In re the Marriage of Darrah ( 2020 )

IN THE COURT OF APPEALS OF IOWA
No. 19-0285
Filed July 22, 2020
IN RE THE MARRIAGE OF ROBERT SCOTT DARRAH
AND JAN RENEE DARRAH
Upon the Petition of
ROBERT SCOTT DARRAH,
Petitioner-Appellant,
And Concerning
JAN RENEE DARRAH,
Respondent-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Pottawattamie County, Kathleen A.
Kilnoski, Judge.
Robert Darrah appeals and Jan Darrah cross-appeals from the decree
dissolving their marriage. AFFIRMED AS MODIFIED.
Andrew B. Howie of Shindler, Anderson, Goplerud & Weese, P.C., West
Des Moines, for appellant.
J. Joseph Narmi, Council Bluffs, for appellee.
Heard by Tabor, P.J., and May and Greer, JJ.
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MAY, Judge.
Robert (Scott)1 Darrah appeals and Jan Darrah cross-appeals from the
decree dissolving their marriage. We affirm with one narrow modification.
I. Facts and Prior Proceedings
Scott and Jan met while attending Creighton University. Both graduated
with business degrees. They married in 1990. They had three children, R.D. in
2001, and twins M.D. and A.D. in 2004.
In the first few years of the marriage, the couple moved between Nebraska
and Iowa as Scott pursued his career. In 2005, the two settled in Council Bluffs
and bought a home, though only Scott is listed on the mortgage.
Scott developed his franchise business with Ameriprise, providing services
such as financial planning, estate planning, investment assistance, and retirement
planning. Some years Jan out-earned Scott.2 But she left the workforce in 2005—
shortly after giving birth to the twins in 2004. In 2012, Jan began working as a
para-educator once the twins began first grade.
By 2007, Scott earned more than $100,000 per year. And by 2013, Scott
earned more than $200,000 per year. And his business took off from there.3
1 Robert goes by his middle name, Scott.
2 Jan managed an eye care clinic for a period and then worked as an account
manager for AT&T. While at AT&T, she earned her highest annual pay, $63,273,
in 2004.
3 Scott’s income was difficult for the district court to ascertain from the
documentation Scott provided. For purposes of setting child support, the court
imputed Scott with an annual income of $325,000.
3
But Scott and Jan had disagreements about their finances. Scott thought
Jan overspent. He put Jan on an $1100 a month allowance. Jan felt the allowance
was just a means for Scott to exert control over her.
In 2016, Scott filed for dissolution of marriage. As part of the temporary
matters, the district court required the couple to open a joint bank account in which
Scott would deposit $10,000 and then replenish when the balance reached $5000.
These funds served as temporary spousal support and temporary child support for
Jan.
Scott continued to pay the mortgage on the marital home. A September
2017 temporary order provided the couple would alternate weekly stays at the
marital home while the children lived in the home. The temporary order also
provided that Scott would pay for Jan’s hotel accommodations during weeks she
was to vacate the home.
The matter came for trial over three days in October 2019. Scott alleged
Jan’s spending of $174,000 in the joint account intended as temporary spousal
and child support amounted to dissipation of assets. So he requested those funds
to be considered an asset for purposes of the property division. The court declined
to do so, citing to Jan’s testimony about how the funds were spent for legitimate
purposes. The court’s decree divided numerous accounts and other assets
between the parties, including awarding Jan the marital home and a bank account
with a balance of $81,612 (the Nexus account). The court also ordered Scott pay
Jan a property settlement award of $521,211 in $4343 monthly installments over
4
the course of ten years. And the court awarded Jan traditional spousal support in
the amount of $4000 per month until either party dies or Jan remarries.4
Both parties filed motions to enlarge or modify the decree. The court
amended the decree, increasing the equalization payment to $546,211.05 to be
paid in monthly installments of $4552 over ten years. The court also ordered that,
once Scott paid Jan the value of the Nexus account ($81,612), Jan would have
120 days to refinance the martial home to remove Scott from the mortgage. 5 The
decree provided interest on the $81,612 would accrue at a rate of 4.86% until
payment is satisfied.
Scott now appeals, and Jan cross appeals.
II. Scope and Standard of Review
Dissolution proceedings are reviewed de novo. In re Marriage of
McDermott, 827 N.W.2d 671, 676 (Iowa 2013). However, we afford deference to
the district court’s factual findings, “particularly when considering the credibility of
witnesses, but we are not bound by them.” In re Marriage of Fox, 559 N.W.2d 26,
28 (Iowa 1997). We will only “disturb the district court’s ‘ruling only where there
has been a failure to do equity.’” McDermott, 827 N.W.2d at 676 (citation omitted);
see also In re P.C., No. 16-0893, 2016 WL 4379580, at *2 (Iowa Ct. App. Aug. 17,
2016) (identifying “reasons to exercise ‘de novo review with deference,’ including:
notions of judicial comity and respect; recognition of the appellate court’s limited
4 The district court also ordered Scott pay Jan child support: $3085 monthly for
three children; $2717 monthly for two children; and $1925 monthly should only one
child be eligible for support. The child support award is not at issue in this appeal.
5 The court amended the decree to award Jan the value of the Nexus account
rather than the account itself.
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function of maintaining the uniformity of legal doctrine; recognition of the district
court’s more intimate knowledge of and familiarity with the parties, the lawyers,
and the facts of a case; and recognition there are often undercurrents in a case—
not of record and available for appellate review—the district court does and should
take into account when making a decision”).
III. Discussion
A. Property Division
1. Asset Dissipation
We first address the distribution of property. Scott renews his claim that
Jan dissipated $174,000 by spending money in the joint account intended to serve
as temporary spousal and child support. He claims the funds were spent on
tangible assets that Jan continues to possess. So, he contends the dissipated
amount should be included as an asset for purposes of the property distribution.
A party dissipates assets when their6 conduct “results in the loss or disposal
of property otherwise subject to division at the time of divorce.” In re Marriage of
Kimbro, 826 N.W.2d 696, 700–01 (Iowa 2013) (citation omitted). “However, the
doctrine does not apply if the spending spouse used the monies for ‘legitimate
household and business expenses.’” Id. at 701 (citation omitted).
We review dissipation claims using a two-pronged test. Id. The first prong
“require[s] sufficient evidence of the spouse’s expenditures.” Id. at 702. This
includes itemizations of the expenditures and a nexus between the expenditures
and use of the marital asset at issue. See id. at 701. Once “a spouse claims the
6 This opinion will use “they” and “their” as gender-neutral pronouns.
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other party dissipated assets and can identify the assets allegedly dissipated, the
burden shifts to the spending spouse to ‘show how the funds were spent or the
property disposed of by testifying or producing receipts or similar evidence.’” Id.
(citation omitted).
If the first prong is met, then we move to the second prong, which
determines “whether that purpose amounts to dissipation under the
circumstances.” Id. (citation omitted). In determining whether expenditures
amount to dissipation, we consider four factors:
(1) the proximity of the expenditure to the parties’ separation, (2)
whether the expenditure was typical of expenditures made by the
parties prior to the breakdown of the marriage, (3) whether the
expenditure benefited the “joint” marital enterprise or was for the
benefit of one spouse to the exclusion of the other, and (4) the need
for, and the amount of, the expenditure.
Id. (citation omitted).
Here, we have itemizations of the expenses coming from the joint account.
This satisfies the first prong of our test. But Scott’s claim falls apart on the second
prong. While these expenditures occurred during the pendency of these
proceedings, they do not amount to dissipation.
This case presents a unique scenario that does not fit neatly into our test at
first glance. The funds in the account were there to serve as temporary spousal
and child support. And the expenditures reflect those one might expect from a
parent raising three teenage children.7 The charges show Jan bought groceries,
7 We note several of the larger charges were associated with Jan’s hotel stays
while Scott exercised his parenting time in the home in accordance with their
temporary week-on/week-off physical care schedule, and the court ordered Scott
to pay for those hotel stays.
7
made her car and auto-insurance payments, paid dental bills for the family, paid
medical bills, paid fees to schools and dance studios for the children, paid
veterinarian bills, bought some material items at places like Wal-Mart and Von
Maur, and dined out. Critically, these expenditures appear to be in line with
expenditures made by Jan prior to the breakdown of the marriage. In fact, at trial
Scott complained that Jan had a long history of shopping, and their differing
approaches to finances appears to be a catalyst to the breakdown of the marriage.
And use of these funds benefitted both parties in a sense. Jan was able to
maintain her standard of living and pay expenses relating to the children, and Scott
was not required to make separate temporary spousal and child support payments.
Moreover, Scott does not parse out what expenses account for the “clothing,
appliances, etc.,” he believes “still existed at the time of trial” and amount to
dissipation. Nor has he shown what spending was excessive as temporary
spousal and child support. So we find Jan did not dissipate assets.
2. Household Contents
Next, Scott claims the district court undervalued household goods Jan
received. The court valued the items at $18,000 as Jan testified, but Scott claims
they are worth $50,000. Yet in the dissolution decree, the court expressly found
Jan’s testimony regarding the household items to be more credible, particularly
when combined with photos Scott provided. But Scott claims the court should not
have credited Jan’s testimony because the following exchange at trial between Jan
and her attorney shows she does not know how to value property:
Q. Then we got the household contents and appliances. We got
appliances, furniture, and items in storage. Do you see that? A. Yep.
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Q. And what did you value those things at? A. I don’t understand
value.
(Emphasis added.) But reviewing the questioning in context shows Jan did not
mean she did not understand how to determine the value of the items. Rather, a
more reasonable interpretation of her response is that she did not understand what
her counsel was referencing at the time of the question. Counsel followed up by
clarifying, “What’s the value on the financial affidavit?” Jan then answered and
discussed the condition and age of items in the home. So we do not take issue
with the district court crediting Jan’s testimony. And we defer to the district court’s
determination that Jan’s testimony on the value of the household items was more
credible. See Fox, 559 N.W.2d at 28 (noting we often defer to the district court’s
factual findings when assessing witness credibility). So we do not disturb its
valuation of the household contents.
3. Children’s Life Insurance Policies
Scott claims the district court should have awarded him sole ownership of
the children’s life insurance policies rather than awarding them jointly to both Jan
and himself. He claims he has superior knowledge of how to manage the policies
and can teach the children how to manage the policies better. But Scott can still
educate the children on policy management while sharing policy ownership with
Jan. And he can use his expertise to manage the accounts as well. While Jan will
have to sign off on any changes, we have no reason to believe she would not agree
to something that serves everyone’s best interests.
The district court’s decision to jointly award the children’s life insurance
policies to both Scott and Jan was not inequitable. We will not disturb it.
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4. Payment for Nexus Account
On cross-appeal, Jan argues there should be a reasonable deadline for
Scott to satisfy the $81,612 award for the value of the Nexus account. She notes
this payoff is a triggering event in the decree: it requires her to refinance the marital
home within 120 days of payment. At oral argument, Scott’s counsel agreed there
should be a definitive deadline for payment of the $81,612. We agree. So we
modify this provision of the decree to order Scott to pay Jan the $81,612 within
ninety days of the issuance of procedendo.
B. Spousal Support
Both parties appeal the spousal support award. Scott agrees he should pay
spousal support but argues he should pay $3000 per month for three years and
then $2000 per month until Jan reaches age sixty-seven, either party dies, or Jan
remarries. Jan argues the district court’s award—$4000 per month until either
parties’ death or her remarriage—is insufficient. She requests $10,000 per month,
presumably until either parties’ death or her remarriage.
“The question of whether to award alimony is a matter of discretion and not
a matter of right. The district court has ‘considerable latitude’ in fashioning or
denying an award of spousal support.” In re Marriage of Mann, 943 N.W.2d 15,
20 (Iowa 2020) (citations omitted). Iowa Code section 598.21A(1) (2016) sets out
factors for the court to consider when fashioning an award. They include:
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.
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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 sufficient education or
training to enable the party to find appropriate employment.
f. The feasibility of the party seeking maintenance becoming
self-supporting at a standard of living reasonably comparable to that
enjoyed during the marriage, and the length of time necessary to
achieve this goal.
g. The tax consequences to each party.
h. Any mutual agreement made by the parties concerning
financial or service contributions by one party with the expectation of
future reciprocation or compensation by the other party.
i. The provisions of an antenuptial agreement.
j. Other factors the court may determine to be relevant in an
individual case.
Iowa Code § 589.21A(1).
Like the district court, we find an award of traditional spousal support to be
appropriate in this instance. Traditional support is appropriate for long-term
marriages where the earning potential of the parties is predictable. In re Marriage
of Gust, 858 N.W.2d 402, 410 (Iowa 2015). It is justified in instances when one
party manages the home at the expense of their own professional development or
future prospects. See id.
The district court aptly stated, “Neither party could have the family life they
shared without the contributions of the other.” Scott was able to foster his
professional life early on while Jan worked and out-earned him, and then he was
able to excel professionally as Jan focused on their three accomplished children
at the expense of her own professional development. And thanks to Scott’s
professional success, Jan has had the comforts of a beautiful lifestyle and flexibility
to attend to her family.
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We recognize Jan would not be able to continue to live in a reasonably
comparable manner absent some type of spousal support. See id. at 411. Aside
from her part-time job as a para-educator,8 she has been absent from the
professional workforce for about a decade and a half. She is now in her early
fifties. She hopes to secure a full-time para-educator position or be able to
substitute teach soon through a certification program. While both jobs would bring
in measurable income, neither would come close to providing Jan with the income
necessary to maintain her lifestyle.
Scott has an optimistic view of Jan’s job prospects, suggesting she could
attend school to obtain an education degree and make $57,870 per year. So he
argues Jan’s need for support is not so great given her future earning potential and
the significant property award. But we note the district court considered the
property award when fashioning the spousal support award. And while we hope
Jan is successful in whatever position she pursues, it appears the district court did
not think Scott’s career plan for Jan is particularly realistic. Nor do we.
At the same time, we reject Jan’s claim that she should receive $10,000 per
month in spousal support. She does earn income from her current job. Plus she
receives child support to help with costs associated with the children. And she is
already receiving a significant property settlement, including an equalization
payment of over half a million dollars paid over ten years, a chunk of Scott’s
deferred compensation, and a payment of $81,612 for the value of the Nexus
8 When Jan started in 2012, she worked two days a week earning $10 or $10.75
an hour. She now works four days a week at $12.75 an hour. She testified she
does not yet work as a full-time para-educator because there were no available
full-time positions.
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account within ninety days of the issuance of procedendo. Those resources—in
addition to the $4000 monthly spousal support award—should provide Jan with a
comparable lifestyle. We also note that due to recent changes to tax laws, spousal
support payments are no longer tax deductible for the paying spouse and no longer
taxable income for the recipient. See Mann, 943 N.W.2d at 21. This will result in
an additional burden on Scott. And it will provide Jan with more cash overall.
While the spousal support award leaves both parties wanting, it was within
the range of equity. We refuse to tinker.
C. Appellate Attorney Fees
Both parties request appellate attorney fees. Appellate attorney fees are
awarded upon our discretion and are not a matter of right. See In re Marriage of
Okland, 699 N.W.2d 260, 270 (Iowa 2005). When considering whether to exercise
our discretion, “we consider ‘the needs of the party seeking the award, the ability
of the other party to pay, and the relative merits of the appeal.’” McDermott, 827
N.W.2d at 687 (quoting Okland, 699 N.W.2d at 270).
After review, we award Jan appellate attorney fees in an amount of $4000.
Costs of this appeal are split equally between Scott and Jan.
IV. Conclusion
We modify the dissolution decree to order Scott pay the $81,612 for the
value of the Nexus account within ninety days of the issuance of procedendo. We
affirm the property award in all other respects. We affirm the spousal support
award. And we award Jan $4000 in appellate attorney fees. The parties shall split
cost of this appeal equally.
AFFIRMED AS MODIFIED.