Opinion
No. 5-657 / 04-0845
Filed March 15, 2006
Appeal from the Iowa District Court for Linn County, Denver D. Dillard, Judge.
Kevin Klein appeals from the economic provisions of his dissolution decree. AFFIRMED.
Stephen B. Jackson of Jackson Jackson, P.L.C., Cedar Rapids, for appellant.
Karen A. Volz of Ackley, Kopecky Kingery, Cedar Rapids, for appellee.
Considered by Miller, P.J., and Hecht and Vaitheswaran, JJ.
Kevin Klein appeals the spousal support and property provisions of a dissolution decree. We affirm.
I. Background Facts and Proceedings
Kevin and Peggy Klein married in 1975 and divorced in 2004. At the time of trial, Kevin was forty-nine years old and Peggy was one week shy of her forty-sixth birthday. Both parties are high school graduates. Kevin also took some postsecondary courses at a local community college.
During most of the marriage, Kevin worked as an auto mechanic. At the time of trial, he was the sole proprietor of a repair shop, earning an average of $65,000 in the four years preceding the parties' separation. Peggy primarily cared for the home and the parties' three children. She also assisted Kevin with business-related paperwork for approximately five to six hours per week, receiving no compensation for this service. With the exception of brief periods during the marriage, she did not earn wages. At the time of trial, she was caring for three of her grandchildren. Although she was initially uncompensated, her son later began paying her $200 per week.
The parties separated in 2003. Following their separation, Peggy moved in with a man she had met several months earlier. The same month, she petitioned to dissolve her marriage to Kevin.
After trial, the court ordered Kevin to pay Peggy $600 per month in traditional spousal support until she "remarries or dies, or [Kevin] attains age sixty five or dies, whichever event occurs first." The court distributed the parties' property and ordered Kevin to make an equalizing payment to Peggy of $97,516.59. Kevin appealed.
II. Spousal Support
Kevin contends the district court should not have awarded Peggy any spousal support or, in the alternative, should have only awarded her rehabilitative spousal support for five years. He maintains that (A) she is capable of earning more, (B) her cohabitation bars her from receiving spousal support, and (C) he cannot pay her $600 a month in spousal support on his income.
Before addressing these arguments, we emphasize that, although our scope of review is de novo, we afford the district court considerable latitude in making alimony determinations and will disturb the ruling only when there has been a failure to do equity. In re Marriage of Spiegel, 553 N.W.2d 309, 319 (Iowa 1996).
A. Peggy's Earning Capacity
Kevin maintains Peggy has the capacity to earn double what she is making as a babysitter for her son's children. The district court found she had "an earning capacity equal to or greater than her current earnings." The record supports this finding. Peggy was in her mid-forties and in good health at the time of trial. Although she lacked significant employment experience, she expressed a willingness to train herself for other employment opportunities. Specifically, she stated that, once the youngest child she was babysitting began kindergarten, she would "be in a better position to figure out what [to do] next and maybe take some courses or classes to get set up."
While we agree with Kevin and the district court that Peggy had the capacity to earn more than she was, we disagree with Kevin that this factor militates against a spousal support award. As the district court noted, this was a long marriage and Peggy "substantially contributed to the earnings for the family but has no employment history nor developed skills which would help her find employment in the job market which would support the standard of living to which she has become accustomed." She was clearly entitled to spousal support.
Anticipating this conclusion, Kevin argues, in the alternative, that Peggy should have been awarded rehabilitative alimony for five years rather than traditional alimony. Rehabilitative alimony "was fashioned as a method of supporting an economically dependent spouse through a limited period of re-education or retraining following a dissolution, thereby creating opportunity and incentive for that spouse to become self-supporting." In re Marriage of Wessels, 542 N.W.2d 486, 489 (Iowa 1995). Traditional alimony, in contrast, is "payable for life or so long as the spouse is incapable of self-support." In re Marriage of Francis, 442 N.W.2d 59, 64 (Iowa 1989).
We agree with the district court that traditional alimony was warranted in this case. Although Peggy was only in her mid-forties and in relative good health, we are not convinced that she could earn enough to become self-supporting. At the time of trial, she was making $200 per week. Even if her earning capacity doubled with reeducation or retraining, she would still only earn a third of the earnings imputed to Kevin. We conclude these earnings would not allow her to enjoy the standard of living she enjoyed during the marriage. In re Marriage of Olson, ___ N.W.2d ___, ___ (Iowa 2005). Accordingly, we affirm the district court's award of traditional alimony.
As for the amount, Peggy sought $1583 per month for the first five years and $500 per month after that until she turned sixty-five, remarried or died. The district court awarded $600 per month. This sum was equitable.
In the interests of completeness, we proceed to address the two other factors cited by Kevin.
B. Cohabitation.
Kevin contends that, in awarding spousal support, the district court failed to consider "the continuous cohabitation of Peggy, virtually from the time she separated from Kevin, through the date of trial." He maintains this factor "is relevant in that it directly impacts any need she may have for spousal support." In declining to consider this factor, the district court stated that the testimony relating to Peggy's new relationship "fails to meet the legal test of cohabitation which would disqualify Petitioner for spousal support." We agree.
In In re Marriage of Wendell, 581 N.W.2d 197, 200 (Iowa Ct.App. 1998), our court held:
[C]ohabitation has too many variables to be a defined future event, like remarriage, in a dissolution decree. Thus, we believe it would be inappropriate to use cohabitation as an event to automatically terminate alimony in an original dissolution decree. The question is better reserved for resolution in an action to modify the decree for dissolution of marriage.
We continued, "our decision today will generally foreclose an adjudication of the cohabitation issue at the time of the original decree." 581 N.W.2d at 200.
The district court declined to deviate from this general rule, noting "there was insufficient history in this case to show that level of permanence" equivalent to a common-law marriage. We agree with the court's reasoning. Accordingly, we have not considered Peggy's cohabitation in assessing her entitlement to spousal support.
C. Ability to Pay
Kevin contends the district court "failed to appropriately take into account" the decline in his income. To the contrary, the court specifically found "unpersuasive" Kevin's evidence relating to his 2003 decline in income. The district court found that Kevin had an earning capacity "equal to his traditional average of $65,000." We agree with the district court's finding and conclude Kevin has sufficient income to pay Peggy spousal support for the duration and in the amount prescribed.
III. Property Distribution
Kevin contends the equalizing payment he was ordered to make was too high. He points to certain valuations that he maintains were inaccurate. Specifically, he notes that the district court valued certain bank accounts based on the balances at the time of the parties' separation rather than at the time of trial. The district court explained why this was done:
Throughout the trial, Respondent's testimony and exhibits were shown to be highly unreliable concerning valuation of property. Not only were Respondent's testimony and exhibits shown to be wrong on numerous property valuations, Respondent admitted that he spent most if not all of the Collins Credit Union business and personal checking and savings accounts in purchasing property and covering expenses resulting from his reduced income. The Collins Credit Union accounts totaled $22,454. The court finds that Respondent's lowered income during this period is based upon factors under Respondent's control.
In a post-trial ruling, the court again addressed Kevin's contention that the accounts should have been valued based on the balances at the time of trial, stating:
Respondent chose to do less work because of the dissolution of marriage and converted or wasted much of the accounts that would have been untouched if he had continued to earn income consistent with his history.
Finally, the court noted that Kevin's "lack of credibility covers Respondent's testimony concerning his reasons for lowered income in addition to valuations."
In assessing this portion of the district court's ruling, we recognize that assets are generally valued as of the time of trial. See, e.g., In re Marriage of Fall, 593 N.W.2d 164, 168 (Iowa Ct.App. 1999). However, the district court's rationale for using a different time period is supported by the record. As the court found, Kevin provided scant evidence concerning the balances in these accounts at the time of trial. In his statement of relief, he valued one of the personal accounts at $600 and stated the business account "varies." In his post-trial motion, he gave no value for the personal account and stated there was $3000 in the business account. Under these circumstances, the district court's valuation of the accounts was equitable.
Kevin also takes issue with the district court's valuation of a 2004 truck. The district court explained this valuation as follows:
Finally, the 2004 GMC has a current value of $30,104 which was arrived at by subtracting the 2003 depreciation of $6,596 from the net cost of $36,700 (price minus rebate). This is not an accurate measurement of the equity in this asset, and neither of the parties provided the court with a reliable way to evaluate the joint interest in the assets. The court concludes that the most reliable and fairest way to value the asset is on the theory that Respondent has traded the GMC truck every three years for business depreciation purposes. It is reasonable to assume that the asset will have the same value after adjustment for inflation for any point during the three-year cycle of the asset. The trade-in allowance on the 2001 GMC truck was $25,062 minus $3000 still owed on the vehicle. The net value of $22,062 would seem to be the most reliable measure for the purpose of this case.
We find no reason to disturb this analysis.
IV. Attorney Fees A. Trial Attorney Fees.
Kevin argues the district court should not have ordered him to pay $2000 of Peggy's trial attorney fees. Our review of this issue is for an abuse of discretion. See In re Marriage of Benson, 545 N.W.2d 252, 258 (Iowa 1996).
In a post-trial ruling, the court explained that its award was based on Peggy's income. Given Kevin's substantially greater earnings, we discern no abuse of discretion in this aspect of the court's ruling.
B. Appellate Attorney Fees.
Peggy requests appellate attorney fees. We deny her request. Although her income is significantly lower than Kevin's, she received a substantial equalizing payment that we have affirmed on appeal. For this reason, we conclude she is capable of paying her own attorney fees.
V. Disposition
We affirm the district court's property distribution and its award of spousal support.