Court Opinion

ID: 4691646
Source: CourtListenerOpinion
Date Created: 2021-06-01 14:09:49.919701+00
Date Added: 2024-06-11T08:05:10.350973
License: Public Domain

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
06/01/2021 09:09 AM CDT

                                                         - 904 -
                             Nebraska Court of Appeals Advance Sheets
                                  29 Nebraska Appellate Reports
                                                 VERZAL v. VERZAL
                                                Cite as 29 Neb. App. 904

                                        Joshua A. Verzal, appellant, v.
                                         Michelle A. Verzal, appellee.
                                                     ___ N.W.2d ___

                                           Filed May 25, 2021.     No. A-20-451.

                 1. Divorce: Child Custody: Child Support: Property Division: Alimony:
                    Attorney Fees: Appeal and Error. In an action for the dissolution of
                    marriage, an appellate court reviews de novo on the record the trial
                    court’s determinations of custody, child support, property division,
                    alimony, and attorney fees; these determinations, however, are initially
                    entrusted to the trial court’s discretion and will normally be affirmed
                    absent an abuse of that discretion.
                 2. Evidence: Appeal and Error. When evidence is in conflict, the appel-
                    late court considers and may give weight to the fact that the trial judge
                    heard and observed the witnesses and accepted one version of the facts
                    rather than another.
                 3. Divorce: Property Division: Equity. Neb. Rev. Stat. § 42-365 (Reissue
                    2016) authorizes a trial court to equitably distribute the marital estate
                    according to what is fair and reasonable under the circumstances.
                 4. Divorce: Pensions. A qualified domestic relations order implements
                    a trial court’s decision of how a pension is to be divided incident to
                    divorce or dissolution.
                 5. Divorce: Property Division. In a divorce action, the purpose of a
                    property division is to distribute the marital assets equitably between
                    the parties.
                 6. Property Division. Equitable property division 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 marital liabilities of
                    the parties. The third step is to calculate and divide the net marital estate
                    between the parties.
                 7. ____. The ultimate test in determining the appropriateness of a property
                    division is fairness and reasonableness as determined by the facts of
                    each case.
                              - 905 -
        Nebraska Court of Appeals Advance Sheets
             29 Nebraska Appellate Reports
                       VERZAL v. VERZAL
                      Cite as 29 Neb. App. 904

   Appeal from the District Court for Sarpy County: George
A. Thompson, Judge. Affirmed in part as modified, and in part
reversed and remanded with directions.

  John S. Kinney and Jill M. Mason, of Kinney Mason, P.C.,
L.L.O., for appellant.

  Bradley E. Nick, of Sidner Law, for appellee.

  Moore, Riedmann, and Bishop, Judges.

  Riedmann, Judge.
                       INTRODUCTION
   Joshua A. Verzal appeals the decree of the district court
for Sarpy County that dissolved his marriage to Michelle A.
Verzal. He challenges the manner in which the court divided
certain marital assets and ordered him to pay an equalization
payment. For the reasons that follow, we reverse the court’s
order related to the equalization payment and remand the cause
with directions. We otherwise affirm the order as modified as
explained below.

                        BACKGROUND
   Joshua and Michelle were married in 2006, and three chil-
dren were born during the marriage. In June 2018, Joshua
filed a complaint to dissolve the marriage. The parties agreed
on numerous issues prior to trial, including custody of their
children, parenting time, and valuation and division of certain
assets. Thus, the issues remaining at the time of trial were cal-
culation of child support, alimony, valuation and division of
the marital residence, and division of certain accounts.
   After trial, the district court entered a decree dissolving
the parties’ marriage. The court approved their agreement that
they share joint legal and physical custody of their children
and ordered Joshua to pay $439 per month in child support.
The court also approved the parties’ undisputed valuation and
                               - 906 -
        Nebraska Court of Appeals Advance Sheets
             29 Nebraska Appellate Reports
                        VERZAL v. VERZAL
                       Cite as 29 Neb. App. 904

distribution of their household goods and vehicles. Michelle’s
request for alimony was denied.
   The district court valued the marital residence at $300,000
and awarded it to Michelle, subject to its mortgage of $197,673.
Michelle was also awarded her employment retirement account
valued at $93,154 and an investment account valued at $11,057.
To Joshua, the court awarded his employment 401K retirement
account with a value of $208,828, his employment 457 retire-
ment account with a value of $12,277, his employment pension
with a value of $103,408, and personal debt totaling $3,336. To
equalize the distribution of the marital estate, the district court
ordered Joshua to pay to Michelle, within 6 months of the entry
of the decree, an equalization payment of $57,319.50.
   After entry of the decree, Joshua filed a motion to clarify
or amend the decree, which the district court denied. Joshua
appeals.
                 ASSIGNMENTS OF ERROR
   Joshua assigns, renumbered, that the district court erred in
(1) ordering him to pay a lump-sum cash equalization payment
of $57,319.50, (2) failing to divide retirement accounts equally
and separately from real estate and other assets, and (3) failing
to require Michelle to refinance the marital home.
                   STANDARD OF REVIEW
   [1,2] In an action for the dissolution of marriage, an appel-
late court reviews de novo on the record the trial court’s
determinations of custody, child support, property division,
alimony, and attorney fees; these determinations, however, are
initially entrusted to the trial court’s discretion and will nor-
mally be affirmed absent an abuse of that discretion. Onstot
v. Onstot, 298 Neb. 897, 906 N.W.2d 300 (2018). When evi-
dence is in conflict, the appellate court considers and may give
weight to the fact that the trial judge heard and observed the
witnesses and accepted one version of the facts rather than
another. Id.
                              - 907 -
        Nebraska Court of Appeals Advance Sheets
             29 Nebraska Appellate Reports
                       VERZAL v. VERZAL
                      Cite as 29 Neb. App. 904

                           ANALYSIS
Equalization Payment.
   Joshua asserts that the district court erred in ordering him
to pay the equalization payment in a lump sum of cash rather
than through a qualified domestic relations order (QDRO). He
argues that he does not have sufficient cash to pay the amount
required and that the marital estate did not contain liquid
assets, other than the equity that Michelle received in the mari-
tal residence. He also claims that such an order has negative
tax consequences on him and the portion of the marital estate
that he received.
   [3,4] Neb. Rev. Stat. § 42-365 (Reissue 2016) authorizes a
trial court to equitably distribute the marital estate according
to what is fair and reasonable under the circumstances. Bock v.
Dalbey, 283 Neb. 994, 815 N.W.2d 530 (2012). A QDRO, gen-
erally speaking, is simply an enforcement device of the decree
of dissolution. Blaine v. Blaine, 275 Neb. 87, 744 N.W.2d 444
(2008). A QDRO implements a trial court’s decision of how
a pension is to be divided incident to divorce or dissolution.
Thompson v. Thompson, 18 Neb. App. 478, 785 N.W.2d 159
(2010). Stated another way, a QDRO provides for an alternate
payee “to receive all or part of any benefits due a participant
under a pension, profit-sharing, or other retirement benefit
plan.” See Black’s Law Dictionary 1497 (11th ed. 2019).
   In the present case, the district court did not divide the
retirement accounts between the parties. Rather, it awarded
certain accounts to each party, awarded the marital residence
to Michelle, and ordered Joshua to pay an equalization pay-
ment in cash. There were no other significant liquid assets
in the marital estate. Joshua explained at trial that since his
separation from Michelle, he has incurred consumer debt
totaling approximately $12,000 because he does not “have the
month-to-month money to pay for the expenses that are com-
ing up.” He also confirmed that he does not have any money
in savings.
                               - 908 -
        Nebraska Court of Appeals Advance Sheets
             29 Nebraska Appellate Reports
                        VERZAL v. VERZAL
                       Cite as 29 Neb. App. 904

   For child support purposes, the court utilized a monthly
net income for Joshua of $7,806.99. He estimated that his
monthly expenses are $8,885; this amount, however, included
an estimated $800 in alimony that the district court declined
to include in the final decree. Thus, Joshua’s expenses out-
weigh his net income by approximately $278 per month. The
district court ordered him to make an equalization payment of
$57,319.50 to Michelle within 6 months of the entry of the
decree. It is evident that although Joshua earns a consider-
able salary, he has little other liquid assets. If he were to make
monthly cash payments to Michelle, he would be required to
pay more than $9,500 per month in order to satisfy the full
amount within 6 months. The evidence establishes that he is
not able to pay this amount.
   We therefore conclude, on this record, that the district court
abused its discretion in ordering that an equalization payment
of $57,319.50 be paid in cash within 6 months. We conclude
that under the circumstances of this case, awarding Michelle
this sum from Joshua’s 401K account using a QDRO was
a more appropriate manner to equalize the division of the
marital estate. We note that at trial, Michelle did not object
to this manner of equalization payment. In her written clos-
ing argument to the district court, she also proposed that the
equalization payment occur through the transfer of proceeds
from Joshua’s 401K account. She asserted that “any other
equalization method would not only be unfair but impossible
based upon the evidence presented at trial.” Her proposed
decree likewise implemented the use of a QDRO for purposes
of receiving the equalization payment.
   Considering the absence of liquid assets in Joshua’s portion
of the marital estate, as well as his complete financial pic-
ture, we agree. Thus, we reverse the district court’s order that
Joshua pay Michelle an equalization payment of $57,319.50
within 6 months of entry of the decree and remand the cause
to the district court with directions to order that this payment
                               - 909 -
        Nebraska Court of Appeals Advance Sheets
             29 Nebraska Appellate Reports
                        VERZAL v. VERZAL
                       Cite as 29 Neb. App. 904

be made from Joshua’s employment 401K account pursuant
to a QDRO. Based on this conclusion, we need not consider
Joshua’s arguments regarding the tax consequences of the dis-
trict court’s decision in this regard.
Division of Property.
   Related to his argument above, Joshua also argues that
the district court abused its discretion in failing to divide the
parties’ retirement accounts equally and separately from real
estate and other assets. He again cites to the tax consequences
of the district court’s decision and asserts that the court could
have and should have separated the marital assets into “proper
categories for division.” Brief for appellant at 13. We find no
abuse of discretion in the division of assets.
   [5-7] In a divorce action, the purpose of a property division
is to distribute the marital assets equitably between the par-
ties. Brozek v. Brozek, 292 Neb. 681, 874 N.W.2d 17 (2016).
Equitable property division is a three-step process. Id. The first
step is to classify the parties’ property as marital or nonmarital.
Id. The second step is to value the marital assets and marital
liabilities of the parties. Id. The third step is to calculate and
divide the net marital estate between the parties. Id. The ulti-
mate test in determining the appropriateness of a property divi-
sion is fairness and reasonableness as determined by the facts
of each case. Id. Joshua’s argument relates to the third step in
the process.
   Although the district court could have adopted Joshua’s
proposed property division wherein he would receive half of
the equity in the marital home and the parties would equally
split the retirement accounts, it was not required to do so.
Further, the district court was not required to consider the tax
consequences of its division when there was no expert testi-
mony regarding the potential tax consequences. The Nebraska
Supreme Court has previously found that the value of certain
retirement accounts to be awarded to the wife in a dissolution
of marriage proceeding could not be reduced by 25 percent
                              - 910 -
        Nebraska Court of Appeals Advance Sheets
             29 Nebraska Appellate Reports
                       VERZAL v. VERZAL
                      Cite as 29 Neb. App. 904

because of future taxes on those accounts without expert testi-
mony of the tax consequences associated with the accounts. See
Jirkovsky v. Jirkovsky, 247 Neb. 141, 525 N.W.2d 615 (1995).
There was no such evidence presented to the district court in
this case, and thus, any consideration of potential tax conse-
quences would be speculative. As a result, the district court’s
division of the marital estate was not an abuse of discretion.
Refinancing Marital Residence.
   After the parties separated, Michelle remained in the mari-
tal residence and Joshua moved out. In the decree of dissolu-
tion, the district court awarded Michelle the marital residence
and the accompanying mortgage. The court valued the home at
$300,000 and found the existing mortgage to total $197,673.
Although the decree provides that Michelle “shall pay the
first mortgage associated with the real estate, and she shall
indemnify and hold [Joshua] free and harmless therefrom,” it
does not require that Michelle refinance the mortgage into her
name only. On appeal, Joshua asserts that the district court
erred in failing to require Michelle to refinance the mortgage
because it continues to remain an obligation on his credit
report and “completely hamstrings Joshua’s ability to move
forward financially from the divorce. His credit is completely
dependent on Michelle maintaining and timely paying the
mortgage payment.” Brief for appellant at 12. He further con-
tends that “[i]t will be impossible for him to purchase his own
home.” Id.
   We disagree with Joshua’s assertion that if his name is not
removed from the mortgage, it will be impossible for him to
purchase his own home, because at the time of trial, he had
already purchased a new home. However, we do agree that
the district court abused its discretion in failing to require
Michelle to refinance the marital home in order to remove
Joshua’s name from the mortgage. The evidence indicates that
the maturity date of the mortgage is 2041, and thus, if Michelle
does not refinance the mortgage in order to remove Joshua’s
                              - 911 -
        Nebraska Court of Appeals Advance Sheets
             29 Nebraska Appellate Reports
                       VERZAL v. VERZAL
                      Cite as 29 Neb. App. 904

name from that debt, his credit could be tied to the marital
residence and the debt thereon for years into the future. We
therefore modify the decree of dissolution to require Michelle
to refinance the mortgage associated with the marital residence
and remove Joshua’s name from any debt obligation thereon by
October 1, 2021. To avoid any financial hardship, the parties
are ordered to share equally the cost incurred.
                        CONCLUSION
   We conclude that ordering Joshua to pay the equalization
payment in cash was an abuse of discretion. Therefore, we
reverse the court’s order and remand the cause with directions
as explained above. We otherwise affirm the order as modified
to require Michelle to refinance the mortgage on the marital
residence by October 1, 2021, the costs of which are to be
shared equally between the parties.
                Affirmed in part as modified, and in part
                reversed and remanded with directions.