IN RE THE MARRIAGE OF CINDY L. MORGAN AND JACK M. MORGAN Upon the Petition of CINDY L. MORGAN, Petitioner-Appellee/Cross-Appellant, And Concerning JACK M. MORGAN, Respondent-Appellant/Cross-Appellee.
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IN THE COURT OF APPEALS OF IOWA
No. 9-151 / 08-0696
Filed April 8, 2009
IN RE THE MARRIAGE OF CINDY L. MORGAN
AND JACK M. MORGAN
Upon the Petition of
CINDY L. MORGAN,
Petitioner-Appellee/Cross-Appellant,
And Concerning
JACK M. MORGAN,
Respondent-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Scott County, David H. Sivright Jr.,
Judge.
Jack Morgan appeals, and Cindy Morgan cross-appeals, from the district
court’s decree dissolving their marriage. AFFIRMED.
Carrie E. Coyle of Carrie E. Coyle, P.C., Davenport, for appellant.
John T. Flynn of Brubaker, Flynn & Darland, P.C., Davenport, for appellee.
Considered by Mahan, P.J., and Miller and Potterfield, JJ.
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MAHAN, P.J.
Jack Morgan appeals the district court’s ruling in his dissolution
proceeding.
He claims the district court erred in (1) failing to offset the
inheritance he received from his grandparents during the marriage; (2) setting
aside a portion of the child support in a separate trust; and (3) failing to award
alimony.
Cindy Morgan cross-appeals, arguing the district court erred in
(1) failing to impute Jack’s income for purposes of child support and the child
support trust; (2) failing to consider Jack’s wasting of assets and Cindy’s increase
in assets during the marriage; and (3) failing to award her trial attorney fees.
Both parties request appellate attorney fees. We affirm.
I. Background Facts and Proceedings.
Jack and Cindy Morgan were married in 1990 and have three children:
Gabriella, born in October 1995; Nicholas, born in January 1998; and Emma,
born in August 2001. At the time of trial, Jack was forty-one years old and Cindy
was forty years old. Neither party has any physical or mental limitations.
Cindy graduated from the University of Iowa in 1989 with a bachelor’s
degree in accounting. Since that time, Cindy has been employed by Deere and
Company. She began her employment as an auditor and has moved into budget
accounting. Her base salary is $102,000, but with bonuses, her gross earnings
in 2006 equaled $155,711.
Jack graduated from St. Ambrose University in 1988 with a bachelor’s
degree in business administration with an emphasis on marketing.
He has
worked in a variety of capacities since that time, including several managerial
positions. He began employment at John Deere Seeding Group in June 2002,
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but was terminated in August 2006 while he was incarcerated for violating a
domestic abuse protection order obtained by Cindy.1 Upon his release, Jack was
rehired by a previous employer, Central Freight Lines, with annual earnings of
$55,000 and the use of a company car. Jack was terminated by Central Freight
Lines in December 2006 when he was involved in a collision while intoxicated
and operating the employer’s vehicle.2 At the time of trial, Jack was employed by
Pleasure Pools, a company owned by a friend, earning $8.50 per hour. He
testified that he was looking for other employment and conceded an earning
capacity of $55,000 per year.
Cindy filed a petition for dissolution on August 23, 2006. After a trial, the
court divided the parties’ nearly $1.4 million in assets. The parties entered into
an agreement regarding custody, physical care, and visitation for the children,
which the court approved. The court ordered the funds Jack inherited from his
grandparents, the majority of which were used to fund the construction of their
home, to be subject to division. The court denied Jack’s request for rehabilitative
alimony. The court ordered Jack to pay child support in the amount of $345 per
month based on his income of $1332 per month and Cindy’s monthly income of
$7772. The court further granted Cindy’s request to place funds in the amount of
$41,389 due to Jack in a separate trust for child support, pursuant to Iowa Code
1
Jack’s abusive behavior involved threats of violence without actual physical contact.
Jack was charged with stalking in violation of Iowa Code section 708.11(3)(b)(1) (2007),
after numerous violations of the protective order. He pled guilty to the lesser offense of
stalking in violation of section 708.11(3)(c) and was sentenced to serve 240 days in jail
with 120 days suspended. Jack took batterers’ education classes while serving time in
jail. A no-contact order in effect at the time of the dissolution proceedings was
scheduled to expire on August 31, 2008.
2
Jack has a history of alcoholism. Jack participated in an alcohol abuse treatment
program while serving time in jail. At the time of the dissolution proceedings, Jack
alleges he had been sober since April 13, 2007.
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section 598.22D. Finally, the court denied Cindy’s request for attorney fees.
Jack now appeals and Cindy cross-appeals from the decree dissolving their
marriage.
II. Scope and Standard of Review.
We review dissolution decrees de novo.
Iowa R. App. P. 6.4; In re
Marriage of Fennelly, 737 N.W.2d 97, 100 (Iowa 2007). Though we are not
bound by them, we give weight to the district court’s factual findings and
credibility determinations. In re Marriage of Sullins, 715 N.W.2d 242, 247 (Iowa
2006).
III. Issues on Appeal.
A. Inheritance.
Jack argues the distribution of property in the dissolution decree was
inequitable. He contends the district court erred in failing to offset the inheritance
he received from his grandparents during the marriage.
He asserts the
inheritance should not be subject to division between the parties.
Generally, property should be equitably divided between the parties in the
dissolution decree. In re Marriage of Shriner, 695 N.W.2d 493, 496 (Iowa 2005).
Distribution of property is made pursuant to the criteria codified in Iowa Code
section 598.21(5). There is an exception, however, for inherited property and
gifts received by one party. Iowa Code § 598.21(6); In re Marriage of Rhinehart,
704 N.W.2d 677, 682 (Iowa 2005). Such property is normally awarded to the
party who owns the property, regardless of the equitable distribution process.
Shriner, 695 N.W.2d at 496. Pursuant to Iowa Code section 598.21(6):
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Property inherited by either party or gifts received by either party
prior to or during the course of the marriage is the property of that
party and is not subject to a property division under this section
except upon a finding that refusal to divide the property is
inequitable to the other party or to the children of the marriage.
In determining whether a refusal to divide the inherited property would be unjust,
the court should consider several factors, including, “the length of the marriage;
contributions made by either party toward the property’s care, preservation, or
improvement; and the impact of the property on the parties’ standard of living.”
In re Marriage of Geil, 509 N.W.2d 738, 741 (Iowa 1993).
In this case, Jack inherited approximately $134,000 from the estates of his
grandparents, which was distributed in installments.
Jack received the first
installment in 1994, and the second came soon thereafter.
Jack placed the
inherited funds in the parties’ joint bank account, the same account in which he
deposited his salary.
Although Cindy did not have a close relationship with
Jack’s grandparents and the inheritance was left to Jack alone, no effort was
made to keep the inheritance separate from other funds. The parties invested
some of the inheritance and used some for marital purposes.
The district court found that the inheritance Jack received from his
grandparents during the parties’ marriage should be subject to division. As the
court stated:
The court finds the funds inherited by Jack thirteen years ago and
invested in the parties’ residence or spent for unstated family
purposes are subject to division. Over $60,000 of the inheritance
was used to purchase the lot upon which their home in Eldridge
was built, supplement the construction loan, and later pay down the
principal of the mortgage on the home at the time it was refinanced.
Additional inherited funds were spent on landscaping the property.
Since the parties have lived in the home, Cindy has been
primarily responsible for housekeeping, which presumably
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implicated the care and preservation of the property. At least
during the past ten years, she has made substantial contributions to
the parties’ economic welfare, also implicating preservation of the
property for the family, especially during Jack’s recent periods of
unemployment. Under the circumstances of this case, a refusal to
divide Jack’s inheritance would be inequitable to Cindy and the
children.
We agree. Cindy and the children, as well as Jack, relied on Jack’s inheritance
to initiate construction of the family’s home.
Jack, Cindy, and the children
resided in the home together for a number of years prior the parties’ separation.
The decision to use Jack’s inheritance to build a house, provide landscaping, and
pay down the principal on the mortgage bear the characteristics of family
decisions. Moreover, Cindy has also made significant economic contributions to
the family’s assets, and particularly to their home, through her income over the
years. Jack’s inherited funds do not remain separate or identifiable, and none of
the family’s present assets are directly attributable to them. Although our review
is de novo, we “accord the trial court considerable latitude . . . and will disturb the
ruling only when there has been a failure to do equity.” In re Marriage of Spiegel,
553 N.W.2d 309, 319 (Iowa 1996). We affirm as to this issue.
B. Child Support Trust.
Jack argued the court erred in setting aside a portion of the funds from the
property division in a separate trust for child support pursuant to Iowa Code
section 598.22D. Jack stresses that he has never failed to pay his child support
obligation.
The district court, however, granted Cindy’s request for the child
support trust after noting that Jack may not maintain consistent employment in
the future, based on his history of alcoholism and violations of the protective
order. As the court stated:
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Cindy’s application to place funds due Jack in a separate fund for
the support of the children, pursuant to Iowa Code § 598.22D, is
granted. Jack’s history of alcoholism and his inclination to violate
the protective order obtained by Cindy, resulting in his
incarceration, make future employment uncertain. Hence, to
protect and promote the best interests of the children, some portion
of the funds payable to Jack by Cindy pursuant to the division of the
parties’ property, shall be set aside in a special account at a bank
selected by Cindy, from which any arrearage of child support
accruing after December 1, 2007, or uncovered medical expenses
payable by Jack may be withdrawn by her, after notice to Jack,
hearing, and court approval. The account shall be owned by Jack,
and interest earned on the deposited funds shall be distributed
quarterly to him.
The court later determined that the amount to be set aside in the child support
trust should be $41,389.
Under section 598.22D, the court has the authority to create a trust fund to
provide for the “support, education, and welfare” of the children. Iowa Code §
598.22D. Such trust fund is permissible if necessary to protect and promote the
best interests of the children. Id.; In re Marriage of Wessels, 542 N.W.2d 486,
491 (Iowa 1995); In re Marriage of Antisdel, 478 N.W.2d 864, 867 (Iowa Ct. App.
1991). In this case, Jack had been incarcerated and terminated as a result of his
history of alcoholism. At the time of trial, he was making $8.50 per hour working
for a friend, when he had previously had an annual income of $55,000.3
Upon our de novo review, we find the circumstances in this case raise a
reasonable concern with regard to the consistency of Jack’s future employment
and his ability to maintain his child support and medical obligations.
A child
support trust is necessary to protect and promote the best interests of the
children. See, e.g., Iowa Code § 598.22D. We affirm as to this issue.
3
We further note that even considering the $41,389 to be placed in a child support trust,
Jack was still awarded a settlement payment from Cindy in the amount of $100,000.
8
C. Alimony.
Jack argues the district court erred in failing to award him rehabilitative
alimony.
Specifically, he alleges the court should have awarded him some
“transitional money” to assist him for a period of time after the entry of the
dissolution decree. He contends he is currently earning $8.50 per hour, with
annual earnings of $17,680, and even if he is able to make $55,000 per year, he
will still earn one-third of Cindy’s annual salary. He further asserts that he may
never be able to reach a standard of living reasonably comparable to that he
enjoyed during the parties’ marriage.
Rehabilitative alimony was designed as a way to support “an economically
dependent spouse through a limited period of re-education or retraining following
divorce, thereby creating incentive and opportunity for that spouse to become
self-supporting.” In re Marriage of Anliker, 694 N.W.2d 535, 541 (Iowa 2005).
The goal of rehabilitative alimony is self-sufficiency for the dependent spouse.
Id.
As a result, the duration of such an alimony award can be “limited or
extended depending on the realistic needs of the economically dependent
spouse, tempered by the goal of facilitating the economic independence of the
ex-spouses.” Id. at 540-41.
Alimony is not an absolute right. Id. at 540. Whether alimony is awarded
depends on the circumstances of each particular case.
Id.
In determining
whether to award alimony, the district court is to consider the factors in Iowa
Code section 598.21A(1) (2007).
That section allows the court to consider
(1) the length of the marriage; (2) the age and physical and emotional health of
the parties; (3) the property distribution; (4) the educational level of the parties at
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the time of the marriage and at the time the dissolution action is commenced;
(5) the earning capacity of the party seeking alimony; and (6) the feasibility of the
party seeking alimony becoming self-supporting at a standard of living
reasonably comparable to that enjoyed during the marriage.
§ 598.21A(1)(a)-(f).
Iowa Code
We only disturb the district court’s decision if there is a
failure to do equity. Anliker, 694 N.W.2d at 540.
In this case, the district court did not award alimony to Jack. The court
considered the factors listed in section 598.21A and determined Jack was
capable of being self-supporting without receiving alimony. As the court stated:
Jack is 41 years of age, and now enjoying good physical and
mental health. Substantial assets will be distributed to him in this
action. He has a college degree and has demonstrated an ability to
succeed as a manager, with the capacity to earn $55,000 per year.
All Jack must do to realize this potential is remain sober. This
would allow him to be self-sufficient. Although he relapsed after a
month of in-patient alcohol abuse treatment at Hazelton, he seems
to have benefitted from treatment while incarcerated for 120 days in
the Scott County Jail.
Upon our de novo review, we find the district court’s decision not to award
alimony is equitable in this case.
Although the parties were married for
seventeen years and enjoyed an economically comfortable standard of living
during that time, we find Jack has the capacity to be self-sufficient without
alimony.
Jack is educated, in good health, and has commendable work
experience. He has earned $55,000 per year in the past and has successfully
worked in managerial positions.
After property distribution, Jack and Cindy have comparable assets.
Jack’s assets are substantial, including nearly one-half million in investments and
other funds.
Furthermore, Jack was ordered to receive an equity settlement
10
payment from Cindy in the amount of $100,000, even after subtracting $41,389
for the child support trust. We also note that the court did not impute Jack’s
income and ordered Jack to pay only $345 per month in child support. This
amount was based on Jack’s income of $1332 per month, despite the fact that
Jack conceded he had an earning capacity of $55,000 per year. Given these
facts, and considering Jack’s history of wasting assets while being unemployed
or underemployed due to his alcoholism and incarceration, we cannot find Jack is
without the assets and earning capacity to be self-supporting at a standard of
living reasonably comparable to that he enjoyed during the parties’ marriage. We
conclude the district court’s decision with regard to alimony is equitable and
affirm on this issue.
IV. Issues on Cross-Appeal.
Cindy argues the district court erred (1) in failing to impute Jack’s income
for purposes of child support and the child support trust and (2) in failing to
consider Jack’s wasting of assets and Cindy’s increase in assets during the
marriage. We have already determined the district court’s decision with regard to
these issues was just and equitable.
Because we find the court’s decision
equitable, we will not further address Cindy’s contention that the court should
have imputed Jack’s salary and considered Jack’s wasting of assets and Cindy’s
increase in assets.
Cindy further contends the court erred in failing to award her trial attorney
fees. An award of attorney fees is not a matter of right, but rather rests within the
court’s discretion. In re Marriage of Hocker, 752 N.W.2d 447, 451 (Iowa 2008).
We review the district court’s award of attorney fees for abuse of discretion.
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Sullins, 715 N.W.2d at 255.
An award of attorney fees is based upon the
respective abilities of the parties to pay the fees and whether the fees are fair
and reasonable. In re Marriage of Applegate, 567 N.W.2d 671, 675 (Iowa Ct.
App. 1997). Considering Cindy’s income and substantial assets, we conclude
the district court did not abuse its discretion in deciding not to award attorney
fees to Cindy.
V. Appellate Attorney Fees.
Both parties request attorney fees on appeal.
This court has broad
discretion in awarding appellate attorney fees. In re Marriage of Okland, 699
N.W.2d 260, 270 (Iowa 2005). An award of appellate attorney fees is based
upon the needs of the party seeking the award, the ability of the other party to
pay, and the relative merits of the appeal. Id.; In re Marriage of Berning, 745
N.W.2d 90, 94 (Iowa Ct. App. 2007). Given the relative asset position of the
parties, we deny their requests for appellate attorney fees. Costs on appeal are
assessed one-half to Jack and one-half to Cindy.
AFFIRMED.
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