In re The Marriage of Bainbridge ( 2023 )

IN THE COURT OF APPEALS OF IOWA
No. 22-1299
Filed April 12, 2023
IN RE THE MARRIAGE OF AMANDA JANE BAINBRIDGE
AND TROY DOUGLAS BAINBRIDGE
Upon the Petition of
AMANDA JANE BAINBRIDGE,
Petitioner-Appellee,
And Concerning
TROY DOUGLAS BAINBRIDGE,
Respondent-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Plymouth County, Tod Deck, Judge.
Troy Bainbridge appeals from the decree dissolving his marriage to Amanda
Bainbridge. AFFIRMED.
William H. Larson of Klass Law Firm, L.L.P., Sioux City, for appellant.
Michele Lewon of Michele Lewon, P.L.C., Sioux City, for appellee.
Considered by Bower, C.J., and Badding and Buller, JJ.
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BULLER, Judge.
This appeal arises from a 2021 dissolution of marriage between Amanda
Bainbridge and Troy Bainbridge, centering on three disputes from the district
court’s decree. Troy argues that the district court erred in its valuation of his
business, Bainbridge Capital, LLC (Bainbridge); the determination of his yearly
income; and the award of spousal support to Amanda. Amanda requests appellate
attorney fees. We find that equity was done, we affirm the dissolution decree, and
we deny Amanda’s request for appellate attorney fees.
I. Background Facts and Proceedings
Amanda and Troy married in November 2000 and had four children
together. At the time of trial, the older two children were young adults and mostly
lived independently. The two younger children—both born in 2009—lived mostly
with Amanda.
Amanda is a nurse anesthetist. She started working as a nurse in 2002 and
earned her doctorate in 2021. Before the dissolution, she worked part time,
earning about $171,000 per year, with the potential to earn $220,000 if she
switched to full time. Troy is a high school graduate and spent his entire career in
construction. He runs Bainbridge.
Bainbridge is a construction company that does mostly governmental
contract work. Troy began Bainbridge in 2000—after the parties’ marriage. At the
time of trial, Troy owned 70% of Bainbridge and Amanda owned 30%. The
business grew significantly during the marriage and, over the two years preceding
the divorce, Amanda and Troy began drawing large amounts from the company.
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By trial, the long-term debt of the business grew to more than $2 million and the
pair incurred significant personal debt.
Amanda filed the petition for dissolution of marriage in December 2020. The
parties stipulated before trial to legal custody of the minor children, placing physical
care with Amanda and visitation with Troy. The remaining issues included
Bainbridge’s valuation, Troy’s annual income, and whether Troy should pay
spousal support to Amanda.
Trial was in December 2021, and the district court issued its dissolution
decree in April 2022. The court valued Bainbridge at $800,000 and awarded the
company to Troy. In addition, the court assigned Amanda an annual income of
$220,000 based on full-time employment and Troy an annual income of $300,000
based on his salary and recent history of draws from Bainbridge. Based on the
marital lifestyle and Troy’s significantly higher income, the court ordered Troy to
pay Amanda $1000 per month for the next ten years, until one of the parties dies
or until Amanda remarries. Troy appeals.
II. Standard of Review
A dissolution-of-marriage proceeding is heard in equity, and we generally
review the resulting dissolution de novo. In re Marriage of Gust, 858 N.W.2d 402,
406 (Iowa 2015). “We give weight to the factual determinations made by the district
court; however, their findings are not binding upon us.” Id. “We will disturb the
trial court’s order only when there has been a failure to do equity.” Id. (citation
and internal quotation marks omitted).
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III. Discussion
On appeal, Troy disagrees with the district court’s valuation of Bainbridge,
the determination of his yearly income, and the award of spousal support to
Amanda. Amanda requests appellate attorney fees. We affirm and deny
Amanda’s request for appellate attorney fees.
A. Valuation of Bainbridge Capital
Troy first challenges the district court’s valuation of Bainbridge at $800,000
and contests the valuation’s effect on the division of marital property. He argues
the court should have not relied on Amanda’s expert and did not consider all of the
relevant evidence when valuing the company.
In dissolution-of-marriage cases, courts divide martial property equitably,
considering the factors outlined in Iowa Code section 598.21 (2020). In re
Marriage of Hansen, 733 N.W.2d 683, 702 (Iowa 2007). What qualifies as an
equitable distribution depends on the circumstances of each case, as an equitable
division is not necessarily an equal division. Id.The property’s value is generally determined as of the date of trial. See In
re Marriage of Driscoll, 563 N.W.2d 640, 642 (Iowa Ct. App. 1997). Even so,
“[t]here may be occasions when the trial date is not appropriate to determine
values. Equitable distributions require flexibility and concrete rules of distribution
may frustrate the court’s goal of obtaining equitable results.” Id. In reviewing the
trial court’s determination, we will not disturb the valuation of an asset if “it is within
the range of permissible evidence.” In re Marriage of McDermott, 827 N.W.2d 671,
679 (Iowa 2013).
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When determining the value of a closely held business like Bainbridge,
courts look to the intrinsic value of the business, as the market value of the stock
can rarely be ascertained. In re Marriage of Moffatt, 279 N.W.2d 15, 19 (Iowa
1979). A wide range of evidence can show intrinsic value, such as the book value
of the stock or the earnings capacity of the company. Id.; In re Marriage of Dieger,
584 N.W.2d 567, 569 (Iowa Ct. App. 1998). A court need not arrive at an exact
value, only an overall equitable result. Dieger, 584 N.W.2d at 569. Because
valuation is difficult, the trial court is given significant flexibility, such as the ability
to devise its own scheme for valuation. In re Marriage of Hitchcock, 309 N.W.2d
432, 435 (Iowa 1981).
Amanda’s expert on Bainbridge’s value was a certified public accountant
and valuation analyst. He provided a written report opining that the value of
Bainbridge was $1,020,597 and testified to his findings at trial. Amanda’s expert
valued Bainbridge as of December 31, 2020, because that was the last date that
complete information was available. Troy did not rebut Amanda’s expert with his
own expert, but instead summed the values of company assets, subtracted the
liabilities, and arrived at a value of $480,187 for Bainbridge as of trial.
The district court found Amanda’s expert persuasive and reasoned it was
appropriate to value Bainbridge as of December 31, 2020, due to incomplete
information after that date. In contrast, the court found Troy’s valuation too volatile
and unreliable, as his valuations fluctuated wildly depending on when he valued
the company. Troy also failed to provide a compelling explanation for why
Bainbridge’s value would drop by more than half in the year between the expert’s
valuation and the time of trial. To some degree, the court split the difference and
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adjusted Amanda’s expert valuation down to $800,000 based on outstanding
receivables and Bainbridge’s uneven history of success. We agree with the district
court’s observations about the competing valuation evidence and find its ultimate
conclusion about valuation was fair. See In re Marriage of McKamey, 522 N.W.2d
95, 97 (Iowa Ct. App. 1994) (taking the past several years of business activity into
account when valuing a business). Because the $800,000 valuation is well within
the “range of permissible evidence,” McDermott, 827 N.W.2d at 679, we find no
failure to do equity in the $800,000 valuation assigned to Bainbridge and reject
Troy’s challenge.
B. Troy’s Yearly Income
Troy next contends the district court erred in finding he earned $300,000
per year, based on his $80,000 annual salary and expected annual draws of
$220,000 from Bainbridge. In considering a party’s income, a court must consider
all circumstances relating to that party’s income. In re Marriage of Powell, 474
N.W.2d 531, 534 (Iowa 1991). For instance, if a party’s income is subject to
substantial fluctuations, an average of that income over several years may be
appropriate. Id. As a whole, however, the parties’ income must be determined
from the most reliable evidence presented. Id.Troy makes two arguments surrounding this claim. First, while Troy
acknowledges his salary is $80,000, he argues his expected draws are only
$63,245 based on an exhibit he submitted showing draws for 2021. Yet Troy
admitted at trial that he made substantial draws not shown in the exhibit, and the
district court identified about $200,000 in draws Troy made in the first seven
months of 2021. Amanda also submitted an exhibit showing the parties made
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more than $1.2 million in draws from 2016 through 2020, an average of nearly
$250,000 annually. Considering the parties’ recent draws from Bainbridge,
Bainbridge’s potential future earnings, and Troy’s ownership of the company, we
agree with the district court that Troy can be expected to draw $220,000 annually
from Bainbridge.
Second, Troy argues the court should have subtracted the sum of the three-
year cash-equalization payment amount—$120,818—from his annual income.
Our precedent does not support this argument. See Hansen, 733 N.W.2d at 704(calculating a party’s income without subtracting a cash-equalization payment from
it). This argument also ignores Troy’s yearly fluctuations in income. Even if we
were inclined toward this claim, Troy’s math does not account for the drastic
increase in his income after the three-year period ends. Like the district court, we
decline to subtract the equalization payment from Troy’s income.
C. Spousal Support to Amanda
Troy also argues neither party should receive spousal support. An award
of spousal support is not an absolute right, and any award depends on the
particular circumstances of a case, dependent on the factors listed in Iowa Code
section 598.21A. In re Marriage of Olson, 705 N.W.2d 312, 315 (Iowa 2005). A
determining court must balance the ability of a spouse to pay support with the
needs of the requesting spouse, while also considering the standard of living the
parties enjoyed during the marriage. In re Marriage of Stark, 542 N.W.2d 260, 262
(Iowa Ct. App. 1995). We will not disturb an award of spousal support unless the
district court failed to do equity. In re Marriage of Pazhoor, 971 N.W.2d 530, 541
(Iowa 2022).
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The district court ordered Troy to pay Amanda spousal support in the
amount of $1000 per month for ten years. The court did not specify which type of
support it was awarding, and neither party claims error related to the type of
support or its duration once ordered. See id. at 543–45 (discussing the types of
spousal support, noting varying lengths for different types of support).
The parties were married for twenty-one years, a duration that favors
spousal support. See Iowa Code § 598.21A(1)(a); Pazhoor, 971 N.W.2d at 542
(finding a seventeen-year marriage “weighs in favor of a substantial [spousal
support] award”). Neither party identified significant health concerns for their age.
See Iowa Code § 598.21A(1)(b). The parties received a near-equal distribution of
marital property that the district court valued at more than $2.5 million, though the
court noted the value of Troy’s distribution is more open to interpretation and
fluctuation. See id. § 598.21A(1)(c). Neither party showed a need or desire for
additional education or training. See id. § 598.21A(1)(d).
Amanda is expected to earn an annual income of $220,000, and Troy is
expected to earn an annual income of $300,000. While Amanda’s income is
substantial, she only worked part time while caring for the children, and she
sacrificed at least some career success to benefit the marriage. See id.
§ 598.21A(1)(e). The parties lived a marital lifestyle commensurate with their high
income, amassing a significant marital estate with multiple homes and enjoying
regular vacations such as wine-tasting in California and skiing in Colorado. See
id. § 598.21A(1)(f). Finally, we note the recent changes in tax law that make
spousal support more burdensome for the payor and more favorable for the payee.
See id. § 598.21A(1)(g); In re Marriage of Mann, 943 N.W.2d 15, 21 (Iowa 2020).
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Considering all relevant factors, we agree Amanda should receive a spousal
support award. In particular, Amanda’s income alone will not allow her to maintain
a lifestyle reasonably comparable to the standard during marriage. Troy earns a
greater income and has the means to pay support. We find no lack of equity in
ordering Troy to pay support to Amanda in the amount of $1000 per month for ten
years.
D. Appellate Attorney Fees
Finally, Amanda requests appellate attorney fees. An award of appellate
attorney fees is within the appellate court’s discretion. McDermott, 827 N.W.2d at
687. In making this determination, we consider the needs of the requesting party
for an award of fees, the ability of the other party to pay attorney fees, and whether
the requesting party was obligated to defend the trial court’s decision on appeal.
In re Marriage of Moore, 526 N.W.2d 335, 338 (Iowa 1994).
Amanda argues she should receive appellate attorney fees because Troy
has significantly greater income and she was obligated to defend the district court’s
decision, which we affirm in its entirety. Even so, Amanda has sufficient means to
pay her attorney fees, especially after receiving a sizable award of marital property.
We decline to order Troy to pay Amanda’s appellate attorney fees.
IV. Disposition
We affirm the district court’s valuation of Bainbridge, determination of Troy’s
monthly income, and spousal support award. We also decline to order any
appellate attorney fees. Costs are assessed to Troy.
AFFIRMED.
Bower, C.J., concurs; Badding, J., concurs specially.
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BADDING, Judge (concurring specially).
I concur in the result reached, though with some hesitation as it relates to
the spousal support awarded to Amanda. This case typifies the difficulty with the
multifactored statutory approach used in our state to determine spousal support.
See In re Marriage of Gust, 858 N.W.2d 402, 408, 410 (Iowa 2015) (noting the “law
of spousal support under the multifactored statutory approach has been criticized
for its arbitrary nature and lack of predictability,” but stating “we are compelled to
follow the traditional multifactor statutory framework”). While the multifactored
approach allows for flexibility, that flexibility can lead to indiscriminate results,
making it difficult for practitioners to advise their clients and judges to decide their
cases. See id. at 408 (noting the “multifactored legal test in which all factors are
relevant and none are dispositive can be extraordinarily difficult to consistently
apply”).
Here, for instance, there are just as many factors against making a spousal
support award to Amanda as there are in favor of such an award, chief among
them Amanda’s ability to support herself at a standard of living reasonably
comparable to that enjoyed during the marriage. See Iowa Code § 598.21A(1)(f)
(2020); In re Marriage of Pazhoor, 971 N.W.2d 530, 543 (Iowa 2022) (“The award
and duration of a traditional alimony award ‘is primarily predicated on need and
ability.’” (quoting Gust, 858 N.W.2d at 411). In past cases, this court has observed
“[t]he fact one party may generate more income than the other is not the controlling
factor in the alimony award where both parties have the education and potential to
supply for themselves a very adequate living.” In re Marriage of Snyder, No. 21-
0438, 2022 WL 610322, at *6 (Iowa Ct. App. Mar. 2, 2022) (affirming rehabilitative
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spousal support award of $2000 per month for thirty months in a sixteen-year
marriage and denying recipient spouse’s request for an award of traditional
support); accord In re Marriage of Borden, No. 09-1148, 2010 WL 1050012, at *4
(Iowa Ct. App. Mar. 24, 2010) (modifying an award of $575 per month in traditional
spousal support, payable until either party’s death or the recipient’s remarriage, to
an award of $300 per month for forty-eight months where the recipient spouse left
a twenty-three-year marriage “with an education and skills enabling her to support
herself and accumulate additional funds to support her in retirement”); In re
Marriage of Grunder, No. 03-1871, 2004 WL 1843316, at *3 (Iowa Ct. App. July
28, 2004) (affirming denial of spousal support in a fourteen-year marriage where
the recipient spouse had an agricultural business degree, worked full-time during
the marriage, and was capable of self-support).
It is also unclear what type—or types—of spousal support was or were
awarded here. See In re Marriage of Sokol, 985 N.W.2d 177, 186 (Iowa 2023)
(noting while courts “may issue hybrid awards,” that “does not mean . . . that courts
are free to award spousal support not corresponding to any recognized category
of support”). The district court discussed the law on traditional, rehabilitative, and
reimbursement spousal support but did not specify which applied to the award that
was made. In defending that award on appeal, Amanda characterizes it as
transitional—even though that was not a category discussed by the court, and it
had only been formally adopted by the supreme court about a month before the
district court issued its decree. See Pazhoor, 971 N.W.2d at 534. And since her
brief was filed in this appeal, our supreme court has clarified that because
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“transitional spousal support is focused on solving a short-term liquidity issue,” it
“generally should not exceed one year in duration.” Sokol, 985 N.W.2d at 187.
Despite these issues, our case law has consistently emphasized the
deference that is to be afforded to the district court in making spousal support
awards. See id. at 182 (“Although our review is de novo, we afford deference to
the district court for institutional and pragmatic reasons.” (citation omitted)). As the
supreme court explained in Sokol:
The institutional deference afforded the district court in determining
spousal support counsels against undue tinkering with spousal
support awards. An appellate court should disturb the district court’s
determination of spousal support only when there has been a failure
to do equity. Otherwise, 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.
Id. at 182–83 (cleaned up).
In order to avoid this undue tinkering, and in consideration of the deference
to be afforded to the district court, I join in the majority’s well-written opinion
affirming the award of spousal support to Amanda—even though I would have
reached a different result under the same factors considered by the district court
and this court. See id. at 188 (Mansfield, J., concurring in part and dissenting in
part) (“Unless and until our state adopts formal alimony guidelines, appellate courts
should not be second-guessing lower courts’ judgment calls.”).