Opinion
No. A-11-265.
11-01-2011
SHERRY L. ROGMAN, APPELLEE, v. REX A. ROGMAN, APPELLANT.
Stephanie R. Hupp and Zachary Blackman, Senior Certified Law Student, of McHenry, Haszard, Roth & Hupp, P.C., L.L.O., for appellant. Gerald M. Stilmock, of Brandt, Horan, Hallstrom & Stilmock, for appellee.
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
NOTICE: THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION
AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).
Appeal from the District Court for Otoe County: RANDALL L. REHMEIER, Judge. Affirmed.
Stephanie R. Hupp and Zachary Blackman, Senior Certified Law Student, of McHenry, Haszard, Roth & Hupp, P.C., L.L.O., for appellant.
Gerald M. Stilmock, of Brandt, Horan, Hallstrom & Stilmock, for appellee.
IRWIN, MOORE, and CASSEL, Judges.
MOORE, Judge.
INTRODUCTION
The district court for Otoe County entered a decree dissolving the marriage of Rex A. Rogman and Sherry L. Rogman. Rex has appealed to this court, assigning error to the court's treatment of certain premarital assets and the valuation of the marital estate. Pursuant to this court's authority under Neb. Ct. R. App. P. § 2-111(B)(1) (rev. 2008), this case was ordered submitted without oral argument. We conclude that the trial court did not abuse its discretion in dividing the property between the parties, and we affirm.
BACKGROUND
The parties were married on March 10, 1990. One child was born to the marriage, who has reached the age of majority.
At the time Rex and Sherry married, Sherry owned a home in Las Vegas, Nevada. Rex and Sherry made some improvements to the Las Vegas residence, with Rex providing some of the labor and Sherry providing most, if not all, of the funds for the materials. The title remained in Sherry's name until 1992, when the house was sold and the parties moved to Nebraska. The parties purchased a home in Bennet, Nebraska, which was titled in Sherry's name, for the sum of $45,100. Sherry testified that $20,000 from the sale of her Las Vegas home was used as a downpayment and that the balance of the purchase price of approximately $25,000 was financed through a mortgage.
Before the parties could move into the new residence, the house required plumbing work, electrical wiring, insulation, and plaster work. The parties hired out the electrical wiring and plumbing work, as well as a portion of the drywall work. Rex did the plaster and insulation work, as well as some of the drywall work and replacement of flooring. Sherry testified that she paid for all of the renovations. Sherry had a 401K account from her previous job in Las Vegas, which account she testified she cashed and used approximately $20,000 toward renovating the new home. Remaining proceeds from the sale of the Las Vegas home were also used for the renovations.
Although Rex did not seem to know how they paid the $20,000 downpayment on the home, he did admit that Sherry probably contributed the $20,000 from the Las Vegas house or from her 401K. Rex did not know the value of Sherry's premarital 401K. Rex did not dispute Sherry's testimony regarding her payment of the downpayment and the improvements, nor did he offer any evidence that marital funds were used for the downpayment or the improvements to the Bennet house.
The Bennet home was refinanced several times throughout the marriage for various purposes. The last refinancing occurred in 2003, after the parties had separated, in the sum of $82,500. At this time, the title to the home was placed in both parties' names. A portion of these funds were used to pay past-due taxes associated with Rex's business and for delinquent child support he owed for another child. As of November 6, 2010, the total amount owed on the mortgage of the Bennet home was $71,016.32.
Rex moved out of the family home in the summer of 2000. He briefly moved back in to the home in 2001, although he testified that it was only for a couple of days. Sherry originally filed for divorce from Rex in 2001, but that proceeding was dismissed. Sherry filed for divorce again on June 17, 2009.
After the separation, Sherry paid all of the expenses associated with the home, including the mortgage payment. Sherry paid for the replacement of the furnace. Rex put in a new pipe for the septic tank and did some additional repairs on the septic tank.
At the time of their separation, Sherry had money invested in a 401K and a retirement plan through her employer. Sherry testified and provided documentation regarding the values of her retirement accounts which will be discussed as necessary below.
After their separation, Sherry continued to provide health insurance for Rex until January 2010. Otherwise, Sherry and Rex kept their finances separate after their separation. In 2005 or 2006, Sherry filed for bankruptcy which extinguished most of their marital debts.
On March 16, 2011, the district court entered its decree of dissolution of marriage. Following an analysis of the relevant facts, it awarded the Bennet home to Sherry and divided her retirement benefits as of the date of separation. Rex timely appeals.
ASSIGNMENTS OF ERROR
Rex alleges, combined and restated, that the district court erred in (1) granting Sherry credit for proceeds from the sale of her premarital residence and liquidation of her premarital 401K as a premarital offset against the parties' real estate and (2) valuing and dividing Sherry's retirement accounts as of the date of separation of the parties.
STANDARD OF REVIEW
In actions for the dissolution of marriage, the division of property is a matter entrusted to the discretion of the trial judge, which will be reviewed de novo on the record and will be affirmed in the absence of an abuse of discretion. Quinn v. Quinn, 13 Neb. App. 155, 689 N.W.2d 605 (2004).
A judicial abuse of discretion exists when a judge, within the effective limits of authorized judicial power, elects to act or refrains from acting, and the selected option results in a decision which is untenable and unfairly deprives a litigant of a substantial right or a just result in matters submitted for disposition through a judicial system. Olson v. Olson, 13 Neb. App. 365, 693 N.W.2d 572 (2005).
When evidence is in conflict, an appellate court considers, and may give weight to, the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another. Millatmal v. Millatmal, 272 Neb. 452, 723 N.W.2d 79 (2006).
ANALYSIS
In a divorce action, the purpose of a property division is to distribute the marital assets equitably between the parties. Tyma v. Tyma, 263 Neb. 873, 644 N.W.2d 139 (2002); Neb. Rev. Stat. § 42-365 (Reissue 2008). Equitable property division under § 42-365 is a three-step process. The first step is to classify the parties' property as marital or nonmarital. Tyma v. Tyma, supra. The second step is to value the marital assets and marital liabilities of the parties. Id. The third step is to calculate and divide the net marital estate between the parties in accordance with the principles contained in § 42-365. Tyma v. Tyma, supra. The ultimate test for determining the appropriateness of the division of property is reasonableness as determined by the facts of each case. Heald v. Heald, 259 Neb. 604, 611 N.W.2d 598 (2000). Offsets for Sherry's Premarital Property:
Las Vegas Home and 401K.
The district court determined the Las Vegas home was premarital property belonging to Sherry. The district court found that approximately $20,000 of the sale proceeds from the Las Vegas home was applied toward the purchase of the Bennet home. Further, the district court found that Sherry expended approximately $20,000 toward "significant improvements" to the Bennet property from her premarital 401K plan with her former employer. The court determined that Sherry was entitled to receive credit for the $40,000 she expended in the purchase and remodeling of the house. The court also took into consideration that Sherry made all of the house payments since the parties separated in 2000 and that part of the latest refinance covered Rex's back child support and taxes. The court determined that the value of the home at the time of separation was approximately $100,000 and that after considering the $71,016.32 remaining balance on the mortgage, and the credits and considerations noted above, no marital equity in the Bennet home existed and awarded the property to Sherry, subject to the mortgage indebtedness.
Rex asserts that the district court abused its discretion in giving Sherry a premarital credit for the use of funds from the Las Vegas home and her premarital 401K account. With respect to the Las Vegas home, Rex contends the offset is in error because (1) Sherry failed to provide documentary evidence to support her testimony that the proceeds from its sale were used for the downpayment on the Bennet home and (2) Rex made significant improvements to the Las Vegas home prior to its sale. Similarly, Rex argues the 401K offset was in error because Sherry failed to provide documentary evidence to support her testimony that $20,000 went toward improvements in the Bennet home.
All property accumulated and acquired by either spouse during the marriage is part of the marital estate, subject to equitable distribution, unless it falls within an exception to the general rule, such as property acquired during the course of the marriage by one party through either gift or inheritance, or property owned by one party before the marriage if traceable, unless significantly cared for by the other spouse during the marriage. See Simon v. Simon, 17 Neb. App. 834, 770 N.W.2d 683 (2009). Property which one party brings into the marriage is generally excluded from the marital estate. Heald v. Heald, supra. The burden of proof to show that property is a nonmarital asset remains with the person making the claim in a dissolution proceeding. Shearer v. Shearer, 270 Neb. 178, 700 N.W.2d 580 (2005).
Rex first argues that Sherry failed to meet this burden of proof because she did not provide documentary evidence to support her testimony that $20,000 from the proceeds of the Las Vegas home was used for the downpayment on the Bennet home and that $20,000 from her premarital 401K account was used to improve the home.
To the extent that Rex suggests that documentary evidence is required in all instances in order to meet the burden of proof regarding premarital property, we reject his argument. A similar argument was considered by this court in Quinn v. Quinn, 13 Neb. App. 155, 689 N.W.2d 605 (2004). In that case, the wife appealed the trial court's finding that the husband had used his separate funds to make a downpayment on a home purchased during the marriage. On appeal, the wife cited Grams v. Grams, 9 Neb. App. 944, 624 N.W.2d 42 (2001), for the proposition that without documentary evidence, the husband's testimony was not sufficient to exclude the downpayment from the marital estate. We distinguished the facts of Grams, finding that tracing of premarital funds was disapproved in that case because the wife used premarital funds "to defray unspecified, and presumably sundry, expenses." Quinn v. Quinn, 13 Neb. App. at 168, 689 N.W.2d at 617. In Quinn, the husband immediately applied the proceeds from his premarital home sale to the downpayment on the marital residence. We also noted that while the wife in Quinn did not specifically admit that the funds for the downpayment on the marital residence came from the proceeds from the sale of the husband's premarital house, her testimony did not contradict the husband's testimony concerning that source of funds. Based on the evidence in that case, we concluded that the trial court did not abuse its discretion in tracing the husband's separate property and giving him credit therefor.
In Grams v. Grams, supra, this court applied the reasoning from Brunges v. Brunges, 260 Neb. 660, 619 N.W.2d 456 (2000), in which the Nebraska Supreme Court found that the husband did not properly account for the disposition of marital property after the parties' separation because he either did not offer an explanation as to the disposition of certain funds or testified that certain funds were used for bills without documentation or testimony as to the specific bills that he paid.
Rex also relies upon Olson v. Olson, 13 Neb. App. 365, 693 N.W.2d 572 (2005), in support of his argument that documentation is required to support a claim of a nonmarital asset. Again, Olson is distinguishable from the case at hand. In that case, the husband sought a setoff for nonmarital real estate which was transferred to a family corporation in exchange for stock. This court rejected the husband's claim that he was entitled to a credit for this nonmarital real estate because there was no evidence introduced upon which to base tracing of the separately owned land which was transferred in 1982 to the valuation of the corporate stock in 2003. Id.
In the present case, we are not confronted with the tracing problems noted in Grams, Brunges, and Olson discussed above. Rather, this case is more akin to Quinn v. Quinn, supra. Sherry's testimony indicated that she immediately applied the Las Vegas house sale proceeds to the downpayment on the Bennet home and that she applied the proceeds from her 401K account to the home renovations which were required immediately after the home was purchased. We also note that Rex did admit that the downpayment for the house came from either the Las Vegas home or Sherry's 401K account. While Rex did not specifically admit that the funds for the renovation of the Bennet home came from Sherry's 401K account, his testimony did not contradict Sherry's testimony concerning the source of the funds. Based on this evidence, we conclude that the district court did not abuse its discretion in granting Sherry the premarital credit for the Las Vegas home and her 401K account. In our de novo review on the record, given the conflict in the evidence on this material issue of fact, we consider and give weight to the findings of the trial judge who heard and observed the witnesses and accepted one version of the facts rather than another. See Heald v. Heald, 259 Neb. 604, 611 N.W.2d 598 (2000).
Rex also argues that the Las Vegas home should not be considered solely Sherry's premarital property because he significantly improved the property prior to its sale in 1992. An exception to the general rule that separate property is set off to the spouse who brought it into the marriage applies where the spouse not owning the property prior to the marriage has significantly cared for the property during the marriage. Olson v. Olson, supra. However, when this exception is applied, it requires evidence of the value of the contributions and evidence that the contributions were significant. Tyler v. Tyler, 253 Neb. 209, 570 N.W.2d 317 (1997).
Sherry testified that prior to selling the Las Vegas home, she and Rex put in a new linoleum kitchen floor, a new shower, a patio, and a brick wall in the backyard. Sherry testified that Rex provided the labor while she paid for all of the materials. Rex testified that Sherry paid for the improvements inside the Las Vegas house and that those were possibly done prior to the marriage. However, Rex testified that he sold two motorcycles for a total of $6,000 and a pickup for $2,500, some of which money was used for the outside improvements. Rex did not present evidence of the value of the improvements or the extent to which the improvements impacted the value of the Las Vegas house, if at all. While there is some conflict in the evidence here, we defer to the district court's findings. The district court found that there were "some modest improvements made to the property," but it stated "[t]he evidence does not support that any improvements made to the Las Vegas property significantly increased the value of that property." The record supports the district court's conclusion, and we find no abuse of discretion in granting Sherry credit for the Las Vegas home proceeds which were invested in the marital home.
Date of Valuation.
Finally, Rex alleges the district court abused its discretion in valuing Sherry's current retirement accounts as of the date of separation as opposed to the date of the dissolution decree. The date upon which the marital estate is valued should be rationally related to the property composing the marital estate. Tyma v. Tyma, 263 Neb. 873, 644 N.W.2d 139 (2002). In dissolution actions, district courts have broad discretion in valuing pension rights and dividing such rights between the parties. Id.
In the present case, the district court used the approximate date of separation to calculate Rex's share of Sherry's 401K and her retirement plan through her employer. On September 30, 2001, Sherry's 401K was valued at $8,805.80. As of September 30, 2010, Sherry's 401K was valued at $22,891.03. The district court calculated the percentage of time that the parties were together prior to separation to determine the amount of Sherry's 401K and retirement plan to include in the marital estate. Rex was awarded a monetary judgment for his portion of the 401K plan and was awarded a percentage of the retirement plan through a qualified domestic relations order.
Both parties agreed that the date of their separation was the year 2000 albeit with a brief reconciliation in 2001. After their separation, Rex and Sherry kept their finances separate. The district court used the date of separation to divide all of Rex and Sherry's material assets and debts, not only the retirement benefits. The valuation of Sherry's retirement benefits was rationally related to the property. See Tyma v. Tyma, supra. We conclude that the district court did not abuse its discretion by choosing the date of separation to identify and value the property composing the marital estate, including Sherry's 401K and retirement plan.
CONCLUSION
The district court did not abuse its discretion in giving Sherry credit for her contribution of premarital funds for the purchase and renovation of the parties' marital home or in its valuation and division of the marital estate, including Sherry's 401K and retirement plan. We affirm the decree of dissolution in all respects.
AFFIRMED.