In Re the Marriage of Michelle Anne Kraker and Leonard Paul Kraker Upon the Petition of Michelle Anne Kraker, petitioner-appellee/cross-appellant, and Concerning Leonard Paul Kraker, respondent-appellant/cross-appellee. ( 2017 )

IN THE COURT OF APPEALS OF IOWA
No. 16-1739
Filed August 16, 2017
IN RE THE MARRIAGE OF MICHELLE ANNE KRAKER
AND LEONARD PAUL KRAKER
Upon the Petition of
MICHELLE ANNE KRAKER,
Petitioner-Appellee/Cross-Appellant,
And Concerning
LEONARD PAUL KRAKER,
Respondent-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Woodbury County, Patrick H. Tott,
Judge.
Respondent appeals the property division and award of spousal support in
the parties’ dissolution decree, and petitioner cross-appeals on the issues of
spousal support and attorney fees. AFFIRMED AS MODIFIED AND
REMANDED.
William H. Larson of Klass Law Firm, L.L.P., Sioux City, for appellant.
Irene A. Schrunk of Irene A. Schrunk Law Firm, Sioux City, for appellee.
Considered by Danilson, C.J., and Potterfield and Bower, JJ.
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BOWER, Judge.
Leonard Kraker appeals the property division and award of spousal
support in the parties’ dissolution decree, and Michelle Kraker cross-appeals on
the issues of spousal support and attorney fees. We modify the decree to
provide Leonard’s pension should be divided pursuant to a marital property order
in accordance with the Benson formula as outlined in this opinion and remand on
this issue. On all other issues of property division, spousal support, and attorney
fees, we affirm the dissolution decree entered by the district court. We do not
award appellate attorney fees.
I. Background Facts & Proceedings
Leonard and Michelle were married in 1986. They have two adult
children. Leonard, who was fifty-five years old, had been employed as a
firefighter with the Sioux City Fire Department for twenty-three years and had
“Medicare wages” in 2015 of $92,851. As a firefighter, he contributed to the
Municipal Fire and Police Retirement System of Iowa (MFPRS), rather than
Social Security. Michelle, who was fifty-six years old, was the sole proprietor of
Klassic Klips, a hair salon. She earned $22,983 in 2015.
Michelle filed a petition for dissolution of marriage on September 24, 2015.
In the dissolution decree, the district court found Michelle had retained personal
property worth $7500, while Leonard had personal property worth $1500. The
court awarded Michelle her business, which was valued at $24,500. The court
determined Michelle should be awarded forty-six percent of Leonard’s retirement
account, payable when Leonard’s benefits commence under the plan. The court
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determined Leonard should pay Michelle spousal support of $1500 per month
until he retires. Michelle was awarded attorney fees of $750.
Leonard filed a motion pursuant to Iowa Rule of Civil Procedure 1.904(2),
stating the court had failed to consider he would receive a reduced amount of
Social Security benefits under the Windfall Elimination Provision (WEP) due to
his receipt of MFPRS benefits and asking the court to reopen the record on this
issue. Michelle also filed a motion pursuant to rule 1.904(2). The court granted
the motion to reopen the record and gave the parties the opportunity to submit
affidavits and briefs on the issue of the WEP. The court made a few
adjustments, but largely denied the parties’ motions. Leonard now appeals, and
Michelle cross-appeals.
II. Standard of Review
Our review in dissolution cases is de novo. Iowa R. App. P. 6.907; In re
Marriage of Fennelly, 737 N.W.2d 97, 100 (Iowa 2007). We examine the entire
record and determine anew the issues properly presented. In re Marriage of
Rhinehart, 704 N.W.2d 677, 680 (Iowa 2005). We give weight to the factual
findings of the district court but are not bound by them. In re Marriage of Geil,
509 N.W.2d 738, 741 (Iowa 1993).
III. Property Division
A. Leonard claims the district court improperly valued the personal
property retained by Michelle. Using an insurance policy, Leonard stated the
value of the personal property in the marital home, where Michelle was living,
was $151,950. Michelle stated she believed the value of the personal property in
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the home was $2500. The district court determined the value of the personal
property was $7500.
On appeal, we refuse to disturb the district court’s valuation of assets
when they are within the range of permissible evidence. In re Marriage of
McDermott, 827 N.W.2d 671, 679 (Iowa 2013). “Although our review is de novo,
we ordinarily defer to the trial court when valuations are accompanied by
supporting credibility findings or corroborating evidence.” In re Marriage of
Hansen, 733 N.W.2d 683, 703 (Iowa 2007). We determine the district court’s
valuation of the personal property retained by Michelle is within the range of
permissible evidence, and we accept the court’s valuation. See McDermott, 827
N.W.2d at 679.
B. Leonard claims the district court improperly divided his retirement
benefits to give Michelle forty-six percent of his monthly pension benefits, leaving
him with fifty-four percent of his benefits. The court also determined Michelle
was entitled to a proportionate share of any increases in Leonard’s benefits.
Leonard points out Michelle will receive a greater amount of Social Security
benefits than he will. In addition, he states the court did not properly apply the
formula found in In re Marriage of Benson, 545 N.W.2d 252, 255 (Iowa 1996), for
dividing pension benefits. Michelle claims she is entitled to fifty percent of
Leonard’s retirement benefits.
A division of pension benefits must be equitable. In re Marriage of
O’Connor, 584 N.W.2d 575, 576-77 (Iowa Ct. App. 1998). “Pensions in general
are held to be marital assets, subject to division in dissolution cases.” In re
Marriage of Branstetter, 508 N.W.2d 638, 640 (Iowa 1993). One method of
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dividing pension benefits is the present-value method, where the present value of
the benefits is determined and a share is allocated to the pension-holder’s
spouse. Benson, 545 N.W.2d at 255.
A second method is the percentage method, where the pension-holder’s
spouse receives “a percentage of the pension, payable when benefits become
matured.” Id. “[T]his percentage is based on the number of years the employee
accrued benefits under the plan during the parties’ marriage in relation to the
total years of benefits accrued at maturity.” Id. “This method has the advantage
of allowing deferred payment, and it properly allocates the risk between the
parties.” Id. “It has however been noted that care must be taken when setting
the formula so that the recipient spouse does not become entitled to any post-
dissolution increases in pension benefits.” Id.We determine Leonard’s pension benefits should be divided using the
percentage method. The Benson formula is based on the equation:
50% of x Years spouse contributed to retirement plan while married
retirement Years spouse contributed to retirement plan before
benefit retirement
In re Marriage of Sullins, 715 N.W.2d 242, 250 (Iowa 2006). “The numerator in
the fraction is the number of years the pensioner accrued benefits under the plan
during the marriage, and the denominator is the total number of years of benefit
accrual.” Id. The value of the retirement benefit is set at the time of maturity, not
at the time of the dissolution of marriage. Benson, 545 N.W.2d at 257.
In this case, the numerator is twenty-three, the number of years Leonard
contributed to the MFPRS pension plan while married. The district court
apparently also used this as the denominator, stating “the parties were married
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the entire time Leonard qualified for the plan.” At the present time, however, the
denominator is unknown, as Leonard has not yet retired. Also, rather than award
Michelle fifty percent of the Benson fraction, the court awarded her forty-six
percent of the total pension.
We determine Leonard’s MFPRS retirements benefits should be divided
using the Benson formula. Thus, Michelle is entitled to fifty percent times the
fraction of the years Leonard contributed to the plan while married (twenty-three)
divided by the total number of years he contributes to the plan before retirement
(currently unknown) times the amount of his monthly retirement benefits
determined at the time of his retirement.
Under the MFPRS rules, a marital property order is the equivalent of a
qualified domestic relations order (QDRO). See In re Marriage of Davis, 608
N.W.2d 766, 774 (Iowa 2000). We modify the decree to provide Leonard’s
pension should be divided pursuant to a marital property order, under Iowa Code
section 411.13 (2015), in accordance with the Benson formula as outlined in this
opinion and remand on this issue. We have considered the remaining arguments
raised by the parties concerning Leonard’s pension benefits but make no further
modification on the issue of pension benefits.
IV. Spousal Support
Leonard claims the district court’s award of spousal support should be
reduced, while Michelle claims the amount should be increased. The district
court determined Leonard should pay $1500 per month in spousal support until
he retires. Leonard asks to have this amount reduced to $868.56 per month.
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Michelle asks to have the award of spousal support increased to $2250 per
month.
“Property division and alimony should be considered together in
evaluating their individual sufficiency.” In re Marriage of Trickey, 589 N.W.2d
753, 756 (Iowa Ct. App. 1998). Spousal support is not an absolute right. In re
Marriage of Fleener, 247 N.W.2d 219, 220 (Iowa 1976). Whether spousal
support is proper depends on the facts and circumstances of each case. In re
Marriage of Brown, 487 N.W.2d 331, 334 (Iowa 1992). When determining
whether spousal support is appropriate, we consider the relevant factors found in
Iowa Code section 598.21A. Hansen, 733 N.W.2d at 704.
The parties had been married for almost thirty years at the time of the
dissolution hearing. Historically, Leonard’s income has exceeded that of
Michelle’s and we determine an award of spousal support until Leonard retires is
appropriate. In determining an award of spousal support, a court considers the
statutory criteria in section 598.21A(1), rather than applying a mathematical
formula. In re Marriage of Mauer, 874 N.W.2d 103, 107 (Iowa 2016); In re
Marriage of Witherly, 867 N.W.2d 856, 859-60 (Iowa Ct. App. 2015).
Leonard earns about $92,851 per year and has the ability to pay spousal
support. Michelle claims she needs an additional amount of spousal support to
meet her expenses, but we find she has overstated her expenses and the award
of $1500 per month is sufficient for her needs. In considering the factors in
section 598.21A(1) in light of the circumstances of this case, we determine the
district court properly determined Leonard should pay Michelle spousal support
of $1500 per month “continuing until such time as Leonard retires and begins to
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draw benefits from his Municipal Fire & Police Retirement System of Iowa
pension.” We will disturb the district court’s award of spousal support only when
there has been a failure to do equity. In re Marriage of Anliker, 694 N.W.2d 535,
540 (Iowa 2005). We affirm on the issue of spousal support.
V. Attorney Fees
A. Michelle claims the district court should have required Leonard to
pay a greater amount of her trial attorney fees. We review a district court’s
decision granting trial attorney fees in a dissolution action for an abuse of
discretion. Sullins, 715 N.W.2d at 255. “Whether attorney fees should be
awarded depends on the respective abilities of the parties to pay.” Id.Michelle states her trial attorney fees were $21,697. The court ordered
Leonard to pay $750 of these fees. The court found Michelle was awarded a
greater amount of liquid assets than Leonard and neither party proceeded to trial
in bad faith. The court concluded, “As Michelle has adequate assets to pay her
attorney fees herein, and while Leonard has his own attorney fees herein, the
Court will not require either party to pay the other’s attorney fees as a general
result of the trial herein.” We conclude the district court did not abuse its
discretion in the award of trial attorney fees.
B. Michelle also requests attorney fees of $6863 for this appeal.
“Appellate attorney fees are not a matter of right, but rather rest in this court’s
discretion.” Id. In determining whether to award appellate attorney fees, we
consider, “the needs of the party seeking the award, the ability of the other party
to pay, and the relative merits of the appeal.” In re Marriage of Okland, 699
N.W.2d 260, 270 (Iowa 2005). Both parties appealed, and both parties
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responded to the other parties’ claims on appeal. Additionally, we recognize
Michelle was awarded a greater share of the liquid assets. We determine each
party should be required to pay his or her own appellate attorney fees.
We affirm the parties’ dissolution decree, except we modify the decree to
provide Leonard’s pension should be divided pursuant to a marital property order
in accordance with the Benson formula as outlined in this opinion and remand on
this issue. Costs of this appeal are assessed one-half to each party.
AFFIRMED AS MODIFIED AND REMANDED.