Schenkelberg v. Schenkelberg
| Decision Date | 26 October 2012 |
| Docket Number | No. 10–1919.,10–1919. |
| Parties | In re the MARRIAGE OF Julianne R. SCHENKELBERG and Gary W. Schenkelberg. Upon the Petition of Julianne R. Schenkelberg, Appellant, and Concerning Gary W. Schenkelberg, Appellee. |
| Court | Iowa Supreme Court |
OPINION TEXT STARTS HERE
J.C. Salvo and Bryan D. Swain of Salvo, Deren, Schenck & Lauterbach, P.C., Harlan, for appellant.
Gregory J. Siemann of Green, Siemann & Greteman, P.L.C., Carroll, for appellee.
On further review, a spouse asks us to determine the validity of a premarital agreement, the fairness of a property settlement, the sufficiency of the spousal support, and the denial of expert fees incurred by a spouse's attorney in preparation of the case for trial. The court of appeals affirmed the district court decision upholding the premarital agreement, the property settlement, and the award of spousal support. The court of appeals also upheld the district court's denial of the expert fees. We affirm the court of appeals opinion and the district court decision concerning the premarital agreement and the distribution of property, because we agree with the court of appeals that the premarital agreement was valid and the property settlement was equitable. Thus, the court of appeals opinion on these issues will stand as our final decision. However, we disagree with the court of appeals opinion and the district court decision regarding the spousal support award and the expert fees. Accordingly, we vacate that part of the court of appeals opinion and modify the district court decision regarding spousal support to require spousal support in the sum of $7000 per month until the spouse's death or remarriage. We also vacate that part of the court of appeals opinion regarding the expert fees and modify the award of attorney fees to require an additional payment of $17,050 in attorney fees for the expert services provided to the other spouse's attorney.
This appeal involves the dissolution of marriage between Gary and Julianne Schenkelberg. In a bifurcated trial, the district court found the parties' premarital agreement was valid under Iowa Code chapter 596 (2009), the Iowa Uniform Premarital Agreement Act (IUPAA). The court finalized its decree in October 2010. The court divided the property pursuant to the premarital agreement by awarding Julianne $312,295 in property and Gary $1,769,517 in property. The court also awarded spousal support to Julianne in the sum of $5000 per month until age sixty-two, her death, or her remarriage. The payments then reduced to $2000 until age seventy, her death, or her remarriage. Finally, the court denied Julianne's request for Gary to pay her attorney for the expert fees incurred in preparation of the case.
Julianne appealed, contending the premarital agreement was void, the property settlement was inequitable, the spousal support was inadequate, and the denial of expert fees was improper. We transferred the case to the court of appeals. The court of appeals affirmed the district court on all issues. It also denied her appellate fees. Julianne then sought further review, which we granted.
In this appeal, Julianne raises four issues. She claims (1) the court erred in finding the premarital agreement was valid; (2) the court distributed the property inequitably, considering the terms of the premarital agreement and provisions of the IUPAA; (3) the court awarded an insufficient amount of spousal support; and (4) the court erred by not requiring Gary to pay the expert fees incurred by her attorney.
In considering an application for further review, we have the discretion to review all or part of the issues raised on appeal or in the application for further review. In re Marriage of Becker, 756 N.W.2d 822, 824 (Iowa 2008). In exercising our discretion, we choose only to review the support award and the expert fees. Therefore, we will let the court of appeals' affirmance of the district court's decision concerning the premarital agreement and the property distribution stand as the final decision of this court. See Hills Bank & Trust Co. v. Converse, 772 N.W.2d 764, 770 (Iowa 2009).
Appeals regarding the dissolution of marriage are equitable proceedings. Iowa Code § 598.3. Therefore, our standard of review is de novo. In re Marriage of Morris, 810 N.W.2d 880, 885 (Iowa 2012); seeIowa R.App. P. 6.907. Although we give weight to the factual determinations of the district court, their findings are not binding upon us. Iowa R.App. P. 6.904(3)( g ); In re Marriage of Brown, 776 N.W.2d 644, 647 (Iowa 2009).
We review an award of attorney fees that includes expert fees for an abuse of discretion. In re Marriage of Maher, 596 N.W.2d 561, 568 (Iowa 1999); see also In re Marriage of Muelhaupt, 439 N.W.2d 656, 662–63 (Iowa 1989). An abuse of discretion occurs when the district court exercises its discretion “on grounds or for reasons that are clearly untenable or to an extent clearly unreasonable.” State v. Nelson, 791 N.W.2d 414, 419 (Iowa 2010); Graber v. City of Ankeny, 616 N.W.2d 633, 638 (Iowa 2000). “A ground or reason is untenable when it is not supported by substantial evidence or when it is based on an erroneous application of the law.” Graber, 616 N.W.2d at 638.
On our de novo review, we make the following findings of fact. Gary and Julianne Schenkelberg married on July 4, 1994. Both were previously married to others and obtained their respective dissolutions in 1993. Julianne had four children from her first marriage. Gary had six children by his first wife. All of their children have attained majority. Prior to their nuptials, Gary and Julianne entered into a binding premarital agreement.
The couple's Iowa tax returns for the years 2005–2009 show Julianne made little to no income. However, the records indicate that Gary's wage, income, and dividend income for those years was as follows:
2005 $182,329
2006 $174,654
2007 $187,068
2008 $250,603
Additionally, the records reveal that his subchapter-S corporation gave Gary a schedule K–1, and that on the K–1, he received the following taxable distributions:
2005 $134,824
2006 $159,916
2007 $200,381
2008 $243,701
Gary claimed his income was limited to his wages and that the K–1 distributions were not actually available to him. The district court agreed and found Gary's average income for computing spousal support for the years 2005–2009 was $208,000.1 In reaching this conclusion, the court disregarded all distributions from the subchapter-S corporation. Based on this finding, the court awarded Julianne spousal support in the amount it did.
We disagree with the court's calculation of Gary's income for the years 2005–2009 and find his income was substantially higher. We base our finding on the following evidence presented at trial.
The accountant for Gary and the subchapter-S corporation explained that the corporation sometimes distributed additional money to the shareholders, including Gary, in the form of loans. Gary testified that he had received distributions from the corporation, which he used to pay back his loans arising from business and tax liabilities.However, there are no documents in the record showing that Gary ever signed a note or had any indebtedness to the corporation. This testimony alone justifies a finding that Gary's income was higher than what the district court and the court of appeals calculated.
Gary's individual tax returns, as well as the corporation's tax returns and balance sheets, also suggest Gary's income was higher. Gary's tax returns show he paid federal and state taxes for the years 2005–2009 as follows:
2005 $88,482
2006 $91,474
2007 $115,102
2008 $167,097
Gary could not have afforded to pay this amount of taxes unless he received a distribution from the corporation. Gary argues that if he did receive any such funds, the distribution was in the form of a loan that he was obligated to pay back. However, the evidence shows that even if these were loans, he paid them back in full by 2009.
The subchapter-S tax returns indicate the outstanding loans to shareholders for the years 2005–2009 were as follows:
2005 $1,529,501
2006 $1,462,556
2007 $1,123,155
2008 $902,287
These figures demonstrate that even if he received a loan from the corporation, there were no loans outstanding as of 2009. Therefore, the corporation either forgave the debt or made distributions to him to retire the loan. In other words, he had sufficient income to pay his taxes in full for the years 2005–2009 without sacrificing his lifestyle or incurring any debt. It is logical to conclude that Gary must have received more than just wages from the corporation, because his only source of income was from the corporation.
The corporate balance sheets also support our conclusion that Gary received more income from the corporation than just his wages. The tax records of the corporation indicate that the total schedule K–1 distribution to all the shareholders 2 for the years 2005–2009 was as set forth below:
2005 $607,392
2006 $720,044
2007 $926,522
2008 $1,224,804
Additionally, the balance sheets for the subchapter-S corporation indicate that the shareholders' equity in the corporation for the years 2005–2009 was as follows:
2005 $1,403,588
2006 $1,447,195
2007 $1,447,195
2008 $1,447,195
If the corporation was retaining distributions as Gary argued, the shareholders' equity should have increased dramatically. As illustrated above, it did not.
From these documents, the figures contained therein, and the testimony of Gary and the accountant, it is apparent that Gary was getting substantial distributions from the corporation above his wages. This evidence leads us to find that Gary's average income for the years 2005–2009 was more than $400,000 per year, not just $208,000 as found by the district court.
As for Julianne's expenses, we agree that her estimate of $7028 in monthly expenses...
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