Schnackel v. Schnackel , 27 Neb. Ct. App. 789 ( 2019 )

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Nebraska Court of Appeals Advance Sheets
27 Nebraska Appellate Reports
SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
Laura B. Schnackel, appellee and cross-appellant,
v. Gregory R. Schnackel, appellant
and cross-appellee.
___ N.W.2d ___
Filed November 26, 2019. No. A-18-428.
1. Divorce: Appeal and Error. 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.
2. 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.
3. Property Division. Equitable property division under Neb. Rev. Stat.
§ 42-365 (Reissue 2016) is a three-step process. The first step is to
classify the parties’ property as marital or nonmarital. The second
step is to value the marital assets and determine the marital liabilities
of the parties. The third step is to calculate and divide the net marital
estate between the parties in accordance with the principles contained
in § 42-365.
4. Divorce: Property Division. As a general rule, all property accumulated
and acquired by either spouse during the marriage is part of the marital
estate, unless it falls within an exception to the general rule.
5. Taxation: Corporations: Words and Phrases. Subchapter S is a tax
status designed to tax corporate income on a pass-through basis to share-
holders of a small business corporation.
6. Taxation: Corporations. Since a subchapter S corporation is not taxed
on its earnings, the various income, expense, loss, credit, and other tax
items pass through and are taxable to or deductible by shareholders in a
manner analogous to that which is applicable to partners.
7. Property Division. With some exceptions, the marital estate does
not include property acquired by one of the parties through gift
or inheritance.
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SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
8. Property Division: Proof. The burden of proof to show that property is
nonmarital remains with the person making the claim.
9. Property Division: Words and Phrases. Dissipation of marital assets
is generally defined as one spouse’s use of marital property for a self-
ish purpose unrelated to the marriage at the time when the marriage is
undergoing an irretrievable breakdown.
10. Appeal and Error. To be considered by an appellate court, an alleged
error must be both specifically assigned and specifically argued in the
brief of the party asserting the error.
11. Divorce: Appeal and Error. In a de novo review of a judgment in
marriage dissolution proceedings, when the evidence is in conflict, an
appellate court considers, and 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.
12. Divorce: Property Division. When marital assets are dissipated by a
spouse for purposes unrelated to the marriage, the remedy is to include
the dissipated assets in the marital estate in dissolution actions.
13. Property Division. As a general rule, a spouse should be awarded one-
third to one-half of the marital estate, the polestar being fairness and
reasonableness as determined by the facts of each case.
14. Divorce: Property Division: Alimony. In dividing property and con-
sidering alimony upon a dissolution of marriage, a court should con-
sider four factors: (1) the circumstances of the parties, (2) the duration
of the marriage, (3) the history of contributions to the marriage, and
(4) the ability of the supported party to engage in gainful employ-
ment without interfering with the interests of any minor children in
the custody of each party. In addition, a court should consider the
income and earning capacity of each party and the general equities of
the situation.
15. Alimony. The purpose of alimony is to provide for the continued main-
tenance or support of one party by the other when the relative economic
circumstances make it appropriate.
16. Alimony: Appeal and Error. In reviewing an alimony award, an appel-
late court does not determine whether it would have awarded the same
amount of alimony as did the trial court, but whether the trial court’s
award is untenable such as to deprive a party of a substantial right or
just result. The ultimate criterion is one of reasonableness.
17. Child Support: Rules of the Supreme Court. The Nebraska Child
Support Guidelines do not apply if the parties have no minor children.
18. Divorce: Property Division: Alimony. The statutory criteria for divid-
ing property and awarding alimony overlap, but the two serve different
purposes and courts should consider them separately.
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SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
19. Alimony. Alimony should not be used to equalize the incomes of the
parties or punish one of the parties, but disparity in income or potential
income may partially justify an award of alimony.
20. Judgments. A court has discretion to require reasonable security for
an obligor’s current or delinquent support obligations when compelling
circumstances require it.
21. Judgments: Alimony: Child Support. An order requiring security to
be given is a somewhat extraordinary and drastic remedy, and there-
fore, reasonable security for payment of alimony, child support, or
monetary judgments should only be invoked when compelling circum-
stances require it.
22. Divorce: Property Division: Presumptions. Accrued investment earn-
ings or appreciation of nonmarital assets during the marriage are pre-
sumed marital unless the party seeking the classification of the growth
as nonmarital proves that (1) the growth is readily identifiable and trace-
able to the nonmarital portion of the account and (2) the growth is not
due to the active efforts of either spouse.
23. Divorce: Property Division. The active appreciation rule sets forth the
relevant test to determine to what extent marital efforts caused any part
of the appreciation or income.
Appeal from the District Court for Douglas County: Horacio
J. Wheelock, Judge. Affirmed as modified.
Michael W. Milone and Mark J. Milone, of Koukol &
Johnson, L.L.C., for appellant.
Edward D. Hotz, of Pansing, Hogan, Ernst & Bachman,
L.L.P., for appellee.
Riedmann, Bishop, and Arterburn, Judges.
Riedmann, Judge.
I. INTRODUCTION
Gregory R. Schnackel (Greg) appeals, and Laura B.
Schnackel cross-appeals, the order of the district court for
Douglas County which dissolved the parties’ marriage, valued
and divided the marital estate, and awarded alimony and child
support to Laura. For the reasons that follow, we affirm the
district court’s order as modified.
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SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
II. BACKGROUND
Greg and Laura were married in 1985 and had two children
during the marriage. The older child had reached the age of
majority before dissolution proceedings began, but the younger
child had not. However, he turned 19 years old during the
pend­ency of this appeal.
Laura filed a complaint for dissolution of marriage in July
2016. Trial was held over the course of several days in October
2017 and February 2018. The parties amassed significant
assets during their marriage, and the record in this case is
voluminous. Trial culminated in an extremely thorough, well-
supported 96-page amended decree, plus attachments, by the
district court. We briefly summarize the evidence presented at
trial here and will include additional facts below as necessary
to address the issues raised on appeal and cross-appeal.
After graduating from college in 1984, Greg began working
for an engineering company owned and operated by his father,
Dale Schnackel. In 1994, Dale created a partnership and gave
Greg a 50-percent interest in it. In 2000, Dale transferred the
remaining 50-percent interest in the partnership to Greg at a
value of $106,750. As will be discussed below, there is a dis-
pute as to whether the 2000 transfer from Dale to Greg was a
gift or a purchase. After Greg gained control of the partnership,
he transferred all of its interests into a newly formed Nebraska
corporation, and in 2007, he changed the name of the corpora-
tion to Schnackel Engineers, Inc. (SEI).
AEA Integration, Inc. (AEA), was formed in 2003, and Greg
is the president and sole shareholder. AEA is in the process of
developing software to be used by SEI. SEI is currently AEA’s
only customer, and through 2016, SEI had spent approximately
$7.5 million in development costs for AEA. The software is not
ready for use outside of SEI, and Greg estimated that it would
not be ready for at least 5 more years.
Greg and Laura each called an expert witness to testify
at trial as to the valuation of SEI and AEA. In the amended
decree, the district court found both experts to be credible
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SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
but determined that the testimony, methodology, and conclu-
sions of Laura’s expert, Matthew Stadler, were more truthful,
credible, and reliable than that of Greg’s expert. This deter-
mination is not challenged on appeal. Stadler opined that as
of June 30, 2017, SEI had a value of $3,267,900. He testified
that AEA had no separate value because it had no income or
revenue and was completely dependent upon SEI.
In 2006, Greg purchased a condominium in New York City
to use while working in New York. SEI paid the $28,000
monthly rent for the condominium. Greg sold the condomin-
ium in 2017 and leased a different New York apartment for
$11,000 per month.
Greg met another woman, Julia Weiss (Julia), in New York
around 2010. Around this time, Greg was working in New
York an average of 150 to 180 days per year. In September
2013, Greg told Julia that he wanted to marry her, and they
began a sexual affair at that time. In order to conceal the
affair from Laura, Greg opened a separate credit card account,
referred to throughout the record as the “9779 account.” Greg
used the 9779 account to charge purchases related to Julia.
Greg spent substantial amounts of money on Julia, providing
gifts of jewelry to her, taking her on trips, giving her cash,
paying her credit card bill, and buying clothes and shoes
for her.
Laura discovered the affair in April 2015, and she and Greg
began attending marriage counseling in June. After just a few
sessions, the counseling transitioned to divorce counseling
because Greg said he was unwilling to end his relationship with
Julia. Despite this, Greg continued to live at the marital resi-
dence and sleep in the marital bedroom, until Laura “demoted”
him to a bedroom in the basement in June 2016. Greg moved
out of the marital home on August 28, 2016.
The amended decree was entered in March 2018. As rel-
evant to this appeal, the district court valued and divided the
marital portion of SEI, finding that after subtracting the pres-
ent value of the 1994 gift from Dale to Greg, SEI had a total
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SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
marital value of $3,096,828.80. Of this amount, $1 million was
awarded to Laura’s share of the marital estate, and the remain-
ing $2,096,928.80 was attributed to Greg’s portion.
The court concluded that Greg dissipated a total of $3.5 mil-
lion in marital assets in connection with his spending on Julia
and that Laura dissipated $146,000 in marital assets, and
it divided those amounts accordingly. Greg was ordered to
pay alimony to Laura of $7,500 per month for 120 months.
Laura inherited funds during the marriage, and the district
court awarded Greg half of the total marital gains of her
inheritance. The parties were ordered to sell two condo-
miniums they own in Florida and Greg’s classic car collec-
tion in order to pay off marital debt. Based on its calcula-
tions and division of the marital estate, the district court
determined that a total equalization payment was owed to
Laura of $1,664,741 and ordered Greg to make payments to
Laura of $8,670.52 per month for 192 months. Additional
details will be provided below. Greg now appeals, and Laura
cross-appeals.
III. ASSIGNMENTS OF ERROR
On appeal, Greg assigns that the district court erred in (1)
valuing and dividing the marital estate, (2) its analysis and
findings regarding dissipation of marital assets, (3) its alimony
award, and (4) issuing postdecree orders.
On cross-appeal, Laura assigns that the district court erred
in classifying the appreciation of her inherited funds as a mari-
tal asset.
IV. STANDARD OF REVIEW
[1,2] 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. Stephens v. Stephens, 297 Neb. 188, 899 N.W.2d 582
(2017). A judicial abuse of discretion exists if the reasons or
rulings of a trial judge are clearly untenable, unfairly depriving
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SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
a litigant of a substantial right and denying just results in mat-
ters submitted for disposition. Id.
V. ANALYSIS
1. Property Division
[3] In his first assigned error, Greg asserts that the district
court committed several errors regarding the classification,
valuation, and/or division of marital property. Equitable prop-
erty division under Neb. Rev. Stat. § 42-365 (Reissue 2016)
is a three-step process. The first step is to classify the parties’
property as marital or nonmarital. The second step is to value
the marital assets and determine the marital liabilities of the
parties. The third step is to calculate and divide the net marital
estate between the parties in accordance with the principles
contained in § 42-365. Stephens v. Stephens, supra.
(a) Necessary Parties
Greg first alleges that the district court erred in dividing
AEA’s assets. He claims that because AEA was not made a
party to the action, a necessary party was absent, and that the
district court therefore lacked the authority to divide AEA’s
assets. Greg does not cite any Nebraska authority to sup-
port his position, and we have found none. To the contrary,
in previous dissolution of marriage actions, this court and
the Nebraska Supreme Court have addressed the valuation
of a business and treatment of the business as a marital asset
without requiring that the business be brought in as a party to
the case. See, e.g., Schuman v. Schuman, 265 Neb. 459, 658
N.W.2d 30 (2003); Logan v. Logan, 22 Neb. Ct. App. 667, 859
N.W.2d 886 (2015). We therefore reject this argument.
(b) AEA’s Future Profits
and Stock
Greg makes several additional arguments regarding the dis-
trict court’s treatment of AEA. In summary, he claims the
court should not have divided AEA’s future profits between
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SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
the parties and should not have awarded Laura 50 percent of
AEA’s issued and outstanding stock.
Greg owns 100 percent of the 1,000 outstanding shares of
AEA capital stock. AEA’s articles of incorporation specify that
AEA has the authority to issue 10,000 shares of capital stock.
In the amended decree, the district court awarded Laura 50
percent of all issued and outstanding capital stock in AEA, or
500 shares. In addition, the amended decree required that Greg
and/or SEI pay all of AEA’s future research and development
costs and that upon AEA’s making a profit, Greg is entitled to
recover all expenses he paid personally or through SEI as of
the date of the amended decree forward, and any profits after
expenses have been repaid are to be divided equally between
Greg and Laura.
[4] Greg first argues that AEA’s future profits should not
be considered marital property because they were not earned
during the marriage and are too speculative to quantify. As a
general rule, all property accumulated and acquired by either
spouse during the marriage is part of the marital estate, unless
it falls within an exception to the general rule. Heald v. Heald,
259 Neb. 604, 611 N.W.2d 598 (2000).
The Nebraska Supreme Court has previously addressed
whether a trial court erred when it treated future compensa-
tion due to a husband as marital property. In Bergmeier v.
Bergmeier, 296 Neb. 440, 894 N.W.2d 266 (2017), the husband
began working for an insurance company during the marriage,
and according to an agreement between him and the company,
upon termination of the agreement and certain contingencies
being met, he was entitled to two forms of termination pay-
ments. The trial court treated both types of payments as marital
assets and divided them equally between the parties.
On appeal, the husband argued that the payments should
have been classified as nonmarital property, because at the
time the decree was entered, it was uncertain whether he
would actually receive the payments and, if so, what the value
of the payments would be. The Supreme Court in Bergmeier
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SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
noted that although the husband did not have an indefeasible
right to the payments, he did have an accrued contractual right
subject only to minimal qualifying conditions, recognizing
that the husband may choose to squander the contractual right
or forfeit it by violating certain provisions in the contract.
However, the Supreme Court determined that these factors
should not affect the payments’ status as marital property. The
Supreme Court was persuaded that the contract, which was
acquired during the marriage, had a substantial value and was
properly considered as part of the marital estate.
The Supreme Court in Bergmeier observed that other juris-
dictions have determined that termination payments under the
same contract have no value for division as marital property,
because the actual value of the contract depends on the activi-
ties of the husband that occur after the marriage has been dis-
solved. But the Supreme Court decided that this fact did not
lead to the conclusion that the wife should be denied any
interest whatsoever in a substantial asset which was acquired
during the marriage. Accordingly, the Supreme Court held that
the trial court did not err when it determined that the payments
were marital property. The Supreme Court did, however, con-
clude that the trial court abused its discretion when it assigned
a specific value to the payments and awarded the wife 50 per-
cent of that value.
Likewise, in the present case, although it is not certain that
AEA will earn a profit in the future, and whether it does so is
within Greg’s control, these factors do not require the conclu-
sion that any future profits are not marital property. To the
contrary, AEA was formed during the marriage and more than
$7.5 million in marital assets have been invested into the com-
pany. According to Laura’s expert, AEA has no current value
independent of SEI, which the district court properly treated as
a marital asset.
In Bergmeier v. Bergmeier, 296 Neb. 440, 894 N.W.2d 266
(2017), the Supreme Court found error in assigning a value to
the termination payments because, inter alia, the value chosen
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SCHNACKEL v. SCHNACKEL
Cite as 27 Neb. Ct. App. 789
was stale, it was not warranted by the facts, and the actual
value depended on factors that had not yet occurred, such as
the date of the husband’s termination and total sales for the
12 months immediately preceding his termination. The court
also determined that it was an abuse of discretion to award
the wife 50 percent of the termination payments because pay-
ments to her are dependent on the amount of time the husband
will have been in a working relationship with the insurance
company both during and after the marriage when the husband
starts receiving the termination payments. As to how to cal-
culate what percentage of the termination payments the wife
should receive, the Supreme Court looked to divorce cases
involving pensions, noting that the marital estate includes only
the portion of the pension which is earned during the marriage
and that contributions to pensions before marriage or after dis-
solution are not assets of the marital estate.
Here, the district court did not assign a value to the future
profits. And we find Bergmeier distinguishable in this respect,
because in the present case, AEA has not yet earned a profit,
but the parties have invested significant marital assets into the
company. In addition, Greg is permitted to recover any addi-
tional research and development costs invested by SEI or Greg
before dividing future profits with Laura. Based on the record
before us, we conclude that the district court did not abuse its
discretion in awarding Laura half of the corporation’s future
profits after Greg’s recoupment of future research and develop-
ment costs.
We also find no abuse of discretion in awarding Laura 50
percent of the issued and outstanding shares of AEA. The
record does not include a copy of AEA’s bylaws, so it is
unclear what rights those 500 shares give to Laura or whether
Greg has the ability to issue additional shares to himself in
order to retain the majority ownership of AEA. But under the
Nebraska Model Business Corporation Act, Neb. Rev. Stat.
§ 21-201 et seq. (Cum. Supp. 2018), ownership of the shares
grants certain rights to Laura, such as the right to receive
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the corporation’s annual financial documents (§ 21-2,227),
the right to inspect and copy records of the corporation
(§ 21-2,222), and the right to commence a derivative action
on behalf of the corporation (§ 21-276). Given that Laura is
entitled to a portion of AEA’s future profits, she may want or
need to exercise these rights in the future.
Greg argues that awarding Laura stock in AEA is contrary
to established Nebraska law that disfavors awards of jointly
owned property. While such practice may be disfavored, it
is not prohibited. See, e.g., Gangwish v. Gangwish, 267 Neb.
901, 678 N.W.2d 503 (2004) (remanding with directions to
award wife seven shares of stock in family corporation owned
by former in-laws with remainder awarded to husband). For
the reasons stated above, we find no abuse of discretion in the
court’s decision to award Laura 500 shares of AEA.
(c) Marvel Schnackel’s Transfers
Greg claims that the district court erred in its treatment of
money given to SEI by his mother, Marvel Schnackel. During
the marriage, Marvel transferred significant amounts of money
to SEI. The transfers were made by Greg, using his power of
attorney over Marvel’s personal and financial affairs. A revolv-
ing promissory note between SEI and Marvel for $1 million
was received into evidence at trial. The note was executed after
the initial transfer occurred, was backdated, and did not include
Marvel’s signature.
According to Stadler, the parties’ accountant told him that
the funds from Marvel were classified as loans to SEI for tax
purposes, and thus, Stadler treated the money extended by
Marvel as a contribution to capital. Based on Stadler’s clas-
sification, the district court also treated Marvel’s extension of
money as a contribution of capital to SEI rather than as a loan
from Marvel to SEI.
Greg argues that the court had the option of classifying the
money as either a loan to SEI or a gift to Greg personally. We
find no abuse of discretion in the treatment of these funds.
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In Heald v. Heald, 259 Neb. 604, 611 N.W.2d 598 (2000),
the husband argued that a share of stock in his family corpo-
ration that he received during the marriage was a gift from
his parents, rather than a purchase made with marital funds.
The husband testified at trial that he and his father negotiated
an agreement in which he became the owner of one share
of the corporation’s stock, and a letter from an attorney was
received into evidence wherein the attorney opined that the
stock should be purchased by the husband. A stock purchase
agreement received into evidence referred to the husband
as a buyer and the husband’s father as a seller. Despite this
evidence, the husband and his mother testified at trial that
the stock was a gift. The trial court found that the stock was
marital property.
The husband appealed in Heald, arguing that the trial court
erred in failing to treat the stock as a gift, thereby excluding it
from the marital estate. The Supreme Court disagreed, noting
that although both the husband and his mother testified that
the stock was a gift, the stock purchase agreement, the attor-
ney letter, and the wife’s testimony suggested otherwise. Upon
its de novo review, the Supreme Court considered and gave
weight to the fact that the trial court heard and observed the
witnesses and accepted the wife’s testimony and the related
inferences from the evidence. The court therefore concluded
that the trial court did not err in including the stock in the
marital estate.
[5,6] Likewise, in the instant case, there was evidence from
which the district court could have concluded that the funds
from Marvel were loans to SEI which were intended to be
repaid, but there was also evidence which would support a
contrary conclusion. SEI is a subchapter S corporation owned
100 percent by Greg. Subchapter S is a tax status designed to
tax corporate income on a pass-through basis to shareholders
of a small business corporation. Gase v. Gase, 266 Neb. 975,
671 N.W.2d 223 (2003). Since a subchapter S corporation is
not taxed on its earnings, the various income, expense, loss,
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credit, and other tax items pass through and are taxable to
or deductible by shareholders in a manner analogous to that
which is applicable to partners. Id. Greg testified that the funds
received from Marvel were loans and that interest on the loans
was accrued and owing. As the district court noted, Greg used
his power of attorney over Marvel to transfer the money and
later issued a backdated promissory note.
The accountant who prepares the parties’ tax returns told
Stadler that the funds from Marvel were treated as loans for
tax purposes to avoid treating them as capital gain income
subject to taxes. The fact that the funds were treated as loans
for tax purposes does not mandate similar treatment here.
Stadler explained that he treated the transaction as Marvel’s
giving money to Greg, as the sole owner of a subchapter
S corporation, who then transferred the money into SEI.
Stadler noted that in several instances, SEI’s general ledger
depicts transfers of the amounts purportedly from Marvel
as coming from Greg directly. In conducting our de novo
review, we give weight to the district court’s consideration
of the conflicting evidence and conclude that the court did
not abuse its discretion in its treatment of the funds received
from Marvel.
(d) Dale’s Transfers
[7,8] Greg also challenges the district court’s failure to
classify two transfers received from Dale as gifts. It is well-
established that as a general rule, all property accumulated and
acquired by either spouse during the marriage is part of the
marital estate, unless it falls within an exception to the general
rule. See, e.g., Heald v. Heald, 259 Neb. 604, 611 N.W.2d
598 (2000). With some exceptions, the marital estate does not
include property acquired by one of the parties through gift or
inheritance. Id. The burden of proof to show that property is
nonmarital remains with the person making the claim. Id. Thus,
the burden was on Greg here to prove that the transfers from
Dale were gifts.
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Greg asserts that funds totaling $100,000 received from
Dale in 2009 should have been considered as gifts to him.
The district court observed that Greg transferred $100,000 to
SEI in three separate transfers in 2009, from the proceeds of
funds from Dale. The evidence indicates that Greg received a
total of $140,000 from Dale and Marvel in 2009 and that he
transferred $100,000 of the funds into SEI. Greg testified that
the remaining $40,000 was used to pay marital expenses and
that although his parents loaned him money, they forgave the
loans. The district court, noting the testimony from the parties’
accountant that the $100,000 was never withdrawn from SEI
and was presently part of SEI’s existing capital, decided that,
consistent with its treatment of funds from Marvel, it would
treat the $100,000 as contributions of capital to SEI. As in
our analysis above concerning the transfers from Marvel, we
likewise find no abuse of discretion in the district court’s deci-
sion to treat the funds from Dale as capital contributions rather
than gifts.
Greg also argues that the 2000 transaction in which he
acquired the remaining 50-percent interest in what is now
known as SEI should have been classified as a gift from Dale.
Greg testified at trial that effective January 1, 2000, he pur-
chased the remaining 50-percent interest in the company now
known as SEI from Dale. According to Greg, he and Dale
agreed that Greg would pay Dale $106,750 and sign a promis-
sory note, but the note was never signed and Greg never paid.
Greg said that he and Dale “arranged a deal whereby [Dale]
would effectively sell the company to [Greg] at $106,750
and then forgive that loan, so effecting a transfer of the firm
without tax implications.” Despite this agreement, accord-
ing to Greg, no promissory note was prepared and he never
paid the purchase price; instead, part of the arrangement was
that in order for Dale to “gift” the company to Greg, Dale
would forgive the purported debt. Greg acknowledged that
there was nothing in writing to indicate that the $106,750
debt was forgiven, and the $106,750 figure was not recorded
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in any government filing, state or federal. Greg said that he
would not know whether Dale paid income taxes on the for-
given debt.
In the amended decree, the district court observed that Greg
agreed to sign a promissory note to pay Dale for the interest,
but that a note was never executed and Greg never paid Dale
for the remaining 50 percent of the partnership. The court
noted that there was no evidence to corroborate a finding that
the interest was a gift from Dale to Greg; rather, the court
found that Dale and Greg had a deal based upon consideration.
The court therefore found that Greg failed to prove that the
interest he received in SEI was a gift, and as a result, it was
treated as marital property. Given the conflicting evidence
presented as to this issue, we cannot find that the district court
abused its discretion in concluding that Greg failed to meet
his burden of proving that the interest he acquired in SEI was
a gift.
(e) Liquidation of Property
Greg next asserts that the district court erred in ordering
him to sell his classic car collection and the Florida condo-
miniums. He argues that it is unclear that liquidation was fair,
reasonable, and necessary to ensure an equitable division of
marital property.
In the amended decree, the district court noted that accord-
ing to Greg and the parties’ accountant, Greg and Laura will
potentially have additional tax liabilities due in the future,
which the court ordered to be paid equally between the par-
ties out of an escrow account they used to pay marital obliga-
tions during the pendency of the dissolution proceedings. For
example, the parties potentially owe an additional $423,517 in
federal taxes and $84,703 in interest as a result of an Internal
Revenue Service audit, which the parties have appealed, and
the appeal remains pending. Depending on the results of
the appeal of the audit, the parties may owe approximately
$145,000 in additional taxes for 2015 and $75,000 for 2016.
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Greg and Laura owe $363,800 in capital gain taxes due to
selling the New York condominium in 2017. Additional taxes
resulting from the sale of certain stock will be due in 2018 in
an amount of at least $655,815. And finally, the parties will
potentially owe capital gain taxes in the amount of $2.4 mil-
lion related to a separate stock that will be liquidated.
The district court specifically ordered that the proceeds
from the sale of the classic car collection and the Florida con-
dominiums be used to pay off the parties’ joint tax liabilities
and debts. As of January 30, 2018, the escrow account had a
balance of $292.63. Given the extent of the potential tax obli-
gations compared to the balance of the escrow account, we
find no abuse of discretion in requiring Greg to sell property in
order to satisfy marital debts.
(f) Treatment of $605,000 Loan
In his final argument regarding the division of property,
Greg claims that the district court double counted a $605,000
payable by SEI. He notes that the court considered the pay-
able to be a marital asset and divided it equally between the
parties but failed to subtract its value from SEI’s total busi-
ness valuation.
In late 2017 and early 2018, SEI borrowed a total of
$605,000 from the parties’ escrow account, and during that
same time period, Greg borrowed money from SEI. The dis-
trict court recognized that Stadler’s valuation of SEI was made
as of June 30, 2017, and that the $605,000 in loans were made
after that date. Thus, the business valuation of SEI does not
take into consideration the $605,000, and we therefore dis-
agree with Greg that this amount was double counted in the
marital estate.
2. Dissipation of Marital Assets
(a) Date Marriage Was Irretrievably Broken
Greg first asserts that the district court abused its dis-
cretion in determining that the marriage was undergoing an
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irretrievable breakdown for dissipation purposes in September
2013. We disagree.
[9] Dissipation of marital assets is generally defined as one
spouse’s use of marital property for a selfish purpose unrelated
to the marriage at the time when the marriage is undergoing
an irretrievable breakdown. Harris v. Harris, 261 Neb. 75,
621 N.W.2d 491 (2001). Although Nebraska case law does not
precisely define when a marriage is undergoing an irretriev-
able breakdown, this court has previously declined to conclude
that such breakdown can be found only when the parties are
estranged or have separated. See Malin v. Loynachan, 15 Neb.
App. 706, 736 N.W.2d 390 (2007).
In considering this issue, an Illinois appellate court deter-
mined that dissipation should be calculated from when the
parties’ marriage begins to undergo an irreconcilable break-
down, not from a date after which it is irreconcilably broken,
because dissipation occurs at a time that the marriage is
undergoing an irreconcilable breakdown. See In re Marriage
of Holthaus, 387 Ill. App. 3d 367, 899 N.E.2d 355, 326 Ill.
Dec. 138 (2008). Thus, dissipation can ordinarily be found
based on conduct that occurred prior to the parties’ separation
or the filing of a dissolution petition. See, In re Marriage of
Harding, 189 Ill. App. 3d 663, 545 N.E.2d 459, 136 Ill. Dec.
935 (1989); In re Marriage of Rai, 189 Ill. App. 3d 559, 545
N.E.2d 446, 136 Ill. Dec. 922 (1989). Although the Illinois
court used the term “irreconcilable breakdown” rather than
the term “irretrievable breakdown,” it has noted more recently
that the terms have been used interchangeably and that any
attempt to distinguish them in a dissipation context is a dis-
tinction without a difference. See In re Marriage of Romano,
2012 IL App (2d) 091339, 968 N.E.2d 115, 360 Ill. Dec.
36 (2012).
Thus, here, the question for the district court was when
Greg and Laura’s marriage began to undergo an irretrievable
breakdown. Greg urges us to find that the facts support a dif-
ferent, much later, date than that used by the district court.
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He admits that his affair with Julia began in September 2013,
but emphasizes that he took extensive steps at that time to
conceal it from Laura and argues that the marriage was not
irretrievably broken until he left the marital home in August
2016. We initially note that this position is inconsistent with
the position Greg took at trial. There, he argued that as a mat-
ter of law, the date that the marriage was irretrievably broken
was July 1, 2015, the time when marriage counseling transi-
tioned to divorce counseling.
Regardless, based on the record before us, we find no
abuse of discretion in the district court’s conclusion that the
marriage began undergoing an irretrievable breakdown in
September 2013. At that time, Greg began a sexual affair,
which he intended to maintain despite the fact that he was
married. Greg expressed this intention when, during one of
the early sessions of marriage counseling, he indicated his
unwillingness to end the affair. At trial, Greg testified that
he did not file for divorce from Laura, because he was afraid
that Julia would leave him, and that he decided he wanted to
continue the marriage and have an affair with Julia. In other
words, Greg admitted that he “wanted [to have his] cake”
and “eat it, too.” He also admitted that he told Julia that he
wanted to marry her in September 2013. At that same time,
he opened the 9779 account in order to hide purchases related
to Julia from Laura and began spending extravagant amounts
of money on Julia, including clothing; jewelry; travel; educa-
tion, medical, and dental expenses; and her separate credit
card payments.
The fact that Greg was able to hide the affair from Laura
until April 2015 is of no consequence. According to one trea-
tise, “expenditures [on] paramours are almost always treated
as dissipation.” 2 Brett R. Turner, Equitable Distribution of
Property § 6:106 at 831 (4th ed. 2019). The evidence estab-
lishes that Laura was not willing to stay in the marriage
if Greg continued to see Julia, and Greg made clear that
was his intent. Although the parties briefly attended marriage
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counseling, once Greg iterated his intention of maintaining
his relationship with Julia, counseling transitioned to divorce
counseling and the parties began trying to reach an agreement
on how to divide their marital property while maintaining the
appearance of the marriage for the sake of their children. The
situation was not one of a casual affair without benefit of fore-
thought; rather, Greg’s actions and intentions were inconsist­
ent with a commitment to his marriage early on in the affair.
Accordingly, we find that the district court did not abuse its
discretion in concluding that the marriage began undergoing
an irretrievable breakdown in September 2013.
(b) Improper Theory
Greg asserts that the district court relied upon an improper
standard of “‘abandonment of the marriage’” as opposed to the
proper standard of “‘irretrievable breakdown of the marriage.’”
Brief for appellant at 44 (emphasis omitted). We do not agree
that the court used an improper standard. The district court
specifically recognized that “[i]n determining the date after
which expenses relating to Julia are to be classified as dissi-
pated marital assets for purposes unrelated to the marriage, the
[c]ourt must determine when the marriage was irretrievably
broken.” The court also relied on appropriate Nebraska case
law discussing dissipation of marital assets, including Harris
v. Harris, 261 Neb. 75, 621 N.W.2d 491 (2001), and Malin
v. Loynachan, 15 Neb. Ct. App. 706, 736 N.W.2d 390 (2007), as
well as Reed v. Reed, 277 Neb. 391, 763 N.W.2d 686 (2009),
which iterate the proper standard. As such, we disagree that
the court used an improper standard by which to determine
dissipation of marital assets.
(c) Hearsay Testimony
[10] Greg argues that the district court erred in overruling
his hearsay objection regarding a conversation he had with
his older child in August 2013. This argument was not spe-
cifically assigned as error, however, and we therefore decline
to address it. To be considered by an appellate court, an
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alleged error must be both specifically assigned and specifi-
cally argued in the brief of the party asserting the error. Chafin
v. Wisconsin Province Society of Jesus, 301 Neb. 94, 917
N.W.2d 821 (2018).
Even if we were to consider this argument, assuming
without deciding that the district court erred in overruling
Greg’s hearsay objection, any reliance by the court on the
conversation in its dissipation analysis was harmless error.
As discussed above, the district court’s determination that
the marriage was undergoing an irretrievable breakdown in
September 2013 was not an abuse of discretion. This is true
without considering Greg’s conversation with his older child.
As detailed above, Greg began a sexual affair with Julia in
September 2013, proposed to her, and began spending signifi-
cant amounts of money on her. As such, any error related to
the court’s reliance upon what Greg argues was hearsay testi-
mony was harmless.
(d) Calculation of Dissipated Assets
Greg’s final argument with respect to dissipation of marital
assets is that the district court’s calculations are incorrect and
unsupported by the evidence. He claims that the court’s dissi-
pation analysis failed to give him credit for legitimate business
and marital expenditures and that instead, the court adopted
Laura’s evidence as to dissipation rather than his evidence,
which he claims was more credible.
Although no published Nebraska cases specifically articu-
late the burden of proof with regard to dissipation of marital
assets, our case law appears to place the initial burden on
the party alleging dissipation, and after sufficient evidence is
produced, the burden shifts to the dissipating spouse to prove
that the funds were spent for marital purposes. See, Harris v.
Harris, supra; Brunges v. Brunges, 260 Neb. 660, 619 N.W.2d
456 (2000). This is consistent with the standard set forth in
a legal treatise, which provides that a party alleging dissipa-
tion of marital property has the initial burden of production
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and persuasion. 27C C.J.S. Divorce § 998 (2016). See, also,
2 Brett R. Turner, Equitable Distribution of Property § 6:105
(4th ed. 2019). The waste and dissipation of marital assets
must be established by a preponderance of the evidence. 27C
C.J.S., supra. After a party establishes a prima facie case
that monies have been dissipated, the burden shifts to the
party who spent the money to produce evidence sufficient to
show that the expenditures were appropriate. Id. The spouse
charged with dissipation bears the burden of establishing by
clear and convincing evidence how the funds were spent. Id.
Vague and general testimony that marital assets were used for
marital expenses is inadequate to meet the spouse’s burden
to show by clear and specific evidence how the funds were
spent, and the trial court is required to find dissipation when
the spouse charged with dissipation fails to meet that bur-
den. Id.
Following this standard in the present case, the district court
concluded that Laura proved by a preponderance of the evi-
dence Greg dissipated marital assets at a time when the mar-
riage was undergoing an irretrievable breakdown and that Greg
failed to establish by clear and convincing evidence the miss-
ing funds were spent on a purpose related to the marriage. Both
parties offered into evidence detailed exhibits outlining Greg’s
spending from the 9779 account. The district court relied on
Laura’s exhibits in the amended decree when it detailed its
findings regarding dissipation. On appeal, Greg argues that his
evidence was more credible than Laura’s.
[11] In our de novo review of a judgment in marriage dis-
solution proceedings, when the evidence is in conflict, we
consider, and 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. Burcham v. Burcham, 24 Neb.
App. 323, 886 N.W.2d 536 (2016). Here, we give weight to
the fact that the district court observed the testimony of both
Greg and Laura and considered the evidence presented by
each party, finding Laura’s to be more credible than Greg’s.
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The court had before it bank records and summaries of the
expenditures compiled by each party, but even Greg could
not recall the exact purpose of each expenditure from the
9779 account.
The district court determined that Greg dissipated $3.5 mil-
lion in marital assets and that Laura dissipated $146,000 in
marital assets, for a net total amount of dissipated assets
of $3,354,000. Thus, each party’s marital portion of dissi-
pated assets equaled $1,677,000. The court ordered that
$1,413,208.30 in Greg’s 401K account be transferred to Laura
as payment for Laura’s marital portion of the dissipated assets.
And in order to offset any potential “accounting gray areas” in
which funds may have been spent for a marital purpose, the
court declined to order an equalization payment from Greg to
Laura of the remaining $263,791.70. Given the foregoing, we
find no error in the district court’s reliance on Laura’s evidence
rather than Greg’s.
Greg also asserts that the district court erred in its calcula-
tion of the amount of cash he provided to Julia, arguing that
the evidence shows he provided her with amounts ranging
from $20 to $4,000 per month, rather than the $6,000 per
month figure calculated by the district court. This argument is
consistent with Greg’s testimony at trial. However, Laura testi-
fied that Greg told her that when he would withdraw $9,000
in cash per month, he would give $6,000 to Julia and keep the
remaining $3,000 in cash for himself. Again, we give weight to
the district court’s assessment of the credibility of the evidence
and find no error in its reliance on Laura’s testimony rather
than Greg’s.
Greg additionally claims that his exhibit detailing the
expend­itures from the 9779 account includes some transac-
tions which he was unable to identify and that therefore, Laura
failed to meet her burden of proving that those expenditures
were for a nonmarital purpose. Greg, himself, admitted that he
opened the 9779 account without Laura’s knowledge in order
to hide purchases from her and that a significant portion of
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the purchases related to his affair with Julia. Thus, the district
court did not abuse its discretion in finding that this evidence
was sufficient to meet Laura’s burden of proving by a pre-
ponderance of the evidence that the unidentified expenditures
were also for Julia.
Similarly, Greg points to a total of $564,510.62 depicted
on one of his exhibits which he identified at trial as not
related to dissipation. And he also correctly observes that
the district court miscalculated the amount of total cash
dissipated; the total when multiplying $6,000 per month
by 46 months equals $276,000, rather than the $296,000
total the district court calculated. Using these adjusted num-
bers, Greg calculates the amount of total dissipated assets as
$2,489,661.57, rather than the $3.5 million calculated by the
district court.
[12,13] When marital assets are dissipated by a spouse
for purposes unrelated to the marriage, the remedy is to
include the dissipated assets in the marital estate in dissolu-
tion actions. See Reed v. Reed, 277 Neb. 391, 763 N.W.2d
686 (2009). As a general rule, a spouse should be awarded
one-third to one-half of the marital estate, the polestar being
fairness and reasonableness as determined by the facts of each
case. Osantowski v. Osantowski, 298 Neb. 339, 904 N.W.2d
251 (2017).
The district court determined that the total net amount of
dissipated marital assets was $3,354,000. Even if we accept
Greg’s adjusted total of dissipated assets of $2,489,661.57
and subtract the $146,000 for Laura’s dissipation, we are
left with a net total of $2,343,661.57 in dissipated assets.
Laura’s award of the $1,413,208.30 in Greg’s 401K represents
approximately 60 percent of the total dissipated assets, which
remains within the general rule that each spouse receive
approximately one-third to one-half of the marital estate.
For these reasons, we conclude that the district court did not
abuse its discretion in its calculation of the dissipated mari-
tal assets.
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3. Alimony
[14] On appeal, Greg challenges certain aspects of the dis-
trict court’s alimony award. In dividing property and consid-
ering alimony upon a dissolution of marriage, a court should
consider four factors: (1) the circumstances of the parties, (2)
the duration of the marriage, (3) the history of contributions
to the marriage, and (4) the ability of the supported party to
engage in gainful employment without interfering with the
interests of any minor children in the custody of each party.
Wiedel v. Wiedel, 300 Neb. 13, 911 N.W.2d 582 (2018). In
addition, a court should consider the income and earning
capacity of each party and the general equities of the situa-
tion. Id.
[15,16] The purpose of alimony is to provide for the con-
tinued maintenance or support of one party by the other when
the relative economic circumstances make it appropriate. Id.
In reviewing an alimony award, an appellate court does not
determine whether it would have awarded the same amount
of alimony as did the trial court, but whether the trial court’s
award is untenable such as to deprive a party of a substantial
right or just result. Id. The ultimate criterion is one of reason-
ableness. Id. An appellate court is not inclined to disturb the
trial court’s award of alimony unless it is patently unfair on
the record. Id.
(a) Calculation of Income
and Ability to Pay
Greg first argues that the district court abused its discretion
in its alimony award by improperly calculating his income and
ability to pay. He claims that based on these erroneous calcula-
tions, the alimony award was in excess of his ability to pay and
drives his net income below the poverty threshold set forth in
the Nebraska Child Support Guidelines.
[17] In a case involving minor children, the amount of
alimony must not force the obligor’s net income below the
poverty line unless the court specifically finds that such an
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award is warranted. See Gress v. Gress, 274 Neb. 686, 743
N.W.2d 67 (2007). The Nebraska Child Support Guidelines
do not apply, however, where the parties do not have any
minor children to support. See Binder v. Binder, 291 Neb. 255,
864 N.W.2d 689 (2015). The child support guidelines require
courts to make a detailed calculation of the parties’ income
and expenses, but in Binder, the Supreme Court stated that it
was wary of grafting the guidelines’ method of calculating net
income onto cases involving only alimony and reiterated that
there is no mathematical formula by which alimony awards
can be precisely determined. See id.
In the present case, although the district court calculated and
ordered child support for the parties’ younger child, that child
has now reached the age of majority and Greg is no longer
required to pay child support. Thus, this case involves only the
payment of alimony, and there is no specific method by which
to calculate the parties’ incomes for alimony purposes.
The district court calculated Greg’s monthly income
by using an annual salary of $174,874, as reported on his
recent tax return, and dividing that into monthly income of
$14,572.83. The court also added $28,000 per month, which is
the amount of monthly rent for the New York condominium,
because the parties’ accountant testified that he considered that
amount to be income attributable to Greg, for a total income
of $42,572.83 per month. Greg argues that the district court’s
inclusion of the New York condominium rent was erroneous
because the condominium had been sold by the time trial was
held and his monthly income is limited to the $14,572 he earns
from SEI.
When looking at the parties’ financial picture as a whole,
we find no abuse of discretion in the district court’s con-
clusion that Greg had the ability to pay $7,500 per month
in alimony. It is undisputed that Greg generally earns an
annual salary of approximately $200,000 per year from SEI.
According to the parties’ tax returns, their adjusted gross
income in 2013 was $2,318,772; in 2014, it was $1,246,009;
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in 2015, it was $11,360,171; and in 2016, it was $1,961,952.
Laura stopped earning income when the parties’ younger child
was born, and thus, these earnings are all attributable to Greg
and the parties’ businesses and investments. Although Greg
correctly points out that the New York condominium had been
sold before trial began, the parties’ accountant agreed that the
amount of rent should be considered part of Greg’s income.
And it is clear from the record that Greg has additional funds
at his disposal beyond his salary from SEI, even after the par-
ties separated and Greg was paying temporary alimony and
child support to Laura.
For example, in September 2017, Greg made a $50,000
payment on his 9779 account, which both he and Julia con-
tinued to use for personal expenditures throughout 2016 and
2017. He also made a $50,000 payment on the account in
December 2017. For each month from January through August
2017, Greg made a payment toward Julia’s separate credit
card for amounts between $3,750 and $7,500 per month.
According to Greg’s own evidence, he spent $127,752.83 on
Julia between August 28, 2016, and October 5, 2017. And on
a personal financial statement Greg completed in April 2017,
he indicated that he had various credit cards that he paid off
monthly at a total of $78,000. We therefore reject Greg’s argu-
ment that the amount of alimony awarded exceeded his ability
to pay.
(b) Excessive Alimony
Greg also claims that the alimony awarded in this case
was excessive when considering the property awarded to
Laura and ignores the primary purpose of an alimony award
in Nebraska—to provide for an economically disadvantaged
spouse for enough time to become self-sufficient. We find no
abuse of discretion in the alimony award.
[18] The statutory criteria for dividing property and award-
ing alimony overlap, but the two serve different purposes and
courts should consider them separately. Brozek v. Brozek, 292
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Neb. 681, 874 N.W.2d 17 (2016). The purpose of a property
division is to distribute the marital assets equitably between
the parties. Id. The purpose of alimony is to provide for the
continued maintenance or support of one party by the other
when the relative economic circumstances and the other cri-
teria enumerated in § 42-365 make it appropriate. Brozek v.
Brozek, supra. We therefore consider the alimony award sepa-
rate from the marital property awarded to each party.
When considering the alimony factors set forth above, we
observe that the parties were married for more than 30 years
and raised two children together. After their second child was
born, Laura forewent her career and stayed home to raise the
children. She later worked for SEI during the marriage, but
was not paid for her work. Laura currently has an active dieti-
cian license, and the court found that her earning capacity was
approximately $40,000 per year.
[19] Alimony should not be used to equalize the incomes
of the parties or punish one of the parties, but disparity in
income or potential income may partially justify an award
of alimony. See Marcovitz v. Rogers, 267 Neb. 456, 675
N.W.2d 132 (2004). In Kelly v. Kelly, 246 Neb. 55, 65, 516
N.W.2d 612, 618 (1994), the Supreme Court addressed an ali-
mony award where there was a disparity between the parties’
incomes, stating:
It is important to recognize that although the wife is
fortunate enough to be able to reenter her career, her
income potential is approximately a third of that of the
husband. The district court’s alimony award tends to
even out that disparity and provides the wife with the
means to partially recapture the standard of living that
she and the husband jointly put together during their 19
years of marriage. Under the circumstances, the district
court’s award cannot be said to have constituted an abuse
of discretion.
Likewise, here, although Laura has the potential to ­reenter
the workforce and earn a living, her earning potential is
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significantly less than Greg’s. In fact, according to the district
court’s income calculations, Greg earns more per month than
Laura could potentially earn in 1 year. Moreover, the parties
had a long-term marriage, during which they enjoyed a certain
standard of living. As in Kelly v. Kelly, supra, the alimony
awarded to Laura will allow her to partially recapture that
standard of living, while assisting her in maintaining mari-
tal property awarded to her such as the marital home. When
considering the factors related to an alimony award, we con-
clude that the district court’s alimony award was not an abuse
of discretion.
(c) Alimony Security
Greg contends that the district court erred in awarding Laura
a security interest in Greg’s real estate and stock in SEI and
AEA to provide security for the monetary obligations he owes
to Laura. We conclude that the district court did not abuse its
discretion in this respect.
[20,21] A court has discretion to require reasonable security
for an obligor’s current or delinquent support obligations when
compelling circumstances require it. Davis v. Davis, 275 Neb.
944, 750 N.W.2d 696 (2008). An order requiring security to
be given is a somewhat extraordinary and drastic remedy, and
therefore, reasonable security for payment of alimony, child
support, or monetary judgments should only be invoked when
compelling circumstances require it. See Lacey v. Lacey, 215
Neb. 162, 337 N.W.2d 740 (1983).
In Brockman v. Brockman, 264 Neb. 106, 646 N.W.2d 594
(2002), the Supreme Court considered whether the trial court
abused its discretion in ordering a husband to set aside part
of a workers’ compensation award as security for his child
support obligation. The evidence presented at the dissolution
trial reflected that the husband had ceased employment after
settling a workers’ compensation case and had spent approxi-
mately $24,000 within 1 month of receiving around $62,000
in settlement proceeds. Thus, given the possibility that the
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husband would exhaust the settlement proceeds and then be
unwilling or unable to pay his child support, the Supreme
Court concluded that the trial court did not abuse its discretion
in ordering the husband to set aside a portion of the settlement
proceeds as security for his child support obligation.
Similarly, the record in this case reflects that although Greg
has substantial assets at his disposal, he continued spending
money at a high rate during the pendency of the dissolu-
tion proceedings, including on Julia and other discretionary
expenses. As noted above, he conceded that he spent more than
$127,000 solely on Julia between August 2016 and October
2017. Given that Greg was ordered to pay to Laura $7,500 per
month in alimony for 120 months and an equalization payment
of $8,670.52 per month for 192 months, the record supports
a possibility that Greg could become unable to satisfy these
obligations in the future. Accordingly, the district court did not
abuse its discretion in awarding Laura a security interest to
secure Greg’s obligations to her.
4. Postdecree Order
Greg assigns that the district court’s postdecree order is
unauthorized by statute and constitutes an abuse of discre-
tion. We find that we do not have jurisdiction over this order,
because it was entered after the notice of appeal was filed.
Greg filed his notice of appeal on April 26, 2018, appealing
from the “Amended Decree of Dissolution of Marriage entered
March 30, 2018.” On May 1, Laura filed a motion for sup-
port pending appeal pursuant to Neb. Rev. Stat. § 42-351(2)
(Reissue 2016). She sought spousal support, child support,
and either the monthly mortgage payment and real estate
taxes on the marital home or the monthly equalization pay-
ment as ordered by the court in its amended decree. Following
a hearing, the district court entered an order granting Laura
spousal support pending appeal in the amount of $7,500 per
month, child support in the amount of $1,998 per month until
the minor child reached the age of majority, and a monthly
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payment of $8,670.52 as ordered in the amended decree. No
notice of appeal was filed following this order.
Section 42-351(2) provides that the trial court shall retain
jurisdiction of domestic relations actions during an appeal
for purposes of entering orders “regarding support, custody,
parenting time, visitation, or other access, orders shown to
be necessary to allow the use of property or to prevent the
irreparable harm to or loss of property during the pendency of
such appeal, or other appropriate orders in aid of the appeal
process.” We recognize that the Supreme Court has reviewed
postdecree orders on appeal. See, e.g., Brozek v. Brozek, 292
Neb. 681, 874 N.W.2d 17 (2016); Jessen v. Jessen, 259 Neb.
644, 611 N.W.2d 834 (2000); Olson v. Olson, 195 Neb. 8, 236
N.W.2d 618 (1975). However, in Jessen v. Jessen, supra, and
Olson v. Olson, supra, the postdecree orders were filed prior
to the notice of appeal being filed. And in Brozek v. Brozek,
supra, although the postdecree order was entered after the
notice of appeal was filed, the appellant filed a separate notice
of appeal after the postdecree order was entered and sought
consolidation of the two appeals.
Neb. Rev. Stat. § 25-1912 (Supp. 2017) requires that a
notice of appeal be filed within 30 days of the “judgment,
decree, or final order.” Section 25-1912(2) provides for rela-
tion forward of a notice of appeal or docket fee only when it
is filed or deposited after the announcement of a decision or
final order, but before entry of the judgment. Here, there was
no announcement of a decision or final order on the postdecree
motion prior to the filing of the notice of appeal; therefore, the
original notice of appeal does not encompass the postdecree
order. Because Greg has not properly appealed from this post-
decree order, we lack jurisdiction to address an assignment of
error relating to it.
5. Appreciation of Laura’s Inherited Funds
On cross-appeal, Laura asserts that the district court abused
its discretion in treating the appreciation of her nonmarital
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stock as a marital asset. She argues that there were no active
efforts taken in managing the stock, but, rather, the apprecia-
tion was passive because it was due to market forces and not
any substantial effort from her or Greg.
Greg claims that Laura failed to properly cross-appeal and
that we are therefore limited to a review for plain error. Greg
correctly notes that the rules of appellate practice mandate the
manner in which a party may raise a cross-appeal. See Neb. Ct.
R. App. P. § 2-109(D)(4) (rev. 2014). Section 2-109 provides
that a brief on cross-appeal must be structured as an appellant’s
brief and include, among other things, a separate section for
assignments of error. If a party’s brief does not include a sepa-
rate section for assignments of error, an appellate court may
proceed as though the party failed to file a brief or, alterna-
tively, may examine the proceedings for plain error. See Steffy
v. Steffy, 287 Neb. 529, 843 N.W.2d 655 (2014).
Here, Laura’s initial brief failed to specifically assign any
errors on cross-appeal. However, she sought and received this
court’s permission to file a replacement brief. Her replace-
ment brief complies with all of the requirements of § 2-109,
including a specific assignments of error section. Because her
replacement brief replaces her original brief and complies with
the rules, she has properly asserted a cross-appeal, and we
therefore proceed to address the error raised in her brief.
[22] The question before us is whether the district court
abused its discretion in treating the appreciation of stock
purchased using Laura’s nonmarital funds as a marital asset.
Accrued investment earnings or appreciation of nonmarital
assets during the marriage are presumed marital unless the
party seeking the classification of the growth as nonmarital
proves that (1) the growth is readily identifiable and traceable
to the nonmarital portion of the account and (2) the growth is
not due to the active efforts of either spouse. See Stephens v.
Stephens, 297 Neb. 188, 899 N.W.2d 582 (2017).
The Supreme Court addressed a similar issue in Coufal
v. Coufal, 291 Neb. 378, 866 N.W.2d 74 (2015). There, the
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question was whether the increase in value of the premarital
portion of a retirement account should be considered as part
of the marital estate. In order to determine what portion of
the retirement account was nonmarital property, the Supreme
Court examined to what extent the appreciation in the sepa-
rate premarital portion of the retirement account was caused
by the efforts of either spouse. The court recognized that in
that context, it had previously held that where appreciation
of a wife’s separate asset was due principally to inflation
and market forces and not to any “‘significant efforts’” by
the husband, the appreciation should not have been included
in the marital estate. Id. at 383, 866 N.W.2d at 78, citing
Van Newkirk v. Van Newkirk, 212 Neb. 730, 325 N.W.2d
832 (1982).
Likewise, the court in Coufal noted that in Buche v. Buche,
228 Neb. 624, 423 N.W.2d 488 (1988), it had held that certain
shares of stock should not have been included in the marital
estate, because the parties were married 3 years after the hus-
band began receiving stock; neither spouse contributed money
to acquire the stock; the wife did not contribute to the improve-
ment or operation of the stock, nor significantly care for the
property during the marriage; and the stock was readily identi-
fiable and traceable to the husband. The Supreme Court com-
mented that in these decisions, some level of indirect or direct
effort was required by the nontitled spouse—not just inflation
or market forces—in order to include the increase in value in
the marital estate. Coufal v. Coufal, supra.
The Supreme Court in Coufal also recognized that other
courts have reached similar conclusions, including in Baker
v. Baker, 753 N.W.2d 644 (Minn. 2008), where the Minnesota
Supreme Court held that where a husband did not devote
significant effort to managing his retirement funds and no
significant effort was diverted from the marriage to generate
the increase in the account, the appreciation in the nonmarital
portion of the funds remained separate property. The court in
Baker noted that in determining whether the appreciation in
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the value of a nonmarital investment is marital or nonmari-
tal, it looks to whether or not the appreciation is the result
of active management of the investment, classifying active
appreciation as marital property and passive appreciation as
nonmarital property. There, the activity of the husband with
respect to the accounts consisted of selecting and occasionally
changing investment advisors; authorizing money managers to
make discretionary decisions about the investments; retaining
discretion to direct investments but exercising that discre-
tion on only one occasion; and declining to withdraw from
the funds although they were available as liquid assets. The
court in Baker posed the question as to how else the husband
could have invested his premarital retirement funds so as
to ensure that their appreciation during the marriage would
remain nonmarital before concluding that based on the record
before it, the husband’s role in the investments was insuf-
ficient to render active the appreciation in the value of the
overall portfolio.
[23] Ultimately, the Supreme Court, in Coufal v. Coufal,
291 Neb. 378, 866 N.W.2d 74 (2015), held that the appre-
ciation was nonmarital, because it was not caused by the
direct or indirect efforts of either spouse. More recently, the
Supreme Court observed that other jurisdictions have reached
a remarkable degree of consensus that appreciation or income
of separate property is marital property to the extent that it
was caused by marital funds or marital efforts. See Stephens
v. Stephens, 297 Neb. 188, 899 N.W.2d 582 (2017). The active
appreciation rule sets forth the relevant test to determine to
what extent marital efforts caused any part of the appreciation
or income. Id. Appreciation caused by marital contributions is
known as active appreciation, and it constitutes marital prop-
erty in the first instance. Id. In contrast, passive appreciation
is appreciation caused by separate contributions and nonmari-
tal forces. Id. And most states, by statute or case law, define
marital contribution broadly to include the efforts of either the
owning or the nonowning spouse. Id.
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In the present case, Laura received her first inheritance
from her mother in 2011. She initially placed the inherited
stocks and cash in a TD Ameritrade account, but later in 2011,
she decided to buy different stock and transfer funds into a
mutual fund. She subsequently inherited an additional sum
and deposited it into the mutual fund. We do not find these
one-time transfers that Laura made during the 6-year period
from the time of inheritance until the time of trial to constitute
active efforts sufficient to render the appreciation in value a
marital asset. Similar to the question posed by the Minnesota
Supreme Court, our concluding that Laura’s actions constitute
active efforts would lead to the question of how a spouse
could ever invest inherited funds so as to ensure that their
appreciation during the marriage would remain nonmarital.
Accordingly, we hold that the district court abused its discre-
tion in classifying the appreciation of Laura’s nonmarital funds
as a marital asset.
The district court determined that there was $291,407.41
in active appreciation in stocks and $225,820.88 in active
appreciation in the mutual fund. There was an additional
$172,631.95 of securities and cash transferred into Laura’s
TD Ameritrade account, but Laura was unable to adequately
explain the source of these funds. The district court thus con-
cluded that Laura failed to meet her burden of proving that
these funds were separate property. Accordingly, the court clas-
sified the sum of all of these amounts, $689,860.24, as marital
property and awarded Greg 50 percent of the value for a total
of $344,930.12.
Our conclusion mandates only that the active appreciation
of the stocks and mutual fund is excluded from the marital
estate, but that the $172,631.95 in funds from unknown sources
remains classified as marital property. We therefore modify the
amended decree to award Greg half of the marital portion of
these assets, or $86,315.97.
This modification also necessitates a modification to the
equalization payment due from Greg to Laura. We note a
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small typographical error in the district court’s final equal-
ization payment: the court ordered Greg to pay a rounded
total of $1,664,741 to Laura, but according to the court’s
calculations, the correct total should be $1,664,714.05,
rounded to $1,664,714. When modifying the marital portion
of Laura’s inheritance as explained above, the total equaliza-
tion payment due from Greg to Laura becomes $1,923,328.20.
Dividing that amount by 192 months as the district court did
results in a monthly payment owed from Greg to Laura of
$10,017.33. The amended decree is therefore modified to
reflect these figures.
VI. CONCLUSION
As discussed above, we conclude that the district court
abused its discretion in finding that the appreciation on Laura’s
inherited funds was marital property, and we modify the
amended decree as explained above. We otherwise affirm.
Affirmed as modified.