In Re the Marriage of Sandi I. Hansen and Andrew J. Hansen Upon the Petition of Sandi I. Hansen, and Concerning Andrew J. Hansen , 2016 Iowa App. LEXIS 1391 ( 2016 )

IN THE COURT OF APPEALS OF IOWA
No. 15-1825
Filed July 27, 2016
IN RE THE MARRIAGE OF SANDI I. HANSEN
AND ANDREW J. HANSEN
Upon the Petition of
SANDI I. HANSEN,
Petitioner-Appellee,
And Concerning
ANDREW J. HANSEN,
Respondent-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Washington County, Lucy J.
Gamon, Judge.
Andrew Hansen appeals from various provisions of the decree dissolving
his marriage to Sandi Hansen. AFFIRMED AS MODIFIED.
Rae M. Kinkead and Matthew J. Adam of Simmons Perrine Moyer
Bergman P.L.C., Coralville, for appellant.
William N. Tooney, John E. Beasley, and Carolyn Russell Wallace of
Phelan Tucker Mullen Walker Tucker & Gelman, L.L.P., Iowa City, for appellee.
Heard by Danilson, C.J., and Vaitheswaran and Tabor, JJ.
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DANILSON, Chief Judge.
Andrew Hansen appeals from various provisions of the decree dissolving
his marriage to Sandi Hansen. He raises issues regarding the division of assets,
determination of physical care, and determination of Sandi’s income for purposes
of child support. We modify the decree as to the division of assets, and affirm on
the issues of physical care and child support.
I. Background Facts and Proceedings.
Andrew (Andy) and Sandi Hansen began their relationship in 2003 and
were married in July 2011. The parties have two children together—M.H. and
T.H.—and Sandi has an older child, K.R. M.H. was seven and T.H. was two at
the time of trial on June 25-26 and September 23, 2015.
At the time of trial, Andy was thirty-five years old and employed as an
independent contractor by James Waterhouse Construction. Andy makes twenty
dollars an hour and can work up to forty hours per week but ordinarily works
fewer hours. Andy earns $41,600 per year. Andy also recently began a firearms
business. Prior to beginning work at James Waterhouse Construction in June
2014, Andy worked in the pipeline industry. He made more money working on
the pipelines—approximately $80,000 to $90,000 per year—but the job was
stressful, dangerous, and required Andy to spend extensive periods of time away
from home. Andy was also enlisted in the Iowa National Guard from 2000 to
2008, and served a year in Ramadi, Iraq, from 2004 to 2005.
Andy is diagnosed with post-traumatic stress and a mild alcohol substance
abuse disorder. He receives treatment and counseling at the Iowa City Veterans
Affairs Medical Center.
3
Sandi was thirty-nine years old at the time of trial and running a home
daycare business. Sandi has an associate’s degree in corrections and a
bachelor’s degree in criminal justice, and she is currently working to obtain a
master’s degree in family therapy and mental health counseling. Early in the
parties’ relationship, Sandi worked as a waitress and bartender, and then at a
casino, while attending school. Sandi later worked as a correctional officer until
the birth of M.H. in 2008. At that time, the parties agreed Sandi would stay home
with the children while Andy worked on the pipeline. In May 2013, Sandi began a
daycare business out of her home. This allowed her to earn an income while
staying at home with the children. Sandi’s 2014 income tax return shows a net
profit of $11,108 from the daycare business.
The district court entered its findings of fact, conclusions of law, judgment,
and decree of dissolution on October 6, 2015. Andy appeals from the court’s
division of assets, determination of physical care, and determination of Sandi’s
income for purposes of calculating child support. We will recite additional facts
as necessary to address each issue.
II. Standard of Review.
We review cases tried in equity, such as dissolution proceedings, de novo.
In re Marriage of Schenkelberg, 824 N.W.2d 481, 483-84 (Iowa 2012). “Although
we give weight to the factual determinations of the district court, their findings are
not binding upon us.” Id. We will disturb the district court’s ruling only when
there has been a failure to do equity. In re Marriage of McDermott, 827 N.W.2d
671, 676 (Iowa 2013).
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III. Analysis.
A. Equalization Payment. Andy contends the district court inequitably
divided the parties’ assets and liabilities. He asserts the court erred in (1) failing
to consider Andy’s parents’ $80,000 contribution to the family home; (2) failing to
address the Chevy Traverse; (3) dividing Andy’s pension; and (4) ordering Andy
to pay an equalization payment to Sandi in the amount of $13,590.60.
“[O]ur 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). However, “Iowa
courts do not require an equal division or percentage distribution. The
determining factor is what is fair and equitable in each circumstance.” In re
Marriage of Hazen, 778 N.W.2d 55, 59 (Iowa Ct. App. 2009). In equitably
dividing the parties’ property, the court considers the factors provided in Iowa
Code section 598.21(5) (2013).1
We first address Andy’s claim that the district court failed to address the
Chevy Traverse. The Traverse was repossessed sometime between the June
and September trial dates. Because of the repossession, the district court made
no award with respect to the Traverse. We acknowledge the district court could
have awarded in the decree any existing right or title to the vehicle subject to any
debt. In doing so, any lingering issues could have been resolved in the event
1
Such factors include: the length of the marriage; property brought to the marriage by
each party; the contribution of each party to the marriage; the age and physical and
emotional health of the parties; the contribution by one party to the education, training, or
increased earning power of the other; the earning capacity of each party; the desirability
of awarding the family home to the party having custody of the children; the amount and
duration of support payments; other economic circumstances; potential tax
consequences; any written agreement concerning property division; an antenuptial
agreement; and other relevant factors. Iowa Code § 598.21(5).
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procedural errors arise that may require possession to be returned to one of the
parties, or if after the sale, the parties are entitled to a surplus or have a
deficiency to pay.
However, we decline to speculate whether a surplus or deficiency may
exist after the vehicle’s sale or if the repossession may be set aside for some
procedural error. We also note that Andy has not preserved error on this issue
as the district court did not address who may be entitled to a surplus or who may
be obligated to pay a deficiency. See Meier v. Senecaut, 641 N.W.2d 532, 537
(Iowa 2002) (explaining error preservation rules require an issue to be both
raised and decided before we will consider the issue on appeal). Because we
decline to speculate about the possible existence of an asset or debt and decline
to reach the merits of an issue when error has not been preserved, we decline
any relief on this issue.
Andy also contends division of his pension according to the Benson2
formula is improper. We agree that in a short-term marriage, where both parties
are many years away from retirement, division of the pension is often
unnecessary for an equitable distribution of the marital assets. Frequently, the
pension accounts are in their infancy, or there is a minimal increase in the value
of the account during the short-term marriage. Rather than applying the Benson
formula, this marital asset may be given its due consideration in structuring the
balance of the property distribution. In this fashion, the parties may obtain some
closure on at least this financial issue. However, here, Andy’s pension account
increased in value during the marriage by a significant sum, over $29,000.
2
In re Marriage of Benson, 545 N.W.2d 252, 255 (Iowa 1996).
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Because of the sizable increase in Andy’s pension account, we agree it was
equitable to divide the pension account via the Benson formula.
Andy also argues the district court erred in ordering him to make an
equalization payment to Sandi and that such a payment is inappropriate due to
the short duration of the parties’ marriage. Andy also asserts the family home
should not have been considered in the calculation of an equalization payment.
The family home was built by Andy prior to the parties’ marriage and prior
to their cohabitation. Andy made all payments on the home. Sandi made some
contributions to the home such as maintenance, decorating, and landscaping.
Iowa Code section 598.21(5) requires the court to divide “all property,
except inherited property or gifts received by one party, equitably between the
parties.” “This broad declaration means the property included in the divisible
estate includes not only property acquired during the marriage by one or both of
the parties, but property owned prior to the marriage by a party.” In re Marriage
of Schriner, 695 N.W.2d 493, 496 (Iowa 2005).
Premarital property is not set aside like gifted and inherited property. In re
Marriage of Fennelly, 737 N.W.2d 97, 102 (Iowa 2010); In re Marriage of Miller,
552 N.W.2d 460, 465 (Iowa Ct. App. 1996). The district court should not
separate a premarital asset from the divisible estate and automatically award it to
the spouse who owned it prior to the marriage. Fennelly, 737 N.W.2d at 102; In
re Marriage of Sullins, 715 N.W.2d 242, 247 (Iowa 2006). Rather, property
brought into the marriage by a party is merely a factor among many to be
considered under section 598.21(5). McDermott, 827 N.W.2d at 678; Schriner,
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695 N.W.2d at 496. “[T]his factor may justify full credit, but does not require it.”
Miller, 552 N.W.2d at 465.
Sandi does not dispute the award of the family home to Andy. However,
she claims, and Andy challenges, the use of the home’s net equity to fix an
equalization payment. Certainly, Sandi would have a better claim for a portion of
the net equity of the family home if this had been a long-term marriage. We have
stated that the claim of a party to the premarital property owned by the other
spouse in a short-term marriage is “minimal at best.” In re Marriage of Dean, 642
N.W.2d 321, 326 (Iowa Ct. App. 2002) (one year); see also, e.g., In re Marriage
of Peiffer, No. 12-1746, 2013 WL 5498153, at *3 (Iowa Ct. App. Oct. 2, 2013)
(seven years). At the same time, appreciation in the value of assets during the
marriage is a marital asset. In re Marriage of White, 537 N.W.2d 744, 746 (Iowa
1995). With respect to appreciation, our supreme court has stated, “[we do not]
find it appropriate when dividing property to emphasize how each asset
appreciated—fortuitously versus laboriously—when the parties have been
married for nearly fifteen years.” Fennelly, 737 N.W.2d at 104. But here, we
have a four-year marriage, and the record is void of evidence showing any
appreciation in the home during the marriage. In fact, Sandi acknowledged there
was no appreciation in the home’s value during the marriage. We can only
conclude if there was an increase in the net equity of the family home during the
marriage, it was due to the reduction of the debt against it by the mortgage
payments.
In light of the facts of this case, we need not align each party’s assets and
debts in a balance sheet to determine an equalization payment. An equalization
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payment suggests each party should be awarded an equal amount of assets and
liabilities. Such a payment might be appropriate where both parties brought into
the short-term marriage a relatively equal amount of net assets but one party is
awarded more of the net assets in the property distribution. Other factors, absent
here, could also support an equal division of assets and an equalization payment
in a short-term marriage. Iowa is an “equalization distribution” state for purposes
of dividing property. In re Marriage of Schriner, 695 N.W.2d 493, 496 (Iowa
2005). But to achieve equity, the division need not be equal in most short-term
marriages. Rather, it is often equitable to simply award the property to the party
that brought it into the marriage. See In re Marriage of Steenhoek, 305 N.W.2d
448, 453-54 (Iowa 1981) (ordering property returned to husband in five-year
marriage); see also, e.g., In re Marriage of Wallace, 315 N.W.2d 827, 830-31
(Iowa Ct. App. 1981) (noting length of marriage can be a major factor in
determining each parties’ rights).
We also note an “equitable division” of the property of a marriage does not
necessarily mean an “equal division” of each asset. Hazen, 778 N.W.2d at 59.
Our focus is on what is equitable under the circumstances in consideration of the
factors set forth in Iowa Code section 598.21(5). Id. Here, there were very few
significant assets resulting from this short-term marriage, except the marital
home.
We find the equalization payment as ordered by the district court in this
matter is inequitable because the parties’ marriage was short, the family home
was Andy’s premarital asset, the asset did not appreciate in value, the parties did
not enter the marriage with an equal value of assets, and there was no overriding
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contribution or sacrifice by either party to support an equal division of the net
assets. Rather, we order Andy to pay a cash award to Sandi in the amount of
$5000 to be paid within ninety days of the issuance of the procendendo.3 We
conclude this sum is equitable in light of the property division ordered by the
district court and to provide some consideration for Sandi’s contributions in both
maintaining and making improvements to the home such as landscaping and
decorating.4
Due to our resolution of Andy’s challenge to the equalization payment, we
find it unnecessary to determine if any monies paid by his parents towards a
down payment for the home were either a loan or gift. Sandi does not contend
that she contributed to the monies that constituted a down payment for the family
home. Clearly, the monies came from either Andy or his parents. Sandi certainly
did not agree to any loan terms, so any obligation to repay Andy’s parents shall
be his sole responsibility.
B. Physical Care and Visitation. Andy also contends the district court
erred in failing to award the parties joint physical care of the children. In the
alternative, Andy asserts he is entitled to more visitation than ordered in the
decree.
3
Sandi expended some monies toward the home for decorating, including painting and
landscaping. She apparently approximated these expenditures at $4000 during a
deposition, but during trial she was not sure the amount was accurate.
4
After division of property, Sandi retains the value of her home daycare business, the
value of her household contents, the wedding rings, and the total amount in her bank
account. Andy retains the family home, two vehicles, a 2013 Montana Fifth Wheel, a
four wheeler, the value of his household contents, and the total amount in his bank
account. Each party was also assigned debts, with Andy retaining a larger amount of
liabilities. Both of the vehicles awarded to Andy and the trailer have substantial
encumbrances.
10
In dissolution cases where physical care is at issue, the primary
consideration is the best interests of the children. Iowa R. App. P. 6.904(3)(o).
Iowa Code section 598.41(3) provides factors to be considered in reaching a
physical care determination that is in the best interests of the children. “The
objective of a physical care determination is to place the children in the
environment most likely to bring them to health, both physically and mentally, and
to social maturity.” In re Marriage of Hansen, 733 N.W.2d 683, 695 (Iowa 2007).
Upon the request of either parent, the court may award joint physical care
unless such an arrangement is not in the best interests of the children. Iowa
Code § 598.41(5)(a). In determining if a shared physical care arrangement is
appropriate, courts are to consider (1) stability, continuity of caregiving, and
approximation; (2) “the ability of the spouses to communicate and show mutual
respect”; (3) “the degree of conflict between parents”; and (4) “the degree to
which the parents are in general agreement about their approach to daily
matters.” Hansen, 733 N.W.2d at 696-99.
The record reveals the parties’—particularly Andy’s—inability to
communicate effectively regarding the children’s care and to exercise mutual
respect. As evidenced by numerous text messages, Andy often shows a
troubling lack of respect for Sandi. Particularly disturbing amongst the text
messages are those including comments about the court’s authority. In response
to Sandi’s concern that the children were not returned to her care on time
pursuant to a temporary order, Andy referenced a “stupid court order” and that
the judge “destroyed my life.”
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These comments do not invoke confidence that Andy will follow court
orders in the future. We can only hope that these comments were out of
character or that Andy now recognizes the error of his ways. Regardless, Andy
has not always shown an ability to properly communicate with Sandi for purposes
of the children’s care, or show respect for Sandi, and has not always abided by
court orders.
We also observe there remains tension between the parties. During their
marriage, the parties often experienced disagreements. On two occasions the
arguments resulted in physical violence by Sandi against Andy. The parties
separated during their relationship for significant periods of time on at least two
occasions. The divorce proceedings only escalated the conflict between the
parties, which we hope will subside once the proceedings are concluded. The
record reflects a number of examples of Andy’s harsh and disrespectful
communication with Sandi both in and out of the courtroom.5 The remaining
conflict impedes the parties from having the type of working relationship
necessary for a shared-care arrangement to be in the best interests of their
children. See id. at 698 (“The prospect for successful joint physical care is
reduced when there is a bitter parental relationship and one party objects to the
shared arrangement.”).
The parties have also disagreed concerning day-to-day child-rearing
practices. Sandi argues Andy does not provide a good example for the children
5
For an example, during Andy’s cross-examination, the following exchange occurred:
Q. You’re telling the mother of your children in a text message to
fuck off and she is a piece of shit; correct? A. Yeah. With all the help I’ve
gotten out of her, I feel that’s—
Q. Correct? A. Correct, yes.
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regarding good communication skills, and she expresses concern about Andy’s
attention to the children’s basic hygiene needs and ensuring the children get
appropriate sleep. Additionally, the parties were involved in two contempt
proceedings initiated by Sandi due to Andy’s repeated failure to make timely
child-support payments.
Upon review of the record, we agree with the district court’s application of
the Hansen factors and the finding that shared physical care is inappropriate.
We also find the district court properly determined Sandi is the best
placement for physical care. Sandi has historically been the children’s primary
caregiver. See id. at 697-98 (“[T]he successful caregiving by one spouse in the
past is a strong predictor that future care of the children will be of the same
quality. . . . [W]here one spouse has been the primary caregiver, the likelihood
that joint physical care may be disruptive on the emotional development of the
children increases.”). Also, Sandi’s home daycare business allows her to be
home to provide care for the children during the day. Most important, the record
reflects Sandi is more respectful of Andy and is more likely to support Andy’s
relationship with M.H. and T.H. Thus, we agree with the district court’s custody
determination and find physical care should remain with Sandi.
Andy alternatively requests his visitation time be increased. Andy
requests the visitation schedule be similar to that of the temporary order, which
gave Andy mid-week visitation with the children twice per week and alternating
weekends. The district court decreased Andy’s visitation to one mid-week
visitation and alternating weekends. The court explained:
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The court agrees with Sandi that Andy’s time with the children
should be reduced somewhat by reducing the children’s mid-week
visits to one overnight per week. Continuing the current schedule
of two overnights per week carries the risk of diminishing the
children’s school performance, particularly as they reach the higher
grades in school. This is particularly true since Andy is currently
not always ensuring that M.H. has her homework done, is getting
adequate sleep, and is ready for school in a timely fashion.
The district court’s minimally reduced visitation schedule is in the best
interests of the children, while ensuring adequate ongoing contact with Andy.
Andy’s failure to comply with previous court orders regarding visitation and
exchange times, as well as the payment of child support, fosters concern that
increased visitation will allow for increased opportunity for disagreements,
communication problems, and perhaps, disregard of court orders. It is in the best
interests of the children to have fewer dislocations on a weekly basis to provide a
more stable home environment, and Andy is still afforded substantial visitation.
Thus, we affirm the district court’s visitation schedule.
C. Sandi’s Income for Purposes of Child Support. Last, Andy asserts the
district court erred in its determination of Sandi’s income for purposes of
calculating child support.
Sandi’s 2014 tax return shows gross receipts from the home daycare
business of $33,988. In expenses, she listed $75 for advertising, $390 for
insurance, $939 for repairs and maintenance, and $11,921 for meals and
entertainment, totaling $13,325 in expenses. Sandi also claimed a $9555
deductible for the business use of her home. This leaves a net profit of $11,108.
The district court attributed income to Sandi in the amount of her net profit for
14
purposes of calculating child support.6 Andy argues that the home-business-use
deductible is incorrect and argues that Sandi’s income for purposes of calculating
child support should be $36,096.
Absent a deviation or variance, child support is calculated based upon
each party’s “net monthly income.” See Iowa Ct. Rs. 9.5, 9.11. “Net monthly
income” is defined as gross monthly income less permissible deductions. Iowa
Ct. R. 9.5. “Gross monthly income” for purposes of calculating child support is
not defined in the guidelines, although we have stated, “Generally, completed
federal and/or state income tax returns are the best evidence of income and tax
liability.” In re Marriage of Will, 602 N.W.2d 202, 204 (Iowa 1999). Yet “gross
monthly income” may not necessarily equate to a party’s adjusted net income on
their tax return. See In re Marriage of Lee, 486 N.W.2d 302, 304-05 (Iowa 1992)
(noting “[t]he guidelines do not limit the definition of gross income to that income
reportable for federal income tax purposes”); see also In re Marriage of Gaer,
476 N.W.2d 324, 329 (Iowa 1991) (concluding there may be circumstances such
as accelerated depreciation where the court “should adjust gross income before
applying the guidelines”).
Legitimate business expenses may be deducted from income for purposes
of determining child support. Gaer, 476 N.W.2d at 329 (“[S]ome consideration
must be given to business expenses reasonably necessary to maintain the
business or occupation.”); see also In re Marriage of Engle, No. 09-1055, 2010
6
Although it appears the court was attempting to use Sandi’s net income of $11,108, in
fact, the decree provides “that Sandi’s gross income for child support purposes is
$11,921.” The sum of $11,921 was the amount of her tax deduction for meals and
entertainment. Because there was no cross-appeal, we only note this discrepancy.
15
WL 446987, at *5 (Iowa Ct. App. Feb. 10, 2010) (holding that deductions for use
of the home, vehicle, cell phone, and garbage pickup services are properly
deducted from income for purposes of child support because “the definition of net
monthly income as provided in Iowa Court Rule 9.5 generally does not
contemplate adding back in deductions that were taken on the Federal Form
1040 and thus excluded from a party’s gross monthly income”).
Here, the home-business-use deduction was a legitimate business
expense, and Sandi’s tax return was professionally prepared. Without the benefit
of expert testimony or additional evidence that the deduction was unreasonably
excessive, we can only conclude the deductions taken by Sandi were reasonably
necessary to maintain the home daycare business and were appropriately
deducted from her income for purposes of determining child support.
Accordingly, we find no inequity in the district court’s determination of Sandi’s net
income.
IV. Conclusion.
We modify the district court’s dissolution decree to eliminate the
equalization payment and order Andy to pay a cash award to Sandi in the
amount of $5000. All other provisions of the decree are affirmed. Costs of this
appeal shall be split equally between the parties.
AFFIRMED AS MODIFIED.