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In re Marriage of Huh

Court of Appeals of Iowa

December 21, 2016

IN RE THE MARRIAGE OF YOUNG B. HUH AND VERONICA A. HUH Upon the Petition of YOUNG B. HUH, Petitioner-Appellant/Cross-Appellee, And Concerning VERONICA A. HUH, Respondent-Appellee/Cross-Appellant.

         Appeal from the Iowa District Court for Scott County, Paul L. Macek, Judge.

         Both parties appeal the economic provisions of the decree dissolving their marriage. AFFIRMED AS MODIFIED.

          Gary D. McKenrick of Cartee & McKenrick, P.C., Davenport, for appellant/cross-appellee.

          Andrew B. Howie of Shindler, Anderson, Goplerud & Weese, P.C., West Des Moines, for appellee/cross-appellant.

          Heard by Vogel, P.J., and Tabor and Mullins, JJ.

          TABOR, Judge.

         This appeal concerns the economic terms of the decree dissolving the marriage of Young and Veronica Huh, whose marital estate exceeds $7 million.[1]Young appeals the district court's valuation of two properties; the provisions for spousal, child, and medical support; and the requirement he maintain life insurance for Veronica. In her cross-appeal, Veronica seeks to increase the support ordered and asserts the court should have granted relief on her claim Young dissipated assets. We amend the decree to incorporate the parties' agreed-upon modifications, reduce Young's life-insurance obligation, and affirm in all other aspects.

         I. Background Facts and Prior Proceedings

         The parties met when Young was a gastroenterology fellow at the University of Pittsburgh and Veronica was working as a full-time pharmacist in New York. After they married in 1994, Veronica worked part time as a pharmacist in Pittsburgh. When their oldest child, C.H., was born in 1995, the parties agreed Veronica would stay home as a full-time mother and homemaker; she has not been employed since then. The parties also have two younger children, H.H. and E.H.

         Young completed his fellowship in 1996; thereafter, the parties moved for Young's employment-two years in New Jersey, followed by three years in Rockford, Illinois. In September 2001, the family moved to the Quad Cities, and Young entered into his present medical practice.

         After moving to Iowa, the family discovered C.H. had special needs; although he was two years ahead of his peers academically, he had difficulty with social interactions. Veronica researched supportive educational programs and discovered a school in Reno, Nevada. The family agreed C.H. would complete high school in Reno. The original plan for Veronica's parents to live with C.H. in Nevada became impractical due to their health issues. Instead, Veronica started a household in Nevada, and all three children moved with her. The parties' next oldest child, H.H., is also academically gifted but has faced mental-health issues. The youngest child, E.H., does not have special needs and will reach the age of majority in six years.

         Veronica and the children returned to Iowa for school breaks and summer vacations. During the school year, Young would fly to Nevada, usually every weekend he was not on call. After C.H. graduated from high school in May 2014, Veronica and the children returned to Iowa, planning to remain here. But in June 2014, when Young told Veronica he wanted a divorce, she and the children returned to Nevada. At the time of the June 2015 dissolution trial, the parties were both in their early fifties. The children were ages eighteen, sixteen, and twelve; C.H. was entering his sophomore year in college. The parties stipulated to the value of their debt-free homes-$323, 881 (Iowa) and $268, 502 (Nevada). The court entered its decree on September 24, 2015. Both parties appeal. We review their claims de novo. See Iowa R. App. P. 6.907.

         II. Division of Property

         The parties accumulated a sizable marital estate and stipulated to the value and distribution of some assets. The district court valued the other assets and awarded property valued at more than $3, 700, 000 to Veronica and at more than $3, 500, 000 to Young.[2] Although cognizant of the difference in Veronica's favor, the court declined to order an equalization payment, reasoning: "Young will continue to automatically build equity in Gastro Real Estate, L.L.C. at the rate of over $80, 000 per year. In about two years, Young's side of the ledger will easily equal Veronica's and then surpass it."

         The parties have agreed to modifications on appeal.[3] When we add those changes, worth approximately $113, 000, to Young's award, he receives more than $3, 600, 000 in marital property. Young does not seek an equalization payment on appeal, instead challenging Veronica's need for spousal support. We turn to Young's valuation challenges.

         Huh Real Estate L.L.C-Hartford, Connecticut.

         During the marriage, the parties bought commercial rental properties and held them in limited liability companies with ownership split equally. Because Veronica managed the properties, Young did not know the intricacies of the rentals. In 2006, the parties purchased their Connecticut property for $418, 000. At the time of trial the property was leased to two tenants, but the lower level had been vacant in the past. Young did not know how long the new tenant had been renting and acknowledged Veronica would know more about the specific dates.

         No expert testimony was provided on valuation. Young testified the current value was $545, 400-a 3% annual increase over the ownership period. Veronica believed the property was worth between $418, 000 and $450, 000. She explained the rental history, issues with delinquent rent, the fluctuating values of commercial real estate in that area, and why she believed the appropriate value remained at the purchase price. In valuing the property at $418, 000, the district court noted, "Veronica managed the property and is more familiar with its fair market value." The court believed Young's opinion as to a percentage increase was "mere conjecture or speculation."

         On appeal, Young asks us to increase the value of this property. Young's own testimony established Veronica was more knowledgeable about the real estate. We accept the district court's valuation, which is within the range of the credible evidence. See In re Marriage of Decker, 666 N.W.2d 175, 180 (Iowa Ct. App. 2003) (deferring to district court when valuations were accompanied by "supporting credibility findings or corroborating evidence.").

         Mineral Interests.

         Young invested in various mineral interests. On appeal, he challenges the district court's valuation of FSH Midstream, L.L.C. at $202, 500, twice Young's original investment. Relying on evidence presented by Young, the court adopted the valuations made by manager Troy W. Eckard for all five mineral investments. According to Eckard, Young owns a "limited and indirect ownership of a LLC Unit" and Midstream "is successfully making income and performing as expected." Eckard explained Midstream made a distribution each year that covered Young's tax liabilities for this investment.

         Young complains the district court did not apply the 25% to 35% marketability discount Eckard said "may" apply, and Young seeks a reduction in the property's value by applying the discount. We note Eckard also clarified he could provide a better estimate of the asset's value in the future.[4] The district court's valuation was within the range of the evidence; we affirm. See id.

         Veronica's Dissipation Claim.

         Veronica asserts Young's cash withdrawals ($126, 000), stock sales resulting in losses ($17, 274), and costs relating to his newly leased Porsche ($32, 182) constitute dissipation of assets. She claims Young's actions "established [his] intent to hide, deplete, and/or divert marital assets."

         In making a property distribution, "it is proper for the court to consider a person's dissipation of assets." In re Marriage of Olson, 705 N.W.2d 312, 317 (Iowa 2005). We consider "whether the alleged purpose of the expenditure is supported by the evidence, and if so . . . whether that purpose amounts to dissipation under the circumstances." See In re Marriage of Fennelly, 737 N.W.2d 97, 104 (Iowa 2007) (citation omitted). The court found Young's actions were more for "control" as opposed to dissipation. Noting Young's attorney fees "approach $300, 000, " the court found any "dissipation" was caused by "the tenacity of the parties in litigating this matter" and concluded Young did not dissipate assets.[5] We evaluate each of Veronica's claims in turn.

         After the parties separated, Young made a series of cash withdrawals over six weeks, all in the amount of $9000, totaling $126, 000. The district court found Young's pattern of withdrawals "in amounts just below the federal reporting requirement for cash transactions strongly suggests a motive to, at a minimum, hide this asset or to give a colorable and untraceable argument that some of the money simply evaporated in the form of living expenses." The court also found while Young paid his Iowa attorneys $27, 000 in cash, it was "highly skeptical" Young spent the remainder of the cash on unspecified "living expenses, " even though Young claimed only $75, 000 remained. Finding Young had accounted for only $27, 000 of the withdrawals, the court deducted that amount from $126, 000 and credited Young with $99, 000 in cash. Because the district court awarded the unaccounted-for cash to Young in its distribution of property, we find no need to further modify the division of assets.

         We next address Young's sale of equities. On August 7, 2014, Young sold five equity positions in the parties' joint brokerage for more than $173, 000, transferring the proceeds into an account in his name, resulting in a loss of $17, 274 to the parties. Like the district court, we conclude "the stock losses were attributable to market forces as opposed to an intentional waste of assets."

         Finally, we consider Veronica's claim Young's lease of a Porsche constitutes dissipation of $32, 000. Young's employer deducted that expense from his distributions. One of the factors in identifying dissipation is whether an outlay by one spouse was atypical of the expenditures made by the parties before the breakdown of the marriage. See In re Marriage of Kimbro,826 N.W.2d 696, 701 (Iowa 2013). Assuming without deciding that leasing the Porsche constituted dissipation, we decline to modify the decree on this ground. Veronica is receiving more assets, and Young is not requesting an equalization payment. Applying $32, 000 to ...

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