In re the Marriage of Cannon ( 2022 )

IN THE COURT OF APPEALS OF IOWA
No. 21-0322
Filed March 30, 2022
IN RE THE MARRIAGE OF KIMBERLY DIANE CANNON
AND DOUGLAS JAMES CANNON
Upon the Petition of
KIMBERLY DIANE CANNON,
Petitioner-Appellee,
And Concerning
DOUGLAS JAMES CANNON,
Respondent-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Johnson County, Carl D. Baker,
Judge.
The husband appeals the district court’s award of temporary spousal
support to the wife. AFFIRMED AS MODIFIED.
Mark J. Seidl of Seidl & Seidl, P.L.C., Cedar Rapids, for appellant.
Paul K. Waterman and Natalie H. Cronk of Kennedy, Gelner, Cronk &
Waterman, Iowa City, for appellee.
Considered by May, P.J., Ahlers, J., and Mullins, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206
(2022).
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AHLERS, Judge.
In this dissolution-of-marriage action, the wife sought temporary spousal
support and attorney fees. A hearing was held on the wife’s application. As
directed by Iowa Code section 598.11(1) (2020), the hearing was conducted based
on affidavits from the parties. Following the hearing, the district court ordered the
husband to pay $6000 per month in temporary spousal support and $5000 of
temporary attorney fees. The husband appeals the temporary spousal support
award.
Like the district court, we are hampered by the limited information available
from a hearing based solely on affidavits. Here’s what we can glean from the
affidavits and the court file. The parties have been married since 2001, and they
have one adult son. The parties signed a premarital agreement before their
marriage. The disclosures attached to the agreement show the husband had
substantially greater net worth than the wife. Throughout the marriage, the parties
benefited from the generosity of the husband’s parents, including being able to
take numerous vacations funded, in whole or in part, by the husband’s parents.
After his father and later his mother passed away, the husband inherited
substantial assets in 2017. At the time of the hearing on temporary matters in
2021, the parties’ net worth was in the range of $3.2 million (the husband’s figure)
to $3.7 million (the wife’s figure). The net worth primarily consists of investments
and other assets the husband received from his parents before and after their
deaths.
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As for income, the wife worked throughout the marriage and currently has
gross annual income of approximately $49,000. There is little dispute that the wife
has monthly take home pay of approximately $3500 per month.
The husband has not been steadily employed throughout the marriage,
relying largely on investment income and financial assistance from his parents. He
traditionally worked as a stagehand, but that work had been severely curtailed due
to theater closures caused by the COVID-19 pandemic. Prior to the dissolution
action being filed, the husband used a line of credit to borrow money to purchase
approximately $574,000 of land in Washington state to operate a campground,
which he manages and where he currently resides. He earns a relatively small
amount of income from that property.
Much of the dispute on appeal centers around how much the husband
makes and how lavish of a lifestyle the wife is entitled to maintain via an award of
temporary spousal support. Our task in determining the husband’s income is made
more challenging by the fact that the district court made no findings as to the
husband’s income. We are left with the task of determining that income before
deciding on an appropriate amount of spousal support.
Determining the husband’s income is a challenge. The wife hired an expert
who submitted an affidavit asserting that the husband can expect annual
investment income of $102,000. The wife’s affidavit of financial status estimates
the husband’s gross annual income from employment to be approximately
$67,000, although she provides little support or explanation for this figure. Her
figure conflicts with the husband’s estimate of employment income of $16,800.
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Our review of the temporary spousal support award is de novo. In re
Marriage of Aronow, No. 05-1749, 2006 WL 3018134, at *1 (Iowa Ct. App. Oct. 25,
2006). This gives us the authority to examine the record and adjudicate rights
anew. Id. Nevertheless, the district court has considerable latitude, and we will
disturb the ruling only when there has been a failure to do equity. Id. at *2.
The district court’s temporary spousal support award fails to do equity.
Even though the parties have enjoyed a fairly unrestrained lifestyle, a temporary
spousal support award still needs to be tethered to the parties’ incomes, as there
are limits on the payor spouse’s ability to pay that need to take into account the
payor’s entitlement to maintain the payor’s own standard of living. See In re
Marriage of Hayne, 334 N.W.2d 347, 351 (Iowa Ct. App. 1983) (noting that a
spousal support award should not destroy the right of the party providing the
support to enjoy at least a comparable standard of living as well).
Even if we give the wife all benefit of the doubt and accept her estimates of
the husband’s annual income at $102,000 of investment income and $67,000 of
employment income, we still find the temporary spousal support award excessive.
A before-tax income of $169,000 for him and $49,000 for her does not justify an
award of $72,000 per year ($6000 per month x 12 months) of spousal support,
which is paid with after-tax money. See In re Marriage of Meints, No. 21-0172,
2022 WL 244433, at *7 (Iowa Ct. App. Jan. 27, 2022) (noting changes to federal
income tax laws result in spousal support payments not being deductible by the
payor and not being taxable to the recipient); see also Iowa Code § 598.21A(1)(g)
(listing tax consequences as a factor in determining spousal support). We agree
that the wife has a need for some temporary support, but we find her claimed
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expenses artificially inflated. For example, her list of monthly expenses includes
$1400 for food; $1200 for recreation and entertainment; $1000 for vacation; and
$833 for gifts (which does not include donations, as there is a separate category
for that). Even if all of her claimed expenses are accurate, the dissolution
proceeding may require some belt-tightening by both parties.
After considering the limited record that comes with a temporary support
proceeding, the statutory factors, and the equities, we find an award of temporary
spousal support of $3000 per month to be the appropriate amount of spousal
support. This takes into account the wife’s income, the husband’s income, the
wife’s needs in light of the established lifestyle, the marital net worth, the parties’
ages, the length of the marriage, the tax consequences, and the contributions of
both parties to the marriage.
We modify the district court’s order by reducing the husband’s temporary
spousal support obligation from $6000 per month to $3000 per month. This
modification is retroactive so as to modify all amounts that came due under the
district court’s order as well as all future temporary support obligations. Because
we have no way of knowing whether the husband is current on his support
obligation, we cannot determine whether this downward modification resulted in
an overpayment by the husband. If it has, the district court shall determine an
appropriate method for the husband to recoup any overpayment. See In re
Marriage of Houser, No. 19-1666, 2021 WL 1016923, at *2 n.1 (Iowa Ct. App.
Mar. 17, 2021) (finding it appropriate to allow the district court to establish the best
method for determining how to recover an overpayment after a downward
modification of a spousal support award). As this is a temporary spousal support
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award, the options available to the district court in determining an appropriate
method for recoupment of any overpayment include waiting to equitably account
for the overpayment in the final disposition of the case. Costs on appeal are
assessed to the wife.
AFFIRMED AS MODIFIED.