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In re Marriage of Gust

Supreme Court of Iowa

January 16, 2015

IN RE THE MARRIAGE OF STEVEN MICHAEL GUST AND LINDA LEANN GUST; Upon the Petition of STEVEN MICHAEL GUST, Appellant, And Concerning LINDA LEANN GUST, Appellee

Page 403

On review from the Iowa Court of Appeals. Appeal from the Iowa District Court for Polk County, Robert B. Hanson, Judge. An ex-spouse seeks further review of a court of appeals decision affirming a district court order requiring him to pay spousal support indefinitely.

Kodi A. Brotherson of Becker and Brotherson Law Firm, Sac City, for appellant.

Michael B. Oliver of Oliver Law Firm, P.C. Windsor Heights, for appellee.

APPEL, Justice. All justices concur except Wiggins, Waterman, and Mansfield, JJ., who concur in part and dissent in part. Waterman and Mansfield, JJ., join this concurrence in part and dissent in part.

OPINION

Page 404

APPEL, Justice.

In this case, we consider the duration and amount of a spousal support award in a dissolution of marriage. Based on the evidence at trial, the trial court ordered the petitioner to pay $1400 per month in spousal support, increasing to $2000 per month upon the termination of child support, for life. The trial court also divided the assets of the parties approximately equally, rejected a dissipation-of-assets claim raised by the respondent, and declined to award the respondent trial attorneys' fees.

The petitioner appealed and the respondent cross-appealed. We transferred the case to the court of appeals, which affirmed the order of the district court. We granted further review.

On further review, we limit our review to questions arising from the award of spousal support. On the other issues raised in the petitioner's appeal and the respondent's cross-appeal, the order of the district court as upheld by the court of appeals is affirmed.

I. Background Facts and Proceedings.

In this case, we consider the spousal support award made by the district court in connection with the dissolution of Steven and Linda Gust's marriage after trial in May of 2012. In its order, the district court, among other things, divided the assets and debts of the parties and required Steven to pay traditional spousal support in the amount of $1400 per month for as long as he was paying child support for a minor son, and $2000 per month thereafter.

Steven filed a posttrial motion seeking to expand the findings of the district court. Among other things, Steven asked that the spousal support begin at $1400 per month, but that it be reduced after a period of time to $1000. Steven also asked the court to place a termination date on spousal support at Steven's retirement. The district court denied the motion.

Steven appealed and Linda cross-appealed. Steven challenged the spousal support amount as excessive in amount and duration. In her cross-appeal, Linda challenged the district court's division of assets and sought attorneys' fees for trial and appellate proceedings. We transferred the case to the court of appeals, which affirmed the order of the district court. We granted further review.

Based upon our review of the entire record, we make the following findings of fact. Steven and Linda Gust were married in 1985. At the time of trial, Steven and Linda had two children, aged seventeen and twenty-one. At the time of the entry of the district court's order in this case, Steven was fifty-seven years old and Linda was fifty-two years old.

Steven received his bachelor's degree in economics from Iowa State University in

Page 405

1977. After working at several construction companies, he testified he began working at MD Construction in approximately 2005, rising to his current position of general manager. Steven testified his base salary from MD Construction was $76,000 per year. In 2011, the year prior to trial, Steven received incentive payments of about $16,000. For 2012, Steven expected to receive incentive payments of between $6000 and $8000. Through his work, Steven received partially paid health insurance, paid vacation, and paid sick leave. We, like the district court, find that Steven's earning capacity from his position is $92,000 per year. Additionally, although Steven has type 1 diabetes, the disease does not prevent full-time employment.

Steven also testified regarding the operations of an entity called Sound Real Estate, LLC (Sound). Linda and Steven were the sole members of Sound and under the operating agreement were entitled to equal amounts of any distributions to members. The original purpose of Sound was to flip houses. More recently, Steven restructured Sound and obtained subcontractors to engage in lead-based paint removal for MD Construction. Steven has certifications as a lead abatement contractor, a lead abatement worker, and lead abatement trainer.

Steven testified the business of Sound was a result of grants administered by the U.S. Department of Housing and Urban Development for Sioux City and Polk County. Steven's role in Sound's business focused on completing paperwork for lead abatement projects performed under the grants. Because of the exhaustion of grant funds, Steven's desire not to work nights and weekends, and Steven's concern about aggravating his diabetes, Sound ceased to be active, and Steven resigned from the entity in 2012.

During 2011 Steven withdrew $64,000 from Sound, which, combined with his compensation from MD Construction, yielded a total gross income for 2011 of approximately $156,000. The funds were largely used, however, to pay credit card debt and to provide temporary support for Linda during the pendency of the dissolution proceeding.

Steven testified he has no desire to continue Sound's business or open a similar business at the present time. Because Sound's business focused on completing paperwork that is no longer required in connection with lead paint abatement projects, there is no current prospect that the business could be resuscitated. Because Steven has a full-time job and because Sound has no current business viability, we do not include earnings from Sound in our calculation of Steven's present earning capacity.

At the same time, however, we find that Steven paid $50 to the Iowa Secretary of State for filing fees on behalf of SafeCon, a business owned by his girlfriend that provides lead-based abatement services to community colleges. Steven testified he had " no idea" whether he would work for SafeCon in the future, but emphasized he was done working two jobs. We find that Steven has no plans to work for SafeCon or any other similar entity while he is employed full time by MD Construction. There is at least a possibility, however, that utilizing his lead abatement training and expertise, Steven will work with SafeCon or a similar entity sometime in the future.

Linda testified that she was almost fifty-two at the time of the trial and lived in a rented townhouse with the parties' minor son. She attended Des Moines Area Community College in the distant past, where she was close to obtaining a two-year degree. Between 1982 and 1986, Linda

Page 406

worked as a secretary for an accounting firm. She also worked as a bookkeeper in Steven's business, H & S Builders, Ltd., from 1992 to 1994 and had done some work for Generavivity, an assisted nursing care facility in Lake Panorama. Aside from this employment, Linda, with the agreement of Steven, took care of the house and kids until 2008 while Steven earned an income to support the family.

Beginning in 2008 as the children grew older, Linda became employed outside the home. She currently holds two part-time jobs with the Ankeny Community School District, one involving work in the media center, which pays $12 per hour, and another barcoding textbooks, which pays $9 per hour. The combination of jobs yields $15,000 in income per year. She does not, however, receive benefits from these two part-time jobs.

At trial, Steven offered expert testimony suggesting that Linda had an earning capacity of between $29,619 and $30,400 per year. Based upon our review of the record, we agree with the district court that while the expert report overstates Linda's earning capacity somewhat, Linda's earning capacity is $22,500 per year.

The property owned by the parties is accurately described in the appendix attached to the district court order. The district court divided the parties' assets roughly equally, with Steven receiving a net equity of $62,249 and Linda $81,651. In the attached appendix, the district court determined Steven was to be awarded approximately $136,000 (valued in 2012) in retirement accounts, and Linda $58,000. The parties had equally divided the proceeds from the sale of the marital home with the expectation that the proceeds would pay each party's attorneys' fees.

With respect to maintaining the standard of living the parties were accustomed to, we find because of the inefficiencies resulting from the establishment of two households and because the parties used credit card debt to live beyond their means during the marriage, neither party will be able to maintain their predivorce lifestyle in the postdivorce world. We find Steven's current living expenses at the time of trial were $4387 per month (assuming no reduction of principal of credit card debt). While Linda claimed $4623.99 in current living expenses, we find this amount was somewhat overstated. Making adjustments for lower costs of health insurance, food and household expenses, cable costs, and eliminating the savings component, we find Linda's current monthly expenses at the time of trial were $3819 per month.

II. Standard of Review.

An appeal regarding the dissolution of marriage is an equitable proceeding. Iowa Code § 598.3 (2011). Our review is therefore de novo. Iowa R. App. P. 6.907; In re Marriage of Schenkelberg, 824 N.W.2d 481, 484 (Iowa 2012). We give weight to the factual determinations made by the district court; however, their findings are not binding upon us. Iowa R. App. P. 6.904(3)( g ).

In reviewing questions related to spousal support, while our review is de novo, we have emphasized that " 'we accord the trial court considerable latitude.'" In re Marriage of Olson, 705 N.W.2d 312, 315 (Iowa 2005) (quoting In re Marriage of Spiegel, 553 N.W.2d 309, 319 (Iowa 1996)); see also In re Marriage of Schenkelberg, 824 N.W.2d at 486. We will disturb the trial court's order " 'only when there has been a failure to do equity.'" In re Marriage of Olson, 705 N.W.2d at 315 (quoting In re Marriage of Spiegel, 553 N.W.2d at 319). We noted in In re Marriage of Benson, 545 N.W.2d 252, 257 (Iowa 1996):

Page 407

This deference to the trial court's determination is decidedly in the public interest. When appellate courts unduly refine these important, but often conjectural, judgment calls, they thereby foster appeals in hosts of cases, at staggering expense to the parties wholly disproportionate to any benefit they might hope to realize.

III. Discussion.

A. Overview of Iowa Law Regarding Spousal Support.

We begin our discussion with an overview of Iowa law regarding spousal support. Originally, the Iowa legislature provided that in a divorce action the court could enter an order with respect to maintenance of the parties " as shall be right." Iowa Code § 1485 (1851). In awarding spousal support under this wide-open provision, Iowa courts considered a range of facts and circumstances, which were reprised in Schantz v. Schantz, 163 N.W.2d 398, 405 (Iowa 1968). In Schantz, the court laid out " a general formula" for considering the equitable determinations in divorce proceedings, including " the troublesome problem inherent in awarding alimony." Id. at 405. Although the Schantz general formula consisted of five premarital and ten postmarital criteria distilled from prior caselaw, the court pointed out that each element is not always present or important in every case. Id.

In 1970, the legislature enacted no-fault divorce. See 1970 Iowa Acts ch. 1266 (codified at Iowa Code ch. 598 (1971)); see also In re Marriage of Williams, 199 N.W.2d 339, 344 (Iowa 1972) (noting " the overriding legislative purpose of the dissolution act is to remove fault-based standards for termination of marriages" ). A decade later, the Schantz approach (except for provisions related to fault of the parties) was largely adopted by our legislature. See 1980 Iowa Acts ch. 1175, § 3 (codified at Iowa Code § 598.21(3) (1981)). Under the current version of Iowa Code section 598.21A(1) (2011), a court may grant an order requiring support payments . . . for a limited or indefinite length of time after considering all of the following:

a. The length of the marriage.
b. The age and physical and emotional health of the parties.
c. The distribution of property made pursuant to section 598.21.
d. The educational level of each party at the time of marriage and at the time the action is commenced.
e. The earning capacity of the party seeking maintenance, including educational background, training, employment skills, work experience, length of absence from the job market, responsibilities for children under either an award of custody or physical care, and the time and expense necessary to acquire ...

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