Court Opinion

ID: 4323932
Source: CourtListenerOpinion
Date Created: 2018-10-24 16:10:59.919778+00
Date Added: 2024-06-11T14:46:30.003034
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                    No. 17-0593
                              Filed October 24, 2018

IN RE THE MARRIAGE OF EDWARD D. GUTCHER
AND NANCY A. GUTCHER

Upon the Petition of
EDWARD D. GUTCHER,
      Petitioner-Appellant,

And Concerning
NANCY A. GUTCHER,
     Respondent-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Monroe County, Randy S. DeGeest,

Judge.

      Appeal and cross-appeal challenging the economic provisions of a decree

of dissolution of marriage. AFFIRMED AS MODIFIED AND REMANDED.

      Bryan J. Goldsmith of Gaumer, Emanuel, Carpenter & Goldsmith, P.C.,

Ottumwa, for appellant.

      Heather M. Simplot of Harrison, Moreland, Webber & Simplot, P.C.,

Ottumwa, for appellee.

      Heard by Danilson, C.J., and Doyle and McDonald, JJ.
                                         2

McDONALD, Judge.

       This is an appeal and cross-appeal from the decree dissolving Nancy and

Edward (Ed) Gutcher’s twelve-year marriage. In Ed’s appeal, he contends the

district court erred in invalidating the parties’ prenuptial agreement and challenges

the district court’s award of reimbursement spousal support to Nancy. In Nancy’s

cross-appeal, she contends the district court erred in refusing to hold Ed in

contempt for failing to preserve assets, contends the property division was

inequitable, seeks an award of traditional spousal support, and requests additional

trial attorney fees.

                                         I.

       Ed and Nancy began dating in 2002. They began living together in 2003.

They married in 2004. This was Ed’s second marriage, and it was Nancy’s third

marriage. Shortly before their wedding Ed presented Nancy with a premarital

agreement, which she signed.

       The parties’ financial circumstances are relatively straight-forward. At the

time they married, Nancy worked as a nurse. Ed worked at Pella Corporation and

farmed part-time. The farm consisted of four-hundred acres of land used for row

crop and livestock. Eventually, Ed ceased employment with Pella to farm full-time.

The farm never had a profitable year from the time the parties met until they

divorced.    Nonetheless, Ed was able to continue to farm due to repeated

refinancing of his operating loans and due to Nancy’s income. All of Nancy’s

income was used to pay the parties’ living expenses, which subsidized Ed’s

perpetually unprofitable farming operation.     By the time of trial, Ed’s farming

operation had been reduced to one-hundred-thirty-five acres, but the value of the
                                          3

farmland he owned increased significantly due, in part, to land improvements made

over the course marriage.

       At the time of trial, Ed suffered from various medical and health conditions.

At the time of trial, Ed was sixty-five years old. In 2002, Ed suffered an acute work-

related injury while employed with Pella resulting in the loss of several of his

fingers. He also suffered and continues to suffer from various cardiovascular

ailments. During the course of the marriage, he underwent triple-bypass surgery.

Nancy’s nursing experience allowed her to provide convalescent care for Ed. The

parties dispute to what extent Ed is currently limited by his health conditions. Ed

contends he is limited, but he admits he has farmed full-time and intends to farm

full time for the next decade.

       Nancy suffers from her own medical condition. At the time of trial, Nancy

was fifty-nine years old. After the parties married, Nancy developed occipital

neuralgia, a form of nerve damage that causes her to suffer pain. Nancy tried

several medical treatments to alleviate her near-constant pain, but the treatments

were not successful. Eventually, with Ed’s approval, Nancy moved to Colorado to

manage her pain through the use of legal, medicinal cannabis oil. She testified the

cannabis oil treatment is helpful. However, she is now unable to work and receives

disability payments.

       Ed filed this dissolution action upon Nancy’s move to Colorado.           With

respect to the property division, Ed sought to enforce the premarital agreement to

prevent division of the parties’ premarital property. The district court invalidated

the agreement, noting Nancy did not have legal representation when she signed

the agreement and the agreement contained no financial disclosures. When the
                                         4

court divided the parties’ property, the district court incorrectly found Ed’s farm

“was inherited and/or a gift” and incorrectly concluded the property could not be

divided. To compensate Nancy for her financial contributions to the marriage, the

district court awarded Nancy reimbursement spousal support in the amount of

$1200 per month for ten years. It also awarded Nancy her car, personal bank

accounts, personal property in her possession, a camping trailer, an ATV (all-

terrain vehicle), an Iowa State Fair camping spot, and items of sentimental value.

                                         II.

       Dissolution cases are reviewed de novo, including challenges to prenuptial

agreements. See In re Marriage of McDermott, 827 N.W.2d 671, 676 (Iowa 2013)

(stating dissolution actions are reviewed de novo); In re Marriage of Shanks, 758

N.W.2d 506, 510-511 (Iowa 2008) (noting “the general rule is that issues

concerning the validity and construction of premarital agreements are equitable

matters subject to . . . de novo review” even though questions about the validity of

a premarital agreement are similar to contract disputes). “Although our review is

de novo, we afford deference to the district court for institutional and pragmatic

reasons.” Hensch v. Mysak, 902 N.W.2d 822, 824 (Iowa Ct. App. 2017); accord

In re Marriage of Gust, 858 N.W.2d 402, 406 (Iowa 2015) (noting we give great

latitude to the district court in fixing spousal support); In re Marriage of Benson,

545 N.W.2d 252, 257 (Iowa 1996) (“This deference to the trial court’s determination

is decidedly in the public interest. When appellate courts unduly refine these

important, but often conjectural, judgment calls, they thereby foster appeals in

hosts of cases, at staggering expense to the parties wholly disproportionate to any

benefit they might hope to realize.”). As such, we will not modify a decree unless
                                         5

the district court failed to do equity. See In re Marriage of Mauer, 874 N.W.2d 103,

106 (Iowa 2016). “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) (citing In re Marriage of Will, 489 N.W.2d 394, 397 (Iowa 1992)).

                                        A.

      We first address Ed’s contention the district court erred in holding the

prenuptial agreement was not enforceable.

      Iowa Code chapter 596 (2016) governs the enforceability of a prenuptial

agreement executed on or after January 1, 1992. See Shanks, 758 N.W.2d at

511. A prenuptial agreement is not unenforceable merely because it is “a bad

fiscal bargain for one party.” In re Marriage of Spiegel, 553 N.W.2d 309, 316 (Iowa

1996) (“[W]e will not so grossly interfere with the parties’ freedom to contract.”),

superseded by statute. However, a premarital agreement is unenforceable under

any of the following circumstances:

             a. The person did not execute the agreement voluntarily.
             b. The agreement was unconscionable when it was executed.
             c. Before the execution of the agreement the person was not
      provided a fair and reasonable disclosure of the property or financial
      obligations of the other spouse; and the person did not have, or
      reasonably could not have had, an adequate knowledge of the
      property or financial obligations of the other spouse.

Iowa Code § 596.8(1).

      We first turn our attention to the question of whether the agreement was

unconscionable when executed. “The concept of unconscionability includes both

procedural and substantive elements.         Procedural unconscionability generally

involves employment of sharp practices, the use of fine print and convoluted
                                         6

language, as well as a lack of understanding and an inequality of bargaining

power.” Shanks, 758 N.W.2d at 515 (citations omitted and altered for readability).

When considering if an agreement is procedurally unconscionable, we consider

the challenging party’s ability to seek independent counsel, the legal and financial

sophistication of the parties, the time the challenging party had to consider the

agreement prior to the marriage, the use of technical language in the agreement,

“and the use of fraudulent or deceptive practices to [secure] the [challenging]

party’s assent.” Id. at 517. “A substantive unconscionability analysis focuses on

the harsh, oppressive, and one-sided terms of a contract.” Id. at 515 (citation

omitted).

      Like the district court, we conclude the agreement here was procedurally

unconscionable.    Here, the parties provided conflicting testimony as to when

Nancy received the agreement. Ed stated it was before the wedding. His signature

is dated three days prior to the wedding. Nancy testified Ed may have signed the

agreement three days prior to the wedding, but he did not present the agreement

to her until the day of the wedding. We find Nancy credible on this issue. Nancy

was not represented by counsel. Given the short-time between the presentation

of the agreement and the wedding, it was not practicable for her to obtain counsel.

Nancy did not have particularized knowledge or expertise relating to legal and

financial issues. Springing the prenuptial on Nancy on the day of the wedding is

procedurally unconscionable.

      In addition, Ed failed to make a fair and reasonable disclosure of his assets

at the time of the marriage. A fair and reasonable disclosure requires each party

have “‘adequate knowledge’ of the other party’s property and financial obligations.”
                                        7

See id. at 519 (citing Iowa Code § 596.8(3)). Although the agreement stated

financial affidavits were attached to the agreement, there were none. While Nancy

knew Ed farmed part-time, there is no evidence she was aware of the scope of

Ed’s farming operation or the value of Ed’s assets at the time the parties married.

Her ability to determine the scope of Ed’s assets was limited, in part, because Ed

owned some farmland and rented other farmland. There is no evidence Nancy

had any knowledge of the extent of Ed’s assets.

      Because the premarital agreement is unenforceable, we will address the

property division without regard to the terms of the premarital agreement.

                                        B.

      Before addressing the property division, we first address the issue of

spousal support. Spousal support is not an absolute right; an award depends upon

the specific circumstances of each case. See Gust, 858 N.W.2d at 408. Our cases

recognize three primary forms of spousal support: traditional, rehabilitative, and

reimbursement.    See id.; In re Marriage of Nelson, No. 15-0492, 2016 WL

3269573, at *3 (Iowa Ct. App. June 15, 2016). Our cases also recognize a limited

fourth category of spousal support—transitional support. See, e.g., In re Marriage

of Hansen, No. 17-0889, 2018 WL 4922992, at *16 (Iowa Ct. App. Oct. 10, 2018)

(McDonald, J., concurring specially); In re Marriage of Lange, No. 16-1484, 2017

WL 6033733, at *3 (Iowa Ct. App. Dec. 6, 2017) (“Jessica does not need traditional

rehabilitative support so much as transitional support while finding suitable

employment.”).

      We conclude this case does not justify an award of traditional spousal

support. Traditional support is typically warranted in long-term marriages where
                                          8

the earning potential of the parties may be reliably predicted. See Gust, 858

N.W.2d at 410. “[T]he shorter the marriage, the less likely a court is to award

traditional spousal support.” Id. Twenty years is the generally accepted durational

threshold for the award of traditional spousal support. See id. at 410-11. Nancy

and Ed’s marriage of thirteen years falls well short of the durational threshold,

making a traditional support award inapplicable under the facts presented. See In

re Marriage of Stephens, No. 13-0861, 2014 WL 69728, at *7 (Iowa Ct. App. Jan.

9, 2014); In re Marriage of Gonzalez, 561 N.W.2d 94, 99 (Iowa Ct. App. 1997).

       Rehabilitative support is also inapplicable here. “Rehabilitative spousal

support is ‘a way of supporting an economically dependent spouse through a

limited period of re-education or retraining following divorce, thereby creating

incentive and opportunity for that spouse to become self-supporting.’”        In re

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

Francis, 442 N.W.2d 59, 63 (Iowa 1989)). In this case, Nancy does not seek further

training or education. She suffers from a disability and is now unable to work.

Rehabilitative support is inappropriate in this case.

       Nor is reimbursement spousal support appropriate under the circumstances

of this case. “Reimbursement spousal support allows the spouse receiving the

support to share in the other spouse’s future earnings in exchange for the receiving

spouse’s contributions to the source of that income.” Id. This occurs when the

dissolution occurs shortly after one spouse has obtained a professional degree

and license with the financial support of the other. See In re Marriage of Mueller,

No. 01-1742, 2002 WL 31425414, at *3 (Iowa Ct. App. Oct. 30, 2002). Here, Nancy
                                        9

did not contribute to Ed obtaining a professional degree that would enhance his

future earnings.

      Nancy argues reimbursement support should nonetheless be awarded

because she contributed financially to the marriage, which allowed Ed to continue

with his unprofitable farm operation.    We disagree.    Reimbursement support

cannot be applied so broadly. Reimbursement support applies only in “situations

where the marriage is devoted almost entirely to the educational advancement of

one spouse” and “there has not been enough time for the parties to receive the

benefit from the educational advancement through tangible assets accumulated

during the marriage.” In re Marriage of Erpelding, No. 16-1419, 2017 WL 2670806,

at *6 (Iowa Ct. App. June 21, 2017), vacated on other grounds, __ N.W.2d __, __,

2018 WL 3322921 (Iowa July 6, 2018).         This case is indistinguishable from

Erpelding. In that case, this court denied the wife’s request for reimbursement

spousal support where she contributed financially to the family’s farm. See id.

This court explained reimbursement support did not apply outside the context of

one spouse contributing to the educational attainment of the other spouse. See

id. Further, Erpelding held the wife’s contributions were better reflected in the

property division. See id. Similarly, in In re Marriage of Probasco the supreme

court denied the wife’s request for reimbursement support where the wife

contributed financially to the family’s acquisition and operation of a successful

restaurant franchise. See 676 N.W.2d 179, 185-86 (Iowa 2004). Our supreme

court reasoned the following facts “militate[d] against an award of reimbursement

[support]:” the marriage was not short in length, one party did not spend the

majority of the marriage gaining additional education, the wife remained “active in
                                          10

the job market during the marriage,” and there was sufficient property to divide

permitting the court to do equity via a property settlement. See id. at 186. We see

no reason to deviate from Erpelding and Probasco, and we conclude it would be

inequitable to award Nancy reimbursement support.

       Nancy has not requested transitional support, and we decline to award it.

Transitional support applies where the recipient spouse already has the capacity

for self-support at the time of dissolution but needs short-term assistance in

transitioning from married status to single status due to the economic dislocation

caused by the dissolution of marriage. See, e.g., Hansen, 2018 WL 4922992, at

*17 (McDonald, J., concurring specially). The critical consideration is whether the

recipient party has sufficient income and/or liquid assets to transition from married

life to single life without undue hardship. See, e.g., id. (collecting cases); In re

Marriage of Hinshaw, No. 12-1783, 2013 WL 3273584, at *4 (Iowa Ct. App. June

26, 2013) (affirming transitional support award where spouse testified support

“would help her ‘get back on [her] feet’ as far as establishing a residence for herself

and the children” (alteration in original) (citation omitted)); In re Marriage of Byrne,

No. 03-0788, 2003 WL 23220082, at *3 (Iowa Ct. App. Nov. 26, 2003) (“Of the

approximately eighty thousand dollars worth of property she received, less than

one half of that amount was in cash or other liquid assets available to assist in her

transition to self-sufficiency.”).

       Nancy contends “[i]t doesn’t matter what the court called the spousal

support award,” she should be awarded spousal support because she has financial

need. She relies on Becker for the proposition that spousal support can be

awarded even though the award does not fall into any generally-recognized
                                           11

category of support. See 756 N.W.2d at 827. While Becker is frequently cited for

that legal proposition, it is a misreading of Becker. Becker did not state courts are

free to fashion spousal support awards outside any traditionally-recognized

category of support. Instead, Becker stated more than one of the traditionally-

recognized forms of spousal support may be applicable to a particular case thus

resulting in a hybrid award. See id. (“We cannot characterize the support we are

awarding Laura as strictly rehabilitative or traditional spousal support. Factually,

the support award may be a combination of both because this spousal support

award will allow Laura to maintain the same standard of living she enjoyed during

the marriage throughout the period of time it will take her to become self-sufficient

at her maximum earning capacity.”). Gust confirmed this more limited reading of

Becker. In Gust, the court stated “[o]ur cases applying the statute have identified

three kinds of support: traditional, rehabilitative, and reimbursement.” 858 N.W.2d

at 408. While the Gust court recognized “the categories may overlap in some

cases,” it did not state courts are free to award support outside of the generally-

recognized categories. See id. (referencing Becker, 756 N.W.2d at 827 as an

example of an instance when overlapping categories of spousal support are

appropriate and classification as one type of support is not required).

       Even if Becker allowed for non-categorical forms of spousal support, the

circumstances justifying such an award should be extraordinary. We should not

be quick to recognize new categories of spousal support. Nor should we be lax in

applying the generally-recognized categories to the facts of a particular case.

Financial need, in and of itself, is not sufficient reason to justify an award of spousal

support. See Iowa Code § 598.21A(1)(a)-(j) (permitting a court to award spousal
                                         12

support after considering all of the factors listed); Gust, 858 N.W.2d at 408 (noting

statutory factors “cannot be considered in isolation from each other”). Once a court

has determined a spouse has a need for financial support, the next question is not

whether the other spouse has the ability to pay. Instead, the next question is

whether the facts and circumstances of the case are such that it would be equitable

to require the other spouse to satisfy the financial need. The answer to that

question is derived from looking at the principles embodied in the traditionally-

recognized forms of spousal support. Among the galaxy of cases, the generally-

recognized categories of support are constellations providing guidance in

navigating what is equitable in the otherwise uncharted waters of spousal support.

       Here, there are no generally-recognized categories of spousal support

applicable to the case at hand. This was a marriage of moderate duration not

warranting traditional support. Nancy is at the end of her career and unable to

work. She does not seek financial support for a limited time while obtaining

additional education and training to improve her earning capacity. Nancy did not

contribute to Ed’s education or improve his earning capacity. The district court

should not have awarded spousal support under the circumstances presented.

Any spousal support already paid to Nancy shall be set off against our property

award as determined below.

                                         C.

       We next address the division of the parties’ property. “Iowa is an equitable

distribution state.” McDermott, 827 N.W.2d at 678. “Although an equal division is

not required, it is generally recognized that equality is often most equitable.” In re
                                        13

Marriage of Rhinehart, 704 N.W.2d 677, 683 (Iowa 2005). In effort to divide

property equitably, we consider the following factors:

             a. The length of the marriage.
             b. The property brought to the marriage by each party.
             c. The contribution of each party to the marriage, giving
      appropriate economic value to each party’s contribution in
      homemaking . . . .
             d. The age and physical and emotional health of the parties.
             ....
             f. The earning capacity of each party . . . .
             ....
             i. Other economic circumstances of each party . . . .
             j. The tax consequences to each party.
             ....
             m. Other factors the court may determine to be relevant in an
      individual case.

Iowa Code § 598.21(5). One party’s greater need for assets may warrant a larger

property award. See Rhinehart, 704 N.W.2d at 684.

      Ed concedes the district court erred in finding his farming assets were gifted

to him or inherited. He contends the property should not be subject to division

because it is premarital. We disagree. “Premarital property may be included in

the divisible estate.” McDermott, 827 N.W.2d at 678. While a “court may assign

varying weight to premarital property, [the court] should not automatically award

[premarital property] to the spouse who owned the property prior to the marriage.”

Id.

      Equity requires an equal division of the parties’ property, including the

parties’ premarital property.   Ed brought significant assets, including farming

assets, into the marriage. He would not have been able to retain the farming

operation without Nancy’s sizable financial support of Ed’s perpetually unprofitable

farm for the entirety of the marriage. This includes all of her wage income over the
                                           14

course of the marriage and the use of the equity in her premarital home. In

addition, Nancy was afflicted with a debilitating illness during the course of the

marriage and is now unable to work.             A sizeable property settlement paid

immediately will alleviate some of her need. We find the property settlement

preferable to an award of spousal support given that it will be paid sooner rather

than later and given that there is a serious question of whether Ed will be able to

pay support over time. We recognize this may force Ed to sell all or part of his

farmland. We also recognize Iowa courts try to avoid forced sales of family farming

operations. See id. at 683 (“[W]hen one of the parties expresses a strong interest

in preserving the farm, the court should do everything possible to respect that

desire.”). However, Ed’s desire to continue farming does not usurp Nancy’s right

to an equitable settlement. See id.

       According to Ed’s most recent financial affidavit, drafted on February 12,

2017, his net worth amounts to $318,389.83. Nancy is entitled to a property

equalization payment of half this amount, $159,194.92. However, because Ed’s

affidavit includes the 2009 Ford Escape, 2004 Kawasaki ATV, and the camping

trailer already awarded to Nancy in the decree, we subtract their total value of

$13,265.00 from the property-equalization-payment award. We thus award Nancy

a property equalization payment in the amount of $145,929.92, with credit awarded

for any amount previously paid as spousal support. This equalization payment

shall be entered as a judgment due six months from the date of this opinion with

interest accruing at the statutory rate.
                                          15

                                          D.

         We next address Nancy’s challenge to the district court’s refusal to hold Ed

in contempt for violating an order to preserve assets. A court’s refusal to hold a

party in contempt is reviewed “to determine if substantial evidence exists to support

the . . . court’s finding.” See In re Marriage of Hankenson, 503 N.W.2d 431, 433

(Iowa Ct. App. 1993) (citing In re Marriage of Wegner, 461 N.W.2d 351, 354 (Iowa

Ct. App. 1990)). Contempt may be characterized as willful disobedience. Ary v.

Dist. Ct., 735 N.W.2d 621, 624 (Iowa 2007). “[C]ontempt proceeding[s] [are]

essentially criminal in nature” requiring each element be “established beyond a

reasonable doubt.” In re Marriage of Ruden, 509 N.W.2d 494, 496 (Iowa Ct. App.

1993).

         Nancy did not prove Ed failed to preserve assets. See Ary, 735 N.W.2d at

624 (noting petitioner carries the burden of showing the respondent willfully failed

to obey a court-mandated duty). We agree with the district court’s characterization

of Ed’s conduct as normal in the course of the farm operation, which the order to

preserve assets expressly permitted. We affirm the district court in this respect.

                                          E.

         Finally we address Nancy’s request for additional trial attorney fees. She

alleges the district court abused its discretion by requiring Ed to only pay $2500.00

of her trial attorney fees. A district court’s attorney fee award is reviewed for an

abuse of discretion. Francis, 442 N.W.2d at 67. The award must be fair and

reasonable and based on the parties’ ability to pay. See In re Marriage of Miller,
                                         16

552 N.W.2d 460, 465 (Iowa Ct. App. 1996). We find the district court did not abuse

its discretion in awarding only a portion of the requested fees.

       Nancy also requests Ed pay $6000.00 in appellate attorney fees. Appellate

attorney fees are awarded upon our discretion and are not a matter of right. See

In re Marriage of Okland, 699 N.W.2d 260, 270 (Iowa 2005). When considering

whether to exercise our discretion, “we consider ‘the needs of the party seeking

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

appeal.’” McDermott, 827 N.W.2d at 687 (quoting Okland, 699 N.W.2d at 270).

Given Nancy’s significant need and Ed’s relative superior ability to pay, we award

Nancy appellate attorney fees in an amount to be determined by the district court

on remand but not to exceed $6000.00. Costs on appeal are taxed to Ed.

                                         III.

       In conclusion, the parties’ premarital agreement is invalid. We modify the

property settlement and award Nancy an equalization payment of $145,929.92,

with credit for any spousal support already paid. We eliminate the district court’s

award of spousal support. We affirm the district court’s denial of Nancy’s contempt

citation. We affirm the district court’s award of trial attorney fees, and we remand

to the district court to determine the appellate attorney fee award not to exceed

$6000.00.

       AFFIRMED AS MODIFIED AND REMANDED.

       Doyle, J., concurs; Danilson, C.J., concurs specially.
                                         17

DANILSON, Chief Judge (concurring specially).

         I concur in the result; however, I part ways with the majority’s reasoning.

Suffice it to say, Nancy has a need for spousal support but Ed has lost money in

the farm operations—even after deducting depreciation—for the past eleven years

(2004–2015) and he has no ability to pay spousal support. As the district court

noted, “Without Nancy’s contributions, the farm would have been lost.” There is

only one reasonable alternative available to the parties, which is to discontinue the

farm operation before the bank forecloses on the real estate or exercises any other

lien-holder rights it may have on the farm equipment. However, I agree Ed should

not be forced to sell the farmland if he can somehow make the financial

arrangements to pay an equalization payment. It may be possible, for example,

for Ed to sell his farm equipment and cash-rent the tillable farm ground. Although

there may be tax consequences incurred by Ed, the majority’s equalization

payment is equitable in light of the $36,000 Nancy brought into the marriage from

her house proceeds. As observed by the district court, all of the $36,000 “went

into the parties’ living expenses, freeing money to be put in farm expansion and

debt.”