Court Opinion

ID: 2795768
Source: CourtListenerOpinion
Date Created: 2015-04-22 15:03:56.737892+00
Date Added: 2024-06-11T09:10:25.207611
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                   No. 14-0920
                               Filed April 22, 2015

IN RE THE MARRIAGE OF MARY K. BOLAND-CHAMBERS
AND RYAN P. CHAMBERS

Upon the Petition of
MARY K. BOLAND-CHAMBERS, n.k.a MARY K. BOLAND,
      Petitioner-Appellee,

And Concerning
RYAN P. CHAMBERS,
     Respondent-Appellant.
________________________________________________________________

      Appeal from the Iowa District Court for Linn County, Sean W. McPartland,

Judge.

      A husband appeals the district court’s refusal to add language to a QDRO

to protect his interest in his former wife’s IPERS pension and the court’s decision

to set aside gifts, inheritance, and premarital property to his wife. AFFIRMED AS

MODIFIED.

      Karen A. Volz of Ackley, Kopecky & Kingery, Cedar Rapids, for appellant.

      Kodi A. Brotherson of Babich Goldman, P.C., Des Moines, for appellee.

      Heard by Vogel, P.J., McDonald, J., and Scott, S.J.*

      *Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2015).
                                        2

VOGEL, P.J.

      Ryan Chambers appeals the district court’s ruling in this dissolution

proceeding, asserting the district court should have ordered certain provisions be

included in the qualified domestic relations order (QDRO) that would protect his

interest in his former wife, Mary Boland-Chambers’s, IPERS pension.

Alternatively, he asks that we value the IPERS at its refund value as of the date

of trial and order Mary to make a property equalization payment to account for

the disparate award.    He also claims the court should not have set aside

premarital, gifted, and inherited funds Mary received before and during the

marriage. In addition both parties request an award of appellate attorney fees.

Because we conclude the IPERS account should be valued at its refund value

and included in the property distribution with an equalization payment made to

Ryan, we modify the dissolution decree; however, we affirm the remainder of the

decree.

I. Background Facts and Proceedings.

      Ryan and Mary were married in 1998, and two children were born of the

union. Mary filed a dissolution proceeding in 2012, and the case proceeded to

trial in December 2013. In the dissolution decree entered in March 2014, the

court decided issues of child custody, physical care, child support, and property

division; however, only the property division issues related to the parties’

retirement accounts and funds set aside to Mary have been raised on appeal.

II. Scope and Standard of Review.

      We review dissolution actions de novo as they are heard in equity. In re

Marriage of McDermott, 827 N.W.2d 671, 676 (Iowa 2013). “[W]e examine the
                                          3

entire record and adjudicate anew the issue of the property distribution.” Id.

While we give weight to the findings of the district court, particularly concerning

the credibility of witnesses, we are not bound by those findings. Id. However,

“[w]e will disturb the district court’s ruling only when there has been a failure to do

equity.” Id. (quotation marks and citations omitted).

III. QDRO Language.

       Ryan appeals the district court’s rulings that rejected his request for

certain language to be included in the QDRO that will be filed in relation to Mary’s

IPERS account.       He is requesting language to (1) name him as Mary’s

“contingent annuitant” in order for him to receive a 50% joint and survivor death

benefit, (2) name him as a beneficiary with respect to the pre-retirement death

benefits where he would receive the same percentage of death benefits as he

would receive upon Mary’s retirement, (3) restrict Mary from requesting a refund

from the IPERS account without his consent, and (4) provide him a share of any

benefit increase afforded to Mary such as cost of living increases, dividends, or

any other postretirement increase in the same proportion as he would receive

upon Mary’s retirement. Ryan claims without these provisions, his court ordered

interest in Mary’s IPERS account is speculative, totally dependent on Mary’s

future actions.    He claims without these provisions, if Mary dies before

retirement, he would receive nothing; Mary could request the refund value of her

account prior to retirement, leaving him with nothing; Mary could elect a

retirement option where the benefits would cease upon Mary’s death; Mary could

select a survivor annuitant who would receive his share upon Mary’s death; and

he would not receive his share of increases that occur over the life of the
                                           4

pension. In the alternative, he requests we value the IPERS account at its refund

value and order Mary to make a property equalization payment to account for the

disparate award.

       Mary first asserts the district court correctly refused to require the

additional language in the QDRO because Ryan failed to make this request at

trial or offer any evidence in support of his request. She points out that Ryan

requested the court use the refund value of the IPERS account, where she asked

the court to divide the account under “the percentage method of division” which

uses the formula articulated in In re Marriage of Benson, 545 N.W.2d 252, 255

(Iowa 1996).1 Mary claims Ryan did not introduce any evidence to support his

request until after the district court ruled on the posttrial motions.

       In reviewing the record in this case, we note in the Joint Pretrial

Statement, Mary proposed each party be awarded their own retirement accounts

free and clear of any claim by the other party, whereas Ryan asked that the

accounts be valued as of the date of trial and Mary be ordered to pay him an

equalization payment in light of the fact that the value of her retirement accounts

significantly exceeded the value of his. However, at trial, Mary changed position

1
  The Benson court articulated a formula to be applied to defined-benefit pension plans
in order to divide the retirement account upon the dissolution of a marriage. The formula
is computed as follows:
        A fraction is first computed, the numerator being the number of years
        during the marriage [benefits accrued] under the pension plan . . . and the
        denominator being the total number of years . . . benefits accrued prior to
        maturity (i.e., receipt of payments upon retirement). This fraction
        represents the percentage of [the] pension attributable to the parties’ joint
        marital efforts. This figure is then multiplied by [the spouse’s] share of the
        marital assets (fifty percent). Finally this second figure is multiplied by
        [the] total accrued monthly benefit upon maturity (retirement) to calculate
        [the spouse’s] share.
Benson, 545 N.W.2d at 255. This has come to be known as the Benson formula.
                                         5

and requested her IPERS account be divided based on the Benson formula. She

also reiterated the request in her posttrial brief. As a result of this change in

position, Ryan, in his posttrial brief, agreed the IPERS account should be divided

using the Benson formula but also asserted specific language should be added

to the QDRO to protect his right to receive future benefits.

       The district court ordered the IPERS account be divided using the Benson

formula, providing Ryan a 50% share2 of the marital portion of the account and

ordering Mary’s counsel to draft the QDRO.         The court specifically rejected

Ryan’s request that Mary be required to name him as a “contingent annuitant” of

postretirement death benefits, finding instead Mary should be free to name the

children or others as the beneficiaries, “particularly since Mary presumably will

continue to accrue IPERS benefits after the dissolution and prior to her

retirement.” The court did not address the other language Ryan requested be

included in the QDRO.

       Both Ryan and Mary filed posttrial motions under Iowa Rule of Civil

Procedure 1.904(2).     Ryan again requested the court order the proposed

language be included in the QDRO. In response, Mary provided the court with a

copy of the QDRO that her attorney had prepared and conceded she would be

willing to include a provision restricting her from requesting a refund from the

account without Ryan’s consent. However, she objected to the other provisions

Ryan had requested be included in the QDRO and also attached a document

2
 Mary had argued Ryan should only receive a 25% share of the martial portion of the
account. However, Mary started her employment with the State of Iowa in 1998—the
same year the parties were married. Thus, the entire amount of the IPERS pension was
marital as of the date of the dissolution trial.
                                          6

entitled “IPERS QDRO Instruction Packet” to her resistance for the court’s

information. The court summarily denied Ryan’s posttrial motion on this issue.

       Ryan then requested a hearing on the entry of the QDRO where he once

again requested the provisions be included to protect this future interest in Mary’s

IPERS account.      At the hearing, Ryan offered, and the court accepted, the

testimony from Greg Schochenmaier, general counsel for IPERS, who testified

regarding the various provisions Ryan wanted included in the QDRO and what

those provisions accomplished. In rejecting Ryan’s request again, the district

court noted the evidence at trial regarding the retirement accounts “was not

thorough, to say the least.” The court considered the testimony offered at the

hearing and declined to revise its rule 1.904(2) ruling related to the distribution of

the retirement assets. The court stated it would enter a QDRO conforming to the

requirements of the decree upon its submission by Mary’s counsel.

       We conclude there are no error preservation concerns as Ryan raised the

issue of the requested QDRO provisions at the earliest opportunity—when he

was made aware at trial that Mary had changed her position regarding the

distribution of the IPERS account and was seeking for the account to be divided

by a QDRO under the Benson formula. The specific language was included in

Ryan’s posttrial brief and his counsel also included IPERS information to the

court for consideration in drafting the decree. It appears either the court did not

see the information/request or decided against the language. The court then

continued to reject the language offered on two more occasions—in the 1.904(2)

motion decision and the hearing on the entry of the QDRO.              See Meier v.

Senecaut, 641 N.W.2d 532, 537 (Iowa 2002) (“It is a fundamental doctrine of
                                         7

appellate review that issues must ordinarily be both raised and decided by the

district court before we will decide them on appeal.”).

         We next consider how to equitably divide Mary’s IPERS account. Ryan

asserts that if the IPERS account is divided with a QDRO, language must be

added to protect his future interest. In the alternative, he requests that instead of

dividing the IPERS account with a QDRO we use the refund value of the account

in the property distribution settlement and order Mary to pay him a property

settlement payment equal to his share of the account.           Mary requests the

account be divided by a QDRO and conceded in the district court posttrial

motions that she would agree to add language restricting her from taking the

refund value of the account unless she first obtains Ryan’s signature—paragraph

c “[Mary] may not request a refund without [Ryan’s] consent.” We agree the

addition of that language would protect Ryan’s interest in the IPERS account if it

were to be divided via a QDRO. The other three provisions Ryan requested are

below:

                a. [Mary] shall name [Ryan] as her contingent annuitant
         under IPERS Option 4. [Ryan] shall receive a 50% joint and
         survivor death benefit payment under this option.
                b. [Ryan] shall be deemed to be a designated beneficiary
         with respect to pre-retirement death benefits under IPERS. [Ryan]
         shall be awarded the same percentage of death benefits as
         determined under the Benson formula.
                ....
                d. [Ryan] shall receive a share of any benefit increase to
         [Mary,] including cost of living, dividends or any other
         postretirement increase in the same proportion as the Benson
         formula.

Ryan claims these provisions protect his portion of Mary’s account in the event of

Mary’s death, either preretirement (paragraph b) or postretirement (paragraph a).
                                          8

He also claims the provisions permit him to benefit from any increase in the

account that occurs after Mary retires but before the plan ceases (paragraph d).

       It should be noted the district court did specifically consider and reject the

provision outlined in paragraph (a) in the dissolution decree. The court stated:

       The Court agrees with Mary that Ryan’s request for an order that
       Mary name Ryan as a “contingent annuitant” under IPERS Option 4
       is not appropriate here. The Court agrees that Mary should be free
       to name the children or other beneficiaries as the beneficiary of her
       death benefits under IPERS in the circumstances here, particularly
       since Mary presumably will continue to accrue IPERS benefits after
       the dissolution and prior to her retirement.

Ryan concedes the postretirement death benefit language under option 4, would

restrict Mary’s choice of retirement payment options as that option has a lower

monthly benefit amount due to the postretirement death annuity, but he claims

without this language any interest he has in Mary’s IPERS account would

completely disappear at the time of her death.3 Mary maintains she should be

able to designate her postretirement death benefits to pass to whomever she

chooses.

       As to (b)—preretirement death benefits, Schochenmaier, IPERS general

counsel, testified:

              Q. If a Qualified Domestic Relations Order is prepared
       simply giving the alternate payee [Ryan] 50 percent of the marital
       portion and there is no provision for a preretirement death benefit,
       will the alternate payee receive anything from IPERS if the

3
  We note per the information in the record, under Option 4, the monthly joint and
survivor death benefit payments IPERS will make to the alternate payee cannot be
subdivided. So if Mary is required to select Option 4 and name Ryan the alternate
payee for the joint and survivor death benefit, she cannot split that death benefit and
name another person to share the monthly payment with Ryan. She can only select one
person who will receive upon her death a monthly payment equal to twenty-five, fifty,
seventy-five, or one hundred percent of the monthly benefit amount she received during
her retirement.
                                         9

       participant has not gone into pay status? A. No. The alternate
       payee would not receive anything.

Provision (b), requiring Mary to name Ryan as a beneficiary of any preretirement

death benefits would provide Ryan security in his retirement funds in the event

Mary dies prior to retirement. Without any such requirement, if Mary were to die

prior to retirement, Ryan would lose any interest in his share of the marital

portion of the IPERS payments.        Finally, provision (d) stating Ryan should

receive his portion of the cost of living, and dividend increases would entitle Ryan

to the increases in proportion to his share of the IPERS pension under the

Benson formula.

       While the language Ryan requests, for the most part, would work to

protect Ryan’s future interest in his share of Mary’s IPERS account, we

determine it is more equitable in this case to value Mary’s IPERS account at the

refund value as of the time of trial and order a property equalization payment

from Mary to Ryan, in lieu of dividing the IPERS account via a QDRO. The

IPERS retirement options and the circumstances of the parties could be

drastically different by the time the parties retire. This is the alternative remedy

requested by Ryan, and it permits the parties to finalize their asset division

without restricting the retirement planning of either party. Because we conclude

the IPERS account should be valued at its refund value and divided with the

other assets in the property distribution, we modify the district court’s decree as

will be outlined below.
                                          10

IV. Gifted, Inherited, and Premarital Funds.

        Next, Ryan claims the district court should not have set aside to Mary the

money she claimed to have received throughout the marriage as gifts from her

parents or the inheritance she received from her grandfather. He also claims the

court should not have set aside as premarital property the retirement account

Mary established while working for a former employer.

        Iowa Code section 598.21(6) (2011) provides:

               Property inherited by either party or gifts received by either
        party prior to or during the course of the marriage is the property of
        that party and is not subject to a property division under this section
        except upon a finding that refusal to divide the property is
        inequitable to the other party or to the children of the marriage.

In considering whether it would be “inequitable” to Ryan or the children if the

gifted or inherited funds are exempt from division, we consider the following

factors

        (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.

McDermott, 827 N.W.2d at 679.

        Ryan makes no argument that Mary’s parents intended the gifts to be to

both parties or that Mary’s grandfather intended the bequest to be to both of

them.     See id. at 678-79 (noting “[t]he donor’s intent and the circumstances
                                        11

surrounding the inheritance or gift are the controlling factors used to determine

whether inherited property is subject to division as marital property”).        His

argument centers solely on the assertion that Mary did not keep the inherited and

gifted money separate from the joint funds of the family and used the funds to

pay for family expenses. However, “it is important to note the act of placing gifts

or inheritances received by one spouse into joint ownership and/or commingling

the same with other marital assets is not controlling in deciding whether the

property should be divided as a martial asset.” In re Marriage of Liebich, 547
N.W.2d 844, 851 (Iowa Ct. App. 1996).

       In the decree the district court concluded the gifts should be set aside to

Mary, explaining,

       The Court finds and concludes that the undisputed evidence here is
       that most, if not all, of the gifts from Mary’s parents to her were
       invested in the marital property and family expenses enjoyed by the
       family. The undisputed evidence, however, establishes by clear,
       convincing and satisfactory evidence the intent to make those gifts
       to Mary. . . . Therefore, such gifts are not subject to a property
       division except upon a finding that refusal to divide the property is
       inequitable to the other party or to the children. . . . The Court
       concludes that Ryan has not met his burden of establishing that
       refusal to divide the gifted property would be inequitable to either
       Ryan or the children.

The court likewise removed $8000 from the net assets allocated to Mary to

account for the inheritance she received from her grandfather. Upon our de novo

review of the record, we agree Ryan has failed to prove that it is inequitable to

set aside to Mary the gifts and inheritance.

       In addition, the district court awarded the value of a premarital IRA to Mary

and then also removed it from the net assets allocated to Mary. A district court

“may not separate [a premarital] asset from the divisible estate and automatically
                                        12

award it to the spouse that owned the property prior to the marriage. Instead,

property brought to the marriage by each party is merely one factor among many

to be considered under section 598.21.” In re Marriage of Fennelly, 737 N.W.2d
97, 102 (Iowa 2007) (quotation marks and internal citations omitted).

      Again, Ryan’s argument is that Mary failed to protect this premarital

property through a prenuptial agreement and also failed to establish the value of

this account at the time of the marriage. He claims she received the lion share of

the marital property including the house, the more valuable car, and the

household furnishing, while he only received an older vehicle, the proceeds of a

four-wheeler, some household furnishings, and the dogs.

      While Mary did receive more assets in light of the decree awarding her the

marital home, she also received the majority of the liabilities, including multiple

encumbrances against the house and loans that were incurred to operate the

parties’ now defunct dog kennel business. Mary did not contribute to this IRA

over the course of the marriage, and it is logical to conclude the account

increased in value as a result of market conditions during the fourteen-year

marriage. In In re Marriage of Hass, 538 N.W.2d 889, 893 (Iowa Ct. App. 1995),

our court noted:

      An additional factor in dividing appreciated property acquired before
      the marriage is whether the appreciation which occurred during the
      marriage was fortuitous or due to the efforts of the parties. An
      equitable property division of the appreciated value of the property
      should be a function of the tangible contributions of each party and
      not the mere existence of the marital relationship. Where the
      accumulated property is not the product of the joint efforts of both
      parties, or where, as here, one party brings property into the
      marriage, there need not necessarily be a division. This is
      especially true where the marriage was of short duration.
                                          13

(Quotation marks and internal citations omitted.) Here, the IRA was funded with

only premarital assets and increased in value only as a result of market

conditions and not through the tangible contributions of either party during the

marriage. We therefore conclude it is not inequitable to set aside this account to

Mary as premarital property.

         Likewise, Ryan’s premarital IRAs should also be set aside to him. With

the addition of the refund value of Mary’s IPERS account, Mary was awarded a

net value of $111,493.65 in joint assets, and Ryan is now awarded $27,566.50

after subtracting out to Ryan his Morgan Stanley IRA worth $1187.00 and his

TransAmerica IRA worth $4885.00. In order to achieve equity as to the property

distribution between the parties, we modify the decree to require Mary to pay to

Ryan a property equalization payment of $41,963.58. The payment should be

made within one year of the issuance of procedendo, and it may be made

through the payment of cash or the transfer or roll-over of Mary’s retirement

funds.

         We therefore affirm the court’s decision to set aside to Mary the gifts, the

inheritance, and the premarital IRA; however we modify the property distribution

to set aside to Ryan his premarital IRAs and to award him a property equalization

payment to account for the IPERS account awarded to Mary. We value the

account at its refund value as of the date of the dissolution trial.

V. Attorney Fees.

         Both parties request an award of appellate attorney fees.          “Appellate

attorney fees are not a matter of right, but rather rest in this court’s discretion.” In

re Marriage of Sullins, 715 N.W.2d 242, 255 (Iowa 2006).               “In determining
                                         14

whether to award appellate attorney fees, we consider the needs of the party

making the request, the ability of the other party to pay, and whether the party

making the request was obligated to defend the decision of the trial court on

appeal.”   In re Marriage of Applegate, 567 N.W.2d 671, 675 (Iowa Ct. App.

1997). Having considered these factors, we award Ryan $2000.00 in appellate

attorney fees.

VI. Conclusion.

       We modify the court’s dissolution decision to award Mary’s IPERS account

to her, and value it at its refund value as of the time of trial for purposes of the

property distribution. We affirm the court’s decision to set aside to Mary the gifts,

the inheritance, and the premarital IRA; however, we modify the property

distribution to set aside to Ryan his premarital IRAs.      Finally, we modify the

dissolution decree to order Mary to pay to Ryan a property equalization payment

of $41,963.58 to be made within one year of the issuance of procedendo, and it

may be made through the payment of cash or the transfer or roll-over of Mary’s

retirement funds.

       Costs in this case are assessed one-half to each party.

       AFFIRMED AS MODIFIED.