Higgins v. Currier , 307 Neb. 748 ( 2020 )


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    307 Nebraska Reports
    HIGGINS v. CURRIER
    Cite as 
    307 Neb. 748
    Billy Meredith Higgins, appellee, v.
    Rashell Rene Currier, appellant.
    ___ N.W.2d ___
    Filed November 13, 2020.   No. S-19-343.
    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. Divorce: Property Division. 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. ____: ____. Any given property can constitute a mixture of marital and
    nonmarital interests; a portion of an asset can be marital property while
    another portion can be separate property.
    6. ____: ____. The original capital or value of an asset may be nonmarital,
    while all or some portion of the earnings or appreciation of that asset
    may be marital.
    7. ____: ____. The active appreciation rule sets forth the relevant test to
    determine to what extent marital efforts caused any part of an asset’s
    appreciation or income.
    8. Divorce: Property Division: Presumptions. Accrued investment
    earnings or appreciation of nonmarital assets during the marriage are
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    presumed marital unless the party seeking the classification of the
    growth as nonmarital proves: (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.
    9. Divorce: Property Division: Words and Phrases. Appreciation caused
    by marital contributions is known as active appreciation, and it consti-
    tutes marital property.
    10. ____: ____: ____. Passive appreciation is appreciation caused by sepa-
    rate contributions and nonmarital forces.
    11. Divorce: Property Division: Proof. The burden is on the owning
    spouse to prove the extent to which marital contributions did not cause
    the appreciation or income.
    Petition for further review from the Court of Appeals,
    Moore, Chief Judge, and Arterburn and Welch, Judges,
    on appeal thereto from the District Court for Douglas County,
    James M. Masteller, Judge. Judgment of Court of Appeals
    affirmed in part, and in part reversed and remanded with
    directions.
    Corey J. Wasserburger, of Johnson, Flodman, Guenzel &
    Widger, for appellant.
    Megan E. Shupe and Richard W. Whitworth, of Reagan,
    Melton & Delaney, L.L.P., for appellee.
    Heavican, C.J., Miller‑Lerman, Cassel, Stacy, Funke,
    Papik, and Freudenberg, JJ.
    Papik, J.
    In its decree dissolving the marriage of Billy Meredith
    Higgins and Rashell Rene Currier, the district court for Douglas
    County found that Currier should be awarded $10,500 from
    a 401K account owned by Higgins, but otherwise awarded
    Higgins all funds in his retirement and investment accounts.
    Currier appealed, challenging various aspects of the dis-
    trict court’s dissolution decree, and the Nebraska Court of
    Appeals affirmed. See Higgins v. Currier, No. A‑19‑343, 
    2020 WL 634183
     (Neb. App. Feb. 11, 2020) (selected for posting
    to court website). We granted Currier’s petition for further
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    review. We find that the Court of Appeals erred in concluding
    that the district court did not abuse its discretion in its disposi-
    tion of Higgins’ 401K accounts.
    BACKGROUND
    Parties’ Marriage.
    Higgins and Currier were married in Washington on May
    20, 2016. At the time of the marriage, Currier and her son from
    a prior relationship lived in Washington and Higgins lived in
    Council Bluffs, Iowa. Following the marriage, Currier and her
    son moved to Council Bluffs to live with Higgins. Higgins and
    Currier have no children together.
    Higgins has been employed by TD Ameritrade since 1997.
    During a portion of the 14 months Currier lived with Higgins,
    she worked part time.
    In July 2017, Currier and her son moved back to Washington.
    Shortly thereafter, Higgins moved to Omaha, Nebraska. After
    July 2017, the parties remained in contact and took occasional
    trips to visit one another. The parties were unable to reconcile
    and ended their relationship in March 2018.
    Higgins initially filed a complaint for legal separation in
    April 2018, but later filed an amended complaint for dissolu-
    tion of marriage. Trial was held in December 2018. Higgins
    was represented by counsel at trial. Currier represented herself.
    Both parties testifed and offered exhibits, which were received
    into evidence by the district court.
    Summary of Trial Evidence.
    Much of the evidence at trial concerned investment and
    retirement accounts owned by Higgins. Higgins testified that
    he had a TD Ameritrade account with an account number end-
    ing in “3733” (the 3733 account). He testified that the 3733
    account was in existence prior to the marriage and that he did
    not make any deposits into the 3733 account during the mar-
    riage. Higgins’ counsel referred to the account as a “brokerage
    account” during direct examination. Higgins asked that the
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    court award all funds in that account to him as a premari-
    tal asset.
    In addition, Higgins testified that he had a 401K account,
    which was established prior to the marriage. He also asked
    that the district court award that account to him, but he did not
    provide any other testimony or documentation with respect to
    that account.
    Currier also presented evidence regarding Higgins’ accounts.
    She testified that Higgins had two different 401K accounts and
    that he was depositing $1,500 per month into the accounts.
    Currier also introduced and the court received two account
    statements for a TD Ameritrade 401K account with an account
    number ending in “0510” (the 0510 account). The account state-
    ments are in Higgins’ name and are from May 2016 and March
    2018. These statements show that the 0510 account had a value
    of $218,182.02 as of May 2016 and a value of $359,128.29 as
    of March 2018. The statements show that Higgins held stocks
    and mutual funds within the account and that securities were
    sold and purchased and interest income was received during
    the period summarized by each statement. When referencing
    the account statements for the 0510 account, Currier noted that
    the account statements corresponded to the month the parties
    were married and the month the parties separated and asked the
    district court to divide the account equitably.
    The district court also received evidence regarding the pur-
    chase and sale of the Council Bluffs house in which the parties
    resided together. Higgins testified that he purchased that house
    in 2014 for approximately $675,000 and that, at the time, the
    house was appraised at $625,000. Higgins testified that he
    made a downpayment on the purchase of about $350,000, and
    a closing statement shows that he and his previous wife bor-
    rowed $315,000 to purchase the house.
    Higgins testified that, at Currier’s request, he sold the
    Council Bluffs house in July 2017. Higgins testified that the
    house sold for $615,000, about $58,000 less than its purchase
    price, and that he paid about $31,000 in fees and closing
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    costs. He testified that he realized about $300,000 from its
    sale. Following the sale of the house, Higgins used $25,000 of
    the proceeds to pay off a marital credit card debt. He applied
    the rest of the proceeds to the purchase of a new house in
    Omaha. Higgins asked the district court to award him the
    Omaha house as nonmarital property traceable to his premarital
    Council Bluffs house.
    District Court Decree.
    In March 2019, the district court entered a decree of dissolu-
    tion, dissolving the marriage and identifying and dividing the
    marital estate. Perhaps unsurprisingly, given the duration of the
    marriage, relatively little property was identified as marital and
    subject to equitable division. The district court awarded Currier
    $303, representing half of the balance in a bank account in
    both parties’ names. The court also awarded her $3,570, a sum
    representing half of an income tax refund that accumulated
    during the portion of 2016 the parties were married.
    The district court found that the TD Ameritrade account end-
    ing in “0733” (presumably the 3733 account) was Higgins’ pre-
    marital asset and that “all accumulations to [that] account were
    from that premarital asset.” It awarded Higgins that account
    and any other “TD Ameritrade accounts which belonged to
    [Higgins] prior to the marriage.”
    In a separate subsection of the decree, the district court
    discussed retirement plans. It found that Higgins had a
    401K account through TD Ameritrade which was established
    prior to the marriage. It found that during the marriage, he
    made monthly contributions of $1,500 from marital funds
    to that account. The court found that for purposes of divid-
    ing the marital portion of the 401K account, the operative
    dates for the marriage were from May 2016 to July 2017
    and that Higgins thus made $21,000 in contributions to the
    401K account that were subject to division. Accordingly, it
    awarded Currier $10,500 from Higgins’ 401K and ordered it
    transferred through a qualified domestic relations order. The
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    district court awarded the parties any other retirement plans
    held in their own names.
    In a subsection of the decree addressing real property, the
    district court concluded that the Council Bluffs house was not
    a marital asset. It also concluded that the equity in the Council
    Bluffs house could be traced to the house Higgins purchased in
    Omaha. It found that the Omaha house was not a marital asset
    and thus awarded Higgins all right, title, interest, and equity in
    that property.
    Court of Appeals.
    Currier appealed. Among other things, she assigned that
    the district court had erred in classifying the increase in value
    of the 0510 account and the Council Bluffs house as non-
    marital property. The Court of Appeals affirmed the district
    court’s decree.
    The Court of Appeals found that the district court did not
    abuse its discretion by declining to include in the marital estate
    the amount by which the 0510 account increased during the
    marriage. The Court of Appeals recognized that the question
    of whether the increase in value was appropriately treated
    as nonmarital called for the application of the active appre-
    ciation rule, whereby the burden is on the owning spouse to
    prove the extent to which marital contributions did not cause
    the appreciation or income. It also acknowledged the district
    court’s receipt of account statements showing that the value
    of that account increased from $218,182.02 in May 2016 to
    $359,128.29 in March 2018 and that stocks and mutual funds
    were sold and purchased within the account during that time.
    It concluded, however, that those statements did not indicate
    that active appreciation was the cause of the increase in value,
    but, rather, they suggested that “the account fluctuates, pre-
    sumably depending on market forces.” Higgins v. Currier,
    No. A‑19‑343, 
    2020 WL 634183
     at *6 (Neb. App. Feb. 11,
    2020) (selected for posting to court website).
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    The Court of Appeals also concluded the district court did
    not err by finding that the Council Bluffs residence was a non-
    marital asset.
    ASSIGNMENTS OF ERROR
    Currier argues on further review that the Court of Appeals
    erred by improperly shifting the burden to her to prove that
    the increase in value in the 0510 account during the parties’
    marriage was due to active appreciation. She argues that, in
    this regard, the Court of Appeals’ opinion is at odds with our
    recent opinion in White v. White, 
    304 Neb. 945
    , 
    937 N.W.2d 838
     (2020). She contends that the increase in value of the 0510
    account during the marriage should have been treated as mari-
    tal property subject to equitable division.
    Currier also claims that the Court of Appeals erred by failing
    to find that mortgage payments made during the marriage were
    inextricably comingled with the equity in the marital residence.
    We find no error in the district court’s disposition of this issue,
    and we see no need for further comment on it. Therefore, our
    analysis below is limited to the assignment of error concerning
    the disposition of the 0510 account.
    STANDARD OF REVIEW
    [1] 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 cus-
    tody, child support, division of property, alimony, and attorney
    fees. White v. White, 
    supra.
    [2] 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
    conclusions with respect to the matters at issue. 
    Id.
    [3] A judicial abuse of discretion exists if the reasons or rul-
    ings of a trial judge are clearly untenable, unfairly depriving a
    litigant of a substantial right and denying just results in matters
    submitted for disposition. 
    Id.
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    ANALYSIS
    Currier introduced evidence showing that the value of the
    0510 account increased during the course of the marriage. The
    account statements Currier introduced showed that the value of
    the account was $218,182.02 in May 2016 and $359,128.29 in
    March 2018. Currier argues that the district court should have
    classified this increase in value as marital property and divided
    it equitably.
    [4‑6] We have said that all property accumulated and
    acquired by either spouse during the marriage is part of the
    marital estate, unless it falls within an exception to this gen-
    eral rule. Stephens v. Stephens, 
    297 Neb. 188
    , 
    899 N.W.2d 582
    (2017). Thus, for example, income from either party that accu-
    mulates during the marriage is a marital asset. 
    Id.
     Any given
    property can constitute a mixture of marital and nonmarital
    interests; a portion of an asset can be marital property while
    another portion can be separate property. 
    Id.
     Therefore, the
    original capital or value of an asset may be nonmarital, while
    all or some portion of the earnings or appreciation of that asset
    may be marital. 
    Id.
    Currier argues that is the case here. Although she concedes
    that the value of the 0510 account at the time of the parties’
    marriage was Higgins’ nonmarital property, she contends that
    the growth in that account during the marriage was marital.
    She argues that this result is compelled by the active apprecia-
    tion rule.
    [7‑11] The active appreciation rule sets forth the relevant
    test to determine to what extent marital efforts caused any
    part of an asset’s appreciation or income. White v. White, 
    304 Neb. 945
    , 
    937 N.W.2d 838
     (2020). Under the rule, accrued
    investment earnings or appreciation of nonmarital assets dur-
    ing the marriage are presumed marital unless the party seeking
    the classification of the growth as nonmarital proves: (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. 
    Id.
     Appreciation caused by
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    marital contributions is known as active appreciation, and it
    constitutes marital property. 
    Id.
     Passive appreciation is appre-
    ciation caused by separate contributions and nonmarital forces.
    
    Id.
     The burden is on the owning spouse to prove the extent to
    which marital contributions did not cause the appreciation or
    income. 
    Id.
    In Stephens v. Stephens, 
    297 Neb. at 205
    , 899 N.W.2d at
    595, we made clear that these principles “apply equally to
    appreciation or income during the marriage of any nonmarital
    asset.” We also explained that placing the burden on the own-
    ing spouse to prove that the growth is not due to active efforts
    “is the better policy, because it places the burden on the party
    who has the best access to the relevant evidence.” Id. at 206,
    899 N.W.2d at 595.
    We recently had occasion to apply the active appreciation
    rule in White v. White, 
    supra.
     In that case, the husband created
    an investment account with funds he inherited. He argued that
    the district court abused its discretion by treating the appre-
    ciation in that account during the course of the marriage as
    marital property. We rejected the argument. We explained that
    under the active appreciation rule articulated in Stephens v.
    Stephens, 
    supra,
     it was the husband’s burden to establish that
    the growth in the account was attributable solely to passive
    market forces or separate contributions. We also noted ways
    in which the husband might have been able to carry this bur-
    den: by showing that the growth was consistent with “some
    recognized benchmark of general market growth,” that the
    annual rate of return was guaranteed or statutorily prescribed,
    or that he relied on the recommendations or management of
    his account by a third party. White v. White, 
    304 Neb. at 961
    ,
    937 N.W.2d at 851. But because the husband failed to present
    evidence on any of these points or any evidence showing that
    his efforts did not cause the appreciation, we found that the
    district court did not err in classifying the appreciation in the
    account as marital.
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    Currier argues that under the active appreciation rule, as
    applied in White, the increase in the value of the 0510 account
    is also marital property subject to equitable division. She does
    not dispute that Higgins satisfied the first element of the active
    appreciation rule by showing that the growth in the 0510
    account was readily identifiable and traceable to the nonmarital
    portion of the account. But she contends that like the husband
    in White, Higgins introduced no evidence showing that the
    growth was not due to the active efforts of either spouse.
    In response to this argument, Higgins has not directed us
    to any evidence in the record that might tend to show that the
    increase in the value of the 0510 account came about as a result
    of something other than the active efforts of either spouse.
    Indeed, during closing argument, Higgins’ counsel seemed to
    acknowledge the lack of such evidence, stating “there’s been
    absolutely no testimony that would guide the Court in deter-
    mining how to divvy up any income and interest that would
    have come into that account during the time . . . that these folks
    have been married.”
    Unable to point to evidence that the increase in value in the
    0510 account was the result of passive appreciation, Higgins
    attempts to undermine Currier’s argument in other ways. First,
    he contends that Currier did not adequately raise this issue in
    the district court. We disagree. In referencing the exhibit she
    offered into evidence showing the increase in value of the
    0510 account between May 2016 and March 2018, Currier
    mentioned that the account statements corresponded with the
    month the parties were married and the month they sepa-
    rated, and she asked the district court to “divide that equi-
    tably.” Higgins’ counsel appeared to understand that Currier
    was asking that at least some portion of Higgins’ accounts
    be treated as marital property subject to equitable division.
    On cross‑examination, he had Currier confirm that she was
    asking the district court to award her a portion of Higgins’
    401K, and, in closing argument, he contended that, with the
    possible exception of funds that were contributed to accounts
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    during the marriage, Higgins should be awarded the entirety
    of any investment or retirement accounts. We believe Currier
    adequately informed the district court and Higgins that she
    sought the equitable division of the 0510 account.
    Higgins also argues that despite the lack of evidence that
    the increase in the value of the 0510 account was the result of
    passive appreciation, the Court of Appeals correctly applied
    the active appreciation rule. Again, we disagree. The Court
    of Appeals stated that the exhibits Currier offered regarding
    the 0510 account did not show any funds being deposited,
    but instead showed stocks and mutual funds being sold and
    purchased within the account along with the receipt of inter-
    est income. It noted that the March 2018 statement showed
    a $20,000 loss for the month. It concluded that this evidence
    “does not indicate that active appreciation is the cause of
    the increase in value during the marriage; rather, it indicates
    that the account fluctuates, presumably depending on market
    forces.” Higgins v. Currier, No. A‑19‑343, 
    2020 WL 634183
    at *6 (Neb. App. Feb. 11, 2020) (selected for posting to
    court website).
    Although the Court of Appeals recognized earlier in its
    opinion that the burden is on the owning spouse to prove the
    extent to which marital contributions did not cause the appre-
    ciation or income, its analysis treated Currier as if she had the
    burden to show that the increase was caused by active appre-
    ciation. After concluding that the exhibits Currier offered did
    not demonstrate active appreciation, the Court of Appeals pre-
    sumed that the account increased due solely to market forces.
    This was an incorrect application of the active appreciation
    rule. The burden was on Higgins to show that the increase
    in the 0510 account was the result of passive appreciation.
    Higgins was obligated to adduce evidence to carry that burden
    as opposed to relying on presumptions. He did not do so. Thus,
    under the active appreciation rule, the increase in value of the
    0510 account during the marriage should have been treated as
    marital property.
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    We are not swayed from this conclusion by Higgins’ conten-
    tion at oral argument that Currier’s argument is flawed because
    the district court, for purposes of determining contributions to
    Higgins’ 401K, treated the marriage as effectively concluded
    in July 2017 when Currier returned to Washington. Higgins
    pointed out that although Currier offered evidence of the value
    of the account in March 2018, she did not offer evidence of
    the value of the account in July 2017. He claimed that there is
    thus no evidence of how much the value of the 0510 account
    increased from the beginning of the marriage until its effective
    conclusion as determined by the district court.
    Higgins is correct that Currier did not introduce evidence
    showing the value of the 0510 account in July 2017, but that
    does not affect our conclusion that under these circumstances,
    the increase between May 2016 and March 2018 should have
    been treated as marital property subject to equitable division.
    As we have discussed, because Higgins did not show that the
    increase in the 0510 account resulted from passive apprecia-
    tion, the increase in the account during the marriage should
    have been treated as marital property under the active appre-
    ciation rule. To the extent the value of the account increased
    after the effective end of the marriage as determined by the
    district court and rendered any marginal increase after that
    time nonmarital property, Higgins had the burden to prove
    it. See Burgardt v. Burgardt, 
    304 Neb. 356
    , 363, 
    934 N.W.2d 488
    , 494 (2019) (“[i]n a marital dissolution proceeding, the
    burden of proof rests with the party claiming that property
    is nonmarital”). Higgins, however, introduced no evidence
    regarding the value of the 0510 account in July 2017 or any
    other time.
    For all these reasons, we conclude that the increase in the
    value of the 0510 account should have been treated as marital
    property subject to equitable division. The district court abused
    its discretion by finding otherwise, and the Court of Appeals
    erred by failing to reverse on this issue.
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    Disposition.
    Currier argues that given the district court’s error, we should
    modify the decree to award her half of the increase in the value
    of the 0510 account. While our de novo on the record stan-
    dard of review permits us to modify a dissolution decree, we
    believe it best to instead reverse, and remand with directions
    in this case.
    As we have noted, while the district court did not treat the
    entire increase of the 0510 account as marital property, it did
    find that Higgins deposited $21,000 into a 401K account dur-
    ing the marriage. It determined those were marital contribu-
    tions and, as a result, awarded Currier $10,500 from the 401K
    account. It is not clear to us from the decree or the broader
    record, however, whether the district court determined that
    those contributions were made to the 0510 account or another
    account. If the contributions were found to be made to the 0510
    account, it would be double counting to treat both those contri-
    butions and the full $140,946.27 increase in the 0510 account
    as marital property. If the contributions were found to be made
    to some other account, however, then the entire increase in the
    0510 account should be treated as marital property in addition
    to the $21,000 in marital contributions the district court treated
    as marital in its initial decree.
    Given this uncertainty in the record and because the district
    court is in a better position to make an equitable division, we
    will return this case to the district court. We do so by remand-
    ing the cause to the Court of Appeals and directing that it
    reverse the district court’s decree in part and remand the cause
    to the district court with the following directions. The district
    court should clarify whether the $21,000 in contributions
    found by the district court to be marital property were made to
    the 0510 account. If so, an additional $119,946.27 should also
    be treated as marital. If not, an additional $140,946.27 should
    be treated as marital. The district court should also determine
    the equitable division of marital property. See Stephens v.
    Stephens, 
    297 Neb. 188
    , 
    899 N.W.2d 582
     (2017) (remanding
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    to district court to determine equitable distribution of asset
    found to be marital). All such determinations should be made
    based on the existing record.
    CONCLUSION
    The Court of Appeals and the district court erred in their
    application of the active appreciation rule. We reverse the
    decision of the Court of Appeals to the extent it affirmed the
    district court’s award of all but $10,500 from Higgins’ 401K
    account to Higgins. On that issue, we remand the cause to the
    Court of Appeals and direct that it reverse the district court’s
    decree in part and remand the cause with directions to the dis-
    trict court as outlined above. In all other respects, we affirm.
    Affirmed in part, and in part reversed
    and remanded with directions.