Opinion
No. 4-126 / 03-0731.
June 23, 2004.
Appeal from the Iowa District Court for Polk County, Joel D. Novak, Judge.
Richard Toon appeals from the trial court's adverse rulings on Mary Toon's application to enforce their dissolution decree. Mary cross-appeals. AFFIRMED.
Michael Holzworth of Holzworth Law Firm, Des Moines, and Jeanne Johnson, Des Moines, for appellant.
Steven DeVolder of the DeVolder Law Firm, West Des Moines, for appellee.
Heard by Sackett, C.J., and Huitink and Miller, JJ.
I. Background Facts and Proceedings
The July 14, 1999, decree dissolving the parties' marriage incorporated the terms of a comprehensive stipulation intended to resolve all issues attending the parties' divorce. The decree and incorporated stipulation included the following:
1. a. Mary Toon shall have the right to possession and control of the residence and 40 acres at 3800 S.W. 56th Street for a ten-year period. The property shall remain jointly owned. Mary Toon shall have the right to place the property on the market for sale at any time during the ten-year period from the entry of the Decree of Dissolution herein. At the end of the ten-year period after the entry of the Decree, the property will be listed for sale with a realtor to be agreed upon by the parties and after paying costs of sale, the sale proceeds will be divided equally between Richard Toon and Mary Toon.
During the ten-year period, Richard Toon will pay all property taxes and one-half maintenance expense other than routine maintenance and lawn care up to $1,500.00 per year. If one-half of maintenance expense each year does not amount to $1,500.00 cost to Richard Toon, the unused portion will accumulate and be carried over to future years.
. . . .
2. Alimony. Richard Toon shall pay monthly alimony to Mary Toon commencing on the 1st day of August, 1999, in the amount equal to 1/12 of 40% of gross income of Dr. Richard Toon from his medical and surgical services based on W-2 income. Alimony will continue until the remarriage of Mary Toon or the death of either party.
Richard Toon agrees to authorize Mary Toon or her designated agent to have full access to Richard Toon's income records and employment records at McFarland Clinic, P.C., and any other entity for whom Richard Toon provides medical or surgical services. . . . Richard Toon agrees to furnish copies of all pay records and payroll stubs generated as a result of his medical and surgical services during the period alimony is paid. Richard Toon agrees to make available to Mary Toon or her agent all W-2 tax forms. All records referred to herein shall be furnished to Mary Toon within fifteen (15) days of Mary Toon's request in writing to Richard Toon.
. . . .
12. The NationsBank debts in the approximate amount of $120,000.00 plus Mary's debts of $45,000.00 will be paid with funds from NationsBank account (of $115,000.00 and $16,500.00). The unpaid balance will be paid from P.C. accounts receivable and any remaining P.C. assets, if any. Any surplus will be divided equally. Any remaining debt will be shared equally.
The "P.C. accounts receivable" and "P.C. assets" referred to in paragraph twelve belonged to Iowa Heart, Lung, and Vascular Surgeons, P.C., a professional corporation in which Richard was a shareholder. McFarland Clinic purchased the assets of the P.C. in May 1999 for $62,000. Richard and a coshareholder retained the accounts receivable.
The decree also required Richard to pay his statutory share of post high school education expenses for the parties' daughter, Christina. Neither party challenged the terms of the decree by postjudgment motions. There was no appeal.
In November 2000 Mary requested court authorization to purchase the residence without listing it for sale with a realtor. The trial court, citing the language of the decree mandating the listing and sale of the residence, denied her request.
On August 7, 2002, Mary filed an application to enforce the July 14, 1999, decree. She requested the following relief:
(1) a ruling that requires Richard Toon to deliver to Mary Toon copies of the records identified in paragraph 6 of this application within 15 days of the ruling [financial records concerning the sale of Richard's interest in the P.C. and other income records relevant to Richard's alimony]; (2) a ruling that requires Richard Toon to pay to Mary Toon one-half of the receivables he received upon or after his termination with Iowa Heart, Lung and Vascular Surgeons, P.C., and within 10 days of the ruling; (3) a ruling that requires Richard Toon to pay to Mary Toon the amount of $4,500.00 for residential maintenance costs for the years 2000, 2001 and 2002, and within 10 days of the ruling, plus interest at the statutory rate on these amounts from the time they became owing; (4) a ruling that Richard Toon is in default and contempt of the decree and stipulation, and that awards Mary Toon the costs she expended in pursuing this application, including but not limited to the amount of reasonable attorney's fees she has incurred; and (5) a ruling that awards Mary Toon such additional relief that is just and proper in the premises.
Mary supplemented her application on November 27, 2002, with a renewed request for the court to allow her to purchase the parties' residence.
On January 23, 2003, Richard filed his own application to enforce the dissolution decree. He claimed Mary owed him $13,000 for payments he made on the NationsBank line of credit and Mary's account at the Des Moines Golf and Country Club. Richard also claimed Mary was liable for excess contributions he made toward Christina's uncovered medical expenses and Mary's unpaid account at Iowa Heart, Lung, and Vascular Surgeons, P.C. Mary's account there resulted from treatment she received for injuries she sustained in a 1998 automobile accident.
In a March 31, 2003, ruling the court determined the decree's provisions regarding the sale of the parties' residence was unambiguous in its requirement that the house must be listed on the market before it is sold to anyone, including Richard or Mary. The court also determined:
1. Dr. Toon owes Mary the sum of $2,392.17 based upon the agreement of the difference between the amount Dr. Toon owed Mary for property maintenance expenses and the amount Mary owed Dr. Toon for Des Moines Golf and Country Club expenses.
This finding was consistent with the parties' pretrial settlement of disputes concerning residential maintenance costs and Mary's account at the Des Moines Golf and Country Club.
2. Dr. Toon owes Mary $90,837.95 as her share of the proceeds of the sale of the P.C [$16,608.75 sale of assets plus $75,229.20 accounts receivable].
3. Dr. Toon's alimony payments shall be made as required in the Decree, on the 1st day of each month.
4. Richard Toon is ordered to authorize Mary Toon or her designated agent to have full access to Richard Toon's income record and employment records at McFarland Clinic, P.C., and any other entity for which Richard Toon provides medical or surgical services. Richard Toon is ordered to furnish to Mary Toon copies of all pay records and pay roll stubs generated as a result of his medical and surgical services during the period alimony is paid. Richard Toon is ordered to make available to Mary Toon or her agent all W-2 tax forms. Richard Toon shall furnish all records referred to herein to Mary Toon within 15 days of Mary Toon's request in writing to Richard Toon. Therefore, Dr. Toon is ordered to comply with this provision of the Decree and to provide such information to Mary Toon or her designated agent within 15 days of her request for such information.
5. Dr. Toon was required to hold for the benefit of the parties' daughter Christina certain funds. Mary is entitled to an accounting of funds received and the disbursement of such funds.
The Court finds that a full accounting is justified. Within 60 days of this ruling, Dr. Toon shall provide to Mary a full accounting of what happened to the funds held for the benefit of and belonging to Christina.
. . . .
6. Mary shall be awarded interest on the judgments awarded her herein as provided by law.
7. Costs of this action are taxed equally to the parties.
8. Each party will be responsible for their own attorney's fees.
Both Mary and Richard filed motions to enlarge or amend the ruling. On April 25, 2003, the court denied Richard's motion in its entirety, and granted Mary's in part. The court modified its previous ruling to include interest accruing from July 14, 1999, for Mary's award of $15,608.75, and interest accruing from May 10, 2002, for Mary's award of $75,229.20. Richard appeals, and Mary cross-appeals.
On appeal, Richard argues:
A. The Trial Court Erred in Finding that Dr. Toon Owed Mary $15,608.75, Representing One-Half of Dr. Toon's Share of the Proceeds from the Sale of the PC's Assets.
B. The Trial Court Erred in Finding that Dr. Toon Owed Mary $75,229.20, Representing One-Half of Dr. Toon's Share of the Collected Accounts Receivables from the PC., and in Finding that Mary Did Not Owe One-Half of the Amount Dr. Toon Paid on the Parties' Line of Credit, In Order to Satisfy Her Obligation Under the Stipulation to Share Equally the Debts Associated with the Line of Credit.
C. The Trial Court Erred in Finding that Mary Did Not Owe the PC for Medical Payments Associated with Her Automobile Accident.
D. The Trial Court Erred in Finding that Mary Was Not Responsible for Half of Christina's Uninsured Medical Expenses Paid by Dr. Toon.
E. The Trial Court Erred in Ruling that Dr. Toon was Required to Provide Mary with a Full Accounting of Funds Received and Disbursed on Christina's Behalf.
On cross-appeal, Mary argues:
A. Mary Should Be Awarded Back-Alimony For The Years 2000 and 2001 In The Amount Of $127,362.00 Plus Statutory Interest.
B. Mary Should Be Awarded Her Attorney's Fees and Expenses Because Dr. Toon Is In Default And Contempt Of His Obligations Under the Stipulation And Decree.
C. Mary Should Be Allowed To Buy Out Through Court Compelled Sale Dr. Toon's Interest In Her Residence Property For That Interest's Fair Market Value.
II. Standard of Review
Our scope of review in this equity case is de novo. In re Marriage of Hull, 491 N.W.2d 177, 179 (Iowa Ct.App. 1992). While not bound by the trial court's determination of factual findings, we will give them considerable weight, especially when considering the credibility of witnesses. Id. A decree for dissolution of marriage is susceptible to interpretation in the same manner as other instruments. In re Marriage of Russell, 559 N.W.2d 636, 637 (Iowa Ct.App. 1996). The determinative factor is the intent of the court as disclosed by the language of the decree as well as its content. Id. Every word should have force and effect and be given a consistent, effective, and reasonable meaning. Id.
III. The P.C.'s Assets and Accounts Receivable
Richard disputes the trial court's findings concerning the actual amount of collected accounts receivable. He also claims the trial court ignored evidence indicating that the sale proceeds for the P.C. assets and collected accounts were used to pay pre-decree family expenses and to reduce the balance of the NationsBank line of credit. Richard further claims his share of the collected accounts receivable were included in his 1999 W-2 income and, as a result, Mary has already received forty percent of the collected accounts receivable as alimony.
Richard testified:
Q. Can you tell the Court how much money the McFarland Clinic paid for [the assets of] the PC? A. It was about 62,000 and change.
. . . .
Q. That money was before the divorce, correct? A. Correct. That was paid on May 6, [1999]. . . .
Q. And so Mary would have gotten half of that money; is that correct? A. Well, that money then was paid out. It was all used. We were still married and that went into all the calculations and permutations of July 14.
. . . .
Q. And do you remember the calculation this morning where Ron Nielsen [Mary's accounting expert] testified that half of the PC — excuse me. — the entire PC would be worth about 300-some-thousand-dollars? A. Yes.
Q. Okay. And that half of that would be $156,000? A. Yes.
Q. And then half — half of that half would be about 78-78,000?
A. Yes.
Q. Did you ever receive that kind of money for your PC? A. No, we didn't. We sold the hard assets of the PC to McFarland Clinic and then we kept the accounts receivable and were allowed to collect the accounts receivable.
Richard's testimony concerning the accounts receivable includes the following:
DOCTOR TOON: Just a little bit of money dribbling in. The 29 [29,000] was money coming in from 1999. Next year 5000-some-dollars was available to pay me on a W-2 income. The year after that there was 3,800 or $4,000. Mary got 40 percent of that last payment at 5,000. I neglected — I just found that, really, today. And she would deserve a portion of the 29 plus the five, which is 34. Pay 16, $17,000.
THE COURT: She would deserve that under the PC proceeds provision where she gets half.
DOCTOR TOON: Correct. But she would also have the obligation to pay half of the — half of the —
THE COURT: 13,027. [Richard's claimed overpayment on the NationsBank line of credit]
DOCTOR TOON: Yes.
THE COURT: You claim you pay — owe her 16 or 17 as her share of the proceeds for — of the PC.
DOCTOR TOON: Yes, sir.
THE COURT: But you think she is obligated to pay one-half of whatever it was, required for that [NationsBank] line of credit which [Dr. Toon] attributes 13,027-$13,027 to her.
Contrary to Richard's assertion, Mary denied receipt of any P.C. sale proceeds or accounts receivable. Her accountant, Ron Nielsen, testified that based on his examination of the relevant financial records, the P.C. collected and distributed all of the sale proceeds plus $250,000 of accounts receivable to its shareholders. Nielsen also testified Mary received no direct payment of these funds from Richard.
The trial court resolved this conflicting evidence against Richard, citing the express language of the decree and Richard's failure to document his version of events. Although Richard offers a plausible explanation for the disposition made of the P.C. sale proceeds and accounts receivable, he has failed to produce a credible paper trail supporting his claims. Additionally, Richard has failed to explain the substantial discrepancy between the amount of receivables he claims were collected and the amount Nielsen testified to based on Nielsen's examination of the P.C.'s financial records. We also note Richard's failure to produce his 1999 income tax records to support his claim that Mary received forty percent of the collected accounts receivable as alimony in 1999. We, like the trial court, find Mary's version of the controlling facts more credible than Richard's, and therefore affirm on this issue. See e.g., In re Marriage of Jacobo, 526 N.W.2d 859, 865 (Iowa 1995) (failure to document financial claims renders testimony generally unreliable).
IV. Mary's Unpaid Account at the P.C.
Richard claims that Mary owed the P.C. $7583 for care and treatment she received following an automobile accident in 1998. According to Richard, Mary was obligated to reimburse the P.C. out of any resulting insurance benefits or settlement and she has failed to do so. In the absence of any supporting documentation, we decline to accept Richard's claim of any agreement to reimburse the P.C. and reject his claim for a credit against Mary's share of the P.C.'s accounts receivable.
V. Christina's Medical Expenses
At trial, Richard offered evidence indicating he paid more than his share of Christina's uncovered medical expenses. The exhibit upon which Richard relied at trial was not admitted because Richard had mistakenly included expenses incurred after Richard was no longer responsible for one-half of Christina's medical expenses.
In denying his claim, the trial court held:
Dr. Toon's counsel asks that Dr. Toon be allowed to recalculate his claim for reimbursement of medical expenses through Christina's 18th birthday and submit same to respondent's counsel, and then have respondent make payment of one-half of that amount to Dr. Toon. Once again, the Court agrees with Mary's counsel that Dr. Toon provided no underlying payment documentation to support his claim of any medical expenditures on behalf of Christina. The Court at this time is not going to ask for a recalculation and reopen the record for Dr. Toon to show payment of these medical expenses on behalf of Christina. This is something that should have been done and presented at trial.
The trial court's ruling implicates its broad discretion to resolve the issues raised by Richard's request to reopen the record. See Neimann v. Butterfield, 551 N.W.2d 652, 655 (Iowa Ct. App. 1996). Because we find no abuse of discretion, we will not intervene and accordingly affirm on this issue.
VI. College Fund
The extent of the record on this issue, at least that referred to in the parties' briefs, is:
THE COURT: As I remember the telephone conference, the issue concerning the daughter and accounting for college expenses was that petitioner — or respondent would like to have the accounting presented to her. Petitioner's position was that this was a matter that he would deal with his daughter. That in terms of accounting — and I stuck my nose and two cents worth in and said, no, the accounting will be provided to the mother. So if that will shortcut this, fine. That was my — basically what I told you how I would handle that issue. Not to say that the daughter couldn't be involved. But, you know, for whatever reason I am not going to put her in the middle of these two folks. I want the mother to get an accounting. If there is some kind of problem — that is why I get paid the big bucks. If some other lucky judge gets the next hearing on this. . . .
There is apparently no dispute concerning the existence of a college fund for Christina and its intended purpose.
Richard correctly notes that the stipulation and decree make no dispositive provision for any identifiable college fund, nor does it contain any provision requiring Richard to account to Mary for the disposition of that fund. Mary nevertheless claims such an accounting is appropriate because she, by the terms of the decree, is responsible for a portion of Christina's college expenses and the extent of her obligations may be affected by the amount of the college fund available to defer those expenses.
Under similar circumstances, the supreme court ordered such an accounting by a divorced parent in control of a fund intended to finance the children's college education. See In re Marriage of Rosenfeld, 668 N.W.2d 840, 844-45 (Iowa 2003). We believe the same rationale applies here and find no inequity in the trial court's order requiring Richard to account for Christina's college fund. See Iowa Code § 598.21(5A) (a)(3) (2001) (apportioning the cost of postsecondary education among Christina, Richard, and Mary). We affirm on this issue.
VII. Mary's Claim for Back Alimony
Mary argues that she is entitled to additional alimony based on Richard's receipt of substantial self-employment income in addition to the wages reported on his W-2 forms from McFarland Clinic. The trial court rejected Mary's argument, stating:
The Court finds and concludes that the decree does not provide for Mary to receive her alimony from any other source other than the W-2 income from Dr. Toon's practice of medicine or surgery. The 1099 income that he receives as a proctor and medical director does not qualify and, therefore, Mary is not entitled to any back alimony.
Mary argues the trial court's interpretation of the decree is erroneous. We disagree. Under the plain and unambiguous meaning of the decree, Mary's alimony is limited to forty percent of Richard's W-2 income derived from his medical and surgical services. Additionally, the trial court found, and we agree, that Richard has not intentionally restructured the source of his income in an effort to diminish his alimony obligations. We also note that at the time of the decree, the primary source of Richard's income was his wages from McFarland Clinic. Any self-employment income Richard now earns was the result of self-employment obtained subsequent to the time of the decree.
Because we find Richard does not owe Mary back alimony as a result of additional self-employment income, we need not address Mary's claim that Richard is in contempt of court for failing to make alimony payments or any other issue incidental to that claim.
VIII. Sale of Marital Home
In Mary's supplemental application to enforce, she requested the ability to purchase Richard's interest in the property and residence she currently occupies at 3800 S.W. 56th Street in Des Moines, Iowa. The trial court determined that Mary was not able to buy-out Richard's interest in the property without first placing it on the market with a reputable listing agent at a fair market value. Mary asserts on appeal that there is nothing in the decree preventing her from buying out Richard's interest during the first ten years of her occupancy. The unambiguous language of the provision requires Mary to place the property on the market if she chooses to sell before the ten-year period expires. Mary may still purchase the property; however, she must first place it on the market to ensure the decree's plain language is given effect. We accordingly affirm the decision of the district court.