, the district court's decree is affirmed.
AFFIRMED AS MODIFIED.
INBODY, Chief Judge, participating on briefs.
SUMMARY OF PROPERTY DIVISION Step 1: (9,500.00) Step 2: Marital Estate (800.00) Gross Marital Estate Net Marital Estate (2.650.00) Step 3: (39,000.12) 2,650.00 (39,978.13) 21,276.29 Reconciliation
Identify Nonmarital Property Joyce's Nonmarital Property Proceeds from nonmarital home $ 30,776.29 Premarital student loan debt $ 21,276.29 Dion's Nonmarital Property Refrigerator sold with home $ 800.00 Identify and Value the Marital Estate Net marital home proceeds: Proceeds from sale $107,334.52 Joyce's premarital to be paid to her (21,276.29) Dion's premarital refrigerator, to him $ 85,258.23 Property already awarded to Dion: $ 39,000.12 Property already awarded to Joyce: $ 39,978.13 $164,236.48 $164,236.48 Credit to Dion for repairs $161,586.48 Division of the Marital Estate ½ of net marital estate to Dion $ 80,793.24 ½ of net marital estate to Joyce $ 80,793.24 Dion: ½ net marital estate $ 80,793.24 Specific property award $ 41,793.12 Dion's total cash award: $ 41,793.12 800.00 (premarital) (credit) $ 45,243.12 Joyce: ½ net marital estate $ 80,793.24 Specific property award $ 40,815.11 Joyce's total cash award: $ 40,815.11 (premarital) $ 62,091.40 Dion's cash from deposit with clerk of court $ 45,243.12 Joyce's cash from deposit with clerk of court $ 62,091.40 Total on deposit with clerk, excluding interest $107,334.52