IN RE THE MARRIAGE OF DONNA LEE SULLINS AND RAYMOND W. SULLINS Upon the Petition of DONNA LEE SULLINS
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IN THE SUPREME COURT OF IOWA
No. 42 / 04-0950
Filed May 12, 2006
IN RE THE MARRIAGE OF DONNA LEE
SULLINS AND RAYMOND W. SULLINS
Upon the Petition of
DONNA LEE SULLINS,
Appellee,
And Concerning
RAYMOND W. SULLINS,
Appellant.
________________________________________________________________________
On review from the Iowa Court of Appeals.
Appeal from the Iowa District Court for Polk County, Sherman W.
Phipps, Judge.
Appeal from district court’s division of property in dissolution case.
DECISION OF COURT OF APPEALS VACATED; DISTRICT COURT
JUDGMENT AFFIRMED AS MODIFIED AND REMANDED.
Raymond W. Sullins, West Des Moines, pro se.
Andrew B. Howie of Hudson, Mallaney & Shindler, P.C., West
Des Moines, for appellee.
2
CADY, Justice.
Ray Sullins seeks further review of a decision by the court of
appeals affirming the property-distribution and attorney-fee provisions of
a district court decree for dissolution of marriage. He argues: (1) the
division of a retirement account was inequitable, (2) the court did not
properly consider his premarital retirement savings, (3) the division of
the parties’ other assets and liabilities was inequitable, (4) he should not
have been ordered to pay attorney fees, and (5) the court should have
ordered a postsecondary education subsidy for the parties’ daughter. We
vacate the decision of the court of appeals and affirm the decree of the
district court as modified.
I.
Background Facts and Proceedings
Ray and Donna Sullins were married on November 25, 1978.
Donna was a teacher in the West Des Moines school district at the time,
and Ray worked as a lawyer in the office of the Iowa Attorney General.
Donna had a bachelor’s degree in music education. Ray owned a house,
which he contributed to the marriage.
Donna contributed a car and
various household items to the marriage. She had also participated in
the Iowa Public Employees Retirement System (IPERS) for eight years
prior to the marriage, and had acquired a tax-sheltered annuity (TSA).
Ray had a variety of personal property as well as an IPERS account from
his employment with the attorney general. A year into the marriage, Ray
withdrew his IPERS funds and used them as a down payment on a new
home. Around the same time, Ray left the attorney general’s office and
began to work as a lobbyist.
Donna and Ray had three children:
Deborah, Stephen, and
Matthew. Deborah was born in 1981, Stephen was born in 1984, and
Matthew was born in 1986. Donna continued to work during this time
3
on a part-time basis, and later returned as a fulltime teacher.
Ray
transitioned from lobbying into the private practice of law. Donna also
took night and weekend classes, which enabled her to obtain her masters
degree in 2000.
After that time, the marriage began to deteriorate. Sadly, Donna
and Ray were confronted with more than their fair share of agony. Ray
had a series of problems in his professional career that culminated in the
revocation of his license to practice law in Iowa in 2002. That same year,
Donna and Ray faced a parent’s worst nightmare when Stephen, their
oldest son, tragically died. They also did not escape financial difficulties.
Their home was put up for tax sale on two occasions.
Donna filed for divorce in February 2003. At the time of the trial in
January 2004, Donna was fifty-six, and Ray was fifty-eight.
Their
daughter, Deborah, was twenty-two and was a fulltime student at
Northwestern College in St. Paul, Minnesota. She was in her final year of
school. Matthew was eighteen and was a senior at Waukee High School.
Donna was teaching fulltime, making approximately $54,000 per year.
Ray was working in sales, making approximately $81,000 per year.
The district court entered its decree in April 2004. The court found
Donna’s annuity, which she funded entirely before the marriage, and her
eight years of premarital IPERS contributions were not “part of the
marital assets” and awarded both to her.
The annuity was valued at
$4872. The court valued the IPERS account at $57,081.47. The court
awarded $35,247.81 of it to Donna, and $21,833.66 of it to Ray. 1
1The
court set aside eight thirty-fourths (23.5%) of the IPERS account
($13,414.14) for Donna as premarital property. Eight was the number of Donna’s
premarital contribution years, and thirty-four was the number of years she had
contributed up to the divorce. The court then divided the remainder of the IPERS
account ($43,667.33) equally between Donna and Ray, awarding each $21,833.67.
4
Including the premarital retirement savings, which the court treated as
Donna’s separate property, the court awarded Donna a total of
$275,198.31 in assets (consisting mainly of the house and retirement
accounts) and awarded Ray $57,236.16 in assets.
The court ordered
Donna to be responsible for $87,777.50 of the marital debt, and Ray to
be responsible for $17,454.50 of the debt (in addition to a $750,000
malpractice judgment against him).
To equalize the disparate equity
awarded to Donna, the court ordered her to pay Ray $61,676.53. The
court also ordered Ray to pay $7500 of Donna’s attorney fees.
Ray appealed, and we transferred the case to the court of appeals.
The court of appeals affirmed the decree in its entirety. Ray sought, and
we granted, further review.
II.
Standard of Review
We review dissolution cases de novo. In re Marriage of Schriner,
695 N.W.2d 493, 495 (Iowa 2005) (citing In re Marriage of Benson, 545
N.W.2d 252, 253 (Iowa 1996); Iowa R. App. P. 6.4).
“Although we decide
the issues raised on appeal anew, we give weight to the trial court’s
factual findings, especially with respect to the credibility of the
witnesses.” In re Marriage of Witten, 672 N.W.2d 768, 773 (Iowa 2003).
We review the district court’s award of attorney fees for an abuse of
discretion. Id. (citing In re Marriage of Benson, 545 N.W.2d at 258).
III.
Premarital Property
Iowa is an equitable distribution state. In re Marriage of Schriner,
695 N.W.2d at 496. This “means that courts divide the property of the
parties at the time of divorce, except any property excluded from the
divisible estate as separate property, in an equitable manner in light of
the particular circumstances of the parties.” Id. (citing In re Marriage of
McNerney, 417 N.W.2d 205, 207 (Iowa 1987)).
All property of the
5
marriage that exists at the time of the divorce, other than gifts and
inheritances to one spouse, is divisible property. Id. (citing Iowa Code
§ 598.21(1) (2003)).
Importantly, “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.”
Id. (citing In re Marriage of Brainard, 523 N.W.2d 611, 616 (Iowa Ct. App.
1994)).
Property brought into the marriage by a party is merely a
factor to consider by the court, together with all other
factors, in exercising its role as an architect of an equitable
distribution of property at the end of the marriage.
Id. (citing Iowa Code § 598.21(1)(b)).
In this case, the district court set aside Donna’s annuity as a
“premarital asset[]” and found that it “should not be considered part of
the marital assets.” This finding was contrary to our distribution scheme
in Iowa. The property is part of the divisible estate, just as is property
acquired during the marriage.
Id.
The trial court may place different
degrees of weight on the premarital status of property, but it may not
separate the asset from the divisible estate and automatically award it to
the spouse that owned the property prior to the marriage.
For the same reason, we reject Ray’s argument that he should be
entitled to a “credit” for the property and retirement savings he owned
before the marriage and integrated into the marital coffers. While this is
a factor to consider in achieving an overall equitable distribution, see
Iowa Code § 598.21(1)(b), it is one factor among many, see id. (a)-(m). It
does not automatically require Donna’s share of the property to be
reduced as a reimbursement for Ray’s premarital contributions. We turn
now to specifically consider the district court’s treatment of Donna’s
IPERS pension.
6
IV.
IPERS
Pensions are divisible marital property.
See In re Marriage of
Branstetter, 508 N.W.2d 638, 640 (Iowa 1993) (“Pensions in general are
held to be marital assets, subject to division in dissolution cases, just as
any
other
property.”
(Citations
omitted.));
see
also
Iowa
Code
§ 598.21(1)(i) (stating vested and unvested pensions are circumstances to
be considered in equitably dividing property).
There are two accepted
methods of dividing pension benefits: the present-value method and the
percentage method.
In re Marriage of Benson, 545 N.W.2d at 255; 24
Am. Jur. 2d Divorce and Separation §§ 585-86, at 747-50 (1998).
Additionally, there are two main types of pension plans: defined-benefit
plans and defined-contribution plans.
In re Marriage of Benson, 545
N.W.2d at 254.
Although both methods of dividing pension benefits can be used
with both types of pension plans, it is normally desirable to divide a
defined-benefit plan by using the percentage method. The present-value
method requires the present value of the benefits to be determined before
allocating a portion of the benefits to the pensioner’s spouse.
In re
Marriage of Benson, 545 N.W.2d at 255 (citing In re Marriage of
Branstetter, 508 N.W.2d at 642).
Present value derived under this
method “represents the ‘restatement in “current dollars” of a payment or
series of payments to a current lump sum equivalent.’ ” Dylan A. Wilde,
Note, Obtaining an Equitable Distribution of Retirement Plans in a Divorce
Proceeding, 49 S.D. L. Rev. 141, 150 (2003) [hereinafter Wilde] (quoting
Gary A. Schulman & David I. Kelly, Learning from the Pension Experts
Dividing Pensions in Divorce (1996)). Yet, the determination of present
value of a defined-benefit plan is a complicated process that requires the
use of actuarial science. In re Marriage of Benson, 545 N.W.2d at 255
7
(citing In re Marriage of Mott, 444 N.W.2d 507, 511 (Iowa Ct. App. 1989));
see also Thompson v. Thompson, 438 A.2d 839, 841 (Conn. 1981) (“The
present value of a pension benefit may be arrived at by using generally
[sic] actuarial principles to discount for mortality, interest and the
probability of the employee remaining with the employer until retirement
age.”); see 24 Am. Jur. 2d Divorce and Separation § 586, at 748 (stating
the present-value method “requires discounting to present value and
further discounting to account for the probability of death before
qualification for benefits and for vesting as well as consideration of the
employee’s life expectancy as a retiree”). 2
The complicated nature of determining the present value of a
defined-benefit plan and dividing the benefits, as well as the economic
difficulty for a pensioner to pay a lump-sum amount representing the
present value of a defined-benefit plan, normally makes the second
method of division and distribution of pensions much more attractive for
2When the plan at issue is a defined-contribution plan, like a 401(k), the
determination of the present value of the benefits and the distribution is less
complicated. In re Marriage of Benson, 545 N.W.2d at 256 n.1.
“The value of such plans is the amount of accumulated contributions
plus interest as of the valuation date. It follows that the value of the
[marital] interest in defined contribution plans is the amount of
contributions made during [the marriage] plus accumulated interest on
these contributions.”
Id. (quoting Phoebe Carter & John Myers, Division and Distribution of the Community
Interest in Defined Benefit Pensions: Schweitzer Reconsidered, 18 N.M. L. Rev. 95, 98
(1988)); see also Elizabeth Barker Brandt, Valuation, Allocation, and Distribution of
Retirement Plans at Divorce: Where Are We?, 35 Fam. L.Q. 469, 479 (2001) [hereinafter
Barker Brandt] (stating a defined-contribution plan “is worth the combined value of the
contributions to it and the growth and earnings on those contributions”); Wilde, 49 S.D.
L. Rev. at 152 (“When the retirement plan is a defined contribution plan that is vested,
there is no need to discount the contributions made by the employee to obtain the
present value of the retirement plan. Instead, the amount of the employee and/or
employer contributions and any accumulated earnings in the employee’s individual
account reflects the actual present value.”). It appears the district court treated
Donna’s IPERS as a defined-contribution plan.
8
defined-benefit plans. Under the second method to divide and distribute
a pension plan, the percentage method, the court awards a spouse a
percentage of the pension payable in the future at the time the benefits
mature.
IPERS is, of course, a defined-benefit plan.
See Iowa Code
§ 97B.49A(3) (“For active or inactive vested members retiring on or after
July 1, 1994, with four or more complete years of service, a monthly
benefit shall be computed which is equal to one-twelfth of an amount
equal to the applicable percentage of the three-year average covered
wages multiplied by a fraction of years of service.”); In re Marriage of
Benson, 545 N.W.2d at 254 (“[I]n a defined benefit plan the future benefit
is specified in advance by a formula.”). The plan uses a “percentage of
earnings per year of service formula, which provides a benefit that is
related to the employee’s earnings and length of service.” In re Marriage
of Benson, 545 N.W.2d at 254-55 (citing Steven R. Brown, An
Interdisciplinary Analysis of the Division of Pension Benefits in Divorce
and Post-judgment Partition Actions: Cures for the Inequities in Berry v.
Berry, 39 Baylor L. Rev. 1131, 1146 (1987)). Donna is a vested member.
See Iowa Code § 97B.1A(25)(a)(4) (stating a member is vested if he or she
“[h]as completed at least four years of service”).
In this case, the district court divided the IPERS pension based on
the current value of Donna’s personal contributions to the plan over the
years of the marriage at the time of the divorce. See id. § 97B.11 (“Each
employer shall deduct from the wages of each member of the system a
contribution in the amount of three and seven-tenths percent of the
covered wages paid by the employer, until the member’s termination
from employment.
The contributions of the employer shall be in the
amount of five and seventy-five hundredths percent of the covered wages
9
of the member.”).
This value was not based on actuarial evidence.
Instead, this value was obtained from information made available to
Donna showing the amount of her personal contributions over the years
and the interest earned on her personal contributions.
However, the
present value of her IPERS plan is more than the present value of her
contributions.
See In re Marriage of Scheppele, 524 N.W.2d 678,
679 (Iowa Ct. App. 1994) (“We note that if we do not include Marcia’s
employer’s contributions, the present value of Marcia’s contributions and
accrued interest in her IPERS plan is $26,000. However, the value of
Marcia’s IPERS pension is not limited to her vested contributions.”); In re
Marriage of Johnston, 492 N.W.2d 206, 208 (Iowa Ct. App. 1992) (“The
exact value of Karin’s IPERS pension is not ascertainable. We, like the
district court, will not assume the value is limited to Karin’s vested
contributions.
However, we disagree with Karin’s argument that a
remand to take actuarial testimony to value the pension is necessary.”).
In fact, the amount of Donna’s IPERS contributions has no relation to
the present value of her future benefits because the contributions are not
used to calculate benefits. Instead, the benefits are ultimately tied to a
percentage
of
the
employee’s
average
wages.
See
Iowa
Code
§ 97B.49A(3) (“For active or inactive vested members retiring on or after
July 1, 1994, with four or more complete years of service, a monthly
benefit shall be computed which is equal to one-twelfth of an amount
equal to the applicable percentage of the three-year average covered
wages multiplied by a fraction of years of service.”). Thus, the district
court’s valuation and distribution of Donna’s IPERS plan fell far short of
our accepted methods and was inequitable. Without actuarial evidence,
the district court could not have divided the retirement plan based on the
present value of Donna’s future benefits. See In re Marriage of Johnston,
10
492 N.W.2d at 208 (“The exact value of Karin’s IPERS pension is not
ascertainable. We, like the district court, will not assume the value is
limited to Karin’s vested contributions.”).
On our de novo review, we
conclude that the better way to divide and distribute the IPERS account
is to use the percentage method normally applicable to cases involving
IPERS. See In re Marriage of Scheppele, 524 N.W.2d at 680 (modifying
decree, where present value of IPERS account was not ascertainable on
the record, to order a QDRO using the percentage method to divide the
future benefits when received).
Under the percentage method, the non-pensioner spouse is
awarded a percentage (frequently fifty percent) of a fraction of the
pensioner’s benefits (based on the duration of the marriage), by a
qualified domestic relations order (QDRO), which is paid if and when the
benefits mature. In re Marriage of Benson, 545 N.W.2d at 255 (citing In
re Marriage of Branstetter, 508 N.W.2d at 642). The fraction represents
the portion of the pension attributable to the parties’ joint marital efforts.
Id. The numerator in the fraction is the number of years the pensioner
accrued benefits under the plan during the marriage, and the
denominator is the total number of years of benefit accrual. Id. (citing In
re Marriage of Mott, 444 N.W.2d at 511); accord Barker Brandt, 35 Fam.
L.Q. at 472-73.
Applying this method, we modify the decree to provide for a QDRO
to divide Donna’s monthly IPERS benefits when received under the
following formula:
# of quarters Donna contributed to IPERS while married 3
Ray’s Share = 50% × # of quarters Donna contributed to IPERS before retirement × Monthly Benefits
3IPERS shall use the number of quarters in each year covered during the
marriage period of November 25, 1978 through April 30, 2004.
11
This modification will require further adjustment of the district court’s
property distribution.
We will address the necessary adjustment after
considering the distribution of the other specific items with which Ray
takes issue.
V.
Other Property
A.
Trust Account
First, Ray complains the distribution scheme by the district court
gave him a credit of $7687 for funds in a trust account that did not
belong to him. Ray testified that the money represented client funds he
obtained as a lawyer that have never been withdrawn from the trust
account. Client funds in a trust account are property of the client, not
the lawyer. See Iowa Sup. Ct. Bd. of Prof’l Ethics & Conduct v. Apland,
577 N.W.2d 50, 55 (Iowa 1998). Only “property of the parties” is divisible
in a dissolution. Iowa Code § 598.21(1). Thus, the district court erred in
considering the trust account funds in its property distribution.
B.
2000 Saturn
Ray also contends the district court erred in considering the
Saturn vehicle to be Ray’s property and giving him a credit of $6250
(minus a $3366 loan) representing the value of the vehicle. We agree. It
was undisputed that Ray purchased the car for Deborah. It is owned by
Deborah and titled in her name.
Consequently, it should have been
excluded from the divisible estate. See id. (stating “the court shall divide
the property of the parties” (emphasis added)).
C.
1992 Buick
Ray argues the district court overvalued the 1992 Buick Park
Avenue awarded to him.
The district court valued it at $3000.
Ray
claims it was worth only about $2000. Donna valued it at $4000. There
was no other evidence offered on the value of the car, and we
12
consequently defer to the judgment of the district court.
See In re
Marriage of Witten, 672 N.W.2d at 773 (“Although we decide the issues
raised on appeal anew, we give weight to the trial court’s factual findings,
especially with respect to the credibility of the witnesses.”); In re Bare’s
Marriage, 203 N.W.2d 551, 554 (Iowa 1973) (stating we will not disturb
the district court’s valuation of assets if it was “within the permissible
range of the evidence”).
D.
Rowat Cut Stone Debt
We have said “that the allocation of marital debts inheres in the
property division.” In re Marriage of Johnson, 299 N.W.2d 466, 467 (Iowa
1980). In this case, the district court held Ray responsible for the entire
$3042 debt to Rowat Cut Stone. Ray argues the loan was used to pay
family expenses and therefore should be divided between him and
Donna.
Even though a debt may have been incurred by a party for
family expenses, it is not inequitable to order that party to be responsible
for the entire amount of the debt as long as the overall property
distribution is equitable. Debts of the parties normally become debts of
the marriage, for which either party may be required to assume the
responsibility to pay. 24 Am. Jur. 2d Divorce and Separation § 571, at
730. However, we recognize that Donna will be responsible for most of
the marital debts, and that Ray’s earning capacity is greater than
Donna’s. See Iowa Code § 598.21(1)(f), (i), (k). These factors, as well as
all other factors, including the allocation of all the debt between the
parties, are considered in determining the equitable division of all
property and debts.
E.
Debt to Ray’s Brothers
Ray claims he borrowed money from his father before his father
died, and that he was required to pay his brothers $18,000 to satisfy this
13
debt. He claims the debt should have been divided between the parties.
It was undisputed that Ray’s father loaned Ray and Donna money. The
evidence included a letter from Ray’s father, dated June 27, 1988,
indicating Ray and Donna owed him $26,100 at 9% interest. However,
Donna testified she thought the debt had been paid, and she was
unaware of Ray’s obligation to his brothers. The district court found the
evidence did not support Ray’s claim, and we decline to disturb the
district court’s credibility judgment. See In re Marriage of Witten, 672
N.W.2d at 773 (“Although we decide the issues raised on appeal anew, we
give weight to the trial court’s factual findings, especially with respect to
the credibility of the witnesses.”).
F.
Ray’s Income Tax Liability
Ray asserts Donna should be responsible for some of his income
tax liability for 2003 and 2004. Donna filed separate tax returns in 2003
and 2004. Ray owed $14,000 in income taxes for these years because he
failed to pay his quarterly self-employment taxes.
We conclude it would be inequitable for Donna to share in the
responsibility for Ray’s tax obligation under the circumstances. Ray’s tax
problems are self-imposed and largely the result of imprudent business
practices adopted to minimize the amount of funds available to satisfy a
personal judgment against him. While Ray neglected his tax obligations,
Donna paid her tax obligations from her wages. Cf. Duckett v. Duckett,
539 N.E.2d 556, 557 (Mass. App. Ct. 1989) (holding “the judge could
reasonably decide to leave each marital party to his or her debts in view
of the finding that the husband had been profligate in incurring personal
and business debts,” while the wife had been “fiscally responsible”);
Carter v. Carter, 626 N.W.2d 576, 580 (Neb. 2001) (“[A]n innocent spouse
who has filed separate tax returns, and paid his or her taxes in a timely
14
fashion, should not be forced to share in any statutory penalties for the
late filings of a dilatory spouse.” (citing Meints v. Meints, 608 N.W.2d 564
(Neb. 2000)). The tax debt assigned to Ray, which ultimately inheres in
the division of all the property, is only part of the overall debt
distribution, and the particular circumstances of the tax obligation
become a factor that benefits Donna in ultimately determining an
equitable distribution of all the property.
G.
Modified Property Distribution
The foregoing conclusions regarding the district court’s property
distribution require us to modify the overall property distribution. We
direct that Donna’s IPERS be divided under the percentage method using
a qualified domestic relations order. We also remove the trust account
funds and Deborah’s Saturn vehicle from the distribution scheme.
In
order to make the property division equitable, we find Donna should be
responsible for the entire amount of the joint debt for the burial plots
and the entire amount of the debt to the funeral home.
In addition,
taking into account that Donna has already paid Ray an equalizing
payment of $61,673.54, we modify the district court’s division of the
Pacific Mutual TSA to award Donna $24,391.03 and to award Ray
$21,154.97. 4
Ray shall remain solely responsible for his $750,000
malpractice judgment, as agreed by the parties.
4The
modified property division is as follows:
Marital Property
Homestead
AIG account
1998 Towncar
1994 GrandAm (Matthew)
1992 Buick Park Avenue
Truck (Ray’s Business)
Bankers Trust Checking (W)
Bankers Trust Savings (W)
Donna
$190,000
$4872
$9000
$2000
Ray
$3000
$1500
$84
$117
15
VI.
Postsecondary Education Subsidy
Under section 598.21(5A), a “court may order a postsecondary
education subsidy if good cause is shown.” Iowa Code § 598.21(5A). Ray
argues the district court erred by not ordering a postsecondary education
subsidy for Deborah.
An award of a postsecondary education subsidy first requires good
cause. Id. In determining good cause, the court considers:
the age of the child, the ability of the child relative to
postsecondary education, the child’s financial resources,
whether the child is self-sustaining, and the financial
condition of each parent.
________________________
Community Choice Account (W)
Financial Plus Account (J)
Wells Fargo Account (Deborah)
Wells Fargo Checking (J)
Wells Fargo Checking (W)
Wells Fargo Savings (Matthew)
Polk County Schools Credit Union
Furniture, Fixtures, Appliances, Personal Property
Pacific Mutual TSA
Pacific Mutual Life TSA
Mass Mutual
Equalizing payment
Total
Less Debts
Burial Plots
Capital One Card
Chase Card (Ray’s Business)
Citi Card (Deborah)
Mortgage
Lien on House
Special Assessment
MBNA (Ray’s Business)
Raddatz Funeral Home
Rowat Cut Stone
1998 Town Car
Total Debts
Total Equity
$371
$44
$40
$10
$306
$5
$1200
$7075
$24,391.03
$1,138.50
$969
($61,673.53)
$179,895
Donna’s Share
of Marital Debt
$9185
$3743
$5000
$21,154.97
$1,138.50
$61,673.53
$93,521
Ray’s Share of
Marital Debt
$2530
$2871
$58,859
$10,369
$398
$2174
$3500
$3042
$5195
$94,120
$85,775
$7746
$85,775
16
Id. § 598.21(5A)(a). Thus, if these factors fail to support good cause, no
subsidy is necessary. For example, the financial resources of the child,
along with other statutory factors, could justify a finding that a subsidy
is not needed.
If good cause is shown for a subsidy, the court must then
determine the amount. To do this, the cost of the college education is
first determined, based on the educational costs of attending an in-state
public institution.
Id. § 598.21(5A)(a)(1).
The amount the child can
reasonably expect to contribute, including contributions in the form of
student loans, is subtracted from the cost figure. Id. § 598.21(5A)(a)(2).
The amount that remains is apportioned to the parents, with a ceiling for
each parent equal to one-third of the cost of attending an in-state public
institution. Id. § 598.21(5A)(a)(3).
The district court determined that no college subsidy could be
ordered because Deborah was twenty-two years old. Although the age of
the child is a relevant factor in considering good cause for a subsidy, a
subsidy is defined under the statute to include children “between the
ages of eighteen and twenty-two.” Id. § 598.1(8). In this case, Deborah
was in her senior year in college at the time of the trial in January 2004,
and was scheduled to graduate in the near future. She would not turn
twenty-three until September 2004.
Thus, she satisfied the age
requirements for a subsidy. See In re Marriage of Neff, 675 N.W.2d 573,
581 (Iowa 2004) (interpreting the statute to mean children under the age
of twenty-three are eligible for a subsidy).
Moreover, she had an
outstanding tuition bill in the amount of $3109 at the time of trial. It is
this amount that Ray claims should be the basis of a subsidy allocated
between the parties.
17
The statutory subsidy provisions exist to help ensure that divorce
between parents will not become a financial impediment to a child’s
college education.
See generally Johnson v. Louis, 654 N.W.2d 886,
891 (Iowa 2002) (“The educational benefit is a quid pro quo for the loss of
stability resulting from divorce.”); In re Marriage of Vrban, 293 N.W.2d
198, 202 (Iowa 1980) (“[E]ven well-intentioned parents, when deprived of
the custody of their children, sometimes react by refusing to support
them as they would if the family unit had been preserved.” (Citation
omitted.)). The model used under the statute to accomplish this goal is
based solely on the costs of a college education at an in-state public
institution, and the statute then attempts to fairly allocate the costs
among the child and the parents. See Iowa Code § 598.21(5A)(a)(1)-(3).
Yet, this same cost component is also used to limit the amount of money
parents can be ordered to contribute by the court. Id. § 598.21(5A)(a)(3).
The subsidy, then, can fall short of providing a complete solution for all
circumstances, and it is far from a perfect answer to the financial burden
of attending college for most students of divorced parents.
This imperfection in the statute is especially evident for students of
divorced parents who desire to attend a private in-state college or an outof-state institution, where the costs will normally be significantly higher,
or for students, like Deborah, who were already attending an out-of-state
institution at the time of the divorce.
The statutory subsidy may not
fully assist these students because the court is not authorized to make a
parent responsible to pay more than one third of the cost of an in-state
public institution regardless of the cost of the institution attended.
Thus, the subsidy approach recognizes that the law cannot always
provide for a perfect solution to all problems, especially problems arising
from family matters. At the same time, this law necessarily recognizes
18
that former spouses remain parents of the children following divorce, and
are free to fill in the inevitable gaps properly left to them by the absence
of obligations imposed by the law, motivated by matters totally detached
from the divorce and intimately woven into the very fabric and meaning
of parenting. Cf. In re Marriage of Vrban, 293 N.W.2d at 202 (recognizing
that “most parents who remain married to each other support their
children through college years” even though they have no legal obligation
to do so). The law only imposes a minimum standard to guide conduct,
and it does not foreclose a level of conduct in excess of the legal
requirement.
In this case, the evidence is clear that Deborah received loans and
federal work-study money to attend an out-of-state college in excess of
the total costs of attending a public in-state college. Clearly, the subsidy
statute does not require a parent to contribute to the college education
costs when the child’s available contribution exceeds the cost of
attending an in-state public institution. Moreover, there is no evidence
that Deborah would not have been able to contribute similar amounts to
her own college education if she had attended an in-state college. Thus,
because Deborah’s contributions exceeded the cost of a public college
education in Iowa, Ray and Donna cannot be made legally responsible
under the statute to subsidize any additional costs of an out-of-state
college education. Instead, the issue is a matter left to the parents and
child.
VII.
Attorney Fees
The district court ordered Ray to pay $7500 of Donna’s trial
attorney fees. We review this award for an abuse of discretion.
In re
Marriage of Witten, 672 N.W.2d at 773. “Whether attorney fees should be
awarded depends on the respective abilities of the parties to pay.”
In re
19
Marriage of Guyer, 522 N.W.2d 818, 822 (Iowa 1994). Because Ray was
making more money than Donna at the time of trial and did not have to
pay any attorney fees of his own, we cannot say the district court abused
its discretion.
The court of appeals ordered Ray to pay $1000 of Donna’s
appellate attorney fees.
Appellate attorney fees are not a matter of right, but
rather rest in this court’s discretion.
Factors to be
considered in determining whether to award attorney fees
include: “the needs of the party seeking the award, the
ability of the other party to pay, and the relative merits of the
appeal.”
In re Marriage of Okland, 699 N.W.2d 260, 270 (Iowa 2005) (quoting In re
Marriage of Geil, 509 N.W.2d 738, 743 (Iowa 1993)). We disagree with
the court of appeals’ decision to award Donna appellate attorney fees.
Most of Ray’s arguments on appeal were meritorious.
Moreover, the
errors by the district court resulted from its near-wholesale adoption of
Donna’s proposed findings of fact and conclusions of law. Thus, we will
not order Ray to pay Donna’s attorney fees for an appeal largely based on
claims by Donna that were not only unsupported by principles of equity,
but were clearly detached from the governing statutory provisions.
Furthermore, the parties have the ability to pay their own attorney fees.
VIII. Conclusion
This district court decree is affirmed, as modified in the following
respects:
1.
Ray is awarded $21,154.97 of Donna’s Pacific Mutual TSA.
The balance, $24,391.03, is awarded to Donna.
2.
burial plots.
Donna shall be responsible for the full $9185 debt for the
20
3.
Donna shall be responsible for the full $3500 debt to
Raddatz Funeral Home.
4.
A QDRO shall be entered directing IPERS to pay benefits to
Ray as a marital property settlement under the following formula: 50%
of the gross monthly or lump-sum benefit payable at the date of
distribution to Donna, multiplied by the “service factor.” The numerator
of the service factor is the number of quarters covered during the
marriage period of November 25, 1978 through April 30, 2004, and the
denominator is Donna’s total quarters of service covered by IPERS and
used in calculating Donna’s benefit.
We remand the case for the district court to enter the QDRO
consistent with this opinion.
DECISION OF COURT OF APPEALS VACATED; DISTRICT
COURT JUDGMENT AFFIRMED AS MODIFIED AND REMANDED.
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