Opinion
No. 5-160 / 04-0252
Filed April 28, 2005
Appeal from the Iowa District Court for Polk County, Gary G. Kimes, Judge.
James Utter appeals, and Bonnie Utter cross-appeals, each challenging various economic provisions of the decree dissolving their marriage. AFFIRMED AS MODIFIED.
Jeanne Johnson, Des Moines, for appellant.
Leslie Babich of Babich, Goldman, Cashatt Renzo, P.C., Des Moines, for appellee.
Considered by Vogel, P.J., Miller and Hecht, JJ.
James Utter appeals the property division, alimony, and attorney fee provisions of the decree entered by the district court dissolving his marriage to Bonnie Utter. He contends the court's distribution of property was inequitable, the court erred in awarding Bonnie alimony, and the court abused its discretion by ordering him to pay $2,500 of Bonnie's attorney fees. Bonnie cross-appeals, arguing the court erred in failing to award her the full amount of her gifted and inherited property used to renovate and remodel the marital home, award her more alimony for a longer period of time, and award her the income tax dependency deduction for the parties' son every year instead of even-numbered years only, and the court abused its discretion in not awarding her at least $7,500 in trial attorney fees. We affirm as modified.
I. BACKGROUND FACTS AND PROCEEDINGS.
James and Bonnie were married on March 24, 1979. Bonnie filed a petition for dissolution of marriage on April 29, 2003, after some twenty-four years of marriage to James. The dissolution trial was held on November 12 and 13, 2003. The parties had two children during the course of their marriage, Tammy who was twenty-one years old at the time of trial, and Jeff, who was eighteen years old at the time of trial.
James was forty-nine years of age at the time of the dissolution trial and had received an associate of arts degree from Kirkwood Community College. He was employed by the City of Altoona as a wastewater treatment supervisor and earned a gross annual income of $57,942. Bonnie was forty-eight at the time of trial. She was a high-school graduate and was working for the Polk County Treasurer's Office earning approximately $39,175 gross annual income. Both parties participate in the Iowa Public Employees Retirement System and both have deferred compensation accounts. Both parties worked throughout the duration of their marriage.
Bonnie has a physical condition called Adductor Spasmodic Dysphonia, which affects the vocal cords and can affect speech. At the time of trial she had been affected by the condition for a couple of years and was receiving Botox injections for the condition. The injections seemed to effectively control the condition. Bonnie testified that at some point the condition could cause her to lose her voice completely and she would be unable to continue to work at her current job if she could not speak. At the time of trial she had not missed any work during the times when her voice was affected by her condition because her employer had given her short-term accommodations.
James had Irritable Bowel Disease at the time of the dissolution trial. The condition had developed about two years earlier. He had seen a doctor a few times for tests and treatment, and used medicine to treat the condition. There were times when the condition affected his life, but his employer also had made accommodations as necessary. James and Bonnie each testified that although they had physical conditions with which they had to deal, they were getting treatment and handling the conditions, and their conditions were not currently affecting their employment or ability to work.
Bonnie received substantial gifts and inheritances totaling $265,360 from her parents and her mother's estate during the last five years of the parties' marriage. She deposited this inherited and gifted money into several different separate accounts all of which were in her name only. One of these separate accounts was the Linsco account which Bonnie considered to be her inheritance account. The parties agree they had used $53,300 of Bonnie's inherited funds to pay for renovation and remodeling of their marital home. Bonnie testified that from May 31, 2001, though April 25, 2003, she used automatic payroll deductions of $300 every two weeks to begin to pay back the funds from her inheritance account that had been used for the house. It is undisputed that James knew about these payroll deductions. However, the parties disagree as to whether James knew Bonnie's purpose in having the deductions made and the funds deposited in her accounts. The total deductions from Bonnie's paychecks which went back into her inheritance account totaled $15,000.
When the Linsco account was opened the agent mistakenly put the account in the names of both Bonnie and James. Upon discovering this error when she received the first account statement, Bonnie had it changed to her name alone.
The trial court accepted the parties' stipulation concerning distribution of certain marital property and the payment of their son's college and health insurance expenses. The total value of the property received by Bonnie pursuant to the stipulation was $272,058.50, including the marital home. According to the stipulation it was agreed Bonnie would refinance the first and second mortgages on the marital home within six months and the parties would equally share the costs of refinancing.
The trial court ruled that in setting off her gifts and inheritances to Bonnie the $265,360 she had received should be reduced by $16,400 for stock market losses, about $21,000 which had been spent for miscellaneous family and household expenses, and $26,650 for one-half of the renovation and remodeling expenditures. Thus, the total amount the court set off to Bonnie for her gifts and inheritances was $201,579. The court awarded Bonnie alimony of $350 per month for seven years or until either party died or Bonnie remarried. James was also ordered to maintain life insurance in the amount of $29,400 with Bonnie named as the exclusive beneficiary so long as his alimony obligation continued. To equalize the division of property not set off to Bonnie as gifts and inheritances the court ordered Bonnie to pay James $46,304 within ten days of the decree. Finally, the court ordered James to pay $2,500 of Bonnie's trial attorney fees.
Both parties filed motions pursuant to Iowa Rule of Civil Procedure 1.904(2). On January 3, 2004, the court entered an order on the motions which, in relevant part, amended the decree to allow James to claim the parties' son Jeff as a dependent and exemption for income tax purposes in odd-numbered years and Bonnie to claim him in even-numbered years.
James appeals and Bonnie cross-appeals from the dissolution decree. James contends the trial court's distribution of property was inequitable in several respects, including setting off to Bonnie the $26,350 constituting one-half of the remodeling expenditures, while on cross-appeal Bonnie argues the full amount of the remodeling expenditures should have been set off to her. James argues the court erred in awarding Bonnie alimony of $350 per month for seven years. He contends she should not have been awarded any alimony, while Bonnie contends on cross-appeal the court erred in not awarding her alimony of $500 per month for ten years. Finally, James contends the trial court abused its discretion in ordering him to pay $2,500 of Bonnie's trial attorney fees, and Bonnie argues the court abused its discretion in not awarding her at least $7,500 in attorney fees. Bonnie further argues on cross-appeal that the trial court erred in not awarding her the income tax dependency deduction every year for their son.
II. SCOPE AND STANDARDS OF REVIEW.
In this equity case our review is de novo. Iowa R. App. P. 6.4. We examine the entire record and adjudicate rights anew on the issues properly presented. In re Marriage of Smith, 573 N.W.2d 924, 926 (Iowa 1998). We give weight to the fact findings of the trial court, especially when considering the credibility of witnesses, but are not bound by them. Iowa R. App. P. 6.14(6)( g). This is because the trial court has a firsthand opportunity to hear the evidence and view the witnesses. In re Marriage of Will, 489 N.W.2d 394, 397 (Iowa 1992). Prior cases have little precedential value with respect to economic issues, and our decision must rest on the particular circumstances of the parties in the case before us. In re Marriage of Gaer, 476 N.W.2d 324, 327 (Iowa 1991).
III. MERITS.
A. Property Division.
James contends the trial court's distribution of property was inequitable. Bonnie contends in her cross-appeal that the court erred in not allowing her a set-off for the entire amount used from her inheritance account for remodeling expenses.
Our analysis of the division of property other than inherited property and gifts is governed by Iowa Code section 598.21(1) (2003). The ultimate question is whether the distribution of property is equitable under the specific facts of the particular case. In re Marriage of Richards, 439 N.W.2d 876, 880 (Iowa Ct.App. 1989). The partners to a marriage are entitled to a just and equitable share of the property accumulated through their joint efforts. In re Marriage of Miller, 552 N.W.2d 460, 463 (Iowa Ct. App. 1996). However, Iowa courts do not require an equal division or percentage distribution. Id.; see also In re Marriage of Conley, 284 N.W.2d 220, 223 (Iowa 1979) (finding equality of property division need not be achieved with "mathematical exactness."). All economic aspects of the divorce decree must be viewed as an integrated whole when considering the equity of the distribution. In re Marriage of McFarland, 239 N.W.2d 175, 179 (Iowa 1976). In marriages of long duration an award of alimony in addition to a nearly equal property division may be appropriate, especially where the disparity in earning capacity is great. In re Marriage of Friedman, 466 N.W.2d 689, 693 (Iowa 1991).
Property inherited by a party is the property of the recipient and not subject to property division upon dissolution of a marriage except upon a finding that refusal to divide the property is inequitable to the other party or children of the marriage. Iowa Code § 598.21(2). Placing an inheritance received by one spouse into joint ownership or commingling it with other assets is not controlling in deciding whether the property should be divided. In re Marriage of Liebich, 547 N.W.2d 844, 851 (Iowa Ct.App. 1996).
Factors to consider in determining whether inherited property should be divided include: (1) contributions of the parties toward the property, its care, preservation, or improvement; (2) the existence of any independent close relationship between the donor or testator and the spouse of the one to whom the property was given or devised; (3) separate contributions by the parties to their economic welfare to whatever extent those contributions preserve the property for either of them; (4) any special needs of either party; (5) any other matter which would render it plainly unfair to a spouse or child to have the property set aside for the exclusive enjoyment of the donee or devisee.
Id. at 850. The length of the marriage or the length of time the property was held after it was devised, although not independent factors, may indirectly bear on the question for their effect on these factors, and still other matters "might tend to negative or mitigate against the appropriateness of dividing the property under a claim that it falls within the exception [to the general rule against division]." In re Marriage of Thomas, 319 N.W.2d 209, 211 (Iowa 1982).
Bonnie received all of her gifts and inheritances within about the last five years of the parties' marriage. James contributed labor to the renovation and remodeling of the parties' residence, and to maintenance of the residence. The factors mentioned in the Liebich and Thomas cases otherwise have little bearing under the facts and circumstances of this case.
1. Home remodeling funds.
As set forth above, the parties agree that $53,300 from Bonnie's inheritance account was used to remodel their marital home. The trial court only reduced Bonnie's set-off for gifts and inheritance by $26,650, one-half of the amount spent for renovation and remodeling, instead of allowing a set-off for the total amount. James argues none of the money used for remodeling should have been set off and it was inequitable for the court to do so. He contends that awarding Bonnie the marital home and the set-off amounted to an unfair duplication of marital assets, the one-half set-off failed to recognize his financial and non-financial contributions which increased the value of the homestead, and the set-off failed to acknowledge his contributions to maintaining the home throughout the marriage. Bonnie asserts the court should have set off the full $53,300 used for renovation and remodeling because the full amount came from her separate inheritance account.
It is well established that property inherited by a party is the property of the recipient and not subject to property division upon dissolution of a marriage, except upon a finding that refusal to divide the property is inequitable to the other party or children of the marriage. Iowa Code § 598.21(2). Here it is undisputed that the full $53,300 used for renovating and remodeling the homestead came from Bonnie's separate inheritance account. Thus, starting with the general proposition of law set forth above the full $53,300 could have been set off to Bonnie. However, the trial court only set off one-half of the total amount. We believe this was the equitable thing for the court to do based on the particular facts and circumstances of this case. Allowing Bonnie to set off only one-half of the total amount, when all clearly came from her inheritance account, did recognize and take into account James's contributions to the renovating and remodeling of the house and maintenance of the home throughout the marriage. Refusing to allow part of the amount to be divided as marital property would arguably have been inequitable to James. Accordingly, we conclude the trial court acted equitably to both parties and in accordance with section 598.21(2) in ordering one-half of the total cost of renovating and remodeling the marital home be set off to Bonnie and dividing the other half as marital property.
Further, awarding Bonnie the marital home was merely part of the trial court's equal division of property not received as gifts or inheritances. We thus find no "unfair duplication of marital assets" in awarding Bonnie the marital home in addition to setting off to her as gifts and inheritances one-half of the renovation and remodeling expenses.
2. Replenishment of inheritance account.
As discussed above, from May 31, 2001, through April 25, 2003, Bonnie used automatic payroll deductions from her Polk County Treasurer's wages of $300 every two weeks to pay back or replenish the funds taken from her inheritance account for renovation and remodeling expenses. The deductions from her paychecks in order to replenish her inheritance account totaled $15,000. James contends it was inequitable for the trial court to set off this amount to Bonnie and not divide equally the entire $15,000 as marital property because it came from marital funds, Bonnie's paychecks. James argues the decree should be modified to include an equal division of the $15,000, awarding him $7,500.
At trial, James testified he was aware that Bonnie was deducting the amounts from her paychecks but he believed it was going into a "car account" for the purchase of their next vehicle. Bonnie testified that when she started putting money back into her Linsco account to reimburse it for renovation and remodeling expenditures she talked to James about it and although her purpose "may not have been clear" to him he was aware she was putting the money into the account and he never objected at any time. James also testified that Bonnie is basically an honest person, she tells the truth whenever she can, and to the best of her ability she was telling the truth during her testimony at trial.
Based on our de novo review of the record we find Bonnie's testimony that James knew about the payroll deductions, probably knew her purpose, and yet did not object to the deductions, to be credible. Accordingly, we conclude the trial court did not err in including in the amount set off to Bonnie as gifts and inheritances the $15,000 with which she partially replenished her inheritance account.
3. Casey's stock.
James next argues it was inequitable for the court not to divide the $1,500 value of the parties' Casey's stock which had been purchased with marital funds. He contends the decree should be modified to include an equal division of the $1,500 between the parties. We agree the record is clear that marital funds were used to purchase the Casey's stock, which was later transferred into Bonnie's inheritance account. Bonnie does not dispute these facts. Accordingly, we conclude the decree should be modified to equally divide the $1,500 value of the Casey's stock. Thus, the amount of the property settlement Bonnie was ordered to pay to James should be increased by $750, one-half the value of the stock.
4. Refinancing costs.
Finally, James contends it was inequitable for the trial court to require him to pay one-half of the costs for refinancing the parties' first and second mortgages on their marital home after he no longer had any legal interest in the property. The record is clear that James agreed in the parties' stipulation that Bonnie would refinance the first and second mortgages within six months and the parties would equally share the costs of the refinancing. James even acknowledges this agreement in his statement of facts in his brief. The stipulation was read into the record and approved by the court prior to trial. We conclude the court did not act inequitably or otherwise err in requiring James to pay one-half of the refinancing costs, as he agreed to do so.
B. Alimony.
The court awarded Bonnie alimony in the amount of $350 per month for seven years, stating as reasons the considerable disparity in the parties' incomes, Bonnie's "potential throat problem," and "all of the matters regarding alimony set forth in 598.21 of the Iowa Code." James contends the court erred in awarding Bonnie alimony. He argues Bonnie was not entitled to any alimony because there is no basis in law or fact to support such an award. On cross-appeal Bonnie argues the court erred in not awarding her alimony of $500 per month for a term of ten years.
"Alimony is an allowance to the spouse in lieu of the legal obligation for support." In re Marriage of Sjulin, 431 N.W.2d 773, 775 (Iowa 1988). Any form of spousal support is discretionary with the court. In re Marriage of Ask, 551 N.W.2d 643, 645 (Iowa 1996). Spousal support is not an absolute right; an award depends on the circumstances of each particular case. In re Marriage of Dieger, 584 N.W.2d 567, 570 (Iowa Ct.App. 1998). The discretionary award of spousal support is made after considering the factors listed in Iowa Code section 598.21(3). Id. Property division and alimony should be considered together in evaluating their individual sufficiency. In re Marriage of Trickey, 589 N.W.2d 753, 756 (Iowa Ct.App. 1998).
Based on the length of the parties' marriage (some twenty-four plus years), the considerable disparity in the parties' gross annual income (James's $57,942 vs. Bonnie's $39,174) and the equal division of the property not set aside to Bonnie as gifts and inheritances, we conclude the trial court did not abuse its considerable discretion in awarding Bonnie alimony in the amount of $350 per month for seven years.
We, unlike the trial court, are not taking into consideration Bonnie's potential throat problem in determining an equitable amount of alimony. Although she testified her condition had the potential to cause her to lose her current job, the record is clear that she had not missed any work at the time of trial due to the problem and she was currently receiving effective treatment for the condition. Further, the evidence shows that James similarly has a health problem which also has the potential to affect his employability. We also note James's testimony regarding the possibility of him losing his job with the City of Altoona at the soonest in July 2006. However, we make alimony determinations based on the circumstances of the parties at the time of trial, not based on speculation of what their situations may perhaps be in the future. If changes in the parties' health or employment circumstances occur, either party may seek modification of the dissolution decree at that time. See In re Marriage of Bell, 576 N.W.2d 618, 623 (Iowa Ct.App. 1998) (declining to order alimony terminated at such time as payor, who was fifty-six at time of dissolution, retired, and noting that payor could seek modification if circumstances changed upon retirement); In re Marriage of Hayne, 334 N.W.2d 347, 353 (Iowa Ct.App. 1983) (declining to order alimony terminated at such time as payor retired, and noting that payor could seek modification if his circumstances changed following retirement).
C. Trial Attorney Fees.
In James's last argument he contends the trial court abused its discretion in ordering him to pay $2,500 of Bonnie's trial attorney fees. Bonnie argues on cross-appeal that the court abused its discretion in not awarding her at least $7,500 in attorney fees.
An award of attorney fees lies 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 Romanelli, 570 N.W.2d 761, 765 (Iowa 1997). An award must be for a fair and reasonable amount, and based on the parties' respective abilities to pay. In re Marriage of Coulter, 502 N.W.2d 168, 172 (Iowa Ct.App. 1993). The trial court correctly assessed the parties' abilities to pay, and we find no abuse of discretion in the amount of the award. We affirm the trial court's order regarding attorney fees.
D. Income Tax Dependency Deduction.
Finally, Bonnie argues on cross-appeal that the trial court erred in awarding the income tax dependency deduction for eighteen-year-old Jeff to James in odd-numbered years. She contends allowing James the deduction in any year results in a windfall to him because he can deduct the alimony paid to her and also claim the deduction for a child for which he did not pay child support. Bonnie asserts equity requires that she be awarded the income tax dependency deduction for Jeff for all years in which she is legally entitled to claim him as such.
Jeff was of college age and the court had accepted and approved the parties' stipulation concerning his college expenses, health insurance, and his "noncovered medical expenses," each bearing approximately equal responsibility for the parties' share of those items.
At the time of the trial both parties were employed full-time and earning good incomes. James was earning more money than Bonnie at the time of trial and thus would receive a greater tax savings from the deduction than Bonnie would. We conclude the trial court's decision to allow James the dependency deduction in odd-numbered years is equitable under the facts and circumstances of this case.
IV. CONCLUSION.
Based on our de novo review of the entire record, and for the reasons set forth above, we conclude the trial court's distribution of property, with the exception of the Casey's stock which was purchased with marital assets, was equitable to both parties. We further find the court did not abuse its discretion in awarding Bonnie alimony in the amount of $350 per month for a term of seven years or in ordering James to pay $2,500 of Bonnie's trial attorney fees. Finally, the court's decision to allow James the income tax dependency deduction for the parties' son in odd-numbered years is equitable under the circumstances of this case. Accordingly, we modify the dissolution decree to include an equal division of the $1,500 value of the Casey's stock, increasing the amount of the property settlement owed to James by Bonnie by $750. We affirm the decree in all other respects. Costs on appeal are taxed one-half to James and one-half to Bonnie.