Cornwell v. Cornwell , 309 Neb. 156 ( 2021 )


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  • Nebraska Supreme Court Online Library
    www.nebraska.gov/apps-courts-epub/
    06/25/2021 08:09 AM CDT
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    Nebraska Supreme Court Advance Sheets
    309 Nebraska Reports
    CORNWELL v. CORNWELL
    Cite as 
    309 Neb. 156
    Daniel D. Cornwell, appellant and
    cross-appellee, v. Melanie J. Cornwell,
    appellee and cross-appellant.
    ___ N.W.2d ___
    Filed May 7, 2021.     No. S-20-530.
    1. Divorce: Child Custody: Child Support: Property Division:
    Alimony: Attorney Fees: Appeal and Error. In a marital dissolution
    action, 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 custody, child support, division of property, alimony, and
    attorney fees.
    2. Evidence: Appeal and Error. In a review de novo on the record, an
    appellate court is required to make independent factual determinations
    based upon the record, and the court reaches its own independent con-
    clusions with respect to the matters at issue.
    3. Judges: Words and Phrases. A judicial abuse of discretion exists if the
    reasons or rulings of a trial judge are clearly untenable, unfairly depriv-
    ing a litigant of a substantial right and denying just results in matters
    submitted for disposition.
    4. Property Division: Pensions: Words and Phrases. Under the deferred
    distribution method, the court makes no immediate division of retire-
    ment benefits, but determines a percentage share which the nonowning
    spouse will receive when the owning spouse retires and orders that
    the nonowning spouse receive that percentage of every payment check
    which the owning spouse is entitled to receive.
    5. ____: ____: ____. Under the immediate offset method, the court deter-
    mines the present value of a share in the pension of the owning spouse
    and immediately awards the nonowning spouse a lump-sum amount in
    view of that value.
    6. Divorce: Attorney Fees. In awarding attorney fees in a dissolution
    action, a court shall consider the nature of the case, the amount involved
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    Nebraska Supreme Court Advance Sheets
    309 Nebraska Reports
    CORNWELL v. CORNWELL
    Cite as 
    309 Neb. 156
    in the controversy, the services actually performed, the results obtained,
    the length of time required for preparation and presentation of the case,
    the novelty and difficulty of the questions raised, and the customary
    charges of the bar for similar services.
    7. Courts: Attorney Fees. Courts have the inherent power to award attor-
    ney fees in certain unusual circumstances amounting to conduct during
    the course of litigation which is vexatious, unfounded, and dilatory, such
    that it amounts to bad faith.
    Appeal from the District Court for Nance County: Rachel
    A. Daugherty, Judge. Affirmed.
    Kathryn D. Putnam, of Astley Putnam, P.C., L.L.O., for
    appellant.
    Nathan T. Bruner, of Bruner, Frank, Schumacher & Husak,
    L.L.C., for appellee.
    Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
    Papik, and Freudenberg, JJ.
    Heavican, C.J.
    I. INTRODUCTION
    The Nance County District Court dissolved the marriage of
    Daniel D. Cornwell and Melanie J. Cornwell. In connection
    with its division of the parties’ marital property, the district
    court used the immediate offset method of valuation to value
    the marital portion of Daniel’s pension. The district court then
    awarded the pension to Daniel and ordered him to make a cash
    equalization payment to Melanie, payable over time. Primarily
    at issue on appeal is the use of the immediate offset method to
    value the pension. We affirm.
    II. FACTUAL BACKGROUND
    Daniel and Melanie were married in 1999. At the time
    of their marriage and for 11 years thereafter, Daniel was
    employed with the Maryland State Police. As the result of a
    workplace accident, Daniel retired in 2010.
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    Nebraska Supreme Court Advance Sheets
    309 Nebraska Reports
    CORNWELL v. CORNWELL
    Cite as 
    309 Neb. 156
    Daniel’s pension was a disability pension and placed some
    limitations on his future employment. However, Daniel was able
    to obtain employment, first with Maryland Fire and Rescue and
    later as a government contractor for the Department of Justice,
    working with the Bureau of Alcohol, Tobacco, Firearms and
    Explosives and the Federal Emergency Management Agency.
    That job required him to live within 3 hours of his assigned
    duty location, which was Kansas City, Missouri; thus, Daniel
    and Melanie rented an apartment in the Kansas City area.
    However, they also owned a property in Belgrade, Nance
    County, Nebraska, which they considered to be their perma-
    nent home.
    At Daniel’s suggestion, Melanie moved to Scottsdale,
    Arizona, in November 2016, because she had health issues
    that the couple hoped would be helped by the warmer weather.
    The parties separated in 2017, with Daniel’s filing for divorce
    in June.
    The record suggests that the divorce was contentious, with
    many issues litigated, as is partially reflected by Melanie’s
    cross-appeal regarding the district court’s failure to award her
    attorney fees and costs. However, as noted above, the primary
    issue on appeal is the valuation of Daniel’s retirement plan
    from his employment with the Maryland State Police.
    Daniel’s retirement plan is a defined benefit plan that has
    been in pay status since his retirement in 2010. Daniel origi-
    nally retired on a full service pension, but several months post-
    retirement, the plan was retroactively changed to a disability
    pension. Because the plan is in part a disability pension, Daniel
    pays no taxes on that part of his monthly payout; the plan has
    no lump-sum buyout provision.
    The parties have stipulated that 49 percent of the value of
    the pension is marital. Melanie wished to utilize the immedi-
    ate offset method of valuation to value the pension. Melanie’s
    expert, David Rosenbaum, set the current total value of the
    pension at $2,561,009, with a 49-percent share valued at
    $1,254,894.
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    309 Nebraska Reports
    CORNWELL v. CORNWELL
    Cite as 
    309 Neb. 156
    Daniel’s expert, Ernest Goss, challenged the accuracy of
    that valuation, suggesting that the valuation was speculative on
    various bases. Instead, Daniel sought to divide the pension via
    a domestic relations order (DRO).
    Following a trial, the district court accepted Rosenbaum’s
    valuation for purposes of valuation of the entire marital estate.
    It then awarded the pension to Daniel and divided the estate
    in half. Daniel was ordered to make an equalization payment
    to Melanie in the amount of $403,892, to be payable annually
    in the amount of $100,000 per year until paid in full. In addi-
    tion, though noting that Daniel had perhaps engaged in some
    “‘game playing’” at the mediation, the court ordered each
    party to pay its own fees and costs.
    Daniel appeals, and Melanie cross-appeals.
    III. ASSIGNMENTS OF ERROR
    Daniel assigns that the district court erred in using the
    immediate offset method to value his pension.
    On cross-appeal, Melanie assigns that the district court erred
    in not awarding her attorney fees and costs.
    IV. STANDARD OF REVIEW
    [1-3] In a marital dissolution action, 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. 1 This
    standard of review applies to the trial court’s determinations
    regarding custody, child support, division of property, alimony,
    and attorney fees. 2 In a review de novo on the record, an
    appellate court is required to make independent factual deter-
    minations based upon the record, and the court reaches its own
    independent conclusions with respect to the matters at issue. 3
    A judicial abuse of discretion exists if the reasons or rulings of
    a trial judge are clearly untenable, unfairly depriving a litigant
    1
    Higgins v. Currier, 
    307 Neb. 748
    , 
    950 N.W.2d 631
     (2020).
    2
    
    Id.
    3
    
    Id.
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    CORNWELL v. CORNWELL
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    309 Neb. 156
    of a substantial right and denying just results in matters sub-
    mitted for disposition. 4
    V. ANALYSIS
    1. Pension Plan
    On appeal, Daniel assigns that the district court erred in
    utilizing the immediate offset method to value and distribute
    his Maryland State Police pension, rather than the deferred
    distribution method effected via the use of a DRO. Daniel
    argues that the process of determining a present value of the
    pension was too difficult and speculative. He also argues that
    the district court failed to examine whether there was “suf-
    ficient equivalent property in the estate to satisfy the claim of
    the non-owning spouse without causing undue hardship to the
    owning spouse.” 5
    As an initial matter, we turn to Melanie’s assertions (1) that
    Daniel sought a DRO prohibited by Maryland law and (2) that
    he has waived any objection to the immediate offset method by
    failing to object to her expert’s testimony. Both assertions are
    without merit.
    (a) QDRO Versus DRO
    Throughout his case, Daniel and his counsel sought use
    of the deferred distribution method and a qualified domestic
    relations order (QDRO). And it appears, at least for purposes
    of the Maryland pension plan at issue, that the correct term
    is “domestic relations order.” Still, Melanie’s contention on
    appeal is one of semantics—there is nothing in the record that
    would suggest that a QDRO and a DRO are not functionally
    the same thing. This argument is without merit.
    (b) Waiver
    We turn to Melanie’s waiver argument. Daniel and Melanie
    differed in their positions regarding how the marital portion
    4
    
    Id.
    5
    Brief for appellant at 19.
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    309 Nebraska Reports
    CORNWELL v. CORNWELL
    Cite as 
    309 Neb. 156
    of Daniel’s Maryland State Police pension should be distrib-
    uted. Melanie offered Rosenbaum’s report and testimony in
    order to value the pension and, by extension, provide a basis
    for use of the immediate offset method. Daniel offered Goss’
    report and testimony to rebut Rosenbaum’s opinion of val­
    uation and, by extension, support his contention that use of
    the deferred distribution method was preferred because a reli-
    able present value could not be determined. 6 Melanie argues
    that by failing to object to Rosenbaum’s testimony, Daniel
    has waived his objection to the immediate offset method and
    Rosenbaum’s valuation.
    We disagree. Daniel’s position throughout has been that
    the district court should use the deferred distribution method
    of valuation rather than the immediate offset method. Daniel
    was not concerned with the admissibility of Rosenbaum’s evi-
    dence or with the court’s ability to hear and consider testimony
    regarding the immediate offset method; rather, he was con-
    cerned with the weight granted that theory by the district court.
    While a party must object to questions of admissibility or risk
    waiving them, no such objections are required with respect
    to the weight accorded such evidence. 7 Melanie’s contention
    regarding waiver is without merit.
    (c) Merits
    We turn to the merits of Daniel’s appeal, pausing first to
    note that the parties at times describe Daniel’s Maryland State
    Police pension as a “disability pension.” Prior opinions from
    this court and the Nebraska Court of Appeals have suggested
    there may be circumstances under which disability pension
    6
    See 2 Brett R. Turner, Equitable Distribution of Property § 6:41 (4th ed.
    2020).
    7
    Cf., Reiber v. County of Gage, 
    303 Neb. 325
    , 
    928 N.W.2d 916
     (2019); City
    of Lincoln v. Realty Trust Group, 
    270 Neb. 587
    , 
    705 N.W.2d 432
     (2005);
    Tank v. Peterson, 
    219 Neb. 438
    , 
    363 N.W.2d 530
     (1985).
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    CORNWELL v. CORNWELL
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    309 Neb. 156
    benefits are properly classified as nonmarital property. 8 We
    need not address that question here, however, because the
    parties have stipulated that 51 percent of Daniel’s disability
    pension is nonmarital. Because no party challenges the proper
    classification of these pension benefits, we confine our analysis
    to whether there was error in the district court’s evaluation or
    distribution of the marital portion of those benefits.
    Under 
    Neb. Rev. Stat. § 42-366
    (8) (Reissue 2016), a pension
    is part of the marital estate. In Reichert v. Reichert, 9 this court
    interpreted the statute and adopted the rule that “the marital
    estate includes only that portion of the pension which is earned
    during the marriage.” In Shockley v. Shockley, 10 we stated that
    “[c]ontributions to pensions before marriage or after dissolu-
    tion are not assets of the marital estate.”
    [4,5] This appeal presents a choice between two major
    competing methods of division, each with its own rules of
    valuation: 11 the deferred distribution method and the immediate
    offset method.
    [Under the] “deferred distribution method” . . . the court
    makes no immediate division of retirement benefits, but
    determines a percentage share which the nonowning
    spouse will receive when the owning spouse retires and
    orders that the nonowning spouse receive that percent-
    age of every payment check which the owning spouse
    is entitled to receive. . . . This is in opposition to the
    “immediate offset method” where the court determines
    8
    See, e.g., Shearer v. Shearer, 
    270 Neb. 178
    , 
    700 N.W.2d 580
     (2005);
    Parde v. Parde, 
    258 Neb. 101
    , 
    602 N.W.2d 657
     (1999); Kramer v. Kramer,
    
    252 Neb. 526
    , 
    567 N.W.2d 100
     (1997); Bandy v. Bandy, 
    17 Neb. App. 97
    ,
    
    756 N.W.2d 751
     (2008); John v. John, 
    1 Neb. App. 947
    , 
    511 N.W.2d 544
    (1993).
    9
    Reichert v. Reichert, 
    246 Neb. 31
    , 35, 
    516 N.W.2d 600
    , 604 (1994).
    10
    Shockley v. Shockley, 
    251 Neb. 896
    , 899, 
    560 N.W.2d 777
    , 780 (1997).
    11
    2 Turner, supra note 6, § 6:30 (discussing methods for distributing
    retirement benefits—defined benefit plans in general).
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    CORNWELL v. CORNWELL
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    309 Neb. 156
    the present value of a share in the pension of the owning
    spouse and immediately awards the nonowning spouse a
    lump-sum amount in view of that value. 12
    The Court of Appeals noted in Polly v. Polly 13 that the deferred
    distribution method is the most widely accepted method of
    dividing retirement benefits; still, the immediate offset method
    remains a viable method under Nebraska law. 14 Contrary to
    Daniel’s implication, while the deferred distribution method is
    perhaps the most widely accepted, such does not make it the
    preferred method of division for retirement benefits.
    The district court’s use of the immediate offset method of
    valuation was not an abuse of discretion. Having reviewed
    the record, we determine it is clear, as we have noted, that
    the parties’ divorce was contentious. One of the benefits of
    the immediate offset method is that it effectuates a complete
    and immediate, albeit slightly deferred, split of the retirement
    account at question, which in the case of Daniel and Melanie
    would be advantageous. 15
    Relatedly, the immediate offset method is useful in cases
    where there is a likelihood of manipulation of the retirement
    account. 16 The record contains an allegation that Daniel made
    changes to his pension without notifying Melanie. When this
    is considered in tandem with the general contentiousness of
    this divorce, such supports the use of the immediate offset
    method and as clean a break between Daniel and Melanie
    as possible.
    In addition, reasons to use the deferred distribution method
    are not present. For example, we have evidence of present
    12
    Koziol v. Koziol, 
    10 Neb. App. 675
    , 692-93, 
    636 N.W.2d 890
    , 906 (2001).
    See, also, 2 Turner, supra note 6, §§ 6:30 to 6:32.
    13
    Polly v. Polly, 
    1 Neb. App. 121
    , 
    487 N.W.2d 558
     (1992).
    14
    Cf. Koziol v. Koziol, 
    supra note 12
    .
    15
    See 2 Turner, supra note 6, §§ 6:31 and 6:36.
    16
    See id., § 6:36.
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    value. 17 Also, because Daniel’s pension was in pay status,
    the amount of his benefits was not unusually speculative. 18
    And both Daniel and Melanie have nonmarital property and
    income, so the need for a steady retirement income that
    would result from the deferred distribution method is not obvi-
    ously present. 19
    Daniel alleges that the parties’ limited marital estate sup-
    ports the use of the deferred distribution method. Daniel con-
    tends that the marital estate does not include sufficient property
    that he could liquidate in order to make payment to equalize
    the estate.
    But contrary to Daniel’s implication, this was not a lim-
    ited marital estate. Together, Daniel and Melanie had sig-
    nificant assets, including three homes and multiple investment
    accounts. Daniel had access to significant funds outside of the
    marital estate, including at least 2 years’ pension payments
    received during the pendency of the divorce of which Melanie
    received none. Moreover, the district court created a plan for
    the equalization payment, allowing Daniel to pay it off over
    multiple years.
    Having reviewed the record de novo, we cannot say that the
    district court’s decision to use the immediate offset method of
    valuation and to accordingly value and divide the estate as it
    did was an abuse of discretion. There is no merit to this assign-
    ment of error.
    2. Attorney Fees
    On cross-appeal, Melanie assigns that the district court erred
    in not awarding her attorney fees and costs. She argues that
    Daniel’s actions throughout the divorce process “frustrated and
    impeded at nearly every step.” 20
    17
    See 
    id.
    18
    See 
    id.
    19
    See 
    id.
    20
    Brief for appellee on cross-appeal at 41.
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    CORNWELL v. CORNWELL
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    309 Neb. 156
    As an initial matter, Daniel argues that Melanie has failed to
    comply with this court’s rules regarding the filing of a cross-
    appeal, because she does not have a separate title page indicat-
    ing her cross-appeal. But Neb. Ct. R. App. P. § 2-109(D)(4)
    (rev. 2014) provides not that the brief and the brief on cross-
    appeal must each have separate title pages, but that “[w]here
    the brief of appellee presents a cross-appeal, it shall be noted
    on the cover of the brief and it shall be set forth in a separate
    division of the brief.” Both of these criteria were met in this
    case, with Melanie’s cross-appeal separately indicated on the
    cover of her brief on appeal. Daniel’s argument to the contrary
    is without merit.
    [6,7] We now turn to the merits of Melanie’s cross-appeal.
    In awarding attorney fees in a dissolution action, a court shall
    consider the nature of the case, the amount involved in the con-
    troversy, the services actually performed, the results obtained,
    the length of time required for preparation and presentation of
    the case, the novelty and difficulty of the questions raised, and
    the customary charges of the bar for similar services. 21 In addi-
    tion, courts have the inherent power to award attorney fees in
    certain unusual circumstances amounting to conduct during the
    course of litigation which is vexatious, unfounded, and dila-
    tory, such that it amounts to bad faith. 22
    As we did with respect to the valuation of the pension plan
    and division of the marital estate, we review de novo on the
    record to determine whether there has been an abuse of dis-
    cretion by the trial judge in the award of attorney fees. 23 A
    judicial abuse of discretion exists if the reasons or rulings of
    a trial judge are clearly untenable, unfairly depriving a litigant
    21
    Dycus v. Dycus, 
    307 Neb. 426
    , 
    949 N.W.2d 357
     (2020).
    22
    Leners v. Leners, 
    302 Neb. 904
    , 
    925 N.W.2d 704
     (2019), disapproved
    on other grounds, State on behalf of Kaaden S. v. Jeffery T., 
    303 Neb. 933
    , 
    932 N.W.2d 692
     (2019); Fetherkile v. Fetherkile, 
    299 Neb. 76
    , 
    907 N.W.2d 275
     (2018).
    23
    See Higgins v. Currier, 
    supra note 1
    .
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    CORNWELL v. CORNWELL
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    309 Neb. 156
    of a substantial right and denying just results in matters sub-
    mitted for disposition. 24
    In this case, the record supports the district court’s decision
    to not award attorney fees. As noted above, while the record
    demonstrates that this divorce was contentious, the record also
    shows that both sides at times prolonged the process. Given
    this conflict, we cannot say the decision to not award fees and
    costs was an abuse of discretion.
    VI. CONCLUSION
    The decision of the district court is affirmed.
    Affirmed.
    24
    
    Id.