IN THE COURT OF APPEALS OF IOWA
No. 16-1446 Filed June 21, 2017
IN RE THE MARRIAGE OF LISA ANNE DUFFY AND MICHAEL J. DUFFY
Upon the Petition of LISA ANNE DUFFY, n/k/a LISA ANNE MORRISON, Petitioner-Appellant,
And Concerning MICHAEL J. DUFFY, Respondent-Appellee. ________________________________________________________________
Appeal from the Iowa District Court for Linn County, Robert E. Sosalla,
Judge.
Petitioner appeals from the provisions of the dissolution decree dividing
the parties’ property, awarding spousal support, and awarding attorney fees.
Petitioner also appeals the trial court’s denial of her motion for new trial.
AFFIRMED AS MODIFIED.
Laura E. Bergus of Hayek, Moreland, Smith & Bergus, L.L.P., Iowa City,
for appellant.
Rebecca A. Feiereisen of Arenson Law Group, P.C., Cedar Rapids, for
appellee.
Considered by Potterfield, P.J., and Doyle and Tabor, JJ. 2
POTTERFIELD, Presiding Judge.
Lisa Duffy appeals the property provisions of the dissolution decree and
the denial of her motion for new trial. She claims the trial court erred in dividing
the property, awarding attorney fees, and determining the amount of spousal
support. We affirm the district court’s property division and award of attorney
fees, but we modify the equalization payment from $69,817.30 to $74,439.83.
We affirm the trial court’s denial of Lisa’s motion for new trial.
I. Background Facts and Proceedings.
Lisa and Michael Duffy were married in 1992. At the time of trial, Lisa was
forty-five and Michael was forty-six years old. Four children were born of the
marriage, but the children reached the age of eighteen before the time of trial.
Michael earned a bachelor’s degree. After college, Michael worked
multiple jobs to support the family. Eventually, Michael and Lisa purchased
Match Play Tennis Centers (Match Play) for five dollars. At the time of trial,
Michael was a fifty percent owner1 in Match Play, where he also worked full-time
and received a salary of $85,819.76. He also received a management fee of
$32,500. Michael’s income was based on a management agreement between
Match Play and Rockwell Collins, which requires Match Play to furnish recreation
services to Rockwell’s employees. Michael also entered into a buy-sell
agreement with the other Match Play owner in which each owner agreed to a
buyout price of $86.67 per share. It is unclear how the owners came up with the
valuation. Match Play has no other management or service agreements.
1 An unrelated individual owns the remaining fifty percentof Match Play. 3
Lisa also earned her bachelor’s degree. The parties both decided that
Lisa would care for the house and children. Beginning in1998, Lisa worked for
United Parcel Service (UPS) for approximately five years. She also worked at
Coe College for approximately three months in 2007. Lisa was not employed at
the time of trial.
Lisa suffers from multiple health-related issues, including arthritis, chronic
sinusitis, recurring MRSA infections, ADHD, hypothyroidism, Steven Johnson
syndrome, depression, and anxiety. Lisa applied for social security disability
benefits based on her medical conditions. The request was initially rejected and
Lisa’s appeal was pending during trial. After the trial ended and the decree had
been filed, Lisa received a notice of award letter granting Lisa’s appeal, in which
it was determined she became disabled on April 13, 2007.
On January 22, 2014, Lisa filed a petition for dissolution of marriage. At
trial, the court heard contradicting testimony about multiple assets and liabilities.
The parties disagreed about the value of the home, whether $25,000 from
Michael’s mother was a loan, and whether the Match Play credit card balance
was marital debt.
The court also heard testimony from Denny Redmond, Match Play’s
accountant. Redmond testified that Match Play had no value. His opinion was
based on Match Play’s status as an S-corporation, which passes all the net
income and expenses through to the shareholders based on a pro-rated share of
the stock ownership. Redmond confirmed the business had no assets other than
a contract that paid the owners a management fee. The contract could be 4
terminated at any time with sixty days’ notice. Redmond also testified that
owners’ salaries should not not used to determine a corporation’s value.
On June 27, 2016, the court issued its decree dividing the parties’ assets
equally, awarding attorney fees, and requiring an equalization payment from
Michael to Lisa. The court determined the $25,000 from Michael’s mother was a
loan and assigned the debt to Michael. The court also determined the Match
Play credit card balance was marital debt and assigned the debt to Michael.
Based on its valuation of the assets, the court concluded Michael should pay Lisa
an equalization amount of $74,439.83. However, the court’s order instructed
Michael to pay only $69,817.30. The court also awarded Lisa $5000 in attorney
fees.
Based in part on the discrepancy between the equalization payment
amounts in the decree, Lisa filed a motion to reconsider, amend, and enlarge the
trial courts filings. She also filed a motion for new trial arguing the “newly
discovered” disability award would have changed the results of the trial. The trial
court denied both motions. Lisa appealed.
II. Standard of Review.
An action for the dissolution of marriage is an equitable proceeding. Iowa
Code § 598.3 (2014). Therefore, our review is de novo. Iowa R. App. P. 6.907;
In re Marriage of Schenkelberg, 824 N.W.2d 481, 484 (Iowa 2012). Although we
give weight to the factual determinations of the trial court, especially regarding
credibility determinations, its findings are not binding upon us. Iowa R. App. P.
6.904(3)(g); In re Marriage of Brown, 776 N.W.2d 644, 647 (Iowa 2009). We
examine the entire record and adjudicate anew rights on the issues properly 5
presented. In re Marriage of Ales, 592 N.W.2d 698, 702 (Iowa Ct. App. 1999).
We give the trial court considerable discretion in awarding spousal support and
will disturb its award only when the decree fails to do equity. In re Marriage of
Smith, 573 N.W.2d 924, 926 (Iowa 1998).
We review the trial court’s award of attorney fees for an abuse of
discretion. See In re Marriage of Grady-Woods, 577 N.W.2d 851, 854 (Iowa Ct.
App. 1998).
We review a trial court’s ruling on a motion for new trial on the grounds of
newly discovered evidence for an abuse of discretion. In re Marriage of Wagner,
604 N.W.2d 605, 609 (Iowa 2000).
III. Discussion.
a. Property Division.
Lisa claims the trial court erred in dividing the parties’ property. She
argues the trial court undervalued the marital home, undervalued Match Play,
and made a mathematical error in determining the equalization payment. She
also argues $25,000 received from Michael’s mother and the credit-card debt
related to Match Play are not marital debt.
1. Property Valuation. Lisa claims the court undervalued Michael’s
business, Match Play. She argues the trial court should not value the business
at zero dollars, but she does not suggest an appropriate valuation. She also
argues the stock price in the buy/sell agreement suggests the business has
value.
At trial, an accountant testified that Match Play had no value. The opinion
was based on the structure of Match Play as an S-corporation, which passes its 6
net income and expenses to Michael and the other owner. The expert stated the
business has no assets. Moreover, the $86.67 per share stock price is based on
the owners’ salaries and it does not reflect a current market value. The trial
court’s valuation matched the expert’s valuation. Generally, valuations within the
permissible range of the evidence will not be disturbed on appeal. See In re
Marriage of Steele, 502 N.W.2d 18, 21 (Iowa Ct. App. 1993); see also In re
Marriage of Alexander, 478 N.W.2d 420, 422 (Iowa Ct. App. 1991). We also note
the income received from Michael’s management of Match Play was accounted
for in other areas of the decree.
Lisa also claims the trial court undervalued the marital home. She argues
a number of improvements—such as a new roof, gutters, furnace, water heater,
and air conditioner—warrant a larger home valuation.
Based on evidence introduced at trial, the Linn County Assessor’s website
reflected the marital home’s assessed value at $166,400. Lisa testified the home
was worth $186,000. Lisa’s opinion was based on her knowledge of the real
estate market and various improvements made to the house. She also
introduced multiple real-estate websites estimating the value of the home
between $192,300 and $206,436. Michael testified recent flood damage reduced
the value of the home to $150,000. The court valued the home at $166,400 in its
decree. The court’s determination is within the permissible range of evidence
introduced at trial. See In re Marriage of Bare, 203 N.W.2d 551, 554 (Iowa 1973)
(“The [real-estate] valuation found by [the] trial court was well within the
permissible range of the evidence, and we are not inclined to disturb it.”); see
also In re Marriage of Swartz, 512 N.W.2d 825, 827 (Iowa Ct. App. 1993) 7
(affirming trial court’s $127,500 real-estate valuation where assessed value was
$119,000 and appellant’s valuation was $215,000).
2. Marital Debts. Lisa next claims the trial court should not have
categorized the $25,000 received from Michael’s mother and the business debt
on a joint credit card as marital debt.2
“[T]he allocation of marital debts inheres in the property division.” In re
Marriage of Johnson, 299 N.W.2d 466, 467 (Iowa 1980). “Even though a debt
may have been incurred by a party for family expenses, it is not inequitable to
order that party to be responsible for the entire amount of the debt as long as the
overall property distribution is equitable.” In re Marriage of Sullins, 715 N.W.2d
242, 251 (Iowa 2006). “Debts of the parties normally become debts of the
marriage, for which either party may be required to assume the responsibility to
pay.” Id.
Lisa argues the money provided by Michael’s mother was never intended
to be a loan. Intra-family loans are assigned as marital debts when the record
suggests the funds were intended to be repaid. See In re Marriage of Vrban, 359
N.W.2d 420, 427 (Iowa 1984) (holding the word “loan” written on the check
supported a finding that the monies received were marital debts); see also In re
Marriage of Morrissey, 669 N.W.2d 263 (Iowa Ct. App. 2003) (“In this case, there
2 Lisa also claims, “The amount owed on the Chevrolet Blazer is not marital debt.” However, based on the parties’ financial affidavits, there is no debt on the Chevrolet Blazer. It appears Lisa would like us to modify the district court’s decision applying the proceeds of the sale of the Blazer to the debt to Michael’s mother, but the parties stipulated the sale proceeds would go to Michael’s mother. Lisa fails to cite any authority or develop her argument that a stipulation from the parties should be reversed on appeal. Therefore, we decline to address her claim on appeal. See Midwest Auto. III, LLC v. Iowa Dep’t of Transp., 646 N.W.2d 417, 431 n.2 (Iowa 2002) (holding random mention of issue, without elaboration or supporting authority, is insufficient to merit appellate consideration). 8
is nothing in the record to suggest that the moneys were to be repaid other than
Sean and his mother’s testimony.”). Here, Michael’s mother testified that she
intended the money to be a loan and Lisa was aware of the loan. Michael also
testified the money was intended to be a loan. The record shows the parties
repaid approximately $6600 of the loan to Michael’s mother, which also suggests
it was intended to be a loan. We decline to upset the trial court’s determination
that the money from Michael’s mother was marital debt. See Sullins, 715 N.W.2d
at 251 (“The district court found the evidence did not support [appellant’s] claim,
and we decline to disturb the district court’s credibility judgment.”).
Similarly, the credit card debt from Michael’s company was properly
allocated as a marital debt. Lisa argues the debt was incurred in the course of
Michael’s business dealings. However, the record suggests the parties used the
credit card for personal and business expenses. Items charged to the credit card
for business expenses were reimbursed by Match Play, and the reimbursement
proceeds were often transferred into the parties’ personal accounts. Thus, much
of the debt incurred in the course of Michael’s business activity was later
“converted” to marital debt when the reimbursement proceeds were used for
marital expenses. The trial court properly included the credit card as marital
debt.
3. Equalization Payment. Lisa claims the trial court made an error in the
provisions of the decree ordering Michael to pay a $69,817.30 equalization
payment while the trial court’s distribution chart showed a $74,439.83
equalization payment. Michael argues the court intended to order an 9
equalization payment of $69,817.30, although in his response to Lisa’s post-trial
motion he conceded the district court intended the $74,439.83 amount.
Iowa is an equitable distribution state. In re Marriage of McDermott, 827
N.W.2d 671, 678 (Iowa 2013). Under section 598.21, all of the parties’ property,
except inherited property or gifts, should be equitably divided between the
parties. Sullins, 715 N.W.2d 242, 247. Equitable distribution depends upon the
circumstances of each case, and it does not necessarily mean equal distribution.
In re Marriage of Hansen, 733 N.W.2d 683, 702 (Iowa 2007). “Equality is,
however, most often equitable.” McDermott, 827 N.W.2d at 682.
We agree with the trial court, a “close to fifty-fifty allocation of [the parties’]
assets” is equitable. However, the ordered equalization payment does not equal
the property division valuation in the decree. In its order, the court assigned
Michael $144,257.13 in assets net of the assigned debt. The court assigned Lisa
negative $4622.53 in assets net of the assigned debt. The difference in the
parties’ assets is $148,879. To equalize the property discrepancy, the court
ordered Michael to pay Lisa $74,439.83 under the “Property Division” section of
the decree. However, under the “Property Equalization” section the court
ordered a $69,817.30 payment from Michael to Lisa. A $74,439.83 equalization
payment results in a fifty-fifty allocation of the parties’ assets based on the trial
court’s net-asset determination. Accordingly, Michael must pay a $74,439.83
equalization payment to Lisa. 10
b. Spousal Support.
Lisa claims the spousal-support award of $3000 per month for thirty
months3 is insufficient because the support should continue until Lisa’s death and
not decrease over time. She also claims the type of support is incorrect.
As a preliminary matter, we note Iowa law recognizes three forms of
alimony—traditional, rehabilitative, and reimbursement. See In re Marriage of
Probasco, 676 N.W.2d 179, 184 (Iowa 2004). However, we are not required to
award any one type of alimony, and our focus is whether the award is equitable
under the facts of each case. See In re Marriage of Becker, 756 N.W.2d 822,
827 (Iowa 2008) (“[T]here is nothing in our case law that requires us, or any other
court in this state, to award only one type of support.”).
In determining the amount of spousal support, we utilize the following
statutory factors: (1) the length of marriage; (2) the age and emotional and
physical health of the parties; (3) the property distribution; (4) the educational
level of the parties at the time of marriage and when the dissolution action is
commenced; (5) the earning capacity of the party seeking alimony, including
educational background, training, employment skills, work experience, and length
of absence from the job market; and (6) the feasibility of the alimony seeking
party to become self-supporting with a reasonably comparable standard of living
to that enjoyed during the marriage. Iowa Code § 598.21A(1); see also Hansen,
733 N.W.2d at 704. Spousal support is not an absolute right, and an award
3 After thirty months, the spousal-support obligation decreases from $3000 per month to $1500 per month until “such time as Lisa qualifies to receive social security retirement benefits.” At that time, Michael’s support obligation is $750 per month until Lisa’s death. 11
depends on the facts and circumstances of each case. Schenkelberg, 824
N.W.2d at 486.
The parties were married for twenty-four years, and Lisa is approaching
retirement in poor health. At the time of trial, Lisa was forty-five and Michael was
forty-six years old. Both parties made significant contributions to the marriage,
and Lisa has limited earning capacity due to her health and limited workforce
experience. These factors weigh in favor of a spousal support award. See In re
Marriage of Gust, 858 N.W.2d 402, 410 (Iowa 2015) (holding marriages lasting
twenty or more years “merit serious consideration for traditional spousal
support”). Under the decree, Michael is also required to pay the remaining
$16,796 debt to his mother, two credit card balances totaling $21,684.93, and
various unpaid medical bills. The trial court determined Michael’s disposable
income is $8000 per month and his monthly expenses are approximately $4678
before the spousal-support obligation. Any additional support over $3000 per
month is unreasonable based on the parties’ monthly expenses compared to
their respective incomes. See In re Marriage of Hayne, 334 N.W.2d 347, 351
(Iowa Ct. App. 1983); see also In re Marriage of Shepperd, No. 14-1766, 2015
WL 7075750, at *3 (Iowa Ct. App. Nov. 12, 2015) (“The amount of spousal
support awarded should not destroy the right of the party providing the support to
also enjoy a comparable standard of living.”). We agree with the trial court’s
spousal-support determination. 12
c. Attorney Fees.
Lisa claims the trial court abused its discretion in awarding her $5000 in
attorney fees. She argues Michael has the ability to pay additional funds, but she
does not state how much.
Trial courts are given considerable discretion in awarding attorney fees. In
re Marriage of Giles, 338 N.W.2d 544, 546 (Iowa Ct. App. 1983). “Trial courts
are familiar with the value of services in dissolution matters. Most of the services
for which compensation was allowed were rendered during trial before the judge
who made the award. Trial courts have considerable discretion in fixing fees.” In
re Marriage of Willcoxson, 250 N.W.2d 425, 427 (Iowa 1977).
Lisa cites In re Marriage of Mugge to support her argument. No. 07-0079,
2008 WL 4525839 (Iowa Ct. App. Oct. 1, 2008). In Mugge, however, the trial
court awarded $20,000 in attorney fees based, in part, on the appellee’s failure to
disclose certain assets, which required the appellant “to incur unnecessary
amounts of attorney fees.” Id. at *5. Here, no such nefarious activity exists in the
record to require an increase in Lisa’s attorney-fee award. Furthermore, the trial
court accounted for Michael’s increased ability to pay attorney fees when it
awarded Lisa $5000 in attorney fees. The trial court outlined Michael’s increased
monthly expenses based on the $3000 per month spousal-support obligation.
Michael was also issued the majority of the marital debt, which increased his
monthly expenses. Accordingly, the trial court did not abuse its discretion in
requiring Michael to pay Lisa $5000 in attorney fees. 13
d. Motion for New Trial.
Lisa claims she should be granted a new trial because she was unable to
reasonably obtain or produce a notice of decision awarding her social security
disability benefits, which, she argues, would have changed the outcome of the
spousal support order in this case. Michael, on the other hand, argues the
information was not available at trial, and the trial court was aware of Lisa’s
appeal
Under Iowa Rule of Civil Procedure 1.1004(7), a new trial may be granted
if “[m]aterial evidence, newly discovered, which could not with reasonable
diligence have been discovered and produced at the trial.” Additionally,
[t]rial courts have broad but not unlimited discretion in ruling on motions for new trials. We do not favor motions for new trial based on newly discovered evidence. We will not disturb the trial court’s ruling unless the evidence clearly shows the court has abused its discretion. We will only find an abuse of discretion if the trial court clearly exercised its discretion on untenable grounds or acted unreasonably.
Benson v. Richardson, 537 N.W.2d 748, 762 (Iowa 1995) (citations omitted).
Lisa must demonstrate three prongs to succeed on her claim: “(1) the evidence is
newly discovered and could not, in the exercise of due diligence, have been
discovered prior to the conclusion of the trial; (2) the evidence is material and not
merely cumulative or impeaching; and (3) the evidence will probably change the
result if a new trial is granted.” Id.
We are not convinced this is an extraordinary case in which a new trial
should be granted. “Newly discovered evidence” must exist at the time of trial.
Id. at 763. Here, the trial ended on March 17, 2016. Although the disability
appeal decision is dated March 11, 2016, the Social Security Administration did 14
not send the letter until April 16, 2016. The evidence did not exist at the time of
trial; the trial court did not abuse its discretion in denying Lisa’s motion for new
trial.
IV. Conclusion.
We hold the division of the parties’ assets and debts is equitable, and we
decline to alter the trial court’s award of trial attorney fees. Based on the courts
valuation of the parties’ net assets, we modify the equalization payment from
$69,817.30 to $74,439.83. Furthermore, the trial court did not abuse its
discretion in denying the motion for new trial.