Grothen v. Grothen
| Decision Date | 31 December 2020 |
| Docket Number | No. S-19-472.,S-19-472. |
| Citation | 952 N.W.2d 650,308 Neb. 28 |
| Parties | Timothy Ray GROTHEN, appellant, v. Martha Sue GROTHEN, appellee. |
| Court | Nebraska Supreme Court |
Richard L. Alexander, of Richard Alexander Law Office, Hastings, for appellant.
Robert J. Parker, Jr., of Seiler & Parker, P.C., L.L.O., Hastings, for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.
On appeal to the Nebraska Court of Appeals, Timothy Ray Grothen claimed that the district court for Adams County erroneously denied his application for modification of his alimony obligation in the decree dissolving his marriage to Martha Sue Grothen. The Court of Appeals affirmed the district court's order denying modification and reasoned, in part, that because the original alimony award was agreed to by the parties as part of a property settlement agreement, the alimony provision could not be modified in the absence of fraud or gross inequity, which Timothy had failed to show. See Grothen v. Grothen , 28 Neb. App. 505, 945 N.W.2d 902 (2020). We granted Timothy's petition for further review.
We conclude that the district court properly used the good cause standard set forth in Neb. Rev. Stat. § 42-365 (Reissue 2016) and that it did not err when it determined that, under that standard, modification of alimony was not appropriate. We further conclude that although the Court of Appeals erroneously applied a fraud or gross inequity standard to modification of alimony, it nevertheless reached the correct result when it affirmed the denial of modification of alimony. We therefore affirm the decision of the Court of Appeals, which affirmed the district court's order denying modification.
In August 2012, the district court filed a decree dissolving Timothy and Martha's marriage. The decree incorporated the parties’ property settlement agreement, pursuant to which they agreed, inter alia, that Timothy would be awarded farmland that was the bulk of the marital estate and that he would pay Martha $600,000 in cash. The parties also agreed that Timothy would pay Martha alimony of $2,500 per month for 15 years.
In April 2018, Timothy filed an application to modify his alimony obligation. He alleged that his income, which came mainly from growing corn and soybeans on the farmland he owned and on other farmland he rented, had decreased significantly since 2012. At a hearing on the application in March 2019, Timothy presented evidence that he was no longer farming two of four rented quarter sections he had farmed in 2012, that rent he paid on the two quarter sections he was still farming had doubled since 2012, and that crop prices for corn and soybeans in 2018 were half of what they had been in 2012. The property settlement in 2012 had been determined based in part on Timothy's 2011 tax return which reported farm income of $167,955; Timothy's 2018 tax return reported a farm loss of $3,973. Conversely, Timothy's annual financial statements showed that his net worth in 2012 was $1.553 million and that by 2018, it had increased to $1.82 million, the bulk of which was farmland valued at $1.76 million.
Martha cross-examined Timothy regarding efforts he could undertake to continue making alimony payments, such as finding additional farmland to rent or obtaining an operating loan using the farmland he owned as collateral. Timothy testified that he always kept his "radar out" but had not specifically sought to replace the rented quarter sections, and although he admitted he had not asked the bank about a loan, he testified that it was the bank's policy to give loans based only on ability to repay and not on assets or equity. Timothy also testified that he had not been able to save his earnings from the "boom" years of 2011 and 2012 because he had taken out a loan to pay the $600,000 property settlement obligation to Martha and that the money he might otherwise have saved had been applied to that loan.
Martha also presented evidence regarding her current financial circumstances. Martha had stayed home during the marriage to raise the parties’ three children, but at some point, she had begun working at a small gift shop the parties owned. She continued working at the gift shop after the divorce, but she testified that the business was not profitable. She also testified that since the divorce, she had had various medical issues that increased her expenses and limited her ability to obtain employment other than working in the gift shop where she had more control over her activities.
After the hearing, the court entered an order denying Timothy's application for modification of alimony. The court began its analysis by citing § 42-365, which provides in part that alimony may be modified or revoked for "good cause" shown. The court cited Metcalf v. Metcalf , 278 Neb. 258, 265, 769 N.W.2d 386, 391 (2009), for the proposition that for purposes of § 42-365, "[g]ood cause means a material and substantial change in circumstances and depends upon the circumstances of each case." The court noted that Martha argued that because the decree of dissolution in this case incorporated a property settlement agreement, it was a "consent decree [that] is accorded greater force than ordinary judgments and ordinarily will not be modified over [the] objection[s] of one of the parties." However, the court's modification analysis focused on whether there had been a material change in circumstances.
The court concluded that Timothy had not shown a material change in circumstances that warranted modification of alimony. In reaching this conclusion, the court cited precedent regarding factors that should be considered with regard to a request to modify alimony. Factors the court stated it considered were as follows: that a change in circumstances does not warrant modification if the change was in the contemplation of the parties at the time of the decree (citing Metcalf v. Metcalf, supra ); that in determining whether there has been a material change in circumstances, the court should compare the financial circumstances of the parties at the time of the decree with their financial circumstances at the time modification is requested (also citing Metcalf v. Metcalf, supra ); and that in determining whether alimony is appropriate, a court should consider the fact that one of the parties has been awarded all the income-producing property from the marriage (citing Grams v. Grams , 9 Neb. App. 994, 624 N.W.2d 42 (2001) ). The court determined that each of these considerations weighed against modification of alimony in this case.
The court stated that Timothy relied on changes in the farm economy to argue that there had been a material change in circumstances with respect to his income, but the court reasoned that an experienced farmer would know that farm prices are cyclical and that therefore, a fluctuation in commodity prices was something that would have been in the contemplation of the parties at the time the decree was entered in 2012. The court rejected Timothy's contention that because of decreased income, he could not make the alimony payments. The court reasoned that Timothy could borrow $30,000 to pay the alimony. Noting Timothy's net worth of $1.82 million, the court specifically discredited Timothy's testimony that he could not borrow $30,000.
Regarding the parties’ comparative financial circumstances, the court noted that Timothy was awarded the bulk of the marital estate and that his net worth was much greater than Martha's. The court determined that the $600,000 payment from Timothy to Martha was not sufficient to equalize the parties’ relative financial circumstances and that therefore, it was clear that alimony was awarded to Martha to make the equities as between the parties closer to a 50-50 split. The court finally reasoned that if it were to reduce or terminate Timothy's alimony obligation, it would be unfair to Martha and a windfall to Timothy because Timothy's net worth was substantially greater than Martha's and Timothy had been awarded the main income-producing property in the dissolution.
In its order, the district court also cited precedent to the effect that the doctrine of unclean hands will bar an application for modification of child support or alimony if the applicant has not satisfied existing obligations and the failure to pay is found to be willful. The court stated that Timothy had failed to pay monthly alimony since April 2018, when he filed his application for modification, and the court found that Timothy's failure to pay alimony was "willful because he had the financial ability to borrow the money and chose instead to pay nothing for a year after having previously been found in contempt." In addition to denying Timothy's application for modification, the court ordered Timothy to pay Martha's attorney fees and to pay costs of the action.
Timothy appealed the denial of his application for modification of alimony to the Court of Appeals. He claimed that the district court erred when it (1) denied his application to modify alimony, (2) determined that his failure to pay alimony was willful and therefore the doctrine of unclean hands precluded him from obtaining a modification of alimony, and (3) awarded attorney fees to Martha. The Court of Appeals concluded that the district court did not abuse its discretion when it denied the application for modification on its merits. Because of this conclusion, the Court of Appeals stated that it need not consider the alternative basis for denying the application based on the unclean hands doctrine. The Court of Appeals also concluded that the district court did not abuse its discretion when it awarded attorney fees to Martha. The Court of Appeals therefore affirmed the district court's order, which denied Timothy's application to modify alimony and awarded attorney fees to Martha.
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