Court Opinion

ID: 4281843
Source: CourtListenerOpinion
Date Created: 2018-06-06 17:06:07.40562+00
Date Added: 2024-06-11T07:49:07.103369
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 17-1051
                               Filed June 6, 2018

IN RE THE MARRIAGE OF KIMBERLY ANN HACKETT
AND MICHAEL SEAN HACKETT

Upon the Petition of
KIMBERLY ANN HACKETT,
      Petitioner-Appellee,

And Concerning
MICHAEL SEAN HACKETT,
     Respondent-Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Dubuque County, Monica L. Ackley,

Judge.

      The husband appeals the spousal-support, child-support, and attorney-fee

provisions in the dissolution decree.        AFFIRMED AS MODIFIED AND

REMANDED.

      Kelsey J. Streinz of Kintzinger, Harmon, Konrardy, P.L.C., Dubuque, for

appellant.

      Jamie A. Splinter of Splinter Law Office, Dubuque, for appellee.

      Considered by Vogel, P.J., Bower, J., and Blane, S.J.*

      *Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2018).
                                           2

BLANE, Senior Judge.

         Michael Hackett appeals from the decree dissolving his marriage to

Kimberly Hackett. Michael claims the district court’s award of rehabilitative alimony

at $1500 per month for seven years was inequitable, the court improperly used his

former salary rather than current earnings to determine his child-support obligation,

and the court abused its discretion when it ordered him to pay the full amount of

Kimberly’s attorney fees—including fees from her contempt action. Kimberly asks

that we affirm the district court’s decree and award her appellate attorney fees.

I. Background Facts and Proceedings.

         Michael and Kimberly were married in 2000 and became parents to twins in

2002.1

         Before the parties married, Kimberly obtained a degree in hotel and

restaurant management. When the parties first married, Kimberly was employed

in the hospitality field and earned approximately $45,000 each year. After the twins

were born in 2002, Kimberly ceased working outside of the home for a number of

years.     She returned to work part-time in 2007 and later, after the parties

separated, began working outside of the home full-time in 2015. She anticipated

earning $32,000 in 2017—her largest salary since leaving the workforce in 2002.

         Michael is close to having sufficient credits for a college degree, but he

never completed the necessary requirements. His lack of a college degree has

not prevented him from rising within the publishing industry; in 2015, the last full

1
  The parties reached an agreement before the dissolution trial whereby they would share
joint legal custody of the children and Kimberly would have care of the children, with
Michael receiving liberal and reasonable visitation.
                                            3

year of his employment with McGraw Hill, Michael earned $191,679.20 in taxable

income.2

       Michael was fired from McGraw Hill for conduct violating the company’s

“Travel & Expense Guidelines.” According to the testimony of a human resource

(HR) manager for the company, Michael’s personal use of his corporate credit card

was brought to the attention of Michael’s manager in late 2015. After noticing

excess charges for Amazon and iTunes, his employer refused to pay a number of

his charges; Michael’s manager discussed the issue with Michael in December of

that year. As the HR manager testified, rather than seeing his spending habit on

the company credit card improve after receiving a warning, “it got more

questionable.” When the company received and reviewed his next expense report,

in February 2016, the company noted “duplicate” expenses—on a single weekend

when Michael was traveling for work, Michael had charged four meals of room

service to his hotel room at times he was actually in a meeting elsewhere. Michael

later admitted he had taken his girlfriend with him on the work trip. Following an

investigation into various charges on the corporate credit card, Michael was fired

in May 2016.

       The next month, Kimberly filed for dissolution. She also filed an application

for temporary relief, asking the court to order Michael to pay spousal support and

child support during the pendency of the dissolution. The application also noted

2
  Michael earned $172,179 in taxable income in 2013 and $240,562 in 2014. The HR
manager testified Michael was earning approximately $160,000 in salary annually with a
potential of a bonus “up to $40,000” at the time of his termination. It is unclear from the
record what took place in 2014 that resulted in his earnings being so much greater than
expected.
                                             4

that the home expenses, such as the mortgage, needed to be paid and the family

was without health insurance since Michael lost his employment.

         The parties reached an agreement, which the court adopted by a

Temporary Order in early August, whereby Michael agreed the money he received

for unemployment—$425 weekly—would be given to Kimberly to pay the marital

home mortgage. Additionally, Michael agreed to provide health insurance for the

entire family, and the parties agreed the marital home needed to be sold, with

Kimberly and the twins residing in the home until it sold.

         By the parties’ agreement, the issue of temporary matters was again

brought to the court for a hearing in October.3 Michael was still unemployed and,

in its written order, the court noted Kimberly had “been profoundly struggling with

no monetary assistance from” Michael. Although the parties cashed out Michael’s

401k from McGraw Hill in June—approximately $110,000 in funds—Michael had

not used any of those funds to pay the mortgage or support for the children;

instead, he had “been frivolously spending money, eating out at expensive

restaurants, traveling with and supporting his new girlfriend, who [was then]

residing with him in a cottage in Galena.” Additionally, Michael had “been pursuing

a music career and play[ed] guitar in a band.” He had also recently purchased a

motorcycle and accoutrements for approximately $12,000.

         The court ordered Michael to sell the motorcycle and use the proceeds to

make payments for the children’s school needs and child support. The court also

ordered Michael to pay monthly child support of $2252, effective October 1. The

3
    Though the hearing was reported, we have no record of it.
                                          5

court used Michael’s “prior earnings” in reaching the amount owed. Additionally,

in lieu of temporary support, Michael was ordered to pay the mortgage on the

family home. At the time, it was believed Michael’s parents were paying for the

health insurance for the family.

       In March 2017, Kimberly filed an application to show cause, alleging

Michael had violated the court’s October order nineteen times, including seven

counts for his failure to provide insurance, one count for failing to turn over the

motorcycle so Kimberly could sell it, six counts for failing to pay child support, four

counts for failing to pay the mortgage, and one count for failing to close a bank

account as ordered.

       In early April, the dissolution trial and the contempt action took place

contemporaneously. Kimberly testified that when the parties cashed out Michael’s

401k, they agreed to divide the money into three equal parts. Each of them

received one-third to do with as they pleased, and the final third was placed in a

joint bank account to pay family bills, such as the home mortgage, the lease on

their vehicles, and their cellular phone bills. Kimberly paid the bills with the one-

third of the 401k set aside for bills until it ran out in October 2016. Between October

and April, during which Michael had been ordered to pay certain family bills and

child support, Michael paid child support one month and the mortgage one month.

He did not make any of the other ordered payments. Kimberly testified she had to

pay family bills from her third of the 401k she had received as her money and used

all but $5000. Also during trial, Kimberly testified that though it was believed at the

time of the October hearing on temporary matters that the family had health

insurance coverage, Michael had not used the $5000 his parents gave him to pay
                                           6

the insurance premiums. Instead, he deposited the money into his account and

spent it on other things before the account was billed by the insurance company.

The family was uninsured for a number of months, and during that time, Michael

underwent back surgery. The family then had approximately $50,000 in medical

bills as a result.

       Michael testified that he became employed in January 2017.               He was

working as an independent contractor for a non-profit organization with a three-

month contract for $25,000. At the time of the April trial, Michael testified his initial

contract would be renewed the next week for a second three-month period; he was

to be paid at the same rate on the second contract.

       The parties agreed that their only assets were the marital home, which they

were attempting to sell; Kimberly’s 401k, which had a balance of $14,705; and the

motorcycle Michael had purchased, which he had not yet sold. The house was

initially listed for sale at the price of $525,000 but had been on the market for a

number of months; at the time of trial the parties reduced the price to $479,900.

The mortgage on the home was approximately $241,250.

       In the dissolution decree, the court ordered Michael to pay child support in

the monthly amount of $1784.55 plus $837.50 in cash medical benefit. The

obligation is based on “his earning capacity” rather than his actual income. In

doing so, the court noted that his earning capacity was much higher than his

current contract pay and the “conduct that caused him to lose his employment was

selfish and thoughtless as that relates to the impact it would have on his [twins].”

Additionally, the court found that Michael’s loss of job and decrease in earnings

was a result of his “intentionally disregard[ing] his obligation to his family.” The
                                              7

court used incomes of $45,000 for Kimberly and $201,000 for Michael. 4

Additionally, Michael was ordered to pay Kimberly rehabilitative spousal support in

the amount of $1500 for seven years. Kimberly was allowed to keep her entire

401k. The parties were ordered to split equally the future profits from the sale of

the marital home, but Michael was ordered to pay out of his half of the sale

proceeds all of the ordered payments he had failed to make under the temporary

matters order.     He owed Kimberly $15,888 for the mortgage, insurance, and

vehicle lease payments; $13,510 in back child support; and $8263.50 in attorney

fees, “inclusive of the fees associated with the” contempt action. Michael appeals.

II. Standard of Review.

       We review a dissolution decree de novo. In re Marriage of Hansen, 886

N.W.2d 868, 871 (Iowa Ct. App. 2016). “Although we give weight to the factual

determinations of the district court, their findings are not binding upon us.” Id.

(citation omitted).

III. Discussion.

       A. Spousal Support.

       Michael maintains the district court’s award of rehabilitative5 spousal

support to Kimberly of $1500 per month for seven years was inequitable; he takes

4
  It appears the court considered the alimony Kimberly was to receive as part of her
income, which is within the court’s discretion. See In re Marriage of McKamey, 522
N.W.2d 95, 99 (Iowa Ct. App. 1994) (providing the trial court with the discretion to
determine if the deduction of alimony should occur under the present decree); but see
Iowa Ct. R. 9.5(1)(a)(1) (providing, effective January 1, 2018, that “[i]f traditional or
rehabilitative spousal support is to be paid in the pending matter, it will be determined first
and added to the payee’s income and deducted from the payor’s income before child
support is calculated” (emphasis added)).
5
  Formerly, rehabilitative alimony was distinguishable from permanent alimony in that the
former was fashioned as a method “of supporting an economically dependent spouse
through a limited period of re-education or retraining following a divorce, thereby creating
                                           8

issue with both the amount and duration of the support. Michael concedes some

alimony is warranted but does not specify what he believes is equitable.

       In deciding to award alimony, the district court is to consider the factors in

Iowa Code section 598.21A (2016). See In re Marriage of Anliker, 694 N.W.2d

535, 540 (Iowa 2005). While our review of the district court’s determination is de

novo, “we give that court considerable latitude in making this determination based

on the criteria” in section 598.21A. Id. And we “will disturb that determination only

when there has been a failure to do equity.” Id.

       As relevant here, the factors to consider include:

               a. The length of the marriage.
               b. The age and physical and emotional health of the parties.
               c. The distribution of property made pursuant to section
       598.21.
               d. The educational level of each party at the time of marriage
       and at the time the action is commenced.
               e. The earning capacity of the party seeking maintenance,
       including educational background, training, employment skills, work
       experience, length of absence from the job market, responsibilities
       for children under either an award of custody or physical care, and

an opportunity and incentive for that spouse to become self-supporting.” In re Marriage
of Francis, 442 N.W.2d 59, 63 (Iowa 1989); see also In re Marriage of Wessels, 542
N.W.2d 486. 489 (Iowa 1995).
        More recently, we noted:
        types of spousal support—whether categorized as traditional, rehabilitative
        or reimbursement—are not mutually exclusive. In fact, as we have stated,
        the moniker is nothing more than a “red herring.” And “there is nothing in
        our case law that requires us, or any other court in this state, to award only
        one type of support” or to “characterize the support award as purely” one
        form or another. Rather, “[w]hat we are required to do is consider the
        factors mandated by the legislature contained in section [598.21A] when
        considering a spousal support award.”
In re Marriage of Stenzel, 908 N.W.2d 524, 531 (Iowa Ct. App. 2018) (alterations in
original) (citations omitted).
        In the case before us, Kimberly made a general claim for alimony, but she did not
specify a need for re-education or retraining to become self-supporting. We therefore
address the alimony issue based on the statutory factors and not upon the moniker
assigned by the trial judge of being rehabilitative.
                                            9

       the time and expense necessary to acquire sufficient education or
       training to enable the party to find appropriate employment.
              f. The feasibility of the party seeking maintenance becoming
       self-supporting at a standard of living reasonably comparable to that
       enjoyed during the marriage, and the length of time necessary to
       achieve this goal.
              g. The tax consequences to each party.
              ....
              j. Other factors the court may determine to be relevant in an
       individual case.

Iowa Code § 598.21A(1).

       Here, both parties are in their mid-40s and in relatively good health.6 Both

were able to work full-time outside of the home and were doing so at the time of

the dissolution trial. The parties were married almost seventeen years. While

Kimberly had completed a college degree and Michael had not, Kimberly had left

the workforce for a number of years after the parties’ children were born. She had

only recently—approximately two years before dissolution—returned to the

workforce full-time and was earning $32,000 annually, which was the most she

had earned since working full-time in 2002. Michael had made a number of

advances in his career and earned $172,179; $240,562; and $191,679 in the three

years before his termination from McGraw Hill. At the time of dissolution, he was

set to start a second three-month employment contract with a nonprofit

organization, which was paying him $25,000 for three months.

       Here, the district court allowed Kimberly to keep her 401k, which had

$14,705 in it and was largely derived from Kimberly’s earnings before the parties

were married. According to Kimberly, she began investing in it during the mid-

6
 Michael had back surgery during the pendency of the proceedings and testified his “days
of lifting couches and digging ditches are probably done,” but there was no indication the
surgery had long-term implications as to his career in publishing or a similar field.
                                        10

1990s and continued through the time she left the workforce in 2002—the parties

had married in October 2000. The parties took some money out of the account in

2004 or 2005 to purchase a marital home, but no further action was taken with the

account and Kimberly did not invest any additional funds after 2002. The only

other assets the parties had were the marital home, in which they believed to have

at least $200,000 in equity, and the motorcycle Michael purchased and valued

around $11,000. The court ordered the parties to split the profits from the home

sale evenly after the home sold. With part of his share of the proceeds, Michael

was required to pay Kimberly the $29,400 he owed her for back child support and

unmade mortgage payments, as well as $8263.50 for her attorney fees. The

motorcycle was awarded to Michael in the property distribution.

       Additionally, the district court considered the medical debt Michael incurred

by failing to pay the insurance premiums as non-marital, and ordered Michael to

pay it. We agree with the district court that the debt should be set aside as

nonmarital. See In re Marriage of Fennelly, 737 N.W.2d 97, 106 n.6 (Iowa 2007)

(“[W]here the dissipation is debt, it is appropriate to set aside the debt for the

spouse who incurred the debt and not include it in the marital estate.”). Michael

was court ordered to provide insurance for the family, and he represented to the

family—and, based on the court’s ruling on temporary matters, the court—that he

had done so. Instead, he spent the money his parents gave him for the insurance

premiums on other unnecessary expenditures. Then, while he was aware—or at

least should have been aware—that the family was uninsured, Michael decided to

undergo back surgery, incurring over $50,000 in medical bills.
                                              11

       Michael maintains Kimberly received more of the marital assets than he did,

but neither Kimberly’s 401k nor the medical debt were marital. And the money

Michael owed Kimberly for his failure to make timely mortgage and child-support

payments is not due to the court’s division of assets. Thus, we will not reduce the

amount of alimony Kimberly is to receive based on this property distribution. See

Iowa Code § 598.21A(1)(c); see also In re Marriage of O’Rourke, 547 N.W.2d 864,

866 (Iowa Ct. App. 1996) (“We consider property division and alimony together in

evaluating their individual sufficiency.”).

       At the time of the dissolution trial, Michael was employed earning more than

three times the salary Kimberly was earning, and, based on his recent salary, his

earning capacity was much greater still.7 Kimberly was working full-time in the

industry in which she had a degree. It did not appear she had the ability to earn

more in the immediate future, as she needed a job with flexibility in scheduling so

she should continue to care and provide transportation for the twins, who had more

than four years left before they were to graduate high school.

       Based on these circumstances, we cannot say either the amount or the

duration of the spousal-support award was inequitable.

       B. Child Support.

       Michael maintains the district court was wrong to use his past income in

determining his child-support obligation. He concedes that our case law provides

7
  “This standard of living during the marriage sets the highest level of spousal support but
this sum must then be adjusted by the payee’s income or earning capacity, whichever is
greater.” Stenzel, 908 N.W.2d at 533 (citing In re Marriage of Gust, 858 N.W.2d 402, 411
(Iowa 2015) (“In determining need, we focus on the earning capability of the spouses, not
necessarily on actual income.”)).
                                         12

for using a parent’s former salary in situations when the parent reduces “their

earning capacity and ability to pay support through improper intent or reckless

conduct,” In re Marriage of Foley, 501 N.W.2d 497, 500 (Iowa 1993), but Michael

maintains his actions that resulted in the termination his employment did not rise

to that level.

       Nothing in the record supports a finding Michael undertook his actions with

the intent to deprive his children of support. We believe it is a closer question

whether it was reckless to take his girlfriend with him on a work trip two months

after he had already been warned by his boss about improper use of his corporate

credit card.     However, our appellate courts have previously found it was

appropriate to use the parent’s current salary in instances after the parent was

terminated from their employment—even when the termination was a result of the

parent’s voluntary action. See, e.g., In re Marriage of Walters, 575 N.W.2d 739,

743 (Iowa 1998) (reducing the father’s child-support obligation after he was

incarcerated even though the reduction in earnings was the result of a voluntary

criminal activity); Foley, 501 N.W.2d at 500 (using the father’s reduced salary to

determine his child-support obligation after he was terminated for insubordination);

Nicolls v. Nicolls, 235 N.W. 288, 290 (Iowa 1931) (using the father’s reduced

income after he was discharged from his job and was unable to find new

employment with comparable pay); In re Marriage of Knust, No. 16-1664, 2017 WL

3283301, at *1 (Iowa Ct. App. Aug. 2, 2017) (using the father’s new, lesser salary

from his present employment after he was transferred to a lower paying job

following a conviction for operating while intoxicated).
                                           13

       Moreover, in considering which salary should be used to determine his

child-support obligation, “some consideration of [Michael’s] earning capacity and

ability to pay is necessary.” Walters, 575 N.W.2d at 743. “[W]e must base our

decision on reality rather than an unattainable utopia.” Id. And here, where

Michael’s former salary was approximately two times greater than his salary at the

time of the trial, we believe it is unrealistic to set his child-support obligation based

on his former salary.

       Because the district court should have used Michael’s actual salary to set

his child-support obligation, we remand to the district court to determine the child

support “based on the present financial circumstances of the parties and the child

support guidelines.” In re Marriage of Hoffman, 867 N.W.2d 26, 37 (Iowa 2015).

       C. Trial Attorney Fees.

       Michael maintains the district court abused its discretion when it ordered

him to pay Kimberly’s attorney fees, including the fees for the contempt action.

       We review an award of attorney fees for an abuse of discretion. See In re

Marriage of Romanelli, 570 N.W.2d 761, 765 (Iowa 1997).                 Generally, the

controlling factor in awards of attorney fees is the ability to pay. Id. As noted

above, Michael was earning more than three times as much as Kimberly at the

time of the dissolution trial. We cannot say the district court abused its discretion

in ordering Michael to pay the attorney fees incurred for the dissolution—$7848.50.

       However, the court erred in ordering Michael to pay the attorney fees—

$365—and costs—$50—incurred in the contempt action.                Iowa Code section

598.24 provides that “the party [who] is in default or contempt of the decree, the

costs of the proceeding, including reasonable attorney’s fees, may be taxed
                                          14

against that party.” But section 598.24 only applies when the grounds for the

contempt relate to a violation of the decree, and here, the decree had not yet been

entered. See In re Marriage of Herbers, No. 13-0668, 2014 WL 955292, at *6

(Iowa Ct. App. Mar. 12, 2014).

       Thus, we remand for entry of a corrected order, requiring Michael to pay

only the attorney fees incurred in the dissolution proceeding.

       D. Appellate Attorney Fees.

       Kimberly asks us to award her appellate attorney fees. An award of such

fees is within our discretion. See In re Marriage of Sullins, 715 N.W.2d 242, 255

(Iowa 2006). “Factors to be considered in determining whether to award attorney

fees include: ‘the needs of the party seeking the award, the ability of the other party

to pay, and the relative merits of the appeal.’” Id. (citation omitted).

       While Michael earns more than Kimberly does, he has also been largely

successful on appeal. We decline to award Kimberly appellate attorney fees.

IV. Conclusion.

       Upon our de novo review, we find the district court’s award of spousal

support equitable. Because the district court should have used Michael’s current

income to determine his child-support obligation, we remand for child support to

be recalculated using the parties’ current incomes. We also remand for entry of a

corrected order removing Kimberly’s attorney fees incurred in the contempt action.

We affirm as modified and remand.

       AFFIRMED AS MODIFIED AND REMANDED.