Court Opinion

ID: 9349285
Source: CourtListenerOpinion
Date Created: 2022-12-21 16:03:28.107601+00
Date Added: 2024-06-11T16:46:35.741172
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                    No. 22-0621
                             Filed December 21, 2022

IN RE THE MARRIAGE OF JEANETTE N. O’BRIEN
AND JOHN J. O’BRIEN

Upon the Petition of
JEANETTE N. O’BRIEN,
      Petitioner-Appellee,

And Concerning
JOHN J. O’BRIEN,
     Respondent-Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Dubuque County, Monica Zrinyi

Ackley, Judge.

      John O’Brien appeals following the denial of his petition to modify the

spousal and child support provisions of his dissolution decree. AFFIRMED AS

MODIFIED AND REMANDED.

      Stephanie R. Fueger and McKenzie R. Blau of O’Connor & Thomas, P.C.,

Dubuque, for appellant.

      Anjela Shutts and Katelyn Kurt of Whitfield & Eddy, P.L.C., Des Moines, for

appellee.

      Heard by Vaitheswaran, P.J., and Ahlers and Buller, JJ.
                                        2

AHLERS, Judge.

       In 2018, Jeanette and John O’Brien dissolved their twenty-one-year

marriage by stipulated decree.     The decree provided Jeanette with spousal

support. The decree also obligated John to pay Jeanette child support. Since

entry of the decree, John’s employment has drastically changed. In response,

John filed this modification action seeking modification of his spousal support and

child support obligations.

I.     Facts and Prior Proceedings

       The parties married in 1997. John had an engineering degree. Jeanette

attended Iowa State University for three and one-half years to study fashion

merchandising but never graduated.       John worked for John Deere since he

completed an internship with the company in 1989.          Jeanette worked as a

receptionist until the birth of their first child. John and Jeanette would go on to

have two more children. John focused on his career at John Deere and a farming

operation he subsidized through his John Deere income.1 John’s base salary at

John Deere was $201,000; and he regularly received significant annual bonuses.2

Meanwhile, Jeanette focused on raising their children, caring for the family home,

1 John shares his crop-farming operation with his brother and his cattle operation
with his brother and another man. However, it appears he runs the farming
operation as a sole proprietor and has verbal agreements with the other men to
split costs and profits in equal shares.
2 By “significant,” we mean the bonuses often nearly matched or even eclipsed his

base salary, as reflected in John’s annual wages shown on his tax returns and his
Social Security earnings statements. Those documents show wages from John
Deere in the amount of $516,655.44 in 2017, $314,690 in 2018, $380,295 in 2019,
and $679,230 in 2020, though his severance package accounts for $309,420 of
the 2020 wage figure.
                                         3

and helping on the farm. Eventually Jeanette took a part-time job providing home

healthcare.

       In 2017, Jeanette filed for dissolution. The parties’ 2018 decree obligated

John to pay Jeanette spousal support of $3500 per month until July 1, 2028, and

then $3000 per month terminating on June 30, 2030. It also obligated John to pay

Jeanette child support.    In terms of property division, John paid Jeanette a

$450,000 equalization payment and must make an additional payment of $200,000

on or before September 1, 2024. The decree also divided the parties’ retirement

accounts and awarded Jeanette a portion of John’s John Deere pension. The

farming operation went to John.

       Jeanette’s father passed away in 2016, but she did not receive her

inheritance until after she and John divorced.3 She used the money to pay off the

mortgage on her home—a home assessed at $415,000. She also continued to

work as a home healthcare worker, averaging twenty-nine hours a week at a rate

of $20 per hour.

       John continued to work at John Deere and the farm following the

dissolution, continuing to use his John Deere income to subsidize and grow the

farming operation as planned. John intended to work at John Deere until he

reached sixty-two years old and then focus on the farm.4 Through those efforts,

the cattle operation has roughly doubled since the dissolution. Unfortunately,

John’s plan encountered a major obstacle when John Deere restructured in 2020

3 Jeanette’s mother passed away in 2003.
4 John was born in 1968 and was fifty-three years old at the time of the modification
trial in 2021.
                                          4

and eliminated John’s position, forcing his retirement. This forced retirement from

John Deere occurred roughly ten years before John planned on retiring. His last

day at John Deere was September 18, 2020. He received a $309,420 severance

payment—equaling roughly eighteen months of his base salary but less than one

year of wages when typical bonuses are considered. He invested that payment in

the farming operation.

       Citing the loss of his John Deere employment, John petitioned to eliminate

or reduce his spousal support obligation and recalculate child support for the

parties’ youngest child (the only child remaining eligible for support). At trial, John

claimed his income from the farming operation was significantly lower than his

income when he still worked at John Deere and Jeanette no longer had a need for

spousal support. Following trial, the district court determined that, although John’s

change in employment was not contemplated at the time of dissolution, he “has

another income source that is meeting or could possibly exceed his prior capacity.”

The court declined to modify spousal support or child support and ordered John to

pay $10,000 of Jeanette’s attorney fees. In reaching this conclusion, the district

court made no findings of either party’s income.

       John appeals.

II.    Standard of Review

       We review actions to modify terms of a dissolution decree de novo. In re

Marriage of Michael, 839 N.W.2d 630, 635 (Iowa 2013). “We will not disturb the

trial court’s conclusions ‘unless there has been a failure to do equity.’” Id. (quoting

In re Marriage of Wessels, 542 N.W.2d 486, 490 (Iowa 1995)). We review an

award of attorney fees for an abuse of discretion. Id.
                                          5

III.   Discussion

       A.     Spousal Support

       First, John challenges the district court’s decision to not modify the spousal

support award. Under Iowa Code section 598.21C(1) (2021), “the court may

subsequently modify . . . spousal . . . support orders when there is a substantial

change in circumstances.”

       In determining whether there is a substantial change in
       circumstances, the court shall consider the following:
                a. Changes in the employment, earning capacity, income, or
       resources of a party.
                b. Receipt by a party of an inheritance, pension, or other gift.
                c. Changes in the medical expenses of a party.
                d. Changes in the number or needs of dependents of a party.
                e. Changes in the physical, mental, or emotional health of a
       party.
                f. Changes in the residence of a party.
                g. Remarriage of a party.
                h. Possible support of a party by another person.
                i. Changes in the physical, emotional, or educational needs of
       a child whose support is governed by the order.
                j. Contempt by a party of existing orders of court.
                k. Entry of a dispositional or permanency order in juvenile
       court pursuant to chapter 232 placing custody or physical care of a
       child with a party who is obligated to pay support for a child. Any
       filing fees or court costs for a modification filed or ordered pursuant
       to this paragraph are waived.
                l. Other factors the court determines to be relevant in an
       individual case.

Iowa Code § 598.21C(1). However, the court considers more than substantial

changes in circumstance when deciding whether to modify spousal support. To

modify a decree under section 598.21C, we consider the following principles,

       (1) there must be a substantial and material change in the
       circumstances occurring after the entry of the decree; (2) not every
       change in circumstances is sufficient; (3) it must appear that
       continued enforcement of the original decree would, as a result of
       the changed conditions, result in positive wrong or injustice; (4) the
       change in circumstances must be permanent or continuous rather
                                         6

        than temporary; (5) the change in financial conditions must be
        substantial; and (6) the change in circumstances must not have been
        within the contemplation of the trial court when the original decree
        was entered.

In re Marriage of Walters, 575 N.W.2d 739, 741 (Iowa 1998) (citation omitted).

        John points to several changes since entry of the dissolution decree as

grounds supporting modification or elimination of his spousal support obligation.

At the forefront of his argument is his loss of his John Deere employment through

the company’s restructuring process. He highlights that both he and Jeanette had

anticipated he would work an additional ten years before he retired, so this change

was not contemplated at the time of the decree. John also notes it is unlikely he

would be able to find employment at a comparable salary in the area and if he took

a lower-paying job it would require him to hire others to complete the farm work he

now does. So, he reasons it is not practical for him to work off the farm, which he

claims produces less income than his John Deere job did. We agree with John

that he is not required to move out of the area and away from his farm to find

comparable employment, and we conclude that it is unlikely that he would be able

to secure a job with comparable compensation to his John Deere job in the area.

See In re Marriage of Blum, 526 N.W.2d 164, 165 (Iowa Ct. App. 1994) (finding

loss of employment to be a change of circumstances warranting modification when

payor refused to move to obtain comparably paying employment); In re Marriage

of Fidone, 462 N.W.2d 710, 712 (Iowa Ct. App. 1990) (finding a payor’s refusal to

move for employment opportunities did not make loss of employment voluntary or

self-inflicted).
                                          7

       The parties argue over John’s farm income, which is currently his sole

source of income other than his pension income from John Deere. We would be

aided in resolving this dispute if we had a finding by the district court as to John’s

farm income, but we have no such finding with which to work. See Benskin, Inc.

v. W. Bank, 952 N.W.2d 292, 307 (Iowa 2020) (noting that appellate courts are

courts of review, not first view). Nevertheless, we find it largely unnecessary to

resolve the disagreement over John’s farm income to resolve the spousal support

issue in this instance. Leading up to the original decree, the parties had a history

of John using his substantial John Deere income to finance the farming operation

with the expectation that the farming operation would continue to grow to the point

that, when John retired from John Deere, the farming operation would support him

and would become a legacy to hand down to the children. The pattern of John

using his John Deere income to finance the farming operation continued after the

dissolution until John lost the John Deere job. All that is to say that no matter how

much the farm operation has grown—and the parties dispute that figure—the

growth was contemplated when the original decree was entered. What is now

missing, unexpectedly, is the $300,000 to $500,000 of John Deere income that

John no longer has. We find this unexpected loss in income to be a substantial

change in circumstances that was not contemplated by the parties or the district

court when the original decree was entered. We also find the change to be

permanent or continuous.

       Our finding that there is a substantial change of circumstances that is

continuous and was not contemplated by the district court at the time of entry of

the original decree does not end the inquiry, as we also need to consider whether
                                          8

enforcement of the original spousal support obligation would result in positive

wrong or injustice. See Walters, 575 N.W.2d at 741. To answer that question, we

note that, after looking at John’s net worth and its growth, John is thriving

financially. John accumulated a net worth of around $3 million by the time of the

parties’ divorce. He managed to increase that amount by around fifty percent to

roughly $4.5 million in the time between the 2018 decree and the end of 2020.

This informs us that John’s financial picture is not as bleak as he claims. That

said, we are mindful that much of that growth comes from the infusion of capital

from John’s John Deere income—a golden goose no longer available to John.

       We also need to consider the change in Jeanette’s financial picture to

determine whether enforcement of the original decree would result in injustice.

Jeanette is also not hurting financially. Since entry of the original decree, Jeanette

received a sizable inheritance that enabled her to pay off the remaining debt on

her $415,000 house and contribute to her investment portfolio. While Jeanette

claims her inheritance was contemplated at the time of the original decree, we

disagree. While the parties knew she was going to receive the inheritance, neither

party knew how much she would receive. The actual amount did not become

known and was not received by Jeanette until after entry of the original decree. In

short, this additional infusion of assets counts in the analysis.

       In addition to her inheritance, Jeanette also has investment income and

receives $1828 per month from John’s pension from John Deere—an unexpected

early stream of income to Jeanette, given that it only came into being because of

John’s forced termination from John Deere. All of this is to say that we agree with

John that Jeanette is also on strong financial footing. Her net worth is now over
                                         9

$2 million. She is set to receive an additional $200,000 property equalization

payment from John in 2024. She has no mortgage on her home or other debts.

John’s expert also explained that Jeanette can expect to receive $49,163 in annual

distributions between 2022 and 2027 and $90,917 from 2028 onward from her

investment portfolio without invading principal. Jeanette’s financial advisor did not

significantly dispute these calculations. Jeanette also works more than she did

before the divorce and at a higher hourly rate to make roughly $29,000 per year

before taxes, a significant increase from the imputed minimum wage used to

calculate Jeanette’s income at the time of the original decree.5

       Given Jeanette’s strong financial health coupled with the unexpected loss

of John’s substantial John Deere income, we conclude Jeanette no longer requires

the same level of financial support from John as previously required. See Michael,

839 N.W.2d at 638–39 (reducing the spousal support award when the receiving

party had an improved financial situation). Although we find there is reduced need

by Jeanette and reduced ability to pay by John, we do not find it equitable to

eliminate the spousal support award, as suggested by John. Instead, we find it

equitable to reduce the spousal support award to $1500 per month to be paid on

the first of every month following procedendo until July 1, 2028, after which time

the award shall reduce to $1000 beginning on August 1, 2028 until Jeanette turns

sixty-two years old. Consistent with the terms of the parties’ stipulated decree,

spousal support shall terminate upon the earliest of any of the following events:

either party’s death or Jeanette’s remarriage.

5Jeanette makes $20 per hour and works an average of twenty-nine hours per
week, grossing $580 per week. We assume she works fifty weeks per year.
                                         10

       B.     Child Support

       Next, John challenges the district court’s refusal to modify child support.

Specifically, the court stated, “the court declines to modify the child support

obligation as it was not pled in the answer filed herein.” We interpret this to be an

explanation for why the court did not consider Jeanette’s post-trial request for more

child support.6   Nevertheless, we note John requested recalculation of child

support in his modification petition. So, the matter was properly before the district

court, and the court should have addressed the merits of John’s request.

       Like spousal support, the court may modify child support upon the

petitioning party establishing a substantial change in circumstances by a

preponderance of the evidence. See Iowa Code § 598.21C(1); In re Marriage of

Mihm, 842 N.W.2d 378, 382 (Iowa 2014). In determining whether to modify a child

support obligation, we consider the same factors that are used to determine

whether a substantial change in circumstances has occurred to modify spousal

support. See Iowa Code § 598.21C(1) (listing the same factors for determining

whether to modify child or spousal support). Here, the child support award in the

stipulated decree was based solely on John’s John Deere income and annual

bonus. That income no longer exists, though John’s undetermined farming income

remains. Meanwhile, Jeanette’s income has increased. To us, this amounts to a

change in circumstance that is “material and substantial, not trivial, more or less

permanent or continuous, not temporary, and . . . not within the knowledge or

6 Jeanette sought recalculation of child support to $1445.81 per month in a post-
trial statement of authorities, but she had not requested such relief in her answer
to John’s modification petition.
                                         11

contemplation of the court when the decree was entered.” Mears v. Mears, 213

N.W.2d 511, 515 (Iowa 1973). Moreover, there is no evidence that John left his

John Deere job in an effort to avoid paying child support. See Walters, 575 N.W.2d

at 741.

       We think recalculation of child support is required. However, we are again

left wondering what John’s annual income from the farm actually is. The district

court never determined John’s annual income after he left John Deere. Instead, it

stated John “has another income source that is meeting or could possible exceed

his prior earning capacity.” We remand to the district court to determine the parties’

annual incomes and recalculate the child support award. In doing so, the district

court should consider John’s actual income. See Iowa Ct. Rs. 9.5, .14. That

entails not only considering the gross revenue from John’s farming operation, but

also properly subtracting permissible business expenses, including straight-line

depreciation. See In re Marriage of Knickerbocker, 601 N.W.2d 48, 51–52 (Iowa

1999) (recognizing a party may factor in straight-line depreciation when

determining the party’s income for child support purposes).

       C.     Trial Attorney Fees

       Finally, John appeals the district court’s order that he pay $10,000 of

Jeanette’s trial attorney fees. “In a proceeding for the modification of an order or

decree under [the dissolution] chapter the court may award attorney fees to the

prevailing party in an amount deemed reasonable by the court.” Iowa Code

§ 598.36. This is permissive language, and we give the district court considerable

discretion to fashion an attorney fee award. In re Marriage of Maher, 596 N.W.2d

561, 568 (Iowa 1999). However, those fee awards depend on the respective
                                          12

parties’ ability to pay and must be fair and reasonable. In re Marriage of Guyer,

522 N.W.2d 818, 822 (Iowa 1994).

       We conclude the district court abused its discretion in awarding Jeanette

attorney fees.    The district court gave no indication that it considered the

appropriate factors, what factors were considered, or why it decided to award the

amount awarded. Without any such findings, we conclude the fees awarded by

the district court were not fair or reasonable in this instance. It appears the district

court failed to consider Jeanette’s ability to pay her attorney fees, a relevant

consideration. See In re Marriage of Bolick, 539 N.W.2d 357, 361 (Iowa 1995).

Jeanette has sufficient income to pay her own fees. More critically, the district

court should have determined John’s income to recalculate child support and

reduced spousal support in favor of John, so Jeanette should not have been

considered the prevailing party. Accordingly, Jeanette should not have been able

to recover attorney fees in this proceeding. See Iowa Code § 598.36.

IV.    Conclusion

       We modify the spousal support award to $1500 per month to reduce to

$1000 per month on August 1, 2028, ending at the earliest occurrence of either

party’s death or Jeanette’s remarriage.        We remand to the district court to

determine the parties’ annual incomes and recalculate child support. In calculating

John’s income, the district court shall give proper consideration to legitimate

business expenses, including straight-line depreciation. We strike the award of

attorney fees to Jeanette. Costs on appeal are assessed to Jeanette.

       AFFIRMED AS MODIFIED AND REMANDED.