Opinion
No. A-08-602.
Filed February 10, 2009.
Appeal from the District Court for Valley County: KARIN L. NOAKES, Judge. Affirmed in part as modified, and in part reversed and remanded with directions.
Barry D. Geweke, of Stowell, Kruml, Geweke Cullers, P.C., L.L.O., for appellant.
Gregory G. Jensen, P.C., L.L.O., for appellee.
INBODY, Chief Judge, and SIEVERS and MOORE, Judges.
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).
MEMORANDUM OPINION AND JUDGMENT ON APPEAL
INTRODUCTION
Susan Kay Zulkoski filed a petition to dissolve her marriage to Harry James Zulkoski in the district court for Valley County. Following a trial, the court ordered a division of the marital property which included the parties' retirement accounts and the marital home. Harry now appeals.
BACKGROUND
Susan and Harry were married on July 17, 1982, in Dawson County, Nebraska. Susan filed a complaint for dissolution of marriage on May 31, 2007, and a trial was held on April 15, 2008. Among the disputed issues at trial were the value and distribution of the parties' retirement accounts and the value and distribution of the marital home.
Harry worked as an electrician and made approximately $35,000 in 2007. He owned a life insurance policy worth $9,227.39 and a retirement account worth $13,702.98. Susan worked as a teacher and made approximately $44,000 per year. She owned a life insurance policy worth $4,621.31 and a Nebraska School Employees' Retirement plan, the account balance of which was $85,081.39.
The record includes a letter and affidavit from a retirement specialist with the Nebraska Public Employees Retirement System (NPERS). The letter states that Susan's retirement plan is a defined benefit plan and her retirement benefit under the plan is determined based on a formula, not her account balance, as defined in Nebraska School Retirement System law. The enclosures accompanying the letter state:
It is important to know that as a member of a Defined Benefit Plan your account balance IS NOT considered when calculating your retirement benefit. . . . Your EMPLOYER is required by law to match your contributions at the rate of 101%. The employer contributions are not credited to your individual account, but provide funding for your benefit at retirement.
(Emphasis in original.) Therefore, the monthly benefit Susan receives at retirement will not be based on her account balance which lists only the amount she had contributed to the plan plus accrued interest.
In the joint property statement, Susan valued her plan at $85,081.39. Susan's proposal was to allow both parties to keep their respective retirement plans and life insurance policies. Harry did not assign a value to Susan's plan, but instead suggested dividing it equally pursuant to a qualified domestic relations order (QDRO). The QDRO Harry proposed would give him the right to an undivided 50-percent interest in Susan's retirement benefit that had accrued during the marriage. The record contains a proposed QDRO form and a letter from the NPERS approving the form of the QDRO.
The parties also disputed the value and distribution of their home. Neither party offered an appraisal of the property, but the court received a letter from the parties' real estate broker which stated that if the home were sold at a public auction or private listing within 30 days of February 21, 2008, it could be expected to sell for a total of $155,000. The letter stated that "[t]his opinion or analysis is not an appraisal. It is intended only for the benefit of [Susan and Harry] for the purpose of assisting buyers or sellers or prospective buyers or sellers in deciding the listing, offering, or sale price of the real property and not for any other purpose." Following the parties' separation in July or August 2007, the home was listed for sale for $199,000, but as of the trial, the parties had not received an offer at this or any price.
Susan testified at trial that she agreed the house was worth $155,000 and that she wanted Harry to have the house at that value or for it to be sold. She was opposed to a sale by public auction, and she did not want to receive the home for a value of $155,000 because she was worried that she would not be able to sell it for that amount. Susan did not know a value at which she would be comfortable receiving the home.
Harry testified that he was willing to have the home sold at a public auction if it was not sold by June 15, 2008. Harry was willing to have the sale proceeds distributed first to the expenses of the sale, then to the indebtedness owed to the bank for the remainder of the mortgage, which, as of the date of separation was $51,743. The net proceeds then would go to the court to divide between the parties. Harry acknowledged that under that proposed arrangement Susan would get credit for the principal she had paid on the mortgage following separation. According to the record and supplemental transcript, Susan lived in the house and paid the mortgage from the date of separation in May 2007 through June 2008. The district court ordered that Harry is responsible for the mortgage payments and may live in the home during the pendency of this appeal, commencing in July 2008.
The decree of dissolution was filed on May 9, 2008. The district court valued the home at $155,000 and noted that neither party wanted to be awarded the home due to concerns about selling in the current market. It also found that Susan had retirement accounts and life insurance valued at $89,702 and that Harry's life insurance and retirement plans were valued at $22,929. The court stated that
the most reasonable distribution of the property would be to award each party their own life insurance and retirement accounts and award the home to [Harry]. In doing this and applying the stipulations, the court finds that [Harry's] net estate exceeds [Susan's] by $52,941.00. . . . Therefore a property settlement judgment of $26,471.00 is necessary to equalize the marital estate.
The court ordered Harry to pay the property settlement judgment of $26,471 within 18 months of the entry of the decree with the judgment to bear interest at the rate of 3.532 percent per annum from the date of entry of the decree until paid. Harry timely appealed.
ASSIGNMENTS OF ERROR
On appeal, Harry asserts, restated, that the trial court erred in (1) valuing Susan's school retirement plan based only on her account balance, (2) not awarding Harry a 50-percent interest in the school retirement plan benefits earned during the marriage, (3) ordering that Harry receive the marital home instead of ordering a sale and division of the net proceeds of the sale, (4) awarding Susan a property settlement judgment against him.
STANDARD OF REVIEW
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. Webster v. Webster, 271 Neb. 788, 716 N.W.2d 47 (2006). An abuse of discretion occurs when a trial court's decision is based upon reasons that are untenable or unreasonable or if its action is clearly against justice or conscience, reason, and evidence. Schwartz v. Schwartz, 275 Neb. 492, 747 N.W.2d 400 (2008).
ANALYSIS
In a dissolution of marriage proceeding, if the parties fail to agree on a property settlement, the court shall order an equitable division of the marital estate. Neb. Rev. Stat. § 42-366(8) (Reissue 2008). The purpose of a property division is to distribute the marital assets equitably between the parties. Neb. Rev. Stat. § 42-365 (Reissue 2008). Although the division of property is not subject to a precise mathematical formula, the general rule is to award a spouse one-third to one-half of the marital estate. Carter v. Carter, 261 Neb. 881, 626 N.W.2d 576 (2001). The ultimate test for determining the appropriateness of a division of property is reasonableness as determined by the facts of each case. Id.
School Retirement Plan.
Harry's first two assignments of error allege that the trial court erred in (1) valuing Susan's school retirement plan based on her account balance of $85,081.39 and (2) not awarding Harry a 50-percent interest in the total school retirement plan benefits earned during the marriage.
That portion of retirement benefits which is earned during the marriage is part of the marital estate. § 42-366(8). See, also, Koziol v. Koziol, 10 Neb. App. 675, 636 N.W.2d 890 (2001). While the trial court has broad discretion in valuing and dividing retirement benefits between the parties, courts have determined that the value of a retirement benefit which was acquired during the marriage should be divided relatively equally. See Webster v. Webster, 271 Neb. 788, 716 N.W.2d 47 (2006). The Nebraska Supreme Court has held that although § 42-366(8) requires that any pension plans, retirement plans, annuities, and other deferred compensation benefits owned by either party at the time of dissolution be included as part of the marital estate, the plain language of the statute does not require that such assets be valued at the time of dissolution. Hosack v. Hosack, 267 Neb. 934, 678 N.W.2d 746 (2004). The expression "at the time of dissolution" in § 42-366(8) qualifies the date at which the marital estate is divided but does not provide that pension-type property must be valued on such date. Pension benefits may be divided whether or not the pension is vested. § 42-366(8).
Based on the record in this case, we conclude that the trial court abused its discretion in valuing Susan's school retirement plan based on her account balance of $85,081. The evidence is clear that this amount represents only the amount that Susan contributed to the plan, plus accrued interest, during the marriage. The school district contributes an amount equal to that contributed by the employee, which "matching" contribution is not included in the account balance. The documentation in the record from the NPERS makes it clear that, because this is a defined benefit plan, Susan's account balance is not indicative of the value of the benefit that has accrued because the value of the benefit she will receive under the plan is determined by a formula. The record does not support a conclusion that the value of the benefit that accrued during the marriage is $85,081. Although the record contains three proposed benefit estimates based on different scenarios such as Susan's age at retirement, there is no evidence of the actual numerical value of the benefit that accrued during the parties' marriage. However, we need not determine the actual value of that benefit because we think it is appropriate to equally divide said benefit between the parties. We agree that the most feasible means of accomplishing this division would be pursuant to a QDRO.
In our de novo review, we conclude that the district court abused its discretion in valuing Susan's school retirement plan at $85,081 and in declining to award Harry 50 percent of the value of the benefit that accrued during the marriage. As such, we reverse that portion of the decree and remand the cause to the district court with instructions to divide Susan's school retirement plan by ordering equal division of that portion of Susan's school retirement plan benefit that accrued during the marriage, pursuant to a QDRO to be approved by the court on remand.
Marital Home.
Harry next asserts that the trial court abused its discretion by ordering that he receive the marital home instead of ordering a sale and division of the net proceeds of the sale. We agree.
The record shows that neither party wanted to receive the house and that both were supportive of a sale, although Susan was opposed to a sale by auction. The record also suggests that the current real estate market makes it difficult to value the home.
We conclude that, under these circumstances, it was an abuse of discretion to assign the home and the mortgage debt to Harry, which requires him to bear all of the uncertainty of the real estate market and all of the costs of sale of the home. As such, we reverse that portion of the decree and remand the cause to the district court with directions to provide that the home be sold and the sale proceeds be distributed first to the expenses of the sale, next to pay off the remaining home mortgage, and finally the remaining proceeds be divided equally between the parties. On remand, the district court shall determine such other terms and conditions of the sale as it deems appropriate, including appointment of a receiver or sale by public auction, if deemed necessary. Because both parties have paid some portion of the mortgage debt since their separation, we find no further adjustment regarding the mortgage debt need be made through the date of the entry of the mandate on our opinion; however, the district court may make any further orders concerning payment of the mortgage following remand as it deems appropriate.
Property Settlement Judgment.
Harry's final argument is that the trial court erred in awarding Susan a property settlement judgment against him.
In light of the above holdings and their effect upon the court's division of the parties' total assets and liabilities as the court determined in attachment A of the decree, we conclude that the property equalization judgment against Harry should be reduced from $26,471 to $17,382. Paragraph 9(A)(1) of the decree is further modified to provide that the property equalization payment shall be due upon closing of the sale of the parties' home. The remaining portions of paragraph 9(B) which refer to judgment interest due on the property equalization payment remain unchanged.
Accordingly, we affirm in part the decree as modified, and in part reverse and remand for further proceedings consistent with this opinion.
CONCLUSION
For the aforementioned reasons, we conclude that the trial court abused its discretion with respect to the division of Susan's school retirement account and the award of the family home to Harry. Accordingly, we affirm in part the decree as modified above, and in part reverse and remand the cause to the district court with directions.
AFFIRMED IN PART AS MODIFIED, AND IN PART REVERSED AND REMANDED WITH DIRECTIONS.