Opinion
No. 4-534 / 03-2113
Filed December 8, 2004
Appeal from the Iowa District Court for Pottawattamie County, Timothy O'Grady, Judge.
Sue Ann Heyne appeals from the alimony, property, and attorney fee provisions of the trial court's decree dissolving her marriage with Bruce Allen Heyne. Bruce cross-appeals. AFFIRMED AS MODIFIED.
J.C. Salvo and Bryan Swain of Salvo, Deren Schenck Lauterbach, P.C., Harlan, for appellant.
Michael Winter, Council Bluffs, for appellee.
Heard by Huitink, P.J., and Vogel and Eisenhauer, JJ.
Sue Ann Heyne appeals from the alimony, property, and attorney fee provisions of the trial court's decree dissolving her marriage with Bruce Allen Heyne. Bruce cross-appeals. We affirm as modified.
I. Background Facts Proceedings
Sue, forty-eight, and Bruce, fifty-two, were married July 2, 1976. The parties have one child from the marriage, Cassandra, whose interests are not affected by this dissolution.
Sue has a high school diploma and completed a semester of college. During the marriage, Sue worked as a sales clerk, nurse's aid, proof-reader, and administrator. She is currently employed as a sales clerk earning $6.50 per hour. Sue is in good physical health but has a history of anxiety disorder and depression.
Bruce has a high school diploma and completed approximately one year of college coursework. During the early years of marriage, Bruce worked on the family farm. Bruce is currently employed as the president and chairman of the board of the Walnut Telephone Co. His annual salary is $33,000. Bruce also receives $1200 per year in director fees from the telephone company. Bruce owns 475 acres of farmland from which he receives approximately $50,000 gross annual cash rents.
The trial court's November 20, 2003, decree distributed the parties' assets and liabilities. Sue was awarded $900 alimony per month for five years. The decree provides:
Bruce is receiving marital assets with fair market value of $1,962,214, and Sue Ann is receiving marital assets with a fair market value of $240,683. The difference between the two awards is $1,729,061, and one-half of that difference is $864,515. That amount shall be paid to Sue Ann by December 31, 2003.
In making its alimony determination, the court found:
Bruce's average annual income from wages over the past eight years is $33,644. He has a salary of $26,000 per year, plus $1,200 per year for attending Board meetings. Bruce will be receiving the farm land which when rented at $115 per acre of cropland will produce $50,542 gross income annually. At the time of trial, Sue Ann was earning $6.50 per hour for 20 hours per week.
Sue Ann has part time employment now. Bruce has an earning capacity that is substantially greater than Sue Ann. Sue Ann is being awarded substantial assets and cash. Though she has had some health problems, she is capable of working, and she acknowledged that she does better when she works. Sue Ann is relatively young. Sue Ann expressed an interest in furthering her education. Given her age, abilities, and assets there is a strong likelihood that Sue Ann will become self-sufficient after a period of adjustment and/or education. Sue Ann should receive rehabilitation support of $900 per month for sixty months. The cost of health insurance is a consideration in this award of support.
Sue's request for $9500 towards her attorney fees was denied. Sue appeals, and Bruce cross-appeals.
On appeal, Sue argues:
I.THE TRIAL COURT'S AWARD OF ALIMONY WAS INADEQUATE.
II.THE TRIAL COURT FAILED TO DIVIDE THE MARITAL ASSETS EQUITABLY.
III.THE TRIAL COURT ABUSED ITS DISCRETION BY FAILING TO AWARD ATTORNEY FEES.
On cross-appeal, Bruce argues:
I.THE TRIAL COURT FAILED TO DIVIDE THE MARITAL ASSETS EQUITABLY WHEN IT SET THE VALUE OF THE WALNUT TELEPHONE COMPANY STOCK AT $700 PER SHARE BOOK VALUE RATHER THAN $150 PER SHARE MARKET VALUE.
Both parties request appellate attorney fees.
II. Standard of Review
Our scope of review in this equitable action is de novo. Iowa R. App. P. 6.4. In equity cases, especially when considering the credibility of witnesses, the court gives weight to the fact findings of the district court, but is not bound by them. Iowa R. App. P. 6.14(6)( g).
III. Alimony
Sue contends she should have been awarded alimony of $3500 per month for life, instead of $900 per month for five years. She argues an award of traditional alimony is warranted based on the parties' twenty-seven year marriage, her mental health issues, and her relatively low-paying job history. Although Bruce does not dispute the court's alimony award, he argues an award of traditional alimony is unjustified in this case.
Alimony is not an absolute right; an award depends upon the circumstances of each particular case. In re Marriage of Kurtt, 561 N.W.2d 385, 387 (Iowa Ct.App. 1997). The discretionary award of alimony is made after considering those factors listed in Iowa Code section 598.21(3) (2003). See In re Marriage of Sychra, 552 N.W.2d 907, 908 (Iowa Ct.App. 1996). We consider the length of the marriage, the age and health of the parties, the parties' earning capacities, the levels of education, and the likelihood the party seeking alimony will be self-supporting at a standard of living comparable to the one enjoyed during the marriage. In re Marriage of Clinton, 579 N.W.2d 835, 839 (Iowa Ct.App. 1998). When reviewing an alimony award, we give the trial court considerable latitude and disturb its ruling only when there is a clear failure to do equity. In re Marriage of Spiegel, 553 N.W.2d 309, 319 (Iowa 1996).
In Iowa, we recognize three different types of alimony; traditional, rehabilitative, and reimbursement. See In re Marriage of Probasco, 676 N.W.2d 179, 184 (Iowa 2004). Traditional alimony "is payable for life or so long as a spouse is incapable of self-support." Id. (quoting In re Marriage of Francis, 442 N.W.2d 59, 64 (Iowa 1989)). Rehabilitative alimony was conceived as a way of supporting an economically dependent spouse through a limited period of further education or retraining following divorce, thereby creating incentive and opportunity for that spouse to become self-supporting. Francis, 442 N.W.2d at 63. Reimbursement alimony is designed to give a supporting spouse a stake in the student spouse's future earning capacity based on contributions made to attain an advanced degree. Probasco, 676 N.W.2d at 184.
Based on our de novo review of the record, we conclude an award of traditional alimony is justified in this case. This is a twenty-six-year marriage, during which the parties enjoyed a comfortable and secure lifestyle. Although Sue has a significant employment history, her earning capacity is limited by her age, education, and lack of more substantial employment opportunities where she lives. Sue's prospects for self sufficiency are further diminished by mental health issues and resulting health insurance and medical expenses. Contrary to Bruce's contentions, we decline to measure Sue's prospects for self sufficiency solely on her share of the marital assets and the fortuity of the return on those assets. We accordingly modify the trial court's alimony award by increasing both its amount and duration. Bruce shall pay Sue $1500 per month until she reaches age sixty-two, dies, or remarries, whichever event first occurs.
IV. Property Distribution
Parties to a marriage are entitled to a just and equitable share of the property accumulated through their joint efforts. In re Marriage of Rebouche, 587 N.W.2d 795, 801 (Iowa Ct.App. 1998); In re Marriage of Gonzalez, 561 N.W.2d 94, 98 (Iowa Ct.App. 1997). Equitable distribution does not necessarily mean an equal division of property, nor does it mean a percentage division of the property. In re Marriage of Bonnette, 584 N.W.2d 713, 714 (Iowa Ct.App. 1998). Instead, each particular circumstance determines what is fair and equitable. In re Marriage of Wendell, 581 N.W.2d 197, 199 (Iowa Ct.App. 1998).
Sue believes that based on the net result of the property distribution, the court should increase her cash award from $865,515 to $950,000. Bruce asserts on cross-appeal that the court erred in using book value instead of the purchase value set out in the articles of incorporation in determining the market value of the Walnut Co. stock and Sue's cash award should be reduced accordingly. We begin our analysis with the valuation of the Walnut stock.
In calculating the fair market value of the stock, the trial court stated:
There are 150 shareholders in Walnut Telephone Company, and a total of 14,020 outstanding shares. Bruce is the president of the company, and he is the largest single shareholder. The stock is not publicly traded, and there have been no recent sales of the stock. Company bylaws create a right of first refusal in the company to purchase shares offered for sale at $150 per share. Bruce argues that $150 per share is a reasonable value to use for stock that is infrequently sold. Sue Ann argues that book value should be used to value the stock. To establish book value, Sue Ann relies on the Consolidated Balance Sheets of Walnut Telephone Company as of December 31, 2002. Those balance sheets show current assets of $1,298,000, non-current assets of $5,347,000, and plant and equipment of $3,178,000. The company has retained earnings in excess of $9,500,000. Sue Ann argues that the book value is $700 per share. Bruce does not quarrel that the book value is $700 per share, but he argues that the book value is not necessarily the fair market value of the stock. Given the retained earnings, the arbitrariness of the $150 figure, and the assets of Walnut Telephone Company, the Court concludes that the better gauge of the fair market value of this stock is its book value.
Bruce does not dispute the book value price. Instead, he argues the fair market value of the Walnut shares is more accurately reflected by the $150 per share purchase price authorized by the Walnut Board of Directors. Bruce testified that, "There's never been a sale for a price that has not been as set by the Board of Directors. A hundred and fifty dollars is the highest."
"The general rule is that stock should be valued at market value if it can reasonably be ascertained." In re Marriage of Moffatt, 279 N.W.2d 15, 19 (Iowa 1979). Book value of stock is not the only legitimate method of valuation. In re Marriage of Dieger, 584 N.W.2d 567, 569 (Iowa Ct.App. 1998). Moreover, the option price in a buy-sell agreement is merely one factor in valuation and is not determinative. Id. The valuation of closely-held corporations is difficult, and therefore, courts must determine the intrinsic value through the admission of evidence of assets and liabilities of the corporation. Moffatt, 279 N.W.2d at 19. Because the valuation is difficult, trial courts are given much leeway. In re Marriage of Dennis, 467 N.W.2d 806, 808 (Iowa Ct.App. 1991).
Based on Walnut's substantial assets aforementioned in the trial court's decision, along with Bruce's testimony that "there was several stock splits through the years," Bruce's suggested valuation of $150 is grossly underpriced. See Dieger, 584 N.W.2d at 569 (finding it unreasonable to assume value of stock was only what it could be sold back to the corporation for in light of the generous dividends it continued to produce). Although the manager of Walnut is only currently authorized to purchase up to 100 shares at a price of $150 per share, the Board of Directors, of which Bruce serves as the chairman, can authorize the purchase of stock to match any offered price. We agree with the trial court's finding and adopt it as our own that book value is the appropriate valuation of the Walnut stock.
We next turn to Sue's request of an additional cash award of $84,485 to make up for the disparity in the net worth assigned to each party. She argues that when the inherited and gifted property is factored into the property distribution, Bruce received approximately $3.95 million compared to the $1.36 million she received of the parties' combined net worth. She believes the additional cash award "will make the property division more equitable."
The court shall divide all property, except inherited property or gifts received by one party. . . ." Iowa Code § 598.21(1). The inherited or gifted property is not subject to division "except upon a finding that refusal to divide the property is inequitable to the other party. . . ." Iowa Code § 598.21(2). Sue does not dispute the court's determination of what was inherited or gifted property, or that the refusal to divide the inherited or gifted property was inequitable. As cited above, the court calculated the difference between the net marital asset awards and gave Sue a cash judgment for half of that total. Under the circumstances in this case, we find the court's cash award fair and equitable and we will not disturb it on appeal.
V. Attorney Fees
Sue claims she should have been awarded trial attorney fees. The district court has considerable discretion in awarding attorney fees. In re Marriage of Okonkwo, 525 N.W.2d 870, 873 (Iowa Ct.App. 1994). The decision to award attorney fees rests within the sound discretion of the court, and we will not disturb its decision absent a finding of abuse of discretion. In re Marriage of Maher, 596 N.W.2d 561, 568 (Iowa 1999). We find no abuse of discretion under the facts of this case. Sue was awarded substantial cash assets from which she can pay her attorney fees.
Sue and Bruce also seek appellate attorney fees. An award of appellate attorney fees is not a matter of right, but rests within the court's discretion. Kurtt, 561 N.W.2d at 389. We consider the needs of the party making the request, the ability of the other party to pay, and whether the party making the request was obligated to defend the district court's decision on appeal. Maher, 596 N.W.2d at 568. We determine because both parties were successful in part on appeal and have sufficient funds to pay their own attorney fees, we decline to award attorney fees to either party. Costs shall be equally shared by the parties.