Opinion
No. 6-103 / 05-0997
Filed March 29, 2006
Appeal from the Iowa District Court for Dubuque County, Alan L. Pearson, Judge.
The respondent appeals from the economic provisions of the decree dissolving his marriage to the petitioner. AFFIRMED AS MODIFIED.
James W. Affeldt and Robert M. Hogg of Elderkin Pernie, P.L.C., Cedar Rapids, for appellant.
Robert L. Day, Jr. of Day, Hellmer Straka, P.C., Dubuque, for appellee.
Heard by Vaitheswaran, P.J., and Eisenhauer, J., and Brown. S.J.
Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2003).
Gary Lenz appeals from the economic provisions of the decree dissolving his marriage to Janice Lenz. We note at the outset the unusual circumstances involved in this case. As the district court stated:
Divorces have become, unfortunately, commonplace in today's culture. They occur in such numbers that, while exceedingly important to the partners involved, they generally occasion little comment and pass quickly from the memories of the professionals who administer them. Every now and then a case comes along of such unique character that it attains a lasting place in the legal culture of a community. This is one such case.
Gary contends the district court erred in valuing the marital property and debts, in distributing the marital property, in awarding Janice excessive alimony, and in awarding Janice an excessive amount of attorney fees. Janice seeks an award of her appellate attorney fees. We affirm as modified.
I. Background Facts and Proceedings.
Janice and Gary Lenz were married in September 1971. In December 1974, Janice filed a petition to dissolve the marriage. Gary was served but never appeared, and on April 25, 1975 the marriage was dissolved by default. Janice, fearing Gary's reaction to the finalization of the divorce, went to California for two weeks. Upon returning, Gary found her, knocked her unconscious, and brought her to the marital home. From that point forward, the parties lived together as husband and wife, held themselves out to be married, and told no one of the finalized divorce.
The parties' relationship was punctuated by Gary's physical and emotional abuse of Janice. Janice suffers from battered women's syndrome as a result of the relationship. Although Janice made several attempts over the years to leave Gary, she always returned to him after a short period of time.
Janice petitioned for dissolution in 1992. Gary moved to dismiss the petition, asserting the parties were already divorced and had never remarried. Janice amended her petition to allege a common law marriage. However, before the issue was resolved, the parties reconciled. This scenario repeated in 1996.
In 1998, Janice again filed for dissolution of marriage, alleging a common law marriage. Gary moved to dismiss, and the motion was denied. After a trial, the court concluded a common law marriage existed. Gary appealed the ruling, but while the appeal was pending the parties reconciled and Janice again dismissed the proceeding.
Three months later, Janice filed the present action for dissolution, asserting a common law marriage. The court ordered Gary to pay Janice temporary spousal support of $2,000 per month beginning February 1, 2000. Gary appealed the temporary support order, contending it was excessive, and this court affirmed in In re Marriage of Lenz, No. 99-0906 (Iowa Ct.App. Aug. 29, 2001).
Gary filed a motion for summary judgment seeking to dismiss the action on the basis that Janice had dismissed prior proceedings in which she had alleged the existence of a common law marriage. The court denied the motion, but determined the issue of the existence of a common law marriage decided by the prior order was not controlling.
In April 2000, Gary took Janice to his attorney's office without her attorney present. Following that meeting, Janice discharged her attorney. The parties then reached an agreement resolving all their financial issues. On June 30, 2000, Janice, without being represented by counsel, signed the stipulation prepared by Gary. It provided that all of the parties' real property would be transferred into a revocable trust controlled by Gary. The stipulation also provided that Janice would not receive any alimony from Gary, that they would each pay their own attorney fees, and that "no additional property exists which needs to be divided." A decree of marriage was entered based on the stipulation. Janice also signed a satisfaction of spousal support received under the temporary support order. She signed this even though the temporary support had not been paid in full.
Janice later filed a motion to vacate the judgment and decree. The issue was tried in April 2002. The court entered a judgment finding that Gary had committed fraud and duress on Janice and set aside the stipulation, the decree, and the satisfaction. The temporary support order from January 2000 was retroactively reinstated. This court upheld the district court's ruling on appeal. In re Marriage of Lenz, No. 02-1022 (Iowa Ct.App. June 25, 2003).
In early 2005, this matter was tried to the court. In its April 15, 2005 decree, the court determined the parties had been common law husband and wife since two weeks following the entry of the 1975 dissolution decree. The court awarded Janice property valued in the amount of $494,950. Gary was awarded property valued at $1,310,821. The court then ordered Gary to pay an equalizing payment of $400,000, with ten percent interest accumulating until paid in full. Gary was further ordered to pay Janice $2,000 per month in alimony until the property award is satisfied, as well as $20,000 of Janice's attorney fees.
II. Scope and Standard of Review.
Appeal of economic provisions of a divorce decree is de novo. In re Marriage of Campbell, 623 N.W.2d 585, 586 (Iowa Ct.App. 2001). This standard requires us to examine the entire record and adjudicate anew rights on the issues properly presented. Id. We recognize the value in listening to and observing the parties and witnesses. See Iowa R. App. P. 6.14(6)( g). Consequently, we give weight to the findings of the trial court, although they are not binding. Campbell, 623 N.W.2d at 586.
III. Division of Property.
Gary contends the district court erred in distributing the parties' marital property in several respects: he claims (1) the court improperly considered past domestic abuse and other fault in dividing the marital property; (2) the court ignored the tax consequences of the sale of non-liquid assets; (3) the court erred in excluding certain debts from the valuation of his business; (4) the court improperly valued certain assets and erred in finding he dissipated assets; (5) the award of interest on the equalization payment and the alimony awarded is inequitable; and (6) property given to him by his mother was improperly considered marital property.
Partners to a marriage are entitled to a just and equitable share of the property accumulated during the marriage through their joint efforts. In re Marriage of Miller, 552 N.W.2d 460, 463 (Iowa Ct.App. 1996). Iowa law does not require an equal division or percentage distribution, but rather merely requires us to determine what is fair and equitable under the circumstances. In re Marriage of Russell, 473 N.W.2d 244, 246 (Iowa Ct.App. 1991). We must take into consideration those factors set forth in Iowa Code section 598.21(1) (1999).
A. Fault.
Gary claims the district court considered domestic abuse and other factors not proper in dividing the marital property. He cited to numerous instances in the dissolution decree in which Gary's abuse of Janice is noted by the court. He requests the trial court be reversed and the case be remanded for determination by a different judge.
We find no evidence that the district court improperly considered the parties' past abusive relationship in dividing the marital property. It is impossible, considering the history of this case, to rule on any issues without noting the extraordinary facts, and we will not fault the trial court for doing so. This is a marriage of long duration, beginning in 1975. While Gary was the primary source of income in the marriage, Janice was a homemaker and raised the parties' three children. Gary is now in a far better position than Janice with respect to his earning capacity; at the time of dissolution, Gary was earning approximately $250,000 per year, while Janice is unlikely to ever be able to earn more than $20,000 per year. Janice suffered a back injury in 2004 which rendered her unable to work. While the district court ordered alimony support for Janice, the duration of this support is temporary, and may not occur at all if satisfaction of the equalization payment is rendered immediately. Considering all relevant factors, we conclude the division of the marital property should be approximately equal. The district court made such a division, favoring Gary slightly in the award. Accordingly, we cannot conclude the property division must be reversed based on Gary's unfounded speculation that improper factors were considered. This court, on de novo review, considers the property division of the district court equitable without giving consideration to any improper factors.
B. Tax consequences.
Gary next claims the court erred in failing to take into consideration the liquidity of assets or the tax consequences of any sale of property required by the property division. He asserts he was awarded very few liquid assets and that in order to make the equalization payment, he would be required to liquidate assets. Specifically, he argues that if he were to sell the farm for $350,000 as valued by the court, he would incur a capital gains tax of $42,400, and if he were to sell his business, he would incur a capital gains tax in excess of $40,000. He contends the court failed to take these tax consequences into account as required, and therefore the decree should be reversed and remanded, or the equalizing payment be reduced by at least $42,400.
In dividing property the court is to consider the tax consequences to each party. Iowa Code § 598.21(1)(j); In re Marriage of Hoak, 364 N.W.2d 185, 193 (Iowa 1985). Where a payment of a lump sum of cash to a spouse will in all probability require the liquidation of capital assets, the income tax consequences of such sale should be considered by the trial court in assessing the equities of the property and spousal support awards. See In re Marriage of Hogeland, 448 N.W.2d 678, 680-81 (Iowa Ct.App. 1989). The question here is whether liquidation of assets is relatively certain. We conclude it is not.
In addition to the farm and business, Gary was awarded the Hilken Road home, valued at $350,000, and the Kerper Boulevard property, valued at $250,000. As Gary's accountant testified, he could sell real estate or borrow against it without tax consequences. In fact, the interest on such a loan would be tax deductible. Gary was also awarded a debt owed to him from Iowa Bison in the amount of $138,000, a note from his business in the amount of $60,000, a note from an individual in the amount of $5,000, and life insurance policies valued at $20,000. Furthermore, as the district court noted, Gary has commingled his funds with the funds of his business. He often has had an abundance of cash on hand for purchases, and dissipated over $150,000 in marital assets prior to dissolution. It is likely Gary has access to liquid assets of which this court has no knowledge. Because liquidation of assets to make the equalization payment is not required, it is not necessary to consider the tax consequences for an event which need not occur. We conclude there is no error.
C. Marital debts.
Gary asserts the court erred in excluding some of his debts from the marital estate. He contends he owes debts totaling more than $200,000 that were not considered by the district court in the property distribution.
In distributing the parties' marital property and debts, the court noted, "A number of debts have not been included because the Court is not satisfied that they actually exist or because they are business debts already included in the valuation of the business." We do not dispute this finding.
It is important to note here the unequivocal credibility findings of the district court regarding Gary. It stated:
In 1999, the undersigned found the respondent to not be a truthful person. This conclusion was based on his frequent unconvincing memory lapses and his self-serving statements. In 2002, Judge Fister found that the respondent lied to the petitioner with intention of deceiving her. He orchestrated a lengthy series of events for the sole purpose of dishonestly divesting the petitioner of her interest in marital assets. In the current trial, the respondent repeatedly avoided specific answers by saying he didn't know, didn't remember, or that counsel should ask the respondent's insurance man or accountant. His responses are not credible and lead the Court to conclude that he has not improved his attitude about truthful disclosure. The respondent is not a person whose uncorroborated testimony can be relied upon.
We defer to the court's strong credibility findings. They are further bolstered by evidence that Gary filed for bankruptcy to avoid Janice's attempts to collect substantial amounts of unpaid temporary spousal support. Also significant is the fact Gary stopped paying alimony when Janice injured her back and could not work. Such tactics were designed to force Janice into a property settlement favorable to him. Gary's testimony on the subject of these debts is considered untrustworthy by this court. On de novo review, we conclude there is no independent, reliable evidence supporting the existence of these debts.
D. Valuation of assets.
Gary argues the court erred in valuing certain marital assets. Specifically, he claims the court erred in valuing a debt owed to him by Iowa Bison at $138,000, in valuing a note owed to him by his business at $60,000, in valuing his livestock at $115,000, and in finding he dissipated more than $150,000 in assets during the dissolution proceeding.
Although our review is de novo, we will defer to the trial court when valuations are accompanied with supporting credibility findings or corroborating evidence. In re Marriage of Vieth, 591 N.W.2d 639, 640 (Iowa Ct.App. 1999). We conclude the valuations made by the district court were in the permissible range of the evidence and we will not disturb them on appeal. In re Marriage of Versluis, 521 N.W.2d 760, 761 (Iowa Ct.App. 1994).
E. Property equalization payment issues.
Gary argues the property distribution is inequitable because he is required to pay $2,000 per month in alimony and ten percent interest on the $400,000 property equalization payment until payment is made in full. He contends this portion of the decree should be reversed or modified to allow him to make installment payments.
Given Gary's history and his actions during this dissolution proceeding, we conclude the portion of the decree relating to the satisfaction of the property equalization payment is necessary. Gary has demonstrated his complete unwillingness to provide Janice with an equitable portion of the marital assets or with alimony over a long period of time. His actions have been so extreme as to include practicing fraud and duress to receive a favorable property distribution. Additionally, Janice had to file three contempt actions against Gary during this dissolution proceeding for failure to pay the temporary alimony awarded her. Given this history, it is necessary to provide penalties for failure to timely pay the equalization payment; it is the only way to ensure Janice receives her fair share of the marital assets and to afford her the means on which to live until the equalization payment is satisfied. As conceded by Janice, the interest on the property equalization payment should be modified to the amount authorized by Iowa Code section 535.3
F. Gifted property.
Finally, Gary claims the court erred in treating $20,000 gifted to him by his mother with which he purchased stock in Catfish Bend as marital property. However, the sole evidence regarding this alleged gifted property is Gary's own testimony. As has already been determined, Gary is not a credible witness regarding property determinations. We conclude the Catfish Bend stock is properly considered marital property.
We affirm the property distribution provisions of the dissolution decree in total.
IV. Alimony.
Gary next contends the court's award of alimony is excessive in light of the property division.
Alimony is not an absolute right. In re Marriage of Dieger, 584 N.W.2d 567,570 (Iowa Ct.App. 1998). Instead, an award of alimony depends on the circumstances of each particular case. Id. When determining the appropriateness of alimony, the court must consider the length of marriage, the age and health of the parties, and the distribution of property. Iowa Code § 598.21(3)(a) — (c). The court also considers "(1) the earning capacity of each party, and (2) present standards of living and ability to pay balanced against the relative needs of the other." In re Marriage of Hettinga, 574 N.W.2d 920, 922 (Iowa Ct.App. 1997) (citation omitted). We consider the economic provisions of the dissolution decree as a whole, taking into consideration both the property division and spousal support award in evaluating their individual sufficiency. In re Marriage of O'Rourke, 547 N.W.2d 864, 866 (Iowa Ct.App. 1996).
We conclude a temporary alimony award of $2,000 per month is proper under the facts before us. As the district court noted:
The petitioner has never had more than minimal employment throughout the marriage and has been dependent on the respondent. She, quite literally, will make less than 1/10th of what he does in any given year. For much of the marriage, the petitioner lived with the respondent in the family home and enjoyed the same lifestyle he did. The record doesn't disclose the cost of their lifestyle, but it was significantly more than $18,000. The petitioner will never have the earning ability to support herself at the level at which she lived during the marriage.
The earning disparity will be offset to some extent by income she will be able to realize from the property award once she receives it. Invested at a reasonable rate of return, the petitioner should be able to enjoy a reasonable lifestyle without additional support. However, until she receives the property she should continue to receive alimony at the rate of $2000 per month.
For the reasons cited by the district court, we conclude the temporary alimony award of $2,000 per month until the property award is satisfied in full is not excessive. We affirm this portion of the decree.
V. Trial Attorney Fee Award.
Finally, Gary contends the court's award of $20,000 of Janice's trial attorney fees is excessive.
An award of attorney fees rests in the sound discretion of the trial court and will not be disturbed on appeal in the absence of an abuse of discretion. In re Marriage of Wessels, 542 N.W.2d 486, 491 (Iowa 1995). Awards of attorney fees must be fair and reasonable and based on the parties' respective abilities to pay. In re Marriage of Hansen, 514 N.W.2d 109, 112 (Iowa Ct.App. 1994).
Janice's attorney billed $30,000 for trial attorney fees in this case. The court found that in light of the property award, Janice should be responsible for a portion of her attorney fees. The court awarded Janice $20,000 of her trial attorney fees, noting that Gary's efforts to hide marital assets required her attorney to incur these fees in an attempt to discover them. Because the district court did not abuse its discretion in awarding Janice $20,000 in attorney fees, we affirm.
VI. Appellate Attorney Fees.
Janice requests an award of her appellate attorney fees.
An award of attorney fees on appeal is not a matter of right, but rests within the discretion of the court. In re Marriage of Gonzalez, 561 N.W.2d 94, 99 (Iowa Ct.App. 1997). We are to 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. See In re Marriage of Maher, 596 N.W.2d 561, 568 (Iowa 1999). We award Janice $5000 in appellate attorney fees. Costs of the appeal are taxed to Gary.