In re the Marriage of Schenkelberg ( 2019 )

IN THE COURT OF APPEALS OF IOWA
No. 17-2035
Filed May 15, 2019
IN RE THE MARRIAGE OF JULIANNE R. SCHENKELBERG
AND GARY W. SCHENKELBERG
Upon the Petition of
JULIANNE R. SCHENKELBERG,
Petitioner-Appellee,
And Concerning
GARY W. SCHENKELBERG,
Respondent-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Carroll County, William C. Ostlund,
Judge.
Gary Schenkelberg appeals the district court’s order denying his petition to
modify the parties’ dissolution decree to decrease his spousal support obligation
to Julianne Schenkelberg. AFFIRMED.
Gregory J. Siemann of Green, Siemann & Greteman PLC, Carroll, for
appellant.
J.C. Salvo and Bryan D. Swain of Salvo, Deren, Schenck, Gross, Swain &
Argotsinger, PC, Harlan, for appellee.
Considered by Vogel, C.J., and Vaitheswaran and Doyle, JJ.
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VAITHESWARAN, Judge.
This is the second appeal arising from the spousal support provision of Gary
and Julianne Schenkelberg’s dissolution decree. The couple married in 1994 and
divorced in 2009. The district court ordered Gary to pay Julianne spousal support
of $5000 per month until she turned sixty-two, died, or remarried, and $2000 per
month thereafter, until she turned seventy, died, or remarried.
Gary appealed. The Iowa Supreme Court increased his obligation to $7000
per month until Julianne’s death or remarriage. See In re Marriage of
Schenkelberg, 824 N.W.2d 481, 488 (Iowa 2012). The court reasoned that the
district court failed to consider his “substantial distributions” from his subchapter S
corporation. Id. at 484–85. Specifically, the court stated:
As long as Gary has an interest in the corporation, there is no
reason to believe that he will not be receiving a substantial cash
distribution from the corporation, even if he no longer receives a
salary from it. Moreover, if he divests himself from his ownership in
the corporation, we believe the value he will receive for his interest
in the corporation will generate sufficient funds to reinvest in another
asset that will provide him with substantial income.
Id. at 487.
In time, Gary filed a petition to modify the spousal support provision. He
testified deterioration in the agricultural economy required a forced sale of the
business and his advancing age and declining health prevented him from obtaining
meaningful employment.
The district court denied the petition after finding “no material change of
circumstance or one that was not contemplated by the supreme court.” Gary
moved for enlarged findings and conclusions. The district court denied the motion,
reasoning as follows:
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[T]his Court will stand with its ruling recently filed and order that the
$7000 per month continue. The Court does so for a number of
reasons. First, it was contemplated by the [supreme court] that
[Gary] might ultimately sell his income-producing business and
reinvest in other income-producing properties. This indeed has
happened. [Gary] has received substantial funds as noted in the
opinion. Further, [Gary] has invested in several businesses and is
currently building a home valued at $1 million.
In short, the Court once again reiterates that [Gary]’s financial
position is very secure, and his financial holdings would support the
continued payment of $7000.
On appeal, Gary acknowledges that the standard for modification of a
dissolution decree requires a material, substantial, and essentially permanent
change of circumstances not within the contemplation of the court at the time of
the decree. See In re Marriage of Sisson, 843 N.W.2d 866, 870 (Iowa 2017). To
support his assertion that this standard was satisfied, he points to “the support of
Julianne by another person” and “changes in the parties’ employment, earning
capacity, and income.”
“[C]ohabitation can affect the recipient spouse’s need for spousal support
and is therefore a factor to consider in determining whether there has been a
substantial change in circumstances warranting modification.” In re Marriage of
Ales, 592 N.W.2d 698, 703 (Iowa Ct. App. 1999). Although Julianne mentioned
she was involved with someone, she testified her romantic partner “does not take
care of me financially.” Gary did not refute this assertion.
We turn to the claimed changes in employment, earning capacity, and
income. As predicted by the supreme court, Gary divested his interest in the
corporation, receiving $2.88 million in proceeds. And, as predicted, Gary invested
his share of the proceeds in other businesses. Although he maintains the
businesses “hemorrhag[ed] money,” the outflow did not deplete his personal
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assets. Those assets, disclosed in a personal financial statement filed on the day
of the modification hearing, left Gary a multimillionaire. As the district court noted,
they allowed him to buy land and build a luxury home months before the
modification hearing. And they cushioned Gary from the effects of his diminished
earning capacity.
In contrast, Julianne’s income remained negligible. Although she attempted
to start a home-decoration business, she made little money at this new venture.
Her minimal earnings were in part due to the substantial hours she devoted to
caring for ill family members.
On our de novo review, we agree with the district court that Gary failed to
carry his burden of proving a substantial change not in the contemplation of the
supreme court. See In re Marriage of Michael, 839 N.W.2d 630, 636 (Iowa 2013)
(stating the party seeking a modification bears the burden of establishing the
substantial change in circumstances); In re Marriage of Maher, 596 N.W.2d 561,
564–65 (Iowa 1999) (“A party seeking modification of a dissolution decree must
establish by a preponderance of the evidence that there has been a substantial
change in the circumstances of the parties since the entry of the decree or of any
subsequent intervening proceeding that considered the situation of the parties
upon application for the same relief.”). The changes in Gary’s employment and
income were within the contemplation of the court and the remaining changes he
cited were “reasonable and ordinary changes that may be likely to occur.” Cf. In
re Marriage of Wessels, 542 N.W.2d 486, 490 (Iowa 1995) (“The initial decree is
entered with a view to reasonable and ordinary changes that may be likely to
occur.”); In re Marriage of Skiles, 419 N.W.2d 586, 589 (Iowa Ct. App. 1987)
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(observing medical problems associated with the aging process are in
contemplation and knowledge of the district court). We affirm the denial of Gary’s
modification petition.
All that remains is the issue of attorney fees. Gary asks us to reverse the
district court order requiring him to pay $3000 of Julianne’s trial attorney fees. “The
controlling factor in awards of attorney fees is the ability to pay the fees.” In re
Marriage of Romanelli, 570 N.W.2d 761, 765 (Iowa 1997). Because Julianne’s
assets pale in comparison to Gary’s, we discern no abuse of discretion in the
court’s award.
Julianne seeks an award of appellate attorney fees. “[W]e look to the needs
of the party making the request, the ability of the other party to pay, and whether
the party making the request was obligated to defend the trial court’s decision on
appeal.” Id. Considering these factors, we order Gary to pay Julianne $1500
towards her appellate attorney-fee obligation. Costs on appeal are assessed to
Gary.
AFFIRMED.