Court Opinion

ID: 4030218
Source: CourtListenerOpinion
Date Created: 2016-08-31 15:06:47.43338+00
Date Added: 2024-06-11T14:29:02.666015
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                  No. 15-1139
                             Filed August 31, 2016

IN RE THE MARRIAGE OF MARCY LEA KERKHOFF
AND NEAL KENNETH KERKHOFF

Upon the Petition of
MARCY LEA KERKHOFF,
      Petitioner-Appellant/Cross-Appellee,

And Concerning
NEAL KENNETH KERKHOFF,
     Respondent-Appellee/Cross-Appellant.
________________________________________________________________

       Appeal from the Iowa District Court for Pottawattamie County, James

Richardson, Judge.

       A wife appeals and a husband cross-appeals the economic provisions of

their dissolution decree. AFFIRMED AS MODIFIED.

       Randall J. Shanks and Emily A. Shanks of Shanks Law Firm, Council

Bluffs, for appellant.

       Shannon D. Simpson and Ryan J. Muldoon of Telpner, Peterson, Smith,

Ruesch, Thomas & Simpson, L.L.P., Council Bluffs, for appellee.

       Considered by Danilson, C.J., and Vogel and Potterfield, JJ.
                                          2

POTTERFIELD, Judge.

       Marcy Kerkhoff appeals and Neal Kerkhoff cross-appeals the economic

provisions of their dissolution decree. Marcy argues she is entitled to a portion of

the appreciated value of gifted stock Neal received from his parents. Marcy also

argues the district court incorrectly calculated Neal’s income for purposes of

determining the proper amount of alimony and child support payments,

mistakenly believed the parties had stipulated to division of property, failed to

address Neal’s dissipation of marital assets, and improperly included the value of

her wedding ring as a part of the marital estate. Finally, Marcy requests she be

awarded attorney fees and costs of this appeal.1 Neal argues the district court

should not have awarded Marcy any spousal support, improperly established a

constructive trust over his gifted stock, and abused its discretion in awarding

Marcy costs and attorney fees.

I. Background Facts and Proceedings

       Marcy and Neal were married in November 1990. Marcy was twenty-two

when they married; Neal was twenty-five. In September 2013, nearly twenty-

three years after the parties wed, Marcy filed a petition for dissolution of

marriage. During their marriage, the parties had three children together. Two of

the children are now adults, and the third is sixteen years old. Both Marcy and

Neal were in good health at the time of trial.

       Neal is a college graduate with a business degree. Since college, Neal

has undertaken a series of entrepreneurial ventures, both alone and with his

1
 Marcy made these final requests as part of a separate motion for fees and costs. On
December 1, 2015, our Supreme Court ordered that the requests sought in the separate
motion be submitted with the appeal.
                                       3

father, Frank Kerkhoff, who is an accomplished businessman. Marcy attended

one year of college, spent one semester at a music conservatory, and later

completed a six-month certificate program in order to become a travel agent.

She never worked as a travel agent.        Marcy worked for approximately eight

months as a salesperson at a jewelry store, eight months doing clerical and

secretarial work at an employee benefits company, and one and one-half years

doing secretarial work and events planning at an 800 number call center for

Radisson Hotels. Then, in 1994, Marcy began working with Neal.

         At first, Marcy worked for a company she and Neal co-owned. In June

1994, she and Neal moved into a senior living center—Belleview Harmony

Court—developed, constructed, and operated by Neal and his father. Neal was

to be the live-in resident manager of the facility. When Marcy gave birth to the

couple’s first child in 1994, she and Neal agreed Marcy would leave the

workforce and devote herself to being a mother and homemaker. The couple

moved out of Belleview Harmony Court and into their own home in July 1996.

Neal and his father opened a second senior living center—Council Bluffs

Harmony Court—in 1999. With the addition of the second facility, Neal was

responsible for the management and operations of a combined two hundred

units.

         Marcy did not have official involvement in decisions involving the

properties, nor did she attend corporate meetings. She did, however, assist Neal

with a variety of tasks related to the facilities, including arranging holiday

programs, assisting with advertising, and running errands. She also continued to
                                          4

work sporadically in advertising as a model and voice-over actor. Her income

from such work was neither steady nor substantial.

       The parties’ economic situation during the marriage was unusual. Neal

was paid a salary as the administrator of the senior living centers operated by the

family-owned corporations. However, the amount he earned in that manner was

not indicative of the parties’ standard of living. Beginning in the 1970s, Neal’s

parents—namely, his father Frank—began gifting shares of stock in the family

corporations to Neal and his siblings in what the district court described as “a

complex tax avoidance scheme.” Neal’s shares in the family companies are as

follows: 16.66% of K.L.W. Construction, Co.—the corporation under which the

senior living centers were built and operated; 21.09% of Lake City Health

Services, Inc.; 15.25% of Kerkoff L.P.; and 17.4% of C.J. Millers, L.L.C. The

stipulated value of Neal’s interest in the corporations at the time of trial, minus a

30% reduction for lack of marketability and minority interest, was $6,295,658.

Neal’s father maintained complete control of all those business entities, and he

controlled all related assets and distributions.

       Neal and Marcy’s tax returns show Neal reported as income from his

position as manager of the senior living centers—where he earned minimum

wage of $7.25 per hour—and a much higher figure of adjusted gross income.

For example, the couple’s 2009 federal tax return shows W-2 income from wages

of $11,725 but an adjusted gross income of $217,329. For the following years,

the couple’s reported wage income versus reported adjusted gross income

figures were $9369 to $199,817 in 2010; $7635 to $214,601 in 2011; $7639 to

$282,239 in 2012; and $6634 to $161,580 in 2013. The difference is largely
                                          5

accounted for by management fees and distributions Neal received at the

discretion of his father.

         Marcy argued to the district court that even these income values are

understated, and the couple’s true income is difficult, if not impossible, to

determine. For example, according to the deposition testimony of Neal’s sister,

who has worked as the bookkeeper for the senior living centers since 1998, Neal

was paid an additional $20,000 in consulting fees, quarterly, each year. Those

payments were made to the corporation jointly owned by Neal and Marcy, and it

is unclear whether those amounts were accounted for in tax paperwork. While

the couple’s precise financial situation may be difficult to determine, their

standard of living was relatively high. The family lived in a home worth $405,000,

which sat on an acreage that included a large outbuilding and motocross track.

The couple owned seven vehicles,2 and Neal owned as many as twenty

motorcycles. The couple sent each of their children to private school, and the

family consistently took vacations and trips.

         The district court entered a temporary order on November 12, 2013, in

which Neal was ordered to pay a property settlement award of $50,000 to Marcy,

plus additional property settlement awards at set intervals as requested by

Marcy.     All such payments would be credited towards any future property

settlement payable to Marcy. In total, Marcy received settlement awards totaling

2
  At the dissolution hearing, Neal argued the seven vehicles were not indicative of a
lavish lifestyle. He testified the vehicles, along with their average trade-in values
according to the Kelley Blue Book, included: (1) a 2013 Chevrolet Camaro, worth
$24,448; (2) a 2013 Chevrolet Silverado, worth $32,108; (3) a 2011 Chevrolet Silverado,
worth $26,124; (4) a 2007 Ford Expedition, worth $7216; (5) a 2003 Ford Windstar,
worth $1814; (6) a 2001 Ford F-150, worth $4356; and (7) a 1996 Chrysler Sebring,
worth $1020.
                                          6

$359,488, which included the 2013 Chevrolet Camaro and half the value of the

marital home.

       The dissolution hearing was held on April 9 and 10, 2015. A number of

issues were stipulated to by the parties prior to, during, and after the dissolution

hearing. For example, the parties stipulated before the hearing Neal would retain

the marital home and pay Marcy half its value, which he did in early February

2015. On April 16, 2015, the parties stipulated to a joint parenting plan in which

they agreed to joint legal custody and physical care of their only minor child. The

primary issues remaining at trial were: (1) the amount of child support; (2) the

amount of spousal support, if any; and (3) whether Neal’s gifted stock should be

divided in any way. Both Marcy and Neal testified extensively, as did Frank

Kerkoff.   Marcy and Neal each presented experts who opined about Neal’s

income and the amount Neal’s gifted stock had appreciated.

       The district court filed its findings of fact, conclusions of law, and decree of

dissolution on April 30, 2015. The court found Marcy was not entitled to any

share of Neal’s gifted stock. The district court also accepted Neal’s expert’s

figure regarding Neal’s net monthly income and imputed an annual income of

$25,000 to Marcy based upon the fact she had marketable skills but was

unemployed and had not sought full-time work during the pendency of the

dissolution proceedings. The district court ordered Neal to pay for the minor

child’s private school tuition and medical insurance, in addition to $662.15 per

month to Marcy as contribution towards support of the child. The district court

also ordered him to pay Marcy $3300 per month as spousal support and to

transfer to Marcy a one-time payment of $205,000—half the value of the marital
                                          7

home he was awarded—although he had already transferred that amount to her.

Finally, the district court ordered Neal to pay Marcy’s costs and attorney fees in

the amount of $108,757.08. The court’s reasoning was as follows:

              At the time of this action, a great deal of distrust existed
       between [Marcy] and [Neal]. In no small amount, this situation
       existed due to the secretive methods in which Frank Kerkhoff
       managed the various businesses. As a result, enormous attorney
       fees and expert witness fees have been incurred. . . . This court
       specifically finds that said fees are reasonable and have been
       earned. Simply, the issue is who should pay these fees. This court
       specifically finds that equity demands that such fees follow and be
       assessed to the ownership of the corporate stock. The various
       corporate entities should be responsible for the fees incurred in this
       application.

       To ensure Neal’s fulfillment of the obligations set forth in the dissolution

decree, the district court established a constructive trust, “created with the

corporate stock awarded to [Neal] being the corpus thereof.”

       Both Marcy and Neal filed motions to enlarge or amend the district court’s

dissolution decree. The district court ruled on those motions on June 1, 2015.

       Marcy appeals and Neal cross-appeals.

II. Standard of Review

       We review dissolution of marriage cases de novo.           In re Marriage of

Schenkelberg, 824 N.W.2d 481, 483–84 (Iowa 2012). We give weight to the

factual findings of the district court, especially when considering the credibility of

witnesses, but are not bound by them. In re Marriage of McDermott, 827 N.W.2d
671, 676 (Iowa 2013). “Prior cases are of little precedential value, except to

provide a framework for analysis, and we must ultimately tailor our decision to

the unique facts and circumstances before us.” In re Marriage of Kleist, 538
N.W.2d 273, 276 (Iowa 1995).
                                        8

III. Discussion

      A. Appreciation of Stock Gifted to Neal

      Iowa is an equitable distribution state. McDermott, 827 N.W.2d at 678.

“In dissolution-of-marriage cases, marital property is to be divided equitably,

considering the factors outlined in Iowa Code section 598.21[(5)]” (2013). Id.

(citing In re Marriage of Hansen, 733 N.W.2d 683, 702 (Iowa 2007) (alteration in

original). Equitable distribution depends upon the circumstances of each case,

and it does not necessarily mean equal distribution. Hansen, 733 N.W.2d at 702.

      Property inherited by, or gifted to, either party is generally not subject to

division, regardless of whether the property was inherited or gifted prior to, or

during, the course of the marriage. Iowa Code § 598.21(5), (6). Nonetheless,

inherited or gifted property may be divided as marital property “upon a finding

that refusal to divide the property is inequitable to the other party or to the

children of the marriage.”     Id.   We consider the following factors when

determining whether it would be inequitable not to divide a gift between spouses:

      (1) contributions of the parties toward the property, its care,
      preservation or improvement;
      (2) the existence of any independent close relationship between
      the donor or testator and the spouse of the one to whom the
      property was given or devised;
      (3) separate contributions by the parties to their economic welfare
      to whatever extent those contributions preserve the property for
      either of them;
      (4) any special needs of either party;
      (5) any other matter which would render it plainly unfair to a
      spouse or child to have the property set aside for the exclusive
      enjoyment of the donee or devisee.

In re Marriage of Thomas, 319 N.W.2d 209, 211 (Iowa 1982).              The Iowa

Supreme Court has also stated “that the length of the marriage may be an
                                         9

important factor in determining whether gifted property should be included in the

court’s property distribution.” In re Marriage of Goodwin, 606 N.W.2d 315, 319

(Iowa 2000).

       The parties do not dispute the fact Neal’s shares of stock were gifted to

him by his parents. Neal’s father testified that the donative intent was to transfer

interests in the family’s business entities to his children only and not to their

spouses. However, Marcy argues the appreciation of the stock during the course

of the marriage should be divided between the parties because she contributed

to the family unit by raising the couple’s children, she contributed to the Kerkhoff

family businesses by performing assorted tasks for the benefit of the senior living

facilities, and the gifted stock provided support for the family’s livelihood. She

asks us to modify the dissolution decree to award her $2,489,012.50—one-half of

the $4,978,025 Neal’s gifted stock appreciated.

       We decline to modify the dissolution decree to award Marcy a share of the

appreciation of Neal’s gifted stock. We agree with the district court’s views on

this issue:

              In this case, it is abundantly clear that the donor’s specific
       intent was . . . a gift to Neal only. . . . Marcy did not contribute
       towards the care, preservation or improvement of the gifted
       property. No close independent relationship existed between the
       donors and Marcy. Neither party has any special needs. The
       gifted property was not preserved by any separate contributions by
       Marcy to the parties’ economic welfare. Therefore, no inequity
       results if Neal’s gifted interest in the business enterprises is set
       aside to him.
              In this case, the gifted companies provided minimal support
       to the parties during the marriage. Frank Kerkhoff maintained
       complete control of the business entities which provided managerial
       fees and wages to [Neal] only. Thus, the real value of the gifted
       corporate stock was the establishment of a standard of living for the
       parties.
                                        10

             Thus, . . . the gifted corporate stock is primarily relevant in
      the assessment of spousal support.

      The gifted stock in the Kerkhoff family businesses never directly supplied

Neal and Marcy with income or wealth. Instead, the value associated with the

gifted stock resided in the income and distributions Neal received through the

businesses, at the sole discretion of his father. This situation is distinguishable

from the case cited by Marcy in which a panel of our court credited to both

parties the appreciation of an inheritance of one party. See In re Marriage of

Kitzman, No. 11-0441, 2012 WL 1439127, at *8 (Iowa Ct. App. Apr. 25, 2012)

(where the husband’s inheritance was farmland that served as a source of the

family’s livelihood over the course of the twenty-nine-year marriage; the wife

contributed by making improvements to home, worked outside the home and

deposited her paychecks into a joint account used to pay bills, had a “very close”

relationship with the husband’s parents, and tended to them in their later years).

      B. Neal’s Annual Income

      Marcy next argues the district court incorrectly determined Neal’s income

for use in calculating alimony and child support. She argues the district court

undervalued Neal’s income when it attributed to the couple a gross annual

income of $165,313.01. She points to the testimony of her own expert as the

most reliable source for determining the proper monthly income to be used in the

court’s calculations. Marcy’s expert valued Neal’s net average annual income at

$169,591.33; she argues the use of her expert’s income valuation should result

in an increase in Neal’s alimony obligation from $3300 to $8784 per month and

an increase in his child support obligation from $662.15 to $1025.92 per month.
                                        11

       In applying the child support guidelines, the court must determine the

parents’ monthly income from the most reliable evidence presented.            In re

Marriage of Powell, 474 N.W.2d 531, 534 (Iowa 1991). “Both parents have a

legal obligation to support their children, not necessarily equally but in

accordance with his or her ability to pay.” Moore v. Kriegel, 551 N.W.2d 887, 889

(Iowa Ct. App. 1996).     Likewise, “[w]hen determining the appropriateness of

alimony, the court must consider ‘(1) the earning capacity of each party; and (2)

present standards of living and ability to pay balanced against relative needs of

the other.’” In re Marriage of Kurtt, 561 N.W.2d 385, 388 (Iowa Ct. App. 1997)

(citation omitted).

       Although we review the district court’s determinations in this matter de

novo, we do grant them significant deference, particularly regarding credibility

determinations. We find no error or inequity in the district court’s decision to

credit the income valuation of Neal’s expert witness over that of Marcy’s expert.

Marcy’s expert witness arrived at his figure by averaging income figures for three

years—2011 to 2013—and admitted on cross-examination his income valuation

assumed Neal realized the total income associated with his percentage interest

in the Kerkhoff family companies, as opposed to the actual distributions Neal

received at the direction of his father. By contrast, Neal’s expert witness arrived

at his income figure by averaging Neal’s income over five years and taking into

account the actual distributions Neal received from his father rather than the total

income derived from the family businesses. We do not disturb on appeal the

district court’s determination the income valuation provided by Neal’s expert was

more reliable. Nor do we increase the district court’s alimony and child support
                                         12

awards. Marcy has not separately argued the district court’s awards of alimony

and child support are inadequate or flawed; she only argues we should increase

those awards if we reassess Neal’s income, which we decline to do.

       C. Division of Personal Property

       In the dissolution decree, the district court ordered the parties to divide the

assets and liabilities set forth in Exhibit QQ-1 as indicated therein and further

ordered, “All personal property not contained in said exhibit shall be divided

pursuant to the parties’ stipulation entered during trial.” No such stipulation was

entered at trial. When this was brought to the district court’s attention, the court

filed a ruling granting the parties an additional twenty days in which to “execute at

counsel’s office all stipulations and transfer of personal property.” Marcy submits

the parties have still failed to resolve the outstanding issues regarding distribution

of personal property and asks that we remand the case to the district court with

direction the court oversee resolution of those issues. Neal has provided no

response to Marcy’s request.

       The district court ruled on this issue in its June 1, 2015 order granting the

parties twenty days to execute further stipulations regarding their minor personal

property items. As the Iowa Supreme Court explained in its December 1, 2015

ruling on Neal’s motion for limited remand, “remand is not needed as the district

court retains jurisdiction to enforce . . . the Decree of Dissolution of Marriage.”

Either party may file an appropriate motion in district court to enforce the

dissolution decree—a motion to initiate contempt proceedings, for example. See

Iowa Code § 598.23(1) (“If a person against whom a temporary order or final
                                          13

decree has been entered willfully disobeys the order or decree, the person may

be cited and punished by the court for contempt . . . .”).

       D. Neal’s Dissipation of Marital Assets

       Next, Marcy argues the district court improperly failed to account for

Neal’s dissipation of marital assets. See In re Marriage of Kimbro, 826 N.W.2d
696, 700–01 (Iowa 2013) (explaining a court may “generally consider a spouse’s

dissipation or waste of marital assets prior to dissolution when making a property

distribution,” and if a spouse’s conduct caused the improper loss of property

otherwise subject to division at time of divorce, then the wasted asset should be

included in the marital estate awarded to the spouse who caused the waste).

Specifically, Marcy argues the $6602.98 Neal spent hiring private investigators to

follow her on trips to Texas and California constitutes an unnecessary expense

and should be awarded to Neal. Neal responds by alleging it was Marcy who

dissipated marital assets by travelling to Texas and California to visit her

paramour and engage in an extramarital affair, and his expense in confirming her

actions was necessary.

       The district court did not address the issue of dissipation of marital assets

in the dissolution decree.     When Marcy pressed the issue in her motion to

enlarge, the district court again did not specifically address it, explaining only that

the court “ha[d] attempted simplicity in its decree to minimize the issues and

tensions between the parties.” The court then overruled and denied “all other

aspects” of the parties’ motions to enlarge, including Marcy’s request that it find

Neal dissipated marital assets. We find the district court’s decisions regarding

the overall division of property and awards of alimony, child support, and attorney
                                              14

fees to be equitable under the circumstances of this case. Specifically, we find

the language contained in the district court’s June 1, 2015 ruling, combined with

the language justifying the award of attorney fees to Marcy and the off-setting

claims of each party regarding Marcy’s travel, sufficient to settle the matter. We

affirm the district court’s rejection of Marcy’s claim for credit for the private

investigator’s fees.

          E. Marcy’s Wedding Ring

          Marcy argues her wedding ring, valued at $6100, was improperly

considered a marital asset by the district court. See Fierro v. Hoel, 465 N.W.2d
669, 672 (Iowa Ct. App. 1990) (“[A]n engagement ring given in contemplation of

marriage is an impliedly conditional gift; it is a completed gift . . . upon

marriage.”). Neal does not now dispute the wedding ring was a gift given to

Marcy and should not be considered a marital asset.3 The district court rejected

Marcy’s claim in the context of its overall division of property.              Marcy was

awarded ongoing alimony payments and child support payments, and she has

already received settlement awards totaling more than $350,000. We do not

believe the district court’s mistaken classification of the wedding ring as marital

property results in an inequitable distribution.

          F. Award of Spousal Support and Amount of Child Support

          Neal argues the district court erred in awarding alimony to Marcy.             In

support of his argument, Neal argues he already paid Marcy an overage of

$43,432.64 in the property division and the evidence presented at trial shows

Marcy is capable of sustaining the standard of living she enjoyed during the

3
    We note Neal’s proposed division of property included the ring as a marital asset.
                                        15

marriage. Neal argues the parties lived “a very modest lifestyle for the duration

of the marriage,” and Marcy is “a fully capable, young, and very talented woman”

who earns a minimum of $100 per hour for voiceover and modeling work and has

a “thriving musical career.”

       When determining whether an award of alimony is appropriate under the

facts of a particular case, we accord the district court considerable latitude and

only disturb the ruling when there has been a failure to do equity. See In re

Marriage of Olson, 705 N.W.2d 312, 315 (Iowa 2005). Traditional alimony, like

the district court awarded to Marcy in this case, is “payable for life so long as a

spouse is incapable of self-support.” See id. at 316 (citing In re Marriage of

Francis, 442 N.W.2d 59, 64 (Iowa 1989)). Typically, this means the alimony is

payable until the death of either party, the payee’s remarriage, or until the payee

is capable of self-support at the lifestyle to which he or she was accustomed

during the marriage. In re Marriage of Gust, 858 N.W.2d 402, 412 (Iowa 2015).

Traditional alimony works to assure equity in dissolutions of long-term marriages,

where “life patterns have largely been set, [and] the earning potential of both

parties can be predicted with some reliability.” Francis, 442 N.W.2d at 62–63.

“Generally speaking, marriages lasting twenty or more years commonly cross the

durational threshold and merit serious consideration for traditional [alimony].”

Gust, 858 N.W.2d at 410–11.

       We disagree with Neal’s contention the district court wrongly awarded

Marcy alimony.    The district court accepted Neal’s exhibit regarding property

division, including the substantial reduction of $220,000 he claimed for money

owed to his father for attorney fees.    His claim he paid Marcy an excess of
                                             16

$43,432.64 in the property division is belied by his exhibit. In accepting Neal’s

exhibit as an accurate depiction of the parties’ assets and liabilities, the district

court specifically listed the promissory note as an exception.

       Second, we do not agree with Neal’s assertion Marcy has a thriving music

career and is capable of maintaining the standard of living she enjoyed during the

marriage. Other than sporadic modeling and voiceover work, Marcy has not

worked outside the home in any meaningful way in more than twenty years. She

has no history of earning income sufficient to support herself, and she is tasked

with reentering the workforce more than two decades after she left it. She does

not have a college degree. We find no inequity in the district court’s award of

alimony to Marcy, particularly given the fact it imputed yearly income of $25,000

to Marcy in determining the amount to be paid.

       Nor do we find inequity in the district court’s calculation of child support

using Neal’s pre-alimony income figures. Neal argues his alimony payments to

Marcy should be reflected in the parties’ respective incomes used to calculate his

child support payments.4 Viewing the district court’s dissolution decree as a

whole, and given the fact the district court already deviated downward from the

Iowa Supreme Court guidelines in order to account for Neal’s payment of the

remainder of the child’s private schooling, we see no inequity in the amount of

child support awarded to Marcy.

4
  Marcy filed a motion to strike this portion of Neal’s brief, arguing he improperly added it
to his proof brief after the filing deadline had passed. Our Supreme Court denied the
motion to strike. Marcy reiterates her argument on appeal. We find no error with
allowing Neal’s amendment to his proof brief. Iowa Rule of Appellate Procedure
6.901(6) provides, “An appellee’s brief may be amended once within 10 days after
service, provided no brief has been served in reply to it.”
                                          17

       G. Constructive Trust on Neal’s Gifted Stock

       Neal also argues the district court improperly created a constructive trust

consisting of his gifted shares of stock.5 He argued in his motion to enlarge that

the trust should not continue during his obligations to pay child support and

alimony. We agree. “A constructive trust is a remedy, applied for purposes of

restitution, to prevent unjust enrichment.”     Slocum v. Hammond, 346 N.W.2d
485, 493 (Iowa 1984). “It is an equitable doctrine.” Id. Constructive trusts fall

into three categories: “first, trusts that arise from actual fraud; second, trusts that

arise from constructive fraud; [and] third, trusts that arise from some equitable

principle independent of the existence of any fraud.”        Loschen v. Clark, 127
N.W.2d 600, 603 (Iowa 1964). Upon our de novo review of the record, it appears

the substantial property settlement awards Neal paid to Marcy prior to the

dissolution hearing resolve most, if not all, of his immediate obligations under the

dissolution decree. The ongoing alimony payments Neal owes to Marcy, which

could continue until the death of one of the parties if Marcy does not remarry, are

not linked directly to the gifted stock but rather to Neal’s income, management

fees, and the distributions overseen by Frank. Any outstanding issues regarding

the parties’ marital property is similarly unconnected to the stock. Therefore, we

believe the purpose for the constructive trust has been satisfied and limit the

constructive trust established by the dissolution decree to Neal’s one-time

obligations. The trust shall no longer be in effect when those obligations have

5
  Marcy also filed a motion to strike this portion of Neal’s brief.   We consider her
objections as we did above and find no issue.
                                         18

been satisfied, leaving Neal with his periodic obligations for alimony and child

support.

       H. Attorney Fees and Costs

       Finally, both parties make arguments related to attorney fees and costs.

On cross-appeal, Neal argues the district court abused its discretion in awarding

Marcy attorney fees in the dissolution decree. “Trial courts have considerable

discretion in awarding attorney fees.” In re Marriage of Guyer, 522 N.W.2d 818,

822 (Iowa 1994). “Whether attorney fees should be awarded depends on the

respective abilities of the parties to pay,” and any fees awarded “must be fair and

reasonable.” Id. As explained by the district court, the high amount of attorney

fees involved in this dissolution was necessitated by the opaque nature of Neal’s

stock holdings and income and was earned by counsel. The court accounted for

Neal’s attorney fees, as represented by his promissory note to his father, in the

property division. We find no abuse of discretion by the district court in awarding

Marcy attorney fees and costs in the amount of $108,757.08.

       Marcy argues we should also award her attorney fees and costs on

appeal, in the amount of $22,672. “Appellate attorney fees are not a matter of

right, but rather rest in this court's discretion.” In re Marriage of Okland, 699
N.W.2d 260, 270 (Iowa 2005).         Whether appellate attorney fees should be

awarded depends upon factors which include “the needs of the party seeking the

award, the ability of the other party to pay, and the relative merits of the appeal.”

In re Marriage of Geil, 509 N.W.2d 738, 743 (Iowa 1993). We have considered

those factors and decline to grant appellate attorney fees. Costs shall be taxed

equally to both parties.
                                        19

IV. Conclusion

      For the reasons discussed above, we find the constructive trust created by

the district court using Neal’s gifted stock as the corpus shall no longer be in

effect. We otherwise affirm the dissolution decree. We decline to award Marcy

appellate attorney fees and tax costs to both parties equally.

      AFFIRMED AS MODIFIED.

      Vogel, J., concurs; Danilson, C.J., dissents.
                                         20

DANILSON, Chief Judge (dissenting)

       I respectfully dissent. This case exemplifies the difficulty courts have in

dealing with appreciation of separate property. In this case, Neal was gifted

corporate stock by his father both before and during the course of this twenty-

four year marriage. During the marriage, the stock appreciated to the tune of

$4,978,025. The district court and the majority concluded that Marcy was not

entitled to share in any of the appreciation. Although the stock was gifted solely

to Neal, I believe this result is contrary to our case law, the principles in Iowa

Code section 598.21, and is inequitable.

       The division of appreciation of separate property is a troublesome issue

throughout the country.      The states are not uniform in their approach to

appreciation arising from separate property, and both chaotic and inconsistent

results arise in attempting to draw lines based upon the amount and type of

contributions each party has made to account for the appreciation. See Sheila A.

Bentzen, “What’s Mine Is Yours . . . Sometimes: Solving the Puzzle of

Nebraska’s Approach to Allocation of Income and Appreciation From Separate

Nonmarital Property.” 47 Creighton L. Rev. 37 (December 2013).

       First, it is significant to realize the issue in dispute is the appreciation of

gifted stock and not the original gift. Our supreme court aptly recited all the

principles, including statutory authority, in considering if gifted property can and

should be divided in In re Marriage of McDermott, 827 N.W.2d 671, 678-83 (Iowa

2013). But here, Marcy does not seek an award of Neal’s gift of corporate stock;

she only seeks a division of the appreciation of the value of the stock that arose

during the marriage.
                                         21

      Our supreme court similarly faced a property division dispute involving

substantially appreciated gifted stock in In re Marriage of Friedman, 466 N.W.2d
689 (Iowa 1991). In Freidman, our supreme court concluded the appreciation

was a marital asset and stated,

              We have previously dealt with the question of appreciated
      stock value in our case law. The court of appeals included in its
      property division the appreciated value of stock in In re Marriage of
      Wallace, 315 N.W.2d 827 (Iowa Ct. App.1981). Our court approved
      this language from Wallace:
              [A]s time goes on, the benefits of such property are
              enjoyed by the married couple; it is both natural and
              proper for the expectations of the other spouse to rise
              accordingly. A sudden substantial rise in the couple’s
              standard of living made possible by a gift or
              inheritance to the husband or the wife will naturally
              and reasonably lead the other spouse to anticipate
              that that standard of living will be maintained,
              particularly if it is sustained over a lengthy period of
              time. . . . With time such changes become ever more
              deeply ingrained, and eventually it becomes virtually
              impossible to return to a world long since renounced
              and forgotten.
      [In re Marriage of] Muelhaupt, 439 N.W.2d [656], 659 (Iowa 1989)];
      see also In re Marriage of Lattig, 318 N.W.2d 811 (Iowa Ct. App.
      1982). Other courts have also divided the appreciated value of
      assets even when separately held where the increase resulted from
      the talent, time and effort of the marital partners. See generally In
      re Marriage of Lee, 430 N.E.2d 1030, 1031 (Ill. 1981); In re
      Marriage of Scott, 407 N.E.2d 1045, 1048 (Ill. 1980). In the case at
      bar we feel it is equitable to treat the appreciated value of the stock
      that we have deemed a marital asset in the same manner as the
      unappreciated values. In Locke v. Locke, 246 N.W.2d 246, [251]
      (Iowa 1976), we pointed out that there need be neither an equal
      division nor a percentage division of the property, saying “that
      which is determinative is that which would constitute an equitable
      and just award under the circumstances.”
466 N.W.2d at 692-93. Ultimately in Friedman, the spouse was awarded forty

percent of both the gifted value and the appreciation that had accumulated in a

twenty-four-year marriage. Id. at 693.
                                        22

       Appreciation was also identified as “marital property” in In re Marriage of

White, 537 N.W.2d 744, 746 (Iowa 1995), where the court stated, “Decisions on

how to use property during the marriage, including inherited property, bear most

of the characteristics of a family decision. Barring special circumstances not

present here, we believe that the resulting appreciation or loss may be

characterized as marital property.” In White, the supreme court also stated that

where inherited property “does not change its form following its receipt” there is

some merit that the appreciation should be awarded to the same person who is

entitled to the separate property. 537 N.W.2d at 746. However, in White the

inherited property was no longer in the same form and had been used to buy

other property. Id. Thus, the court never reached the issue of whether inherited

property that does not change its form but appreciates in value should be

awarded to the same spouse who inherited it, nor was consideration given to the

efforts or contributions of the parties as prior cases had suggested.

       Subsequent to White, the court faced the issue of whether appreciation of

premarital property was subject to division in In re Marriage of Fennelly, 737
N.W.2d 97 (Iowa 2007). Although premarital property is not separate property as

is gifted and inherited property, the principles of Fennelly took a new step in

viewing or weighing the efforts and contributions of the parties. In Fennelly, the

parties did not dispute setting aside the premarital property—corporate stock—to

the party who had brought the property into the marriage, but challenged the

distribution of the appreciation of the premarital property. 737 N.W.2d at 103.

The stock had appreciated fortuitously and the family home appreciated at least

in part by the contributions of both parties. Id. The court stated, “We do not find
                                         23

the parties' respective contributions to the marriage justify treating the parties

differently.” Id. The court went on to explain,

               It is important to remember marriage does not come with a
       ledger. Spouses agree to accept one another “for better or worse.”
       Each person’s total contributions to the marriage cannot be
       reduced to a dollar amount. Many contributions are incapable of
       calculation, such as love, support, and companionship. “Financial
       matters . . . must not be emphasized over the other contributions
       made to a marriage in determining an equitable distribution.”
               In the present case, both parties contributed in countless
       ways to the marriage. Both worked outside the home, cooked,
       cleaned and looked after the children. We presume they found
       solace in one another, at least in the earlier years of their marriage.
       Although each party’s contribution to a marriage is an appropriate
       factor affecting property division, it is not “useful to analyze the
       exact duties performed by the marriage partners.” Suffice it to say,
       neither party shirked his or her duties so as to justify disparate
       treatment.
               Nor do we find it appropriate when dividing property to
       emphasize how each asset appreciated—fortuitously versus
       laboriously—when the parties have been married for nearly fifteen
       years. Property may be “marital” or “premarital,” but it is all subject
       to division except for gifts and inherited property. Iowa Code §
       598.21(1).

Id. at 103-04 (case citations omitted). Fennelly does not eliminate consideration

of contributions as a factor in property distribution.            See Iowa Code

§ 598.21(5)(c). Evidence of a non-contributing spouse or one who has “shirked

their duties” may not be entitled to an equal distribution. But contributions to the

marriage can support an equal or nearly equal treatment in the property

distribution. We also no longer need to consider “how each asset appreciated—

fortuitously versus laboriously—” in a marriage of about fifteen years or longer.

Fennelly, 737 N.W.2d at 104.

       The principles set forth in Fennelly provide a sound basis to apply to the

appreciation of any asset, premarital, marital, or separate gifted or inherited
                                            24

property in a long-term marriage. The reasoning in both Friedman and Wallace

support its application to both gifted and inherited property. The facts in this

case, as in Friedman and Wallace, reflect that appreciation may well far exceed

the value of the initial gift or inheritance.

       Applying the Fennelly principles to appreciation of gifted or inherited

property in a long-term marriage is not only equitable but avoids the difficulty

encountered in weighing the contributions made by each party so long as neither

“shirked their duties.” See id. at 103-04. At the same time, the initial gift or

inheritance can be awarded to the recipient as required by Iowa Code section

598.21(6). Our court has chosen to follow this path in numerous prior cases.

See, e.g., In re Marriage of Hansen, No. 15-1825, 2016 WL 4036182, at *3 (Iowa

Ct. App. July 27, 2016); In re Marriage of Klingman, No. 11-1839, 2013 WL
541622, at *3-5 (Iowa Ct. App. Feb. 13, 2013); In re Marriage of Kinser, No. 11-

0169, 2012 WL 3194088, at *8 (Iowa Ct. App. Aug. 8, 2012); In re Marriage of

Antoine, No. 09-1653, 2010 WL 5023072, at *7-8 (Iowa Ct. App. Dec. 8, 2010).

       Even if we tread into the deep waters of weighing the contributions in this

case, here, Neal was actively involved in the corporate business and the family

relied upon the income and dividends from the corporation. While Neal was

benefiting the corporation by his services, Marcy provided other contributions

such as serving as a stay-at-home mom. Marcy was the consummate mother.

She attended all the school conferences, chaperoned activities, made all the

school lunches, assisted in some coaching duties, made costumes, transported

the children to their frequent activities, assisted in 4-H projects, planned all

vacations, and stayed home when a child was ill. And for one of the enterprises
                                         25

run by Neal’s family, the district court noted she “assisted in running errands,

entertaining residents, and promotion work.”

       Both the district court and the majority contend the gifts never significantly

improved the parties’ lifestyle.    I acknowledge the oft-cited principle that a

spouse’s lifestyle may be consideration in dividing a gift if, for example, the gift

substantially increased the parties’ standard of living.      See Muelhaupt, 439
N.W.2d at 659; Wallace, 315 N.W.2d at 833. Although such a consideration

seems reasonable, it fails to take into account the spouse who lives a

conservative lifestyle to preserve assets or build-up a nest egg in expectation

that assets eventually will be available to provide for the family needs or to pass

on to loved ones. Marcy may not have lived a lifestyle typical of the parties’ net

worth but their house was paid; the children attended private schools; there was

no family debt; they had seven vehicles, about twenty motorcycles, and a huge

outdoor building; and they took “nice” vacations. The fact that Neal and Marcy

lived a conservative lifestyle in light of their net worth should not impact the

division of their property.

       I would remand and require the stock appreciation to be divided equally,

and in so doing, no award of alimony would be necessary because Marcy would

have the benefit of either an equal amount of dividends as Neal, or if her share

was paid by an equalization payment, she would have sufficient assets to

support herself. I would also remand for a determination of how Marcy’s share

should be paid or distributed, recalculation of child support, and determination of

the allocation of personal property—which apparently had not yet been

completed.