Upon the Petition Miller v. & Concerning Karri Ann Miller (In re Miller)

• Decision Date: 19 November 2021
• Docket Number: No. 19-0969,19-0969
• Citation: 966 N.W.2d 630
• Parties: IN RE the MARRIAGE OF Matthew Tait MILLER and Karri Ann Miller. Upon the Petition of Matthew Tait Miller, Appellant, and Concerning Karri Ann Miller, Appellee.
• Court: Iowa Supreme Court

966 N.W.2d 630

IN RE the MARRIAGE OF Matthew Tait MILLER and Karri Ann Miller.

Upon the Petition of Matthew Tait Miller, Appellant,

and

Concerning Karri Ann Miller, Appellee.

No. 19-0969

Supreme Court of Iowa.

Submitted October 21, 2021

Filed November 19, 2021

Heather A. Prendergast (argued) of Roberts, Stevens & Prendergast, PLLC, Waterloo, for appellant.

Andrew B. Howie (argued) of Shindler, Anderson, Goplerud & Weese, P.C., West Des Moines, for appellee.

Christensen, C.J., delivered the opinion of the court, in which all justices joined.

CHRISTENSEN, Chief Justice.

When things are going well, married folks pay little attention to whose stuff is whose or how it ended up in the marital pot. But when things go south, there is an intense laser focused on the marital pot. Under Iowa dissolution law, all marital property must be equitably divided unless inherited or gifted. Here, Matthew (Matt) believes he should not have to share his future disability benefit because it replaces income he can no longer earn and, as such, is not marital property. Karri disagrees and points towards the "inherited or gifted" exception. She urges us to award her part of Matt's future disability benefit because it is neither inherited nor gifted. Is Matt's future disability benefit income or property? We determine it is a replacement for income and not part of the marital pot to be divided upon dissolution. Therefore, we vacate the court of appeals in part and use our discretion to let the rest of the court of appeals opinion stand on the remaining issues appealed from the district court.

I. Background Facts and Proceedings.

Matt and Karri Ann Miller met in November 2009 and subsequently married on April 24, 2010. Matt petitioned for divorce about seven years later on August 7, 2017. Matt was forty-two years old at the time of the trial and Karri was thirty-seven years old. The couple has no children. Matt obtained two degrees from the University of Northern Iowa: a bachelor's degree before the marriage in 1999 and a master's degree in May of 2017 after the marriage. Karri earned two bachelor's degrees from Mount Mercy College in 2003 before the marriage.

Karri worked for the State of Iowa Department of Human Services from 2003 to 2011. From 2011 to 2017, she stayed at home and worked several different jobs. Since 2017, she has been a work counselor at Hawkeye Community College helping high school students with disabilities explore career opportunities.

Matt joined the Army National Guard in November 1993. He was deployed three times before the marriage between 2000 and 2007, serving in Saudi Arabia, Egypt, and Iraq. After marriage, he was deployed a fourth time in Afghanistan between 2010 and 2011. During his deployment in Iraq between 2006 and 2007, he provided security for convoys entering western Iraq from Syria. These responsibilities included locating improvised explosive devices (IEDs) on convoy routes. Matt was exposed to many IEDs, several of which exploded, and he witnessed several injuries or deaths among fellow soldiers, coalition partners, and civilians.

Matt obtained other employment in conjunction with his military service. He was employed at Veridian Credit Union from some point as an undergraduate student at the University of Northern Iowa until late 2007 or early 2008. In March 2008, Matt transitioned to become a police officer in Waterloo. He remained in various roles with the Waterloo Police Department until September 2015. Since 2017, Matt has been a Program Director for Military and Veteran Student Services at the University of Iowa.

After Matt's return from Iraq before the marriage, he began to experience anxiety, lack of patience, bouts of depression, and trouble staying in large crowds. In June 2014, his family doctor suggested that he participate in an assessment for PTSD. Five months later, Matt was formally diagnosed with PTSD and given a disability rating of 70 by the Veteran's Administration (VA). Matt retired from the Waterloo Police Department due to his PTSD in 2015.

Matt receives two disability payments related to his PTSD diagnosis. The first disability payment is a VA disability payment of $1,364.48 per month. The second disability payment is from the Municipal Fire & Police Retirement System of Iowa.¹ This second benefit is governed by Iowa Code chapter 411. Chapter 411 creates "a retirement system [for fire fighters or police officers] which will provide for the payment of pensions to retired members and members incurring disabilities." Iowa Code § 411.1A(1) (2017). Matt qualified for an ordinary disability retirement benefit (chapter 411 ordinary disability benefit) due to his PTSD diagnosis. Id. § 411.6(4). See generally Municipal Fire & Police Retirement System of Iowa, Retirement Resources Disability Benefits: Eligibility Requirements and Applying for Disability Benefits 3 (n.d.), http://www.mfprsi.org/site_media/publications/disability_retirement_brochure_1.pdf [https://perma.cc/8RQWEJDA] (describing the differences between ordinary and accidental disability retirement benefits). Matt receives a chapter 411 ordinary disability benefit equal to 50% of his average final compensation based on his eight years of service with the Waterloo Police Department. Iowa Code § 411.6(4)(b ). For Matt, this disability payment amounts to $2,651 per month but is subject to an earnings test. Id. § 411.6(7)(a)(1).

The district court entered a dissolution decree on October 9, 2018. The district court determined several issues regarding marital property. Regarding Matt's chapter 411 ordinary disability benefit, the district court determined it was marital property subject to division pursuant to the Benson formula.² The Benson division of Matt's chapter 411 ordinary disability benefit came out to be approximately $828.44 per month to Karri. Matt would have retained the rest of the benefits.

Matt and Karri filed timely appeals arguing various provisions of the dissolution decree were incorrect or inequitable, including whether future payments from a chapter 411 ordinary disability benefit are marital property. We transferred the case to the court of appeals. The court of appeals affirmed the district courts determination that a chapter 411 ordinary disability benefit is marital property along with most aspects of the dissolution decree.³ Matt filed a petition for further review and Karri resisted. We granted the petition.

On further review, we reverse the district court's ruling that chapter 411 ordinary disability benefits are marital property and we vacate the part of the court of appeals decision affirming the same. In our view, chapter 411 ordinary disability benefits replace income that an individual would have earned if not for an injury causing the disability and should be treated as income and not property. However, we use our discretion to let the court of appeals decision stand in all other respects including the denial of survivor benefits for the chapter 411 ordinary disability benefit and Matt's National Guard retirement pension; the division of Matt's National Guard retirement pension; the award of $20,000 from Matt's TIAA-CREF account to Karri; the modification of Matt's Roth IRA to be awarded to Karri; and ordering the loan by Karri's mother to be repaid with the proceeds from the sale of their home.

II. Standard of Review.

In an equity action, such as dissolution of marriage, our review is de novo. In re Marriage of Mann , 943 N.W.2d 15, 18 (Iowa 2020) (citing Iowa R. App. P. 6.907 ). "We give weight to the factual determinations made by the district court; however, their findings are not binding upon [this court]." Id. (alteration in original) (quoting In re Marriage of Gust , 858 N.W.2d 402, 406 (Iowa 2015) ).

III. Analysis.

A. Future Payments from a Chapter 411 Ordinary Disability Benefit are Separate Property.

1. Framework for determining marital property in Iowa. Iowa is an equitable distribution jurisdiction. In re Marriage of McDermott , 827 N.W.2d 671, 678 (Iowa 2013). "In dissolution-of-marriage cases, marital property is to be divided equitably, considering the factors outlined in Iowa Code section 598.21 [(5)]." Id. (alteration in original) (quoting In re Marriage of Hansen , 733 N.W.2d 683, 702 (Iowa 2007) ). Iowa Code section 598.21(5) provides that "[t]he court shall divide all property, except inherited property or gifts received or expected by one party, equitably between the parties after considering" certain factors. (Emphasis added.) Inherited and gifted property can be subject to division if the court finds "that refusal to divide the property is inequitable to the other party or to the children of the marriage." Id. § 598.21(6). "An equitable distribution of marital property, based upon the factors in 598.21(5), does not require an equal division of assets." McDermott , 827 N.W.2d at 682 (quoting In re Marriage of Kimbro , 826 N.W.2d 696, 703 (Iowa 2013) ).

The legislature's choice of the word "all" creates an expansive marital pot. In re Marriage of Schriner , 695 N.W.2d 493, 496 (Iowa 2005). Beyond the specific exclusion of gifts and inherited property, "the statute makes no effort to include or exclude property from the divisible estate." Id. For example, the statute also encompasses property owned by a party before the marriage. Id. "[T]he circumstances and underlying nature of the included property are generally considered as factors that impact the ... task of determining an equitable division, along with all other relevant factors" listed in section 598.21(5). Id. However, future earnings are not considered property subject to division at the time of the dissolution. Id. at 498–99.

2. Mechanistic and analytical approaches to disability pensions. Historically, we have treated retirement pensions as marital property. See, e.g. , In re Marriage of Crosby , 699 N.W.2d 255, 258 (Iowa 2005) ; In re Marriage of Branstetter , 508 N.W.2d 638, 640 (Iowa 1993) ; In re Marriage of Howell , ...