In re The Marriage of McCreedy ( 2023 )

IN THE COURT OF APPEALS OF IOWA
No. 22-0657
Filed September 13, 2023
IN RE THE MARRIAGE OF TODD ALLEX McCREEDY
AND THERESA RENE McCREEDY
Upon the Petition of
TODD ALLEX McCREEDY,
Petitioner-Appellee/Cross-Appellant,
And Concerning
THERESA RENE McCREEDY,
Respondent-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Jefferson County,
Shawn Showers, Judge.
A wife and husband appeal the economic provisions of the decree
dissolving their marriage. AFFIRMED AS MODIFIED.
Cynthia D. Hucks of Box and Box Attorneys at Law, Ottumwa, for appellant.
R.E. Breckenridge of Breckenridge Law, PC, Ottumwa, for appellee.
Considered by Bower, C.J., and Badding and Buller, JJ.
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BADDING, Judge.
According to the district court, Todd and Theresa McCreedy approached
the dissolution of their thirty-two-year marriage with a shared philosophy of, “what’s
mine is mine and what’s yours is mine.” That philosophy continues on Theresa’s
appeal, and Todd’s cross-appeal, from the economic provisions of the decree
dissolving their marriage. We affirm as modified.
I. Background Facts and Proceedings
Todd and Theresa McCreedy were married in 1989. They have three
children, only one of whom was still a minor when they divorced in 2022. Todd,
who was fifty-seven years old at the time of trial, is employed as an engineering
technician earning $46,543.29 per year. He is in good health as compared to then-
fifty-four-year-old Theresa, who was diagnosed with cancer and other conditions
during the marriage. Theresa is a self-employed cosmetologist, who has owned
her own hair salon for the past twelve years. She claimed to make little from this
business although, during the marriage, she was responsible for paying the
mortgages, taxes, insurance, and utilities for the parties’ home.
That home was built by the couple on four acres that Todd’s parents gifted
to them in 1995. They received another six acres from Todd’s parents in 1999.
These ten acres are in the corner of what had been an eighty-acre parcel owned
by Todd’s parents.
In 2016, before the parties separated, Theresa received an inheritance of
roughly $114,000 from her grandfather. She used the funds to buy a condo in
Branson for $107,700. Theresa deposited the remaining $7000 in a Mainstay
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investment account, which had increased to $17,842 by the dissolution trial six
years later.
Todd petitioned for divorce in March 2020. Theresa moved out of the
marital home in September and into a rental that costs her $600 per month. She
took two vehicles with her when she left—a 2008 Chrysler Sebring and a 2014
Jeep Wrangler, both of which she thought were paid off. But Todd, who handled
vehicle expenses during the parties’ marriage, had taken out loans on them without
telling Theresa. He stopped paying the loans when she moved out, resulting in
both vehicles being repossessed in December. Todd “recovered [the Sebring]
from the repo lot and started paying the loan on it again.” And after a temporary
order was entered in December, he resumed payments on the Jeep loan, although
the Jeep itself remained at an auction lot because Theresa would not consent to
its sale by the bank.
Before the dissolution trial in March 2022, the parties agreed to joint legal
custody and joint physical care of their daughter, who was seventeen years old at
the time. They did not agree on much else, asking the court to resolve child
support, the division of their property and debts, Theresa’s request for spousal
support, and payment of attorney fees.
Following the trial, the court entered a decree ordering Todd to pay $100
per month in child support. In doing so, the court found Theresa’s credibility “to be
lacking on . . . her income,” which it set at $25,045.71 based on what she reported
in a loan application from 2006. Turning next to the parties’ property, the court
found the marital home and its surrounding six acres should be included in the
marital estate. The court valued the home at $357,600, the four acres the home
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sat on at $48,700, and the adjacent six acres at $36,000, awarding them all to
Todd. The court awarded the Branson condo to Theresa, but included its
appreciated value of $143,000 in the marital estate. The court did not do the same
for the Mainstay account, the full value of which it set aside to Theresa. As for
Theresa’s business, the court adopted Todd’s valuation of $27,544 and awarded
it to Theresa. Todd’s retirement accounts were divided equally between the
parties, while Theresa received the full balance of an IRA in her name. The court
awarded most of the parties’ vehicles and equipment to Todd, including the
Sebring, valued at $3000, and its debt of $2534. He was also ordered to pay the
loan on the Jeep, which was $2581, although Theresa was awarded that vehicle
and ordered to pay the $8138 in storage fees that had accumulated since its
repossession. Most of the parties’ other debts were assigned to Todd.
In the end, Todd received a net award of $483,368.50, while Theresa
received $351,183.50, for a difference of $132,179. Rather than ordering Todd to
make an equalization payment to Theresa, the court awarded her traditional
spousal support of $500 per month until she “is eligible for Medicare, either party’s
death, or until [her] remarriage.” The court reasoned such an award was
appropriate “[b]ased on the length of the marriage, Todd’s higher net worth, and
access to quality health care.” While it found “an equalization payment would be
inequitable,” the court noted that its spousal support award was about equal to
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what a property settlement to Theresa would be.1 Finally, Todd was ordered to
pay $7500 of Theresa’s attorney fees.
Theresa appeals, claiming the court erred in (1) calculating her income for
child support; (2) its division and valuation of the marital home; (3) including the
appreciation of the Branson condo in the marital estate; (4) adopting Todd’s
valuation of her business; (5) requiring her to pay the storage fees for the Jeep;
and (6) not awarding her an equalization payment in addition to traditional spousal
support. Todd cross-appeals, challenging the court’s decision to (1) separately
value the land on which the marital home sits and (2) not include the appreciation
of the Mainstay account in the marital estate.
II. Standard of Review
We review dissolution proceedings de novo, see Iowa R. App. P. 6.907,
keeping in mind that “[t]here are no hard and fast rules governing the economic
provisions in a dissolution action.” In re Marriage of Gaer, 476 N.W.2d 324, 326
(Iowa 1991). Instead, “each decision depends upon the unique circumstances and
facts relevant to each issue.” Id.III. Analysis
A. Child Support
Theresa claims the district court’s “calculation of child support was not
supported by the facts and the weight of the evidence.” She argues the court
should have determined her income by averaging what she reported on her income
1 The court calculated that there were 128 months until Theresa turned sixty-five
and became eligible for Medicare, which multiplied by $500 per month equaled
$64,000.
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tax returns from 2017 through 2020, rather than tying it to what she reported on a
loan application from 2006.2
Income tax returns are generally the best evidence of income when
calculating child support. In re Marriage of Hansen, 886 N.W.2d 868, 876 (Iowa
Ct. App. 2016). Yet the determination of “gross monthly income” under the child
support guidelines “may not necessarily equate to a party’s adjusted net income
on their tax return.” Id. The district court determined that was the case here,
finding, “Theresa was clearly bringing home more income than [the] $5,000 per
year in profits which was being reported to the Department of Revenue and IRS.”3
We agree. See In re Marriage of Fennelly, 737 N.W.2d 97, 100 (Iowa 2007)
(stating we give weight to the trial court’s factual findings, especially with respect
to the credibility of the witnesses, though we are not bound by them).
While the court did tie Theresa’s income to a 2006 loan application, other
evidence supported that amount, including a handwritten note by Theresa detailing
her annual “take home” from the business: $23,558.44 in 2018, $22,026.40 in
2019, $15,376.05 in 2020, and $18,870.10 in 2021. See In re Marriage of Powell,
474 N.W.2d 531, 534 (Iowa 1991) (“The court must determine the parent’s current
monthly income from the most reliable evidence presented.”). Theresa also
testified that she supplemented her business with occasional cleaning jobs and
2 We note that Theresa has cited no authority in support of this issue in the
argument section of her appellate brief. While we could find the issue waived, see
Iowa R. App. P. 6.903(3)(g), we choose to address her income because it has
some bearing on her property-division claims. See Iowa Code § 598.21(5)(f)
(2020).
3 The parties’ joint income tax returns showed that Theresa’s business operated at
a net income of $1002 in 2017, $5578 in 2018, $5068 in 2019, and a loss of $2693
in 2020.
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rental income from the condo. And, as Todd pointed out at trial, if Theresa’s
income was really as low as she reported on their income tax returns, she would
not have been able to afford the roughly $2000 per month in home-related
expenses that she paid throughout the marriage. With these facts, we conclude
the record supported the court’s determination of Theresa’s income. See In re
Marriage of Claar, No. 05-0174, 2006 WL 334219, at *3 (Iowa Ct. App.
Feb. 15, 2006) (finding that the adjusted gross incomes from the parties’ tax
returns were “of little value in calculating child support” because of deductions,
omissions of cash and barter payments, and the parties’ ability to support a
comfortable lifestyle).
B. Property Division
We start our review of the district court’s property division with some familiar
principles. Iowa is an equitable distribution state, meaning “our courts equitably
divide all of the property owned by the parties at the time of divorce except inherited
property and gifts received by one spouse.” In re Marriage of Keener, 728
N.W.2d 188, 193 (Iowa 2007). In making this equitable distribution, we are guided
by the factors listed in Iowa Code section 598.21(5). Id. “Although an equal
division is not required, it is generally recognized that equality is often most
equitable.” Id. (citation omitted).
1. Marital home and land
Theresa first claims the “total value of th[e] real estate” gifted to the couple
by Todd’s parents “should be treated as marital property.” That is exactly what the
court did, as shown by its balance sheet that included the home, its surrounding
four acres, and the adjacent six-acre parcel on Todd’s side. Theresa’s real
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complaint seems to be the value the court placed on the home, arguing that her
appraisal of $385,000 was more credible than Todd’s appraisal of $330,220. The
court “split[] the difference” between these appraisals and valued the marital home
at $357,600. Because this valuation was within the range of evidence, we will not
disturb it on appeal. See id. at 194.
We do, however, agree with Todd on his cross-appeal that an adjustment
is needed for the court’s separate valuation of the four acres on which the house
sits. As Todd points out, both parties’ appraisals included the value of the land in
their valuation of the marital home. So there was no need for the court to
separately value that land at $48,700. We accordingly modify the dissolution
decree to remove that amount from the property division.
2. Branson condo
Unlike the marital home and surrounding land, the court set aside the
$107,000 purchase price of the Branson condo to Theresa as her separate
property, but included its appreciation of $143,000 in the division, meaning the
court valued the condo at $250,000. Theresa challenges this valuation and the
court’s inclusion of the appreciation in the property division. She argues “[t]here is
absolutely no information in the record that indicates any increase in value for the
condo had anything to do with the efforts of the parties.”
Starting with the court’s valuation, Todd presented a printout from a real
estate website as an exhibit, showing similarly aged condos in an adjacent building
were listed for sale between $265,000 to $279,900. Theresa, on the other hand,
seemed to argue the condo had not appreciated in value at all because it was in
mostly the same condition as when it was purchased for $107,000. We again find
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the court’s valuation was within the range of evidence presented, especially
considering its finding that Theresa was not credible on financial issues. See id.(“[A]ppellate courts defer to a trial court’s valuations when accompanied by
supporting credibility findings or corroborating evidence.”).
As for the inclusion of the appreciated value of the condo in the division,
when a spouse receives a cash inheritance and uses it to buy property, the
appreciation in value “may be characterized as marital property” barring special
circumstances. In re Marriage of White, 537 N.W.2d 744, 746 (Iowa 1995). Such
“[d]ecisions on how to use the property during the marriage, including inherited
property, bear most of the characteristics of a family decision.” Id.; accord In re
Marriage of Hockenson, No. 98-1956, 1999 WL 1072716, at *5 (Iowa Ct. App.
Nov. 23, 1999). Here, although Theresa considered the condo to be hers alone,
Todd “considered it a place for the family to go” and paid some bills for it. He also
helped make cosmetic improvements to the property, including removing
wallpaper, painting, and moving cabinets in the kitchen. And he contributed to the
overall economic welfare of the parties during their thirty-two-year marriage with
his salary. See In re Marriage of Goodwin, 606 N.W.2d 315, 319 (Iowa 2000)
(identifying factors for courts to consider in determining whether inherited property
should be divided).
Under these circumstances, we find no inequity in the court’s decision to
include the appreciated value of the Branson condo that Theresa bought with her
inheritance in its property division. See In re Marriage of Schriner, 695
N.W.2d 493, 496 (Iowa 2005) (“Iowa has a unique hybrid system that permits the
court to divide inherited and gifted property if equity demands in light of the
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circumstances of a spouse or the children.”); see also In re Marriage of Grady-
Woods, 577 N.W.2d 851, 853 (Iowa 1998) (“The critical inquiry is always whether
the distribution is equitable in the particular circumstances.”).
3. Mainstay account
Because these same considerations apply to the Mainstay account that
Theresa funded with the rest of her inheritance, we address that cross-appeal
issue next. The value of that account at the time of trial was $17,842. Without
much analysis, Todd claims the court should have considered the amount the
account appreciated during the marriage—$10,000—as a marital asset. We
disagree.
Unlike the condo that Theresa bought with most of her inheritance, her
investment of the remainder in the Mainstay account did not bear the
characteristics of a family decision. Cf. White, 537 N.W.2d at 746. She kept that
account separate from Todd, who did not contribute to its care, preservation, or
improvement. See Goodwin, 606 N.W.2d at 319; cf. Fennelly, 737 N.W.2d at 104(stating that when dividing premarital property it is not appropriate “to emphasize
how each asset appreciated—fortuitously versus laboriously—when the parties
have been married for nearly fifteen years”). This part of her inheritance did not
really change form like it did with the purchase of the Branson condo. See White,
537 N.W.2d at 746 (noting that in “situations in which the inherited property does
not change in form following its receipt,” there is merit to setting off its total value
at the time of trial). We accordingly conclude it was not unjust to set aside the full
value of this account to Theresa.
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4. Business valuation
Theresa next claims that her business should have been valued at $2700,
rather than $27,544, because “[t]he furniture which was very old had basically no
value. The two rooms for the salon are only rented. There is no real estate that
the business owns. There is no inventory and no accounts receivable.”
Other than disputing Todd’s valuation at trial, Theresa did not offer any
testimony or evidence of her own to support what she believed the business was
worth. The only evidence the court received was from Todd, who offered an exhibit
from a website with a formula for valuing hair salons. The court relied on that
exhibit, finding:
The parties are light-years apart on the value of Theresa’s
business. The Court finds that Theresa’s asserted amount of value
of $2,500[4] is as absurd as her income amount listed on the parties’
tax returns. The Court found Theresa’s credibility to be lacking on
the value of her salon and her income, among other financial issues.
Todd’s demeanor and expressions were not anything exceptional,
but Petitioner’s Exhibit 16 is a credible estimate ($27,500) of what
Custom Cuts’ value actually is. Overall, the Court found Todd to be
the more credible witness, however, both parties are still in the
process of emotionally processing their long marriage ending.
We again give weight to these credibility findings and the court’s valuation, which
was within the range of evidence. See Keener, 728 N.W.2d at 194.
5. Jeep storage fees
Moving on to the debt allocation, Theresa claims the storage fees for the
Jeep should be assigned to Todd because “[h]e leveraged the vehicles, he stopped
making the payments and caused the vehicles to be repossessed.” “Debts of the
4 The record does not show where the figure of $2500 came from versus the $2700
that Theresa uses on appeal.
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parties normally become debts of the marriage, for which either party may be
required to assume the responsibility to pay.” See In re Marriage of Sullins, 715
N.W.2d 242, 251 (Iowa 2006). Even assuming that Todd was responsible for the
increased fees, “as long as the overall property distribution is equitable,” see id.,there is no error. Because Todd was responsible for most of the marital debts—
$149,293 compared to $20,138 for Theresa—we find no inequity in requiring
Theresa to assume this debt. See id.
6. Equalization payment
This leaves us with Theresa’s claim that she “should rightfully be paid
traditional spousal support in addition to her share of the assets of the marriage.”
She argues “[t]here is no justification for failing to award an equalization
payment . . . simply because she has needs which justify the award of spousal
support.” We agree.
Property division and spousal support are considered together in evaluating
their individual sufficiency. See Iowa Code §§ 598.21(5)(h), .21A(1)(c); In re
Marriage of Russell, 473 N.W.2d 244, 246 (Iowa Ct. App. 1991). That said, “they
are distinguishable concepts with differing purposes.” In re Marriage of Steddom,
No. 13-0435, 2013 WL 6405375, at *1 (Iowa Ct. App. Dec. 5, 2013). “The division
of marital property is based on the parties’ respective rights to a just and equitable
share of the property accumulated during the course of the marriage.” Id. Spousal
support, on the other hand, “is a stipend paid to a former spouse in lieu of the other
spouse’s legal obligation to provide financial assistance.” Id.; accord In re
Marriage of Gust, 858 N.W.2d 402, 408 (Iowa 2015) (“The purpose of a traditional
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or permanent alimony award is to provide the receiving spouse with support
comparable to what he or she would receive if the marriage continued.”).
Todd does not dispute that Theresa was entitled to the traditional spousal
support of $500 per month awarded by the court until she is eligible for Medicare.
Rather, he contends that the court correctly determined an equalization payment
would not be equitable because he was saddled with more debt, Theresa received
half of his retirement accounts, and she was awarded the income-producing
condo. But even with those allocations, Todd received $132,185 more in assets
under the district court’s division than Theresa. And in marriages of long duration
with an earning disparity, like this one, both spousal support and a nearly equal
property division may be appropriate. In re Marriage of Weinberger, 507
N.W.2d 733, 735 (Iowa Ct. App. 1993). We find that is the case here.
C. Modification
So how do our conclusions affect the result in this dissolution appeal?
When the value of the land on which the marital home sits is removed from the
marital estate, Todd’s net property award decreases to $434,668.50. This leaves
a difference of $83,485 between his award and Theresa’s. To equalize the
awards, we order Todd to pay Theresa $41,742.50. Because Todd does not have
this amount in liquid assets, and a cash payment may be an undue burden on him,
we direct Todd to make the payment through a qualified domestic relations order
from his retirement funds. See In re Marriage of Naber, No. 16-1767, 2017 WL
3283315, at *5 (Iowa Ct. App. Aug. 2, 2017). Todd shall prepare the order and
submit it to Theresa for her approval within ninety days from the date procedendo
is issued.
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D. Attorney fees
Theresa requests $3500 in appellate attorney fees. Given the mixed results
of the appeals, the needs of each party, and their ability to pay, we deny her
request. See In re Marriage of Heiar, 954 N.W.2d 464, 473 (Iowa Ct. App. 2020).
Costs on appeal are assessed equally between the parties.
AFFIRMED AS MODIFIED.