Court Opinion

ID: 4553342
Source: CourtListenerOpinion
Date Created: 2020-08-05 17:04:19.805199+00
Date Added: 2024-06-11T13:08:30.817312
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                 No. 19-1256
                             Filed August 5, 2020

IN RE THE MARRIAGE OF JACQUELYN SCHULTZ
AND JOEL SCHULTZ

Upon the Petition of
JACQUELYN SCHULTZ,
      Petitioner-Appellee,

And Concerning
JOEL SCHULTZ,
     Respondent-Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Buchanan County, Monica L. Zrinyi

Wittig, Judge.

      Joel Schultz appeals from the decree dissolving his marriage. AFFIRMED

AS MODIFIED.

      Benjamin M. Lange of Swisher & Cohrt, P.L.C., Independence, for

appellant.

      Timothy D. Ament of Timothy D. Ament Law Firm, P.L.C., Waterloo, for

appellee.

      Considered by Tabor, P.J., and May and Greer, JJ.
                                         2

GREER, Judge.

       The district court dissolved the twenty-seven-year marriage of Jacquelyn

and Joel Schultz in 2019. Joel appeals certain factual findings made by the district

court and argues for an entitlement to spousal support. Jacquelyn found the

decree acceptable and asks that we affirm. We review the issues raised by Joel.

       I. Background Facts and Proceedings.

       The parties married in February 1992 and separated in January 2017. At

the time of trial, Joel was sixty years old and Jacquelyn was fifty-one years old.

The trial occurred in May 2019, but Joel applied for temporary spousal support and

received $4000 per month from December 2018 until the June 2019 decree was

entered. The district court determined that spousal support was “not appropriate,”

made several factual findings Joel now disputes, and divided the marital assets.

With the assets divided, the district court required Joel to pay an equalization

payment to Jacquelyn of $125,000. Joel asked the court to reconsider the ruling,

and the district court denied his motion. Joel appeals only the denial of spousal

support.

       As is often the case, the facts developed by Jacquelyn and Joel at trial

diverged. Facts undisputed were that after separation Joel moved to the family

vacation home in Wabasha, Minnesota, and Jacquelyn remained in the family

home in Winthrop, Iowa. They spilt the real estate in that same manner. Then to

help resolve other disputed matters, the parties stipulated to the marital asset and

debt values and the intended designee. Except for determining the values of a

boat and a motor, the district court’s charge was to decide whether an award of

spousal support was warranted. In determining whether spousal support was
                                         3

appropriate, the district court found the following facts. Two months after the

marriage, Jacquelyn graduated from college with a Bachelor of Arts degree in

psychology. She returned to college in 2006, graduating in 2008 with a master’s

degree in social work. Jacquelyn testified that because she worked full-time and

applied for a loan forgiveness program, no marital monies were used to pay for her

master’s education.     Jacquelyn worked outside the home at various jobs

throughout the marriage, except for an eight-month maternity leave after the birth

of one of their two children.1 In 2011, Jacquelyn formed her own counseling

service where she remains as a mental-health therapist treating clients along with

other therapists in her employ. Her income climbed after this employment change.

At the time of trial, Jacquelyn reported gross income of around $14,000 per month.

       As for Joel’s income, the parties conceded that for most of the years of the

marriage Joel was the primary income earner. For background, Joel graduated

with an associate degree in science. Because of an injury to his arm,2 Joel now

receives Social Security disability (SSD) benefits and is unemployed. Before the

injury, Joel’s last employment involved an eighteen-year stint as a retail territory

manager for a food broker making $52,000 annually. That job ended with a layoff

in May 2017 after a buyout of the company, for which Joel received nineteen weeks

of severance pay. For many years before the food-broker job, Joel worked for a

major grocery store, and the family relocated several times for his employment

advances. Joel described both long-term jobs as requiring manual labor, which he

1No dissolution issues are impacted by these adult children.
2Joel fell at a restaurant, injuring his shoulder in March 2017. Disability benefits
began in March of that year. After two years, he qualifies for Medicare health
benefits.
                                         4

can no longer do. At trial, the established SSD monthly payment to Joel equaled

$2249 per month and his disability insurer paid him $470 per month in disability

benefits. Shortly before trial, Joel’s insurer alerted him that the monthly long-term

disability policy payment would terminate in July because they found that Joel

could be employable in some job even if it different from his last job. He planned

to appeal that determination. Joel also reasoned that when he reaches age sixty-

seven, his SSD ends and he will receive a smaller regular social security benefit,

which will be $100 less than he is currently receiving.

       With the spousal-support question at the forefront, Joel focused on the

goals of his retirement plan. Joel described his retirement plan as one that he and

Jacquelyn supported. Jacquelyn disagreed. As for the age disparity of the couple,

Jacquelyn, at age fifty-one, will work another sixteen years producing income

where Joel, at age sixty, is near retirement age. For the twenty-six years working

at a grocery store in various roles—both before and during the marriage—Joel and

his employer contributed to a retirement plan. While married, but after starting the

retail manager job in 2001, Joel and Jacquelyn used the retirement monies from

the employment with the grocer to fund the down payment and some

improvements on the Winthrop home purchase. After paying the early withdrawal

penalty and taxes, only half of the $190,000 balance of retirement funds were

available to use. Under the current plan, Joel would retire at age seventy and one-

half years to maximize his retirement plan benefits.        To reach his goal, he

contributed maximum earnings to the retirement accounts while working at the

food brokerage company. His plan involved allowing those retirement funds to

appreciate to a value of one million dollars when he reached age seventy and a
                                          5

half. Under Joel’s plan, at that point, the couple could access the funds for

retirement and start investing more of Jacquelyn’s earnings. At trial, his retirement

account equaled $593,920.

       We address Joel’s claims that certain factual findings made by the district

court were in error and that he was entitled to spousal support.

       II. Standard of Review.

       A trial involving the dissolution of a marriage is an equitable proceeding.

Iowa Code § 598.3 (2018). As a result, our review is de novo. Iowa R. App. P.

6.907; In re Marriage of Schenkelberg, 824 N.W.2d 481, 484 (Iowa 2012). While

we give weight to the factual determinations made by the district court; its findings

are not binding upon us. Iowa R. App. P. 6.904(3)(g).

       When we review questions of spousal support, in our de novo review, we

still “accord the trial court considerable latitude.” In re Marriage of Olson, 705

N.W.2d 312, 315 (Iowa 2005) (quoting In re Marriage of Spiegel, 553 N.W.2d 309,

319 (Iowa 1996)); see also Schenkelberg, 824 N.W.2d at 486. And we will disturb

the trial court's findings “only when there has been a failure to do equity.” Olson,

705 N.W.2d at 315 (quoting Spiegel, 553 N.W.2d at 319).

       III. Analysis.

       A. Were There Errors in the Factual Findings? Joel claims these facts

from the decree are in error: (1) “no marital money was expended for [Jacquelyn’s]

education”; (2) Jacquelyn’s net income is $9805 per month; (3) Joel’s retirement

account is large because “his disposable income was diverted into the investment

as opposed to being used by the parties”; (4) Joel should be able to work in the

field of sales despite his social security administration disability determination; (5)
                                         6

that the Wabasha real estate had rental income potential; (6) an award of alimony

to Joel would require Jacquelyn to increase her monthly earnings given the new

tax laws; (7) after Joel pays the balance of the furniture and boat loans his monthly

expenses will be “almost non-existent”; and (8) the current asset distribution allows

Joel to realize his retirement plan. We address each factual finding separately, but

we realize that we need not correct every perceived error in the district court's

findings of fact. “Since this is an equity case in which our review of both facts and

law is de novo . . . we need not separately consider these assignments. We do

not reverse an equity case upon such complaints as these but draw such

conclusions from our review as we deem proper.” Lessenger v. Lessenger, 156

N.W.2d 845, 846 (Iowa 1968).

       1. “No marital money was expended for [Jacquelyn’s] education.” The

completion of Jacquelyn’s bachelor’s degree preexisted the marriage.            But,

because there is no question Jacquelyn achieved her master’s degree during the

marriage, we assume Joel provided some means to support that effort. “[M]arriage

does not come with a ledger.” Fennelly, 737 N.W.2d 97, 103 (Iowa 2007). Likely

each party contributed in ways financially and non-financially in this long-term

marriage. For purposes of our analysis, we assume that Joel, in the years he was

the primary provider, supplied economic resources, although not direct payments

to the educational costs, to help Jacquelyn achieve her goals.3

       2. Jacquelyn’s net income is $9805 per month. Jacquelyn agreed at trial

that her income was “at least $14,115.66 per month.” Joel arrived at that figure by

3At a minimum, Jacquelyn accessed Joel’s health insurance benefits through his
employer.
                                          7

averaging Jacquelyn’s reported business income for the years 2015, 2016, and

2017. Joel promulgated confusion by claiming that the number represents net

income, when, in fact, the sum represents the gross income earned in those years.

So the district court determined:

       Petitioner’s salary is reported on her financial affidavit as $14,166.00
       per month, but this does not take into consideration her operating
       expenses. She incurs on average, a monthly obligation for operating
       and other expenses in the amount of $4,361.00 leaving her a net of
       $9,805.00.

After a review of the parties’ tax returns, we agree with the finding of the district

court and find the net income attributable to Jacquelyn equals $9805 per month.

       3. Joel’s retirement account is large because “his disposable income was

diverted into the investment as opposed to being used by the parties.”            Joel

concedes the increased contributions of disposable income to his retirement

account but resists the characterization of that effort as being “diverted” funds. He

opines the term carries a negative connotation. Instead, he emphasizes that the

goal to increase contributions was a joint plan and retirement strategy. Jacquelyn

disagrees that it was part of her plan. But in this review, the enhanced funding is

a reality and we only need address how it plays with the request for spousal

support. Motive is a part of a history we may never know.

       4. Joel should be able to work in the field of sales in spite of his social

security administration disability determination.     Without contest, the parties

agreed that the Department of Social Security Disability determined that Joel was

disabled from an injury he sustained after falling. And the court found that Joel

“was on disability and essentially retired.” Joel described a shoulder injury that

caused him throbbing pain while working on a computer for no longer than an hour.
                                           8

He testified his condition limited any return to his previous line of work that required

some manual labor. Noting that no one offered medical testimony or medical

reports supporting Joel’s descriptions, the court offered that no medical support for

Joel’s testimony was provided, no testimony explained whether recovery was

ongoing over the past two years since injury, and only Joel opined he could no

longer be a salesperson. Likewise, the court said, “The Court has no idea what

[Joel] earned in sales or what his bonus schedule may have been as the Court

was not provided his tax records prior to his injury.” The court also found that Joel

intended to retire at the time of his injury in any event and so it was unlikely he

would have sought future employment even without having fallen.

       Interestingly, during the trial, the district court observed Joel and made

factual findings that “he has mobility in his arm and shoulder, especially when he

demonstrated his movement to the Court. The Court is not clear how the shoulder

injury would prevent him from future work in the field of sales.” One role of the

factfinder is to assess the credibility of the witness on the witness stand by

observing the witness’s conduct and appearance. Ruden v. Peach, 904 N.W.2d

410, 413 (Iowa Ct. App. 2017) (finding trial court improperly “became a witness”

by relying on matters outside the trial record). The line between factfinder and

witness can be crossed where observations by the judge are the basis for a finding

on a disputed fact that must be proved and corroborated. See Dworkis v. Dworkis,

111 So. 2d 70, 74 (Fla. Dist. Ct. App. 1959) (“The effect of a trial judge’s

observation of a party’s manner and demeanor in the court room should be limited

to its bearing on the credibility to be accorded to the party’s testimony given under

oath; and such observations by the judge should not be the basis for findings by
                                           9

the court on disputed facts, to the contrary of that party’s position, because in so

doing a judge may be said to have made himself a witness, unsworn and not cross-

examined.”). Here, we have no basis for evaluating the court’s evaluation of Joel’s

condition as there is no record of what he did or how he used his body from which

to assess the findings. Without the medical evidence the district court seemed to

seek, it instead made medical findings about a party. That left Joel with no

opportunity to cross-examine, offer countervailing evidence, or know upon what

evidence the court relied when making its decision.

         Jacquelyn argues that despite the court’s observations, it never veered from

the conclusion that Joel received social security payments based on a disability

and could only receive SSD earnings. What is unclear from the record is what

impact the court’s observations of Joel’s functioning played in the spousal support

decision.4 Because no one challenges the disability finding and no one countered

with vocational choices for Joel or what earnings he might reap, on this record we

find it would be unlikely for Joel now with his shoulder injury to earn what he made

at the height of his career.

         5. The Wabasha real estate had rental income potential. Joel disputes the

district court’s finding that the Wabasha home had rental income potential.

Apparently, based on past tax returns, the parties did recognize income from

4   In the ruling on the posttrial motion, the court stated:
          The Court rendered its findings from the tax records and personal
          observations in the courtroom. [Joel] also indicated his status as a
          recipient of disability was coming on for review. The Court cannot
          speculate as to what that might mean for him, but the Court viewed
          a man capable of participating in trial, communicating with
          confidence and moving without severe limitation.
                                         10

renting the lake home. But Joel’s point is well taken here; if the Wabasha house

serves as his primary residence, the rental opportunity is unrealistic.

       6. An award of alimony to Joel would require Jacquelyn to increase her

monthly earnings given the new tax laws.          Addressing tax ramifications and

spousal support, the court noted, “With the new tax laws and the effect such has

on alimony, [Jacquelyn] will have to increase her current income to meet a present

day value to pay any alimony in order to maintain her business and her expenses.”

Joel asserts the court erred by concluding that if Jacquelyn paid spousal support

the new tax laws impacting deductibility of the payment would require Jacquelyn

to increase her income. The practical impact of the tax changes is that there is an

increased cost to the payor when a payment of spousal support is ordered. In re

Marriage of Mann, 943 N.W.2d 15, 21 (Iowa 2020) (addressing the greater

economic impact of paying spousal support on the payor because of changes in

tax law deductibility). The payor pays the support amount and cannot deduct the

payment on the tax return, so the payor is effectively taxed on the amount. But we

address tax considerations, along with other factors, as a part of the overall

fairness analysis if we determine spousal support is warranted.           Iowa Code

§ 598.21A(1)(g). The district court’s comments about tax laws do not impact our

overall de novo review of the factual findings.

       7. After Joel pays the balance of the furniture and boat loans his monthly

expenses will be “almost non-existent.”       We acknowledge that this comment

“cherry picked” out of the decree is not an accurate reflection of Joel’s monthly

expenses. Joel assumed the boat loan ($15,906.32 total with a $726.20 monthly
                                          11

payment) and the furniture loan ($1208.77 with a$197 monthly payment).5 From

his financial affidavit, Joel has other monthly expenses but these loans will be

satisfied in short order. We consider the reasonable expenses of both parties as

developed in this record.

         8. The current asset distribution allows Joel to realize his retirement plan.

Much of the trial revolved around Joel’s retirement concerns. He rejects the district

court’s conclusion the property distribution, which Joel did not appeal, solved his

retirement goals. The court noted “[n]ow that awards of assets are made in this

decree, [Joel] will be able to commence planning for distribution from his retirement

account as was his plan given his station in life.” After an equalization payment to

Jacquelyn of $125,000, Joel netted assets of $597,910. The $125,000 payment

would be transferred from Joel’s retirement plan monies of $593,920, leaving him

$468,920 in that account. On the other side of the ledger, Jacquelyn received net

assets valued at $365,599. Joel did not appeal this property award.

         We recognize and agree that Joel’s plan to accumulate $1 million dollars

before accessing the retirement monies at age seventy and one-half years was not

achieved. Jacquelyn denies participation in the planning and instead noted that

Joel’s testimony referenced only “my goal” and “my plan.” And with the dissolution

of the marriage, it is not unrealistic to expect that previous goals and plans might

require modification.

         We next address Joel’s spousal support request.

5   Debt balances come from Jacquelyn’s financial affidavit.
                                        12

      B. Was Joel entitled to an award of spousal support? In the history of

this marriage, Joel carried the mantle of primary breadwinner for many years of

the union. Now he is on the verge of his retirement years, and Jacquelyn arguably

has another decade or more in the labor market. After this long-term marriage and

with the disability Joel experiences, he argues that spousal support is mandated

under these facts. He lobbies for a payment of $4391.46 per month to support his

pre-dissolution lifestyle. While the length of this marriage meets the durational

threshold used to consider a spousal award, our inquiry does not stop there. See

In re Marriage of Gust, 858 N.W.2d 402, 410–11 (Iowa 2015) (concluding

marriages lasting over twenty years “merit serious consideration for traditional

spousal support”).

      But the central question comes down to the analysis of need and ability to

pay. Id. at 411. The “yardstick” for determining need is whether the spouse can

“become self-sufficient at ‘a standard of living reasonably comparable to that

enjoyed during the marriage.’” Id. (citation omitted); see also Iowa Code

§ 598.21A(1)(f).     We also review the earning capability of the spouses, not

necessarily just the actual income. See In re Marriage of Wegner, 434 N.W.2d

397, 399 (Iowa 1988) (“We have consistently examined the earning capacity [of

the parties] beyond simply ascertaining present income.”). We also look at the

case avoiding a prism defined by gender. Generally the historical record of the

spouse’s earnings provides a starting point to determine earning capacity, but we

only have a one-year history for Joel and a three-year history for Jacquelyn. With

little evidence about Joel’s earning capacity, we are left with testimony and a

review of the 2017 joint tax return. We glean that Joel receives SSD of $2249 plus
                                         13

a long-term insurance disability payment of $470, which may or may not be

continued. And there was no vocational rehabilitation information about any return

to work given his disability. On the flip side, the tax returns support Jacquelyn’s

three years of substantial earnings in her counseling endeavor, with a monthly

average gross income of $14,115. The disparity between earnings equals $11,396

each month.

       Yet “[s]pousal support ‘is not an absolute right, and an award thereof

depends upon the circumstances of a particular case.’” Schenkelberg, 824 N.W.2d

at 486 (citation omitted). Those important circumstances are incorporated into a

statutory checklist of factors to review. Those factors relevant here include: (a)

length of the marriage, (b) the age and physical and emotional health of the parties,

(c) the property distribution, (d) the education level of each party, (e) the earning

capacity of the party seeking maintenance, including educational background,

training, employment skills and work experience, (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 (g) tax consequences to each

party. Id.; see also Iowa Code § 598.21A(1). Our cases applying the statute have

identified three kinds of support: traditional, rehabilitative, and reimbursement.

See In re Marriage of Becker, 756 N.W.2d 822, 826 (Iowa 2008); In re Marriage of

Francis, 442 N.W.2d 59, 63–64 (Iowa 1989). The categories may overlap in some

cases. See, e.g., Becker, 756 N.W.2d at 827 (involving spousal support award the

court could not characterize as strictly rehabilitative or traditional). Traditional

spousal support is often used in long-term marriages where “life patterns have

been largely set, [and] the earning potential of both parties can be predicted with
                                        14

some reliability.” Francis, 442 N.W.2d at 62–63; see also In re Marriage of Kurtt,

561 N.W.2d 385, 388 (Iowa Ct. App. 1997). “The purpose of a traditional or

permanent alimony award is to provide the receiving spouse with support

comparable to what he or she would receive if the marriage continued.” In re

Marriage of Hettinga, 574 N.W.2d 920, 922 (Iowa Ct. App. 1997).

      Under the statutory checklist, the length of this marriage meets the

threshold period for an award of spousal support. See Gust, 858 N.W.2d at 411.

Next, at trial, Joel was sixty years old and Jacquelyn was fifty-one years old. Both

parties are well educated but Jacquelyn has attained a master’s degree. And while

the parties acknowledged that Joel served as the primary breadwinner for many

years of the marriage, he now is disabled and out of the workforce. In contrast,

Jacquelyn has moved into the peak of her career, with another sixteen years of

earning power until reaching a traditional retirement age of sixty-seven. Turning

to the property division, the district court found that given Joel’s “current

circumstances” he should receive most of the retirement account. Joel received

about 63.9% of the net marital assets, leaving Jacquelyn with 36.1%. Generally in

marriages of long duration, the property award is substantially equal. Id. With

retirement savings now equaling $468,920, Joel only has his SSD income to meet

expenses and will be required to dip into that savings. If required to pay spousal

support, Jacquelyn suggested at trial that she would rather transfer more assets

to Joel than be saddled with a monthly alimony payment.6 And it appears the

6The court noted Jacquelyn would forgo her half share in Joel’s retirement plan to
avoid an alimony payment.
                                         15

district court heeded that proposal. But even with the disparate award favoring

Joel, Jacquelyn improves her ability to live at the lifestyle the parties maintained.

       The district court considered the couple’s lifestyle and said this:

       The Court did not receive any information about the family’s lifestyle.
       The Court did not hear about expensive family vacations. The Court
       did not hear about expensive or elaborate homes or vehicles. The
       family carried balances on loans for larger purchases. There was no
       testimony offered to indicate that either gambled, over imbibed or
       haphazardly spent money. They seemed to enjoy time in Wabasha.
       It can be gleaned that the Petitioner enjoys horses and Respondent
       enjoys fishing. Both will be able to continue these recreational
       pursuits given the division of the assets herein.”

       We recognize the trial court was in the best position to balance the parties’

needs, and we should intervene on appeal only where there is a failure to do equity.

See Olson, 705 N.W.2d at 315. Arguments for spousal support for Joel are (1) his

disability, (2) his age of sixty years, and (3) Jacquelyn’s substantial earnings. The

compelling argument against a spousal support award to Joel is the award of

63.9% of the parties’ property. “We consider alimony and property distribution

together in assessing their individual sufficiency.     They are neither made nor

subject to evaluation in isolation from one another.” Hettinga, 574 N.W.2d at 922.

       Because Joel received a greater share of the marital property, it is important

to weigh that factor against his request for spousal support. Indeed, Jacquelyn’s

earnings allow her to afford a spousal support award.          Her financial affidavit

estimated her monthly expenses at $2591.17. In an earlier filed affidavit, Joel first

described his monthly expense at $1727.42 but then at trial provided a more

detailed statement showing expenses of $6839.32 per month. Jacquelyn opined
                                          16

the estimate was high.7 Thus, when we access the “yardstick” of whether Joel can

achieve a standard of living reasonably comparable to that enjoyed during the

marriage, even with the greater balance of assets in his pocket, we do not believe

he can. Unlike the district court, we find the evidence supports a comfortable

lifestyle with two homes, boats, and the ability to save significant monies for

retirement.   And while Joel can access the retirement monies to support his

lifestyle, Jacquelyn will support her lifestyle without having to reduce her net worth.

Thus, Joel makes a compelling argument that Jacquelyn can afford to help support

that similar pre-dissolution lifestyle for him. See Hettinga, 574 N.W.2d at 922

(noting that spousal support “provide[s] the receiving spouse with support

comparable to what he or she would receive if the marriage continued.”).

       Noting that there is no magic formula for calculating spousal support, we

look to the specific facts of the case and apply the statutory factors addressing the

award. Mann, 943 N.W.2d at 20. With consideration of those factors, including

the property award and the potential tax consequences to the parties, we award

Joel spousal support of $2500 per month until he reaches age seventy. After that

date, the spousal support shall be reduced to $1500 per month and the spousal

support obligation shall terminate when either party dies or Joel remarries.

       IV. Disposition.

       We affirm the district court dissolution order as modified in this opinion.

       AFFIRMED AS MODIFIED.

7 Jacquelyn offered that Joel would soon qualify for Medicare/Medicaid and the
$910 health insurance premium would no longer be an expense. She also pointed
to two loans (the boat and the furniture), that would be satisfied soon, again
reducing Joel’s monthly obligations.