In re Marriage of Crosby

• Citation: 699 N.W.2d 255
• Decision Date: 01 July 2005
• Docket Number: No. 03-1919.,03-1919.
• Parties: In re MARRIAGE OF Jean Marie CROSBY and Clayton Crosby, Jr. Upon the Petition of Jean Marie Crosby, Appellee, and Concerning Clayton Crosby, Jr., Appellant.
• Court: Iowa Supreme Court

699 N.W.2d 255

In re MARRIAGE OF Jean Marie CROSBY and Clayton Crosby, Jr.

Upon the Petition of Jean Marie Crosby, Appellee, and

Concerning Clayton Crosby, Jr., Appellant.

No. 03-1919.

Supreme Court of Iowa.

July 1, 2005.

Joseph G. Bertogli, Des Moines, for appellant.

Patrick H. Payton of Patrick H. Payton & Associates, P.C., Des Moines, for appellee.

LARSON, Justice.

The respondent in this case, Clayton Crosby, appeals from a property division in the decree of dissolution of the marriage between Clayton and his wife, Jean. The court of appeals modified and affirmed the decree. We vacate the decision of the court of appeals, affirm and modify the decree, and remand.

I. Facts and Prior Proceedings.

In September 2002 Jean Crosby filed a petition for dissolution, following an eleven-year marriage to Clayton. The couple did not have children together, but they each had children from other marriages. At the time of the decree in 2003, Jean was thirty-eight. She had been employed throughout most of the marriage as a registered nurse and earned approximately $44,000 per year. She contributed to social security and also had a private pension plan. Clayton was forty-six and was employed by the United States Postal Service, where he had worked since 1975. He earned approximately $62,000 per year and participated in two retirement systems: civil service retirement, which is in lieu of social security, and a Thrift Savings Plan, which is similar to a 401(k) plan.

Clayton suffered a stroke in 2001, and he continues to have residual effects from it. He testified that he might lose his job because the complications from his stroke often caused him to miss work. Although he was able to use sick leave to cover most of his absences up to the time of trial, he only had eight hours of paid sick leave left, and he speculated that he would need to take leave without pay in the future, or possibly take early retirement.

Three months after Jean filed for dissolution, the district court entered a temporary order resolving the couple's disputes concerning their home; Clayton wanted to keep it, while Jean wanted to sell it. The court ordered the parties to sell the home, but granted Clayton temporary possession until it was sold, provided he pay the first and second mortgage payments. Clayton, however, failed to pay the first mortgage installments, which resulted in the initiation of foreclosure proceedings and $1610 in attorney fees. He also refused to produce the abstract for continuation, claiming it was lost, resulting in an $835 replacement fee.

After receiving an offer on the house, Clayton refused to sign the deed and closing documents. On April 30, 2003, the district court ordered the sale of the house without Clayton's signature. Between the time the parties received the offer to buy and the closing, Clayton's son burned a large hole in the carpeting, resulting in a $1500 deduction from the sale price. Clayton asked if he could keep some patio bricks, and the buyers agreed, deducting $1000 from the sale price. Clayton took some patio flagstones as well, resulting in another $1286 deduction.

II. The District Court's Property Award.

A. The house. The district court divided the proceeds of the house sale by taking the gross sale price and deducting the mortgage balances to come to a net amount for distribution of $46,528.77. The court divided that figure in half, allocating $23,264.38 to each party. The court then deducted from Clayton's share all of the expenses, such as the delinquent mortgage payments accrued while he was under court order to pay them, the deduction for the bricks and flagstones, the foreclosure costs caused by his failure to pay the mortgage payments, damage to the carpet, the replacement of the abstract, and cleaning and moving expenses. As a result of these expenses, the district court concluded that Jean should receive $38,996.22 and Clayton should receive $7532.54 from the house proceeds.

Clayton complains that this distribution is inequitable to him because the $46,528.77 received from the buyers already reflected the items set out above for which Clayton was ultimately required to reimburse Jean. He contends that to deduct them again in computing his share effectively charges him more than once for the reduction in value he caused.

The net sale proceeds were $46,528.77. The district court deducted from Clayton's share all of the expenses caused by him, which included:

Bricks and flagstones $ 2,286.00 Carpet damage 1,500.00 Clayton's court-ordered mortgage 8,900.15 payments Abstract replacement 835.00 Attorney fees on foreclosure 1,610.00 __________ Total expenses attributed to Clayton $15,131.15

Adding this $15,131.15 to the net sale proceeds of $46,528.77 makes the amount the parties should have realized $61,659.92, if it had not been for Clayton's actions. Half of that amount is $30,829.96, and that is what Jean should be allowed (subject to adjustment for moving and cleaning expenses as discussed later). Clayton's $30,829.96 should be reduced by $15,131.15 for the expenses he created for a net of $15,698.81 (subject to adjustment for moving and cleaning expenses).

After the parties moved out of the home, Jean spent $203.52 for cleaning and $897.17 for moving expenses for a total of $1100.69. One-half of that amount, or $550.35, should be added to Jean's share of the sale proceeds and the same amount deducted from Clayton's share. Jean's total share of the sale proceeds is therefore $31,380.31 ($30,829.96 plus $550.35), and Clayton's total share is $15,148.46 ($15,698.81 less $550.35). The decree should be modified accordingly.

B. The Thrift Savings Plan. The district court divided Clayton's Thrift Savings Plan by treating it as a 401(k) retirement account. The court combined the total value of the couple's accounts and then split the sum equally between them. At the time of trial, Jean's account was valued at $5726.84 and Clayton's at $51,757.53. The total of the two accounts was $57,484.37, and each party was awarded half or $28,742.18. The district court awarded Jean her own retirement account plus $23,015.34 from Clayton's account to reach that total. The court then deducted Jean's attorney fees of $5000 from Clayton's share as well as $14,237.13, representing: the value of a 1994 Mazda, one-half half of Clayton's toy bank collection, "unreturned items" claimed by Jean, credit card charges, and one-half of the parties' bank account. The total of attorney fees and other charges to be deducted from Clayton's retirement account was $19,237.13, plus the $23,015.34, representing Jean's share of the parties' combined retirement accounts. The total deduction to be allocated to Jean from Clayton's thrift plan account amounted to $42,252.47. Clayton would retain only $9505.06. The court ordered that Jean's share would be secured by a qualifying domestic relations order (QDRO) to obligate the Thrift Savings Plan to pay this amount to Jean.

Clayton does not complain about the fifty-fifty division of the parties' accounts, but he does complain that the district court should not have reduced his thrift share to compensate Jean for her attorney fees and marital assets not related to retirement. He claims

in doing so the Court mixed the concepts of the division of retirement assets with the division of non-retirement assets which is inappropriate and also fails to take into consideration ... the tax consequences of such a decision.

Clayton does not elaborate on what the "tax consequences" would be, but we agree...