Opinion
No. 3-683 / 02-1539.
Filed January 14, 2004.
Appeal from the Iowa District Court for CarrollCounty, Gary L. McMinimee, Judge.
Susan Romey appeals and Randall Romey cross-appeals from the economic provisions of the decree dissolving their marriage. AFFIRMED AS MODIFIED.
Patricia Hulting of Terrill, Martens, Hulting Stockdale, Ames, for appellant.
Thomas Polking of Wilcox, Polking, Gerken, Schwarzkopf Copeland, P.C., Jefferson, for appellee.
Heard by Huitink, P.J., and Zimmer and Miller, JJ.
Susan Romey appeals and Randall Romey cross-appeals from the district court's decree dissolving their marriage. We affirm the district court's property division, but modify the decree to award Susan alimony.
I. Background Facts and Proceedings.
Susan and Randall were married in 1971. They have two adult children. The couple separated in June 2001 when Susan left the marital home. Susan filed a petition to dissolve the marriage the day after she moved out. On November 30, 2001, the district court entered an order requiring Randall to pay Susan $400 per month in temporary alimony.
At the time of trial, Susan was fifty-two years old and Randall was fifty-three years old. The district court dissolved the parties' marriage by decree entered July 22, 2002. In the decree, the court made a nearly equal division of the parties' assets. The court rejected Susan's request for an award of alimony. The court also determined that the parties should pay their own attorney fees. Both parties filed post-trial motions to amend the decree which were ruled on by the trial court.
Susan appeals. She contends the trial court erred when it failed to award her alimony. She also challenges the court's valuation and division of the marital assets. Finally, she contends the court erred when it failed to award her attorney fees. On cross-appeal Randall challenges several aspects of the court's property division, and contends the trial court erred in failing to award him attorney fees.
II. Standard of Review.
Our review of this equitable proceeding is de novo. Iowa R. App. 6.4. We give weight to the district court's findings of fact, but are not bound by them. Iowa R. App. 6.14(6)( g).
III. Property Division.
The partners to a marriage are entitled to a just share of the property accumulated through their joint efforts. In re Marriage of Russell, 473 N.W.2d 244, 246 (Iowa Ct. App. 1991). Accordingly, the overriding question before this court is whether the division was just and equitable in light of the circumstances of the case. Id. Here, the district court valued the parties' property at approximately $239,000, and made a nearly equal division of this amount. On appeal, neither party contends it was inequitable for the district court to make a nearly equal division of the assets, and we conclude such a division was just and equitable in light of each party's contributions to this thirty-year marriage. Rather, the disputes focus on the treatment of individual assets. Upon review, we find no merit in any of the individual contentions, which we now address in turn.
This value does not include the parties' personal property or a car that Susan purchased post-separation.
A. Morton Building.
Randall was awarded the parties' three-acre homestead, from which he operates Romey Electric (RE), a subchapter S corporation. The district court set the value of the homestead at $87,000. Susan claims the value set by the court was too low, as it failed to include an independent assessment for the Morton building from which RE operates. In reviewing the value set by the court, we look to see whether it was within the permissible range of the evidence. In re Marriage of Driscoll, 563 N.W.2d 640, 643 (Iowa Ct. App. 1997).
Susan argues the court should have independently valued the Morton building at $27,000. However, the real estate appraiser, who valued the entirety of the homestead at $80,000, believed the presence of the commercial Morton building at best minimally contributed to, and likely detracted from, the marketability of this residentially-zoned property. In addition, the most recent tax assessment set the value of the entire property, including the Morton building, at approximately $85,000. In setting an $87,000 value on the entirety of the homestead, the district court relied on both the current assessed value, and the fact the Morton building "has a value to Randall and the corporation which should be recognized." The court's valuation of the homestead was within the permissible range of the evidence, and will not be disturbed on appeal. Driscoll, 563 N.W.2d at 643.
She arrives at this figure based, not on an appraisal, but upon the cost basis for the Morton building appearing on RE's balance sheet, and the building's replacement cost.
B. Shareholder Loan.
When the district court valued the assets of the parties, it did not consider a $65,436 shareholder loan Randall made to RE in 1998. The court declined to include the loan among the parties' assets, concluding the resulting need to treat it as a debt of RE would only serve to reduce the value of RE's corporate stock.
It appears this loan was essentially a paper transaction used by Randall as a tax device to reduce his reportable income. The tax returns and balance sheets admitted into evidence indicated that, as of the time of trial, the loan balance had been reduced to $51,411.
Susan agues this was error, as the district court valued only the corporation's tangible assets, and thus there was no corporate stock whose value would be reduced by the corporate debt. She contends the assets of the parties should simply be increased by the original amount of the loan, with Randall then being required to pay her a cash award in the amount of one-half the obligation owed by RE. We cannot agree.
As noted by the district court, RE "has no `blue sky' to value. The success of the business is solely dependent upon Randall's ability to attract business through personal contact and bidding."
Randall is the only shareholder of RE. The value of his shareholder equity is necessarily measured by the value of the corporation. If the loan is treated as an asset of the parties, the value of the corporation, and thereby the value of Randall's shareholder equity, would necessarily be reduced by a corresponding amount. If the parties' net assets are to be nearly equally divided, a proposition not challenged by Susan, consideration of the loan has virtually no impact on the ultimate property division. We therefore conclude no inequity resulted from the district court's treatment of the shareholder loan.
C. Lot and Acreage.
The court awarded Susan a piece of real estate known as the Main Street lot, located within the town where the parties reside, and an acreage located approximately one-quarter mile outside of the town. Randall filed a post-trial motion pursuant to Iowa Rule of Civil Procedure 1.904(2), requesting that he be awarded both properties. He contended that failure to award him these assets would create a "hardship" on RE, as RE used the Main Street lot for storage, and parked business vehicles on the acreage. The court denied the request, concluding Randall had not shown "any substantial business use was being made of either of the properties. . . ." Randall appeals this decision, arguing equity necessitates that he be awarded both pieces of real estate, and be required to reimburse Susan for their full value.
We agree with Susan's contention, and the district court's conclusion, that there is not sufficient evidence either piece of land was a necessary part of Randall's business. Susan testified the Main Street lot was vacant as of the time of trial, and there was no evidence it was essential for RE to park its vehicles on the acreage located some one-quarter mile outside of town, rather than on the three-acre homestead awarded to Randall. We see no inequity in awarding these two assets to Susan.
D. Certificate of Deposit.
Susan also filed a post-ruling motion pursuant to Iowa Rule of Civil Procedure 1.904(2). Among the issues she raised was the court's failure to consider and divide a $7,000 certificate of deposit (CD) that was listed both on Randall's November 2001 financial affidavit, and Susan's Exhibit 22, which was a list of "marital and separate assets." In its post-trial ruling the court stated it had not considered the CD as an asset because the parties had not listed it in their May 2002 pretrial stipulation. Apparently based on statements made by counsel, the court then found Randall had redeemed the CD just prior to the execution of the pretrial stipulation. Concluding there was "nothing to suggest the proceeds were reflected in the pretrial statement or expended for joint obligations," the court ordered Randall to pay Susan $3,792.05, representing one-half of the value of the CD, plus accrued interest.
Randall argues it was error for the court to consider and divide the CD, as it did not exist as of the time of trial. However, because there is no actual proof in the record that Randall in fact liquidated the CD, there is no evidence from which we can positively conclude the CD no longer existed as of the date of trial. Even if we were to assume the CD was liquidated prior to trial, as found by the district court, the court correctly noted there was no evidence from which it can be concluded that the proceeds of the CD were utilized for joint obligations or reflected in the other assets of the parties. Under either circumstance, the court's division of the CD or CD proceeds would be equitable.
IV. Alimony.
Susan contends the district court should have awarded her $400 per month in permanent or traditional alimony. See In re Marriage of O'Rourke, 547 N.W.2d 864, 866 (Iowa Ct. App. 1996) (" Traditional alimony is payable for life or for so long as a dependent spouse is incapable of self-support.") (emphasis in original). She asserts the court erred when it set her earning capacity above her current salary, and concluded that, at the present time, Randall had no ability to make alimony payments. She also asserts the court placed undue emphasis on the fact the parties lived a frugal lifestyle.
An award of spousal support is a balancing of the equities, used as a means of compensating the party who leaves the marriage at a financial disadvantage. In re Marriage of Clinton, 579 N.W.2d 835, 839 (Iowa Ct. App. 1998). An award is dependent upon each party's earning capacity and present standards of living, as well as the ability to pay and the relative need for support. In re Marriage of Bell, 576 N.W.2d 618, 622 (Iowa Ct. App. 1998). In a marriage of long duration, an award of both alimony and a substantially equal property distribution may be appropriate. See In re Marriage of Geil, 509 N.W.2d 738, 742 (Iowa 1993).
At the time of trial, Susan was primarily employed as a residential manager, earning just under $1,100 per month. She held two additional positions that raised her yearly salary to approximately $15,000. However, the district court determined that Susan had an earning capacity of $18,000 per year. It reasoned that Susan, who had been employed outside for the home for the majority of the marriage and had twenty-three years of secretarial experience, was qualified for one of any number of locally available secretarial positions that paid between eight to twelve dollars per hour. Despite Susan's lack of advanced computer skills, and some minor physical limitations, we agree that $18,000 per year is a reasonable earning capacity to impute to Susan. Where we differ with the district court is in its assessment of Randall's earning capacity.
Susan averaged between forty-three to forty-fours hours per week at her residential manager position. She also earned approximately ninety dollars per month for a four hour per week hostess job, and worked an additional eight to nine hours per week for a $304 rent reduction.
Randall's average income for the five-year period from 1997 through 2001 was $33,650. However, in corporate fiscal year ending April 30, 2002, which coincided with the parties' separation, Randall reported no income and RE reported a $49,000 loss. The court relied on this recent downturn, as well as Randall's testimony that the near future for his company did not look much brighter, to conclude that Randall was unable to pay alimony, either now or in the near future. However, we conclude that equity requires us to look to Randall's earning history, rather than focusing on a single year, when setting his earning capacity.
When we do so, even taking fair consideration of RE's recent economic losses, we conclude Randall is capable of paying some spousal support. The record reveals Randall is a skilled electrical contractor. He has successfully operated his own business since 1979. Randall consistently earned more income than Susan during the marriage, and he has demonstrated that he has the capacity to earn more than his former spouse in the future. Given the length of the marriage as well as Susan's age and earning capacity, we conclude that she is entitled to and does require some level of support to meet her financial needs. See Iowa Code § 598.21(3) (2001) (listing relevant factors for consideration in determining whether to award alimony).
However, the $400 per month requested by Susan is both currently beyond Randall's ability to pay, and more than that required by Susan, who received a modest income-producing business in the property division. After balancing the various considerations, we conclude Susan requires, and Randall can afford to pay, $200 per month in alimony. We therefore amend the district court's dissolution decree to provide that Randall shall pay to Susan $200 per month in alimony, until such time as Susan reaches the age of sixty-six, and begins to draw social security income.
One of the items Susan received in the property settlement was a storage facility, co-owned with Randall's brother, which appears to produce between $100 and $200 per month in profit for each co-owner.
V. Attorney Fees.
Both Randall and Susan contend the district court should have ordered that a portion of their trial attorney fees be paid by the other party. However, such awards are within the discretion of the district court, and should be made only if they are fair and reasonable in light of the parties' respective financial positions. In re Marriage of Grady-Woods, 577 N.W.2d 851, 854 (Iowa Ct. App. 1998). Here, we perceive no abuse of discretion in the court's decision not to award either party trial attorney fees.
In addition, both parties seek appellate attorney fees. Such an award is discretionary and is determined by assessing the needs of the requesting party, the opposing party's ability to pay, and whether the requesting party was forced to defend the appeal. In re Marriage of Gaer, 476 N.W.2d 324, 330 (Iowa 1991). We decline to award appellate attorney fees in this matter. Costs of the appeal are to be assessed to the parties equally.