Coufal v. Coufal
Decision Date | 17 July 2015 |
Docket Number | No. S–14–591,S–14–591 |
Citation | 866 N.W.2d 74 |
Parties | Dale J. Coufal, appellant, v. Lavon M. Coufal, appellee. |
Court | Nebraska Supreme Court |
Kent A. Schroeder, of Ross, Schroeder & George, L.L.C., Kearney, for appellant.
Gregory G. Jensen, P.C., L.L.O., Taylor, for appellee.
Heavican, C.J., Wright, Connolly, Stephan, McCormack, Miller–Lerman, and Cassel, JJ.
1. Divorce: Appeal and Error.In actions for dissolution of marriage, an appellate court reviews the case de novo on the record to determine whether there has been an abuse of discretion by the trial judge.
2. Judges: Words and Phrases.A judicial abuse of discretion exists when the reasons or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in matters submitted for disposition.
3. Divorce: Child Custody: Child Support: Property Division: Alimony: Attorney Fees: Appeal and Error.In actions for dissolution of marriage, an appellate court reviews the trial court's determinations regarding custody, child support, division of property, alimony, and attorney fees de novo on the record to determine whether there has been an abuse of discretion.
4. Divorce: Property Division: Pensions.In dissolution actions, district courts have broad discretion in valuing pension rights and dividing such rights between the parties.
5. Divorce: Property Division.In a divorce action, the purpose of a property division is to distribute the marital assets equitably between the parties.
6. Divorce: Property Division.As a general rule, all property accumulated and acquired by either spouse during a marriage is part of the marital estate.
7. Divorce: Property Division: Pensions.Only that portion of a pension which is earned during the marriage is part of the marital estate.
8. Divorce: Property Division: Pensions.Generally, amounts added to and interest accrued on such pensions or retirement accounts which have been earned during the marriage are part of the marital estate. Contributions to pensions before marriage or after dissolution are not assets of the marital estate.
This is an appeal from a decree of dissolution of marriage in which the district court included in the marital estate the increase in value of the premarital portion of the husband's public employees' retirement account. Prior to the marriage, the increase in value was fixed and guaranteed by statute, but it accrued during the marriage. The court found that the increase in value was “ ‘earned’ or accumulated during the marriage” and that it should be included in an equitable division of the marital estate pursuant to Neb. Rev. Stat. § 42–366(8) (Reissue 2008). We find that the increase in value of the premarital portion of the husband's retirement account was not the result of the efforts or contributions of either spouse and, therefore, was not earned during the marriage.
In actions for dissolution of marriage, an appellate court reviews the case de novo on the record to determine whether there has been an abuse of discretion by the trial judge. Molczyk v. Molczyk, 285 Neb. 96, 825 N.W.2d 435 (2013). A judicial abuse of discretion exists when the reasons or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in matters submitted for disposition. Tyma v. Tyma, 263 Neb. 873, 644 N.W.2d 139 (2002).
Dale J. Coufal (Appellant) and Lavon M. Coufal (Appellee) were married on June 11, 2004. Each had one prior marriage, and no children were born during this marriage.
Appellant has been employed by the Nebraska Department of Roads since April 1986, including the time during the marriage. He participates in the Nebraska Public Employees Retirement Systems (NPERS), which is not a defined benefit plan that would apply to some state employees. Before the marriage, the balance of Appellant's retirement account was $76,271.45. Under Neb. Rev. Stat. § 84–1301(17) (Reissue 2014), members of NPERS are guaranteed a rate of return on their retirement plans of not less than 5 percent or the applicable federal midterm rate plus 1.5 percent. Appellant claimed that the premarital portion of the retirement account should be valued so as to include the statutorily guaranteed interest on the principal.
Appellant offered the testimony of David Rosenbaum as an expert witness for the purpose of establishing the present value of the premarital portion of Appellant's retirement account. Rosenbaum has a Ph.D. in economics from the University of Wisconsin–Madison. He has been employed in various teaching and administrative positions with the University of Nebraska–Lincoln for almost 30 years and is the owner of an economic consulting firm. Rosenbaum testified that as of May 6, 2013, the adjusted value of the premarital portion of the retirement account ($76,271.45) was $120,010.82. His calculation was based upon the statutory rate of return which the State must provide on the principal. After Rosenbaum determined his formulas, he verified with NPERS that his methodology was correct. The adjusted value of this part of Appellant's retirement account is not disputed.
The district court issued a decree of dissolution on May 5, 2014, in which it valued the retirement account at $219,830.07. The court concluded that the increased value of the premarital estate was accumulated and acquired during the course of the marriage through the joint efforts of the parties and
that, therefore, it was part of the marital estate. The court found that the interest accruing on the premarital portion of the retirement account did not fit into any exception to the general rule that property acquired by either party during the marriage is included in the marital estate.
Appellant contends that the district court abused its discretion in including the interest accruing on the premarital portion of the retirement account as part of the marital estate. He asserts that because the increased value on the premarital principal of the retirement account was guaranteed by § 84–1301, it was not due to the joint efforts of the spouses and, therefore, was not “ ‘earned during the marriage.’ ” See brief for appellant at 4. We granted Appellant's petition to bypass to address this issue.
Appellant claims that the district court abused its discretion by not excluding from the marital estate the interest accrued on the nonmarital portion of the retirement account. Appellant asserts the court should have excluded the statutorily guaranteed appreciation of $43,739.37, because the increase resulted solely from the appreciation under § 84–1301 and was not the result of the joint efforts of the parties.
the purpose of a property division is to distribute the marital assets equitably between the parties. Neb. Rev. Stat. § 42–365 (Reissue 2008). Equitable property division under § 42–365 is a three-step process. The first step is to classify the parties' property as marital or nonmarital. Tyma, supra .
In dissolution actions, § 42–366(8) confers upon the court the power to equitably divide the marital estate and to include any pension or retirement plans, annuities, and other deferred compensation as part of the marital estate.
As a general rule, all property accumulated and acquired by either spouse during a marriage is part of the marital estate. Reed, supra . Applying this general rule to pensions, we have held that only that portion of a pension which is earned during the marriage is part of the marital estate. See Blaine v. Blaine, 275 Neb. 87, 744 N.W.2d 444 (2008). Generally, amounts added to and interest accrued on such pensions or retirement accounts which have been earned during the marriage are part of the marital estate. Contributions to pensions before marriage or after dissolution are not assets of the marital estate. See Shockley v. Shockley, 251 Neb. 896, 560 N.W.2d 777 (1997).
In the case at bar, Appellant claims that the district court abused its discretion by including as part of the marital estate the increase in value of the premarital portion of the account. The question presented is whether the increase in value of the premarital portion of the retirement account should be considered as part of the marital estate.
Other courts have concluded that an increase in value of such property during the marriage is not a marital asset when it is not caused by marital efforts or funds. “Appreciation in separate property is marital property to the extent that it was caused by marital funds or marital efforts; otherwise, it remains separate property.” 1 Brett R. Turner, Equitable Distribution of Property § 5:54 at 546 (3d ed. 2005). As early as 1983, one annotation stated:
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