Schnackel v. Schnackel
| Citation | 937 N.W.2d 234,27 Neb.App. 789 |
| Decision Date | 26 November 2019 |
| Docket Number | No. A-18-428.,A-18-428. |
| Parties | Laura B. SCHNACKEL, appellee and cross-appellant, v. Gregory R. SCHNACKEL, appellant and cross-appellee. |
| Court | Court of Appeals of Nebraska |
Michael W. Milone and Mark J. Milone, of Koukol & Johnson, L.L.C., Omaha, for appellant.
Edward D. Hotz, of Pansing, Hogan, Ernst & Bachman, L.L.P., for appellee.
Gregory R. Schnackel (Greg) appeals, and Laura B. Schnackel cross-appeals, the order of the district court for Douglas County which dissolved the parties’ marriage, valued and divided the marital estate, and awarded alimony and child support to Laura. For the reasons that follow, we affirm the district court’s order as modified.
Greg and Laura were married in 1985 and had two children during the marriage. The older child had reached the age of majority before dissolution proceedings began, but the younger child had not. However, he turned 19 years old during the pendency of this appeal.
Laura filed a complaint for dissolution of marriage in July 2016. Trial was held over the course of several days in October 2017 and February 2018. The parties amassed significant assets during their marriage, and the record in this case is voluminous. Trial culminated in an extremely thorough, well-supported 96-page amended decree, plus attachments, by the district court. We briefly summarize the evidence presented at trial here and will include additional facts below as necessary to address the issues raised on appeal and cross-appeal.
After graduating from college in 1984, Greg began working for an engineering company owned and operated by his father, Dale Schnackel. In 1994, Dale created a partnership and gave Greg a 50-percent interest in it. In 2000, Dale transferred the remaining 50-percent interest in the partnership to Greg at a value of $106,750. As will be discussed below, there is a dispute as to whether the 2000 transfer from Dale to Greg was a gift or a purchase. After Greg gained control of the partnership, he transferred all of its interests into a newly formed Nebraska corporation, and in 2007, he changed the name of the corporation to Schnackel Engineers, Inc. (SEI).
AEA Integration, Inc. (AEA), was formed in 2003, and Greg is the president and sole shareholder. AEA is in the process of developing software to be used by SEI. SEI is currently AEA’s only customer, and through 2016, SEI had spent approximately $7.5 million in development costs for AEA. The software is not ready for use outside of SEI, and Greg estimated that it would not be ready for at least 5 more years.
Greg and Laura each called an expert witness to testify at trial as to the valuation of SEI and AEA. In the amended decree, the district court found both experts to be credible but determined that the testimony, methodology, and conclusions of Laura’s expert, Matthew Stadler, were more truthful, credible, and reliable than that of Greg’s expert. This determination is not challenged on appeal. Stadler opined that as of June 30, 2017, SEI had a value of $3,267,900. He testified that AEA had no separate value because it had no income or revenue and was completely dependent upon SEI.
In 2006, Greg purchased a condominium in New York City to use while working in New York. SEI paid the $28,000 monthly rent for the condominium. Greg sold the condominium in 2017 and leased a different New York apartment for $11,000 per month.
Greg met another woman, Julia Weiss (Julia), in New York around 2010. Around this time, Greg was working in New York an average of 150 to 180 days per year. In September 2013, Greg told Julia that he wanted to marry her, and they began a sexual affair at that time. In order to conceal the affair from Laura, Greg opened a separate credit card account, referred to throughout the record as the "9779 account." Greg used the 9779 account to charge purchases related to Julia. Greg spent substantial amounts of money on Julia, providing gifts of jewelry to her, taking her on trips, giving her cash, paying her credit card bill, and buying clothes and shoes for her.
Laura discovered the affair in April 2015, and she and Greg began attending marriage counseling in June. After just a few sessions, the counseling transitioned to divorce counseling because Greg said he was unwilling to end his relationship with Julia. Despite this, Greg continued to live at the marital residence and sleep in the marital bedroom, until Laura "demoted" him to a bedroom in the basement in June 2016. Greg moved out of the marital home on August 28, 2016.
The amended decree was entered in March 2018. As relevant to this appeal, the district court valued and divided the marital portion of SEI, finding that after subtracting the present value of the 1994 gift from Dale to Greg, SEI had a total marital value of $3,096,828.80. Of this amount, $1 million was awarded to Laura’s share of the marital estate, and the remaining $2,096,928.80 was attributed to Greg’s portion.
The court concluded that Greg dissipated a total of $3.5 million in marital assets in connection with his spending on Julia and that Laura dissipated $146,000 in marital assets, and it divided those amounts accordingly. Greg was ordered to pay alimony to Laura of $7,500 per month for 120 months. Laura inherited funds during the marriage, and the district court awarded Greg half of the total marital gains of her inheritance. The parties were ordered to sell two condominiums they own in Florida and Greg’s classic car collection in order to pay off marital debt. Based on its calculations and division of the marital estate, the district court determined that a total equalization payment was owed to Laura of $1,664,741 and ordered Greg to make payments to Laura of $8,670.52 per month for 192 months. Additional details will be provided below. Greg now appeals, and Laura cross-appeals.
On appeal, Greg assigns that the district court erred in (1) valuing and dividing the marital estate, (2) its analysis and findings regarding dissipation of marital assets, (3) its alimony award, and (4) issuing postdecree orders.
On cross-appeal, Laura assigns that the district court erred in classifying the appreciation of her inherited funds as a marital asset.
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. Stephens v. Stephens , 297 Neb. 188, 899 N.W.2d 582 (2017). A judicial abuse of discretion exists if 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. Id.
In his first assigned error, Greg asserts that the district court committed several errors regarding the classification, valuation, and/or division of marital property. Equitable property division under Neb. Rev. Stat. § 42-365 (Reissue 2016) is a three-step process. The first step is to classify the parties’ property as marital or nonmarital. The second step is to value the marital assets and determine the marital liabilities of the parties. The third step is to calculate and divide the net marital estate between the parties in accordance with the principles contained in § 42-365. Stephens v. Stephens, supra .
Greg first alleges that the district court erred in dividing AEA’s assets. He claims that because AEA was not made a party to the action, a necessary party was absent, and that the district court therefore lacked the authority to divide AEA’s assets. Greg does not cite any Nebraska authority to support his position, and we have found none. To the contrary, in previous dissolution of marriage actions, this court and the Nebraska Supreme Court have addressed the valuation of a business and treatment of the business as a marital asset without requiring that the business be brought in as a party to the case. See, e.g., Schuman v. Schuman , 265 Neb. 459, 658 N.W.2d 30 (2003) ; Logan v. Logan , 22 Neb. App. 667, 859 N.W.2d 886 (2015). We therefore reject this argument.
Greg makes several additional arguments regarding the district court’s treatment of AEA. In summary, he claims the court should not have divided AEA’s future profits between the parties and should not have awarded Laura 50 percent of AEA’s issued and outstanding stock.
Greg owns 100 percent of the 1,000 outstanding shares of AEA capital stock. AEA’s articles of incorporation specify that AEA has the authority to issue 10,000 shares of capital stock. In the amended decree, the district court awarded Laura 50 percent of all issued and outstanding capital stock in AEA, or 500 shares. In addition, the amended decree required that Greg and/or SEI pay all of AEA’s future research and development costs and that upon AEA’s making a profit, Greg is entitled to recover all expenses he paid personally or through SEI as of the date of the amended decree forward, and any profits after expenses have been repaid are to be divided equally between Greg and Laura.
Greg first argues that AEA’s future profits should not be considered marital property because they were not earned during the marriage and are too speculative to quantify. As a general rule, all property accumulated and acquired by either spouse during the marriage is part of the marital estate, unless it falls within an exception to the general rule. Heald v. Heald , 259 Neb. 604, 611 N.W.2d 598 (2000).
The Nebraska Supreme Court has previously addressed whether a trial court erred when it treated future compensation due to a husband as marital property. In Bergmeier v. Bergmeier , 296 Neb. 440, 894 N.W.2d 266 (2017), the husband began working for an insurance company during the marriage, and according to an agreement between him and the...
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