Patricia S. Hemmer v. Allen R. Hemmer.

Allen R. Hemmer appeals from the order of the district court for Dodge County, Nebraska, dissolving his marriage to Patricia S. Hemmer and distributing the parties' marital property. For the reasons set forth herein, we affirm as modified.

STATEMENT OF FACTS

Patricia and Allen were married in Hawaii on February 14, 1993. No children were born during the course of the parties' marriage. On May 8, 2002, Patricia filed a "Petition for Dissolution of Marriage" in the Dodge County District Court. The petition requested that the parties' marriage be dissolved and asked the court for "[a] fair, just and equitable division of the marital assets, as well as a fair, just and equitable division of the marital debts," as well as for "[s]uch other and further relief as the Court may deem just and equitable in the premises."

A trial was held on the petition for dissolution on February 20, 2003. Patricia testified that during their entire marriage, she and Allen lived at a home in Fremont, Nebraska, and that Allen had purchased the home prior to their marriage. She testified that the parties both put all of their incomes jointly into the marriage. Patricia next testified that during the marriage, improvements had been made to the marital home; these improvements were detailed in exhibit 15. Exhibit 15 contained a list of six improvements Patricia claimed were made to the home during the marriage, to wit: wood flooring was added in the kitchen; landscaping was done; designer blinds, drapes, and wallpaper were added; the inside and outside of the house were repainted; columns were added to the dining room; and cement flooring and a storage shed were added to the property. Patricia testified that these improvements were paid for "[o]ut of the joint money." She also noted that she assisted in the normal upkeep and maintenance of the home.

Patricia also offered exhibit 16, which was a list of assets accumulated during the marriage. Exhibit 16 contained a statement from the assessor's office showing "the value [of the marital home] as of the year of the marriage and the values as of 2002." Exhibit 16 also contained an appraisal of a lot that the parties had acquired at Lake Bennington; the parties stipulated that the lot carried a value of $77,000. Patricia testified that the lot was purchased out of the parties' joint savings account. Patricia asked that "the [Lake Bennington] lot be sold and the net proceeds be divided equally." Additionally, Patricia testified that she felt that Allen should make a $57,400 payment to her, as well as give her the dining room set and hutch in his possession, to equalize the property settlement.

On cross-examination, Patricia testified that the wood flooring was put into the marital home "years ago, probably, four years ago," but she admitted she did not know the exact date the flooring was installed. She also agreed that "back in 1992, tax valuation [percentage] wasn't -- or real estate wasn't valued at 90 percent, but rather at 66 percent." Patricia also offered exhibit 17, which was her proposed division of marital assets. The remainder of Patricia's testimony regarded marital assets and debts that are not part of this appeal and need not be discussed further.

Allen testified that he owned the marital home prior to the parties' marriage and that he had purchased the home in 1983. He noted that when he bought the home, it was "in terrible shape and [he] tore it down and constructed a new home there, [and he] did 90 percent of the construction" himself between 1983 and 1984. Allen offered exhibit 5, which suggested that during the parties' marriage, the mortgage principal on the home had been reduced by $6,976.14. Allen also offered exhibits 3 and 4, which were proposals concerning distribution of the parties' marital assets. Each proposal indicated that Allen wanted the Lake Bennington lot. Allen also testified that he had paid maintenance fees on the Lake Bennington lot.

On cross-examination, Allen testified that the marital home had not really appreciated in value, claiming that "[n]othing has been done to appreciate my property. No major renovation has been done to appreciate it." He did admit that he and Patricia had both contributed equally to the upkeep and maintenance on the home during the marriage. The remainder of Allen's testimony dealt with other marital assets and debts that are not a part of this appeal and need not be discussed further.

On March 31, 2003, the district court entered its decree. The court found that the parties' marriage was irretrievably broken, and it dissolved the marriage. The court also ordered Patricia to maintain coverage for Allen under her health insurance policy for 6 months, and it ordered Allen to pay Patricia $53.92 per month for his contribution to that coverage. Neither Patricia nor Allen was awarded alimony, and each party was ordered to pay their own attorney fees. Patricia's maiden name of "Klein" was restored to her.

The decree awarded Patricia the following assets: a 1996 Toyota Camry, valued at $8,500; a Charles Schwab account, valued at $28,377.31; a savings plan, valued at $8,859.54; a 401K plan valued at $2,642.61; Pier 1 stock, valued at $4,150; a Texaco thrift plan valued at $415.15; Texaco stock, valued at $1,000; and the jewelry in her possession, valued at $23,523. The decree awarded Allen the following assets: a 1973 Corvette, valued at $14,500; a 1989 Nissan, valued at $1,743; a 1991 Chevrolet truck, valued at $3,158; a 1990 Corvette, valued at $6,509; a 1966 Corvette, valued at $3,500; a car trailer, valued at $1,000; a 401K plan valued at $16,700.68; and the jewelry in his possession, valued at $6,150.

The court also awarded the marital home to Allen. Specifically, the court ordered:

[Allen] is awarded the [marital home in] Fremont, Nebraska. The Court finds the value of that residence at the time of the marriage to be $106,000 (the 1993 assessed valuation of $70,670 found to be based on 66% of the value) [and] the Court finds the value at the time of the filing of the dissolution to be $185,000 (the 2002 assessors valuation of $167,075 is found to be 90% of the value). Therefore, the increase in value during the marriage is $79,500, and that $79,500 valuation is found to be [a marital] asset that is awarded to [Allen]

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The district court further found that the household goods, furnishings, and personal property had already been equally divided, as had the funds in the bank accounts.

The district court ordered that the parties' real estate lot at Lake Bennington should be sold, with the net proceeds to be divided equally between the parties. Finally, the decree provided that

[b]ased on the assets being awarded to each party, and the values of those assets (not including Lot 156, Bennington Lake which is to be sold and the net proceeds to be divided equally), [Patricia] has total marital assets of $77,467.61, and [Allen] has total marital assets of $132,760.68. To equalize the division of the marital estate, [Allen] shall pay through the Clerk of the District Court of Dodge County, Nebraska, as property settlement to [Patricia], the sum of $27,645. Adjusting for the property settlement payment, [Patricia's] share of the marital estate will be $105,112.61, and [Allen's] share of the marital estate will be $105,115.68

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Allen has timely appealed to this court.

ASSIGNMENT OF ERROR

Allen alleges that the district court abused its discretion in its division of the parties' marital property.

STANDARD OF REVIEW

In actions for dissolution of marriage, an appellate court reviews the case de novo on the record to determine whether there has been an abuse of discretion by the trial judge. This standard of review applies to the trial court's determinations regarding division of property, alimony, and attorney fees. Bauerle v. Bauerle, 263 Neb. 881, 644 N.W.2d 128 (2002).

A judicial abuse of discretion exists when a judge, within the effective limits of authorized judicial power, elects to act or refrains from acting, and the selected option results in a decision which is untenable and unfairly deprives a litigant of a substantial right or a just result in matters submitted for disposition through a judicial system. Id.

In a review de novo on the record of an action for dissolution of marriage, an appellate court reappraises the evidence as presented by the record and reaches its own independent conclusions with respect to the matters at issue. Schuman v. Schuman, 265 Neb. 459, 658 N.W.2d 30 (2003). However, when evidence is in conflict, the appellate court may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another. Id.

ANALYSIS

Allen alleges that the district court abused its discretion in its division of the parties' marital property. Specifically, Allen assigns as error the district court's award of half of the increased value of the marital home to Patricia and the district court's order that the parties sell their Lake Bennington property, with the net proceeds to be divided equally. We will address each specific assignment in turn.

Increased Value of Marital Home

Allen asserts that the district court erred when it credited Patricia with half of the increase in the value of the marital home in its division of the marital estate. Specifically, the district court ordered:

[Allen] is awarded the [marital home in] Fremont, Nebraska. The Court finds the value of that residence at the time of the marriage to be $106,000 (the 1993 assessed valuation of $70,670 found to be based on 66% of the value) [and] the Court finds the value at the time of the filing of the dissolution to be $185,000 (the 2002 assessors valuation of $167,075 is found to be 90% of the value). Therefore, the increase in value during the marriage is $79,500, and that $79,500 valuation is found to be [a marital] asset that is awarded to [Allen]

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Neither party contests the values used by the district court in valuing the marital home or that the total increase in the home's value was $79,500. Rather, Allen asserts that the district court erred "by granting [Patricia] 50 percent of the tax valuation increase during the marriage of [Allen's] premarital real property, where there was no evidence of any contributions made to that property" by Patricia, "save and except, the reduction in mortgage princip[al] due and owing on the property."

"As a general rule, the marital estate includes only property accumulated and acquired during the marriage through the joint efforts of the parties." Smith v. Smith, 9 Neb. App. 975, 982, 623 N.W.2d 705, 712 (2001). "Property owned by a party at the time of marriage is not marital property." Id. "With respect to separate property, whether inherited, gifted, or premarital, if it can be identified, it is typically set off to the inheriting spouse, the spouse donee of the gift, or the spouse who brought the property into the marriage." Id.

An exception to the rule applies where both of the spouses have contributed to the improvement or operation of the property which one of the parties owned prior to the marriage or the spouse not owning the property prior to the marriage has significantly cared for the property during the marriage

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Id. This exception is commonly known as the Van Newkirk exception, because it was explained in Van Newkirk v. Van Newkirk, 212 Neb. 730, 325 N.W.2d 832 (1982). "This rule, as well as the exception, has been applied in numerous cases since Van Newkirk." Tyler v. Tyler, 253 Neb. 209, 213, 570 N.W.2d 317, 319 (1997).

The record reveals that Allen owned the marital home for approximately 10 years prior to his marriage to Patricia and that the home was clearly a premarital asset. Thus, in order to acquire an interest in the increased value of the home, Patricia must rely on the Van Newkirk exception. In other words, in order for the exception to apply, the record must show that "both of the spouses have contributed to the improvement or operation of the property which one of the parties owned prior to the marriage or the spouse not owning the property prior to the marriage has significantly cared for the property during the marriage." Smith, 9 Neb. App. at 982, 623 N.W.2d at 712. Further, "Tyler clearly held that before the Van Newkirk exception can be applied, the party claiming the benefits of it must offer evidence of the value of the contribution upon which the claim is made." LaBenz v. LaBenz, 6 Neb. App. 491, 495, 575 N.W.2d 161, 165 (1998).

In refusing to apply the Van Newkirk exception in Tyler, the Nebraska Supreme Court noted:

The record suggests that while husband may have made certain contributions to the improvement of the marital home, he failed to demonstrate the value of all his alleged contributions. The evidence suggests that husband solely, or with the assistance of wife, made various improvements to the home, including refinishing the doors and trim, building a deck, carpeting and painting the basement family room, replacing the kitchen counter tops, wallpapering and painting interior walls, installing four ceiling fans, painting the exterior of the house, retiling the master bathroom, installing new vinyl in the bathrooms, installing a heat pump, recarpeting the main floor, installing a sump pump, and installing a garage door opener. However, husband failed to produce any evidence indicating the value of these contributions.

Similarly, husband failed to demonstrate the significance of the aforementioned contributions. The only evidence husband produced was proof that he paid the $2,850 special assessment lien, helped reduced the mortgage by approximately $3,500, installed a $450 sump pump, built a $200 deck, and installed a $500 heat pump.
253 Neb. at 214, 570 N.W.2d at 320

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In the instant case, Patricia testified that improvements were made to the home, that she contributed to the maintenance of the home, and that she assisted in the normal upkeep of the property. She offered exhibit 15, entitled "Improvements to [the marital home] During the Course of the Marriage." Exhibit 15 listed six improvements and additions, including: wood flooring in the kitchen; landscaping; designer blinds, drapes, and wallpaper; new paint; columns in the formal dining room; and cement flooring and a storage shed on the property. However, similar to the husband in Tyler, supra, Patricia offered no evidence indicating the value of her contributions to the home. "A spouse cannot acquire an interest in the nonmarital property of the other spouse for services related to that property absent evidence of the value of such services to the nonmarital property of the other spouse." Mathew v. Palmer, 8 Neb. App. 128, 139-40, 589 N.W.2d 343, 352 (1999). Thus, we find that the district court erred in holding that the increased value of the marital home, or $79,500, was a marital asset in which Patricia could claim an interest.

Our finding that the district court abused its discretion in finding the amount of $79,500 to be a marital asset requires a modification of the district court's decree. However, this finding does not indicate that Patricia should not receive any credit for the increased equity that was acquired during the parties' marriage. The record suggests that the mortgage principal was reduced by $6,976.14 during the parties' marriage and that all of the mortgage payments made during the parties' marriage were taken out of joint funds. Thus, we find that the amount that the mortgage principal was reduced during the parties' marriage, or $6,976.14, is a marital asset, and we further find that this marital asset should be awarded to Allen. The decree should be modified to award Allen the $6,976.14 in increased equity in the home due to the decreased mortgage principal. Additionally, we hold that the decree should be modified by vacating the portion ordering Allen to pay Patricia the sum of $27,645.

With these modifications, our calculations suggest that Patricia will receive roughly 56 percent of the marital estate, while Allen will receive roughly 44 percent of the marital estate. "It has been repeatedly held in this jurisdiction that the marital estate is to be divided so that a spouse receives one-third to one-half." Dormann v. Dormann, 8 Neb. App. 1049, 1054, 606 N.W.2d 837, 843 (2000). "In a dissolution action, the court will consider all pertinent facts in reaching a property division that is just and equitable." Id. Our de novo review of the facts in the instant case suggests that the property division, as modified, is indeed just and equitable. Accordingly, this portion of the district court's decree is affirmed as modified.

Sale of Lake Bennington Lot

Allen next alleges that the district court abused its discretion when it ordered that the parties' unimproved Lake Bennington lot be sold, with the net proceeds of the sale to be equally distributed between the parties. The parties stipulated that the piece of land carried a value of $77,000. Allen indicates that the district court abused its discretion in ordering the land to be sold because "such an asset could have been awarded to [Allen] with a cash payment to [Patricia] to offset any overage in dividing the estate between the parties." Brief for appellant at 17-18.

Allen is unable to provide any persuasive legal analysis suggesting that the district court abused its discretion when it ordered the sale of the parties' Lake Bennington lot. "The division of property is a matter entrusted to the discretion of the trial judge, which will be reviewed de novo on the record and will be affirmed in the absence of an abuse of discretion." Medlock v. Medlock, 263 Neb. 666, 675, 642 N.W.2d 113, 123 (2002). There is nothing in the district court's decree prohibiting Allen from bidding on and purchasing the Lake Bennington lot when it is sold. We are unable to say that the district court abused its discretion when it ordered the sale of the parties' Lake Bennington lot. This assignment of error is without merit, and that portion of the decree ordering the Lake Bennington lot to be sold is affirmed.

CONCLUSION

We find that the district court did not abuse its discretion when it ordered the parties to sell their Lake Bennington lot and divide the net proceeds equally, and we affirm that portion of the district court's decree. However, we do find that the district court abused its discretion when it divided the parties' marital property, and we modify the decree accordingly.

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of the Court's opinion.

Affirmed as modified in favor of Defendent.

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Reported by L. Hargraves