Opinion
No. 2-326 / 01-1448
Filed September 25, 2002
Appeal from the Iowa District Court for Polk County, Douglas F. Staskal, Judge.
On appeal from a district court allocation of equity in real estate and property in a dissolution, petitioner seeks an upward modification of his award based on the language of the premarital agreement. AFFIRMED AS MODIFIED.
Robert A. Nading II of Nading Law Firm, Ankeny, for appellant.
Thomas McCann, Des Moines, for appellee.
Heard by Hecht, P.J., and Vaitheswaran and Eisenhauer, JJ.
We must decide whether a district court's allocation of assets in a dissolution decree is consistent with the parties' premarital agreement. We conclude one aspect of the allocation is not. Accordingly, we modify the asset distribution portion of the decree.
I. Background Facts and Proceedings
Stephen Lombardi and Sally Jo Studer-Lombardi executed a premarital agreement before their marriage in 1994. The agreement distinguished between their "separate property" and "common property," allocating to each party their own "separate property" and setting forth a plan to distribute the "common property." The "common property" included a lake cabin as well as the parties' homestead. The agreement provided for a percentage division of the equity in those properties based on the number of years the parties remained married. The agreement further stated, "[a]ny increase in value of the equity attributable to extraordinary payments on the mortgage principal (other than monthly payments) made by either party shall be treated as separate property."
The agreement provides that "the equity which Steve currently owns shall be divided as follows":
Dissolution Date Sally's Equity Steve's Equity
1995-1998 10% 90%
1999-2002 20% 80%
After six years of marriage, Stephen sought a divorce. Following trial, the district court determined the premarital agreement was enforceable. The court valued the lake cabin at $100,400 and determined there was $72,700 in equity in the cabin at the time of the marriage, and $13,850 in appreciated equity during the marriage. Sally was awarded $28,350 of that equity pursuant to the formula prescribed in the premarital agreement. As for the home, the court noted that the parties sold their first home and garnered proceeds of $71,707.48, which were funneled into another home. The court allocated those proceeds pursuant to the formula in the premarital agreement. Finally, the court determined that a grand piano purchased in 1995 for $31,600 was "common property," the value of which was subject to equal division.
Stephen moved for enlarged findings and conclusions pursuant to Iowa Rule of Civil Procedure 1.904. In response, the court ruled that a large payment Stephen made on the lake cabin was not an "extraordinary payment" under the premarital agreement for which he should receive credit. The court further determined that Sally's interest in the home purchased after the parties married was $132,487.76. Finally, the court reiterated that the piano was household furniture subject to equal division.
The district court valued the new residence at $450,000, deducted the $142,000 due on the mortgage, subtracted the pre-existing equity of $71,707.48 and then divided the remaining value, $236,292.52, equally between the two parties. The court then added twenty percent of the equity in the property at the time the parties married. ($308,000 — $71,707.48 = $236,292.52 divided by 2 = $118,146.26 plus $14,341.50 [20% x $71,707.48] = $132.487.76)
Stephen appealed. Our review of the issues he raises is de novo. Iowa R. App. P. 6.4.
II. Lake Cabin
Stephen purchased the lake cabin about a year before his marriage to Sally. He was required to make monthly payments of $350.54 from that date until September, 2000, when a balloon payment was due for the balance. In February, 1999, Stephen made a payment on the cabin of $25,459.79. The district court determined that this payment was not an "extraordinary payment" within the meaning of the premarital agreement subject to treatment as "separate property." Stephen maintains this ruling contravenes the terms of the agreement. We agree. The agreement defined "extraordinary payments" as anything "other than monthly payments." Stephen's payment of $25,459.79 was not a monthly payment. Therefore, it was an extraordinary payment that was Stephen's separate property.
Crediting Stephen for this payment, the value of the lake cabin would decrease from $100,400 to $74,940.21 and the net equity in the cabin would decrease from $13,850 to $2,240.21 ($74,940.21 — $72,700), leaving Sally with a total interest in the cabin of $15,620.10. We modify the decree to reflect this revised calculation.
III. Home
After Stephen and Sally married, Stephen made a down payment on the new house of $168,806.69. The down payment check was written on Stephen's law firm account. There is apparently no dispute that the $71,707.48 in proceeds from the sale of the first home was included in this down payment and comprised the beginning equity in the new home. In his post-trial rule 1.904 motion, Stephen argued that the remaining $99,099.21 ($168,806.69 — $71,707.48) were separate funds belonging to him, which constituted an "extraordinary payment" under the premarital agreement for which he should receive a credit. The district court rejected this argument, essentially noting that Stephen's own trial calculation of the equity in the parties' home did not include a credit for this sum. We agree with the district court's assessment.
Stephen introduced his hand-written calculations of the equity in the home and also testified about how he arrived at the final figure. Neither the written document nor his testimony made any mention of the $99,099.21 credit he now seeks, raising doubts as to whether error was preserved. See Meier v. Senecaut III, 641 N.W.2d 532, 540 (Iowa 1992) (noting a rule 1.904 motion is a vehicle to have the district court address an issue presented but not decided) (emphasis added).
Bypassing this error preservation concern, we note that the "extraordinary payment" language on which Stephen relies applies only to payments "on the mortgage principal made by either party" under the terms of the premarital agreement. The $99,099.21 payment was not made on the mortgage principal and, accordingly, is not an extraordinary payment.
Stephen nevertheless suggests that the clearly expressed intent of the premarital agreement is to treat all assets as separate property unless otherwise designated in writing. See In re Marriage of Van Regenmorter, 587 N.W.2d 493, 497 (Iowa Ct. App. 1997) (stating prenuptial contracts are to be treated and construed like any ordinary contract). While we agree in principle with this contention, the record reveals the $99,099.21 was common rather than separate property. The account on which the check was drawn contained the proceeds from the sale of the parties' first home. Those proceeds are defined as "common property" under the premarital agreement. At a minimum, therefore, the account commingled separate and common funds. The record also contains a letter from Stephen to the mortgage company stating "[t]he funds Sally and I are providing to close are from fees and savings." Although the letter also notes that the majority of funds came from his business accounts, Stephen introduced no ledger entries or other documents showing that the sum of $99,099.21 constituted Stephen's business earnings, as opposed to home sale proceeds or savings. On this record, we cannot conclude solely from the business name on the account that the $99,099.21 was "separate property" entitling Stephen to a credit. Accordingly, we affirm the district court's disposition regarding the equity in the home.
IV. Piano
Stephen claims the district court should not have characterized the parties' grand piano as "common property." We disagree. The premarital agreement provides that "property designated in a writing to be common property shall be common property of the parties. . . ." Sally's exhibit of "mutual belongings" includes the piano, with a notation that it was "purchased together." There was also testimony that both parties played the piano, as did two of the children in the home. We conclude the district court acted equitably in equally dividing the value of the piano.
Cf. Jensen v. Jensen, 114 N.W.2d 920, 1016 (Iowa 1962) (characterizing piano and organ as "household furnishings"); Harlow v. Harlow, 150 Iowa 173, 176, 129 N.W. 833, 834 (1911) (characterizing piano as "furniture"). Contrast In re Zoellner's Marriage, 219 N.W.2d 517, 520 (Iowa 1974) (noting grand piano treated separately from furniture).
V. Appellate Attorney Fees
Sally seeks an award of appellate attorney fees. Such an award is discretionary. In re Marriage of Ask, 551 N.W.2d 643, 646 (Iowa 1996). We believe the issues raised by Stephen are not frivolous, as Sally contends. We also cannot conclude that her financial circumstances warrant an award of fees. Accordingly, we deny her request.