In re the Marriage of Redenius ( 2022 )

IN THE COURT OF APPEALS OF IOWA
No. 21-0593
Filed March 30, 2022
IN RE THE MARRIAGE OF KARA LYNN REDENIUS
AND RYAN ALLEN REDENIUS
Upon the Petition of
KARA LYNN REDENIUS,
Petitioner-Appellee,
And Concerning
RYAN ALLEN REDENIUS,
Respondent-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Wright County, Gregg R.
Rosenbladt, Judge.
Ryan Redenius appeals the support provisions of a temporary order entered
during the proceedings to dissolve his marriage to Kara Redenius. AFFIRMED.
Dani L. Eisentrager, Eagle Grove, for appellant.
Scott L. Bandstra, Des Moines, for appellee.
Considered by Bower, C.J., and Vaitheswaran and Chicchelly, JJ.
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CHICCHELLY, Judge.
Ryan Redenius appeals the support provisions of a temporary order entered
during the proceedings to dissolve his marriage to Kara Redenius.1 The district
court granted the parties joint legal custody of their three children and placed them
in Kara’s physical care. Finding that Ryan earns about $90,000.00 per year, the
court ordered Ryan to pay $1000.00 per month in temporary child support and
$500.00 per month in temporary spousal support. It also ordered Ryan to pay
$1000.00 toward Kara’s temporary attorney fees.
Ryan challenges the amount of his temporary child support obligation, the
award of temporary spousal support, and the award of temporary trial attorney
fees. Generally, we review dissolution proceedings de novo. See Iowa R. App.
P. 6.907; In re Marriage of Mauer, 874 N.W.2d 103, 106 (Iowa 2016). This means
that we give weight to the district court’s fact findings, even though they are not
binding. See Mauer, 874 N.W.2d at 106. We will disturb those findings only if they
fail to do equity. See id.
Resolution of the three issues on appeal first requires determination of the
parties’ earnings. See, e.g., In re Marriage of Wade, 780 N.W.2d 563, 566 (Iowa
Ct. App. 2010) (stating application of the child support guidelines requires
determining the parties’ net monthly income); In re Marriage of Schenkelberg, 824
N.W.2d 481, 486–87 (Iowa 2012) (stating an award of spousal support depends
1 Iowa Code section 598.10 (2021) allows the court to enter temporary orders for
“the separate support and maintenance of the other party and the children and to
enable such party to prosecute or defend the action.” Unlike temporary custody
orders, temporary orders for financial assistance are final judgments appealable
as a matter of right. See In re Marriage of Denly, 590 N.W.2d 48, 50-51 (Iowa
1999).
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on the circumstances of each case and factors the comparative earning capacities
of the parties); In re Marriage of Sullins, 715 N.W.2d 242, 255 (Iowa 2006)
(considering “the needs of the party seeking the award, the ability of the other party
to pay, and the relative merits of the appeal” in reviewing an award of trial attorney
fees).
The parties agree that Kara earned $46,464.28 as a registered nurse in
2020, as shown in her W-2 Wage and Tax Statement. The main point of contention
is Ryan’s earnings, and the record before us on appeal is scant. Because of the
COVID-19 pandemic, the order scheduling the hearing on temporary matters
prohibited personal appearances. Instead of testimony, the court allowed each
party to submit (1) an affidavit of no more than 5500 words, (2) up to three witness
affidavits of no more than 750 words each, and (3) a rebuttal affidavit of no more
than 1500 words. The court also allowed each party to submit “no more than five
exhibits that number no more than 25 pages in total.” Most of the record evidence
relates to the child-custody determination, which is not at issue on appeal.
Ryan is self-employed. In her affidavit, Kara states that Ryan is the owner
of Ida Corporation and co-owns USA Chemical with his brother. Based on
$7500.00 monthly checks made out to Ida Corporation from USA Chemical in
2020, she alleges Ryan’s income is $90,000.00 per year. 2 Ryan disputes this in
his rebuttal affidavit, stating that he “own[s] 10% of Ida Corporation and 5% of USA
Chemical” and his 2019 tax return reflects his income, which would be “the same
2 The only other evidence Kara submitted addressing the parties’ finances is a
statement in her rebuttal affidavit that her attorney subpoenaed USA Chemical’s
bank records, which show “a monthly balance of between six and ten million
dollars.”
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or similar” for 2020. Ryan submitted the parties’ 2019 Iowa tax return, showing
Ryan earned $7100.00 in business income and $21,905.00 in supplemental
income for total earnings of $29,005.00. But the federal schedules from which
those figures are derived are not in the record made to the district court and
provided to us on appeal.3
The district court found it “evident that the respondent does have stable
employment and makes about $90,000 per year.” Ryan argues that the court erred
by relying on the $7500.00 checks made to Ida Corporation in determining his
income because no information was provided to show what the checks were for or
that they directly benefited him when he owns only a ten percent share of the
corporation. Ryan claims he earns only $29,005.00, as shown on his state tax
return. However, we are “not limited to income that is reportable to the federal
government as income.” Wade, 780 N.W.2d at 566. And the tax return is
incomplete without the federal schedules showing the source and amount of
Ryan’s gross profits or the deductions he took.
In determining self-employed income, we consider the reasonable
expenses of maintaining the business. See Iowa R. Ct. 9.5(1)(c) (“Gross income
from self-employment is self-employment gross income less reasonable business
3 The instructions for completing the Iowa return require taxpayers to report the net
business income from federal Schedule C (profit or loss from a sole proprietorship)
on line 5 of step 5, “Business income/(loss).” They require taxpayers to report
income or loss from federal Schedule E (supplemental income and loss from rental
real estate, royalties, partnerships, S corporations, estates, trusts, real estate
mortgage investment conduits, etc.) on line 10 or step 5, “Rents, royalties,
partnerships, estates, etc.” The instructions direct taxpayers to include a copy of
those federal schedules—which allow deductions for various expenses, including
depreciation—when filing their returns.
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expenses.”); In re Marriage of Gaer, 476 N.W.2d 324, 329 (Iowa 1991). But we
also recognize the ability of a self-employed party to manipulate earnings reported
on a tax return. See, e.g., Gaer, 476 N.W.2d at 328 (recognizing that depreciation
“is a mere book figure which does not either reduce the actual dollar income of the
defendant or involve an actual cash expenditure when taken” but rather
“represents additional cash available to the defendant by permitting substantial tax
deductions and, ultimately, tax savings” (citation omitted)); In re Marriage of
Wiedemann, 402 N.W.2d 744, 748 (Iowa 1987) (“It is not uncommon for an owner
to cover many normal personal living expenses through the corporation or to over-
depreciate or undervalue inventory, all of which would decrease profits while
increasing the owner’s standard of living or the actual value of the company’s
assets.”); In re Marriage of Tollefsrud, No. 12-1984, 2013 WL 4009659, at *1, *4
(Iowa Ct. App. Aug. 7, 2013) (affirming the district court’s calculation of appellant’s
net income in the amount of $68,496.86 instead of $34,908.66 figure used by
appellant who “took full advantage” of federal tax deductions to reduce income); In
re Marriage of Starcevic, 522 N.W.2d 855, 856-57 (Iowa Ct. App. 1994) (“[W]e find
it unacceptable as a matter of public policy to allow a person . . . to generate paper
losses which are then deducted from his primary income in order to avoid paying
child support as determined by the child support guidelines.”); In re Marriage of
McKamey, 522 N.W.2d 95, 99 (Iowa Ct. App. 1994) (concluding that district court
properly increased self-employed husband’s income by amounts taken from
business for personal use but claimed as business expenses on husband’s tax
returns).
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Without complete tax records, we cannot determine which expenses are a
reasonable cost of business and which are inflated. Because Ryan is in the best
position to explain his income, he bears the burden of showing what income should
be considered and what should be excluded. Cf. Markey v. Carney, 705 N.W.2d
13, 20 (Iowa 2005) (“The recipient of extra income is in the best position to present
the underlying circumstances to the court, which makes it fair to place the burden
on the recipient to show the extra income should be excluded or considered in
some other manner.”). We are unwilling to accept blindly that Ryan earned only
the $29,005.00 reported on the tax return given the evidence of corporate
ownership, especially considering checks showing monthly payments from one
corporation Ryan owns an interest in to another. Cf. Schenkelberg, 824 N.W.2d
at 485-86 (determining, based in part on analysis of individual and corporate tax
returns, that a husband’s average income for four-year period was over
$400,000.00 due to distributions from S-chapter corporation rather than the
$208,000.00 the husband received in wages alone).
We are especially reluctant to rely on the incomplete tax return given Ryan’s
own statements suggesting he earns far more than what he reported. In his
affidavit, Ryan complains that Kara withdrew $43,891.00 from a joint savings
account in September 2020, claiming he contributed “most of” the $50,000.00 the
account held at the start of 2020. And in his rebuttal affidavit, Ryan states: “I paid
for all ‘big ticket items’ including all vehicles and monthly insurance premiums for
home and auto as well as multiple daily life expenses. Buying the children things,
bikes, clothes, toys and many, many things they needed, too numerous to
mention.” It is difficult to conceive how Ryan, with little to no contribution from
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Kara, could save almost $50,000.00 while also buying the family’s “big ticket
items,” paying all of its insurance premiums, and covering daily living expenses—
all while earning a gross annual income of $29,005.00. In view of the conflicting
and incomplete evidence submitted by the parties, we find Ryan’s statements
show a much greater cash flow than reflected on the tax return. See In re Marriage
of Ruth, No. 05-0440, 2006 WL 468773, at *3 (Iowa Ct. App. Mar. 1, 2006)
(affirming district court’s decision to disallow straight-line depreciation of farm
equipment where tax return showed a net income of $11,257.00 based on gross
farm income of $255,995.00 and expenses of $244,738.00 because the appellant
had “a cash flow which significantly exceeds his taxable farm income”). On this
basis, we affirm the finding that Ryan earns about $90,000.00 per year.
In view of our findings on Ryan’s income, we affirm the district court’s child-
support determination. See Wade, 780 N.W.2d at 566 (stating that the court must
first determine the parties’ net monthly income to apply the child support
guidelines). Kara’s amended child support guidelines worksheet—which shows
Ryan’s earnings as $90,000.00 per year, Kara’s earnings as $46,464.28, and
assumes spousal support of $1000 per month rather than the $500 per month the
court awarded—shows Ryan’s obligation as $1153.09 per month. Although the
court ordered Ryan to pay only $1000.00 in child support, Kara does not contest
the award of less than provided by the guidelines. Ryan’s argument to lower his
child support payment is based on his earning only $29,005.00 per year, a claim
that we reject. He provides no other compelling reason to reduce further the
amount of his child support payment.
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We turn then to the district court’s award of spousal support to Kara in the
amount of $500.00 per month. Spousal support depends on the circumstances of
each case and factors the comparative earning capacities of the parties. See
Schenkelberg, 824 N.W.2d at 486-87. Because the court has “considerable
latitude” in determining an award of spousal support, we only disturb the award if
it fails to do equity. Id. at 486.
Ryan argues it is inequitable to award Kara spousal support a given the
parties’ respective financial positions. We have already rejected Ryan’s claim
about his annual earnings. But Ryan also claims that Kara has no need for spousal
support given the $43,891.00 she withdrew from the parties’ joint savings account
when they separated in September 2020. Given the sparse record before us on
appeal, we find the matter is best resolved by the district court in dividing the
parties’ property after a full record is made at the dissolution trial.
Ryan also argues Kara has not shown a need for spousal support because
her net monthly income exceeds her total monthly expenses. But Kara’s affidavit
of financial status lists $3711.68 in monthly expenses. Her net monthly income of
$3674.82 from her work as a registered nurse results in a shortfall of $36.84 each
month. In contrast, Ryan earns about $90,000 per year or a net monthly income
of $5497.50. Because he did not file an affidavit of financial status before the
hearing on temporary matters, Ryan’s monthly expenses are unknown. Still, his
earnings are nearly twice that of Kara’s and there is no indication that he cannot
meet his financial obligations. And reducing or eliminating spousal support would
result in a corresponding increase in the child support Ryan must pay under the
guidelines. See Iowa R. Ct. 9.5(1)(a)(1) (“If spousal support is to be paid in the
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pending matter, whether temporary or permanent, it will be determined first and
added to the payee’s income and deducted from the payor’s income before child
support is calculated.”). Under these circumstances, we cannot find the district
court’s award of spousal support inequitable.
Ryan’s last contention on appeal concerns the award of temporary attorney
fees. Such an award is within the discretion of the court. See Sullins, 715 N.W.2d
at 255. To overturn an award of attorney fees, a party must show the ruling “rests
on grounds that are clearly unreasonable or untenable.” In re Marriage of
Erpelding, 917 N.W.2d 235, 238 (Iowa 2018) (citation omitted). “A ruling is clearly
unreasonable or untenable when it is ‘not supported by substantial evidence or
when it is based on an erroneous application of law.’” In re Marriage of Kimbro,
826 N.W.2d 696, 698-99 (Iowa 2013) (citation omitted). For the reasons already
cited, we find the award of $1000 in temporary attorney fees is neither
unreasonable nor untenable.
Finally, Kara requests an award of her appellate attorney fees. Such an
award is not a matter of right but rests in our discretion. In re Marriage of
McDermott, 827 N.W.2d 671, 687 (Iowa 2013). In exercising this discretion, we
consider the needs of the party seeking appellate attorney fees, the other party’s
ability to pay, and the merits of the claims made on appeal. See id. Given the
temporary support and attorney fees awarded by the district court, we decline to
award Kara appellate attorney fees.
In summary, we affirm the temporary order providing financial support.
Although the record before the court at the temporary matters hearing was
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incomplete, our supreme court has observed that it is better to err in favor of
awarding such support:
In some cases it is inevitable that temporary support will be
ordered which will be determined, after full hearing, not to have been
justified. We believe, however, that in balancing the policy
considerations it is preferable to provide temporary support pending
the outcome of the case, even if it is later determined that a
preponderance of the evidence did not support it. Our concern about
such occasional injustice is outweighed by our concern that parties
affected by dissolution actions, especially children, be adequately
provided for while awaiting a final decision.
Bork v. Richardson, 289 N.W.2d 622, 625 (Iowa 1980). Any remaining inequities
can be addressed in the dissolution decree.
AFFIRMED.