CourtListener 4337690•In Re the Marriage of Angela Renee Johnston and Jeremy James Johnston Upon the Petition of Angela Renee Johnston, and Concerning Jeremy James Johnston
In Re the Marriage of Angela Renee Johnston and Jeremy James Johnston Upon the Petition of Angela Renee Johnston, and Concerning Jeremy James Johnston
CourtListener 4337690Iowactapp11.01.2017
Gesamter Gesetzestext
IN THE COURT OF APPEALS OF IOWA
No. 16-0107
Filed January 11, 2017
IN RE THE MARRIAGE OF ANGELA RENEE JOHNSTON AND
JEREMY JAMES JOHNSTON
Upon the Petition of
ANGELA RENEE JOHNSTON,
Petitioner-Appellant,
And Concerning
JEREMY JAMES JOHNSTON,
Respondent-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Audubon County, Jeffrey L. Larson,
Judge.
Angela Johnston appeals from the district court orders dismissing her
application for contempt and denying her application for declaratory judgment.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
Joel C. Baxter of Wild, Baxter & Sand, P.C., Guthrie Center, for appellant.
Gregory J. Siemann of Green, Siemann & Greteman, P.L.C., Carroll, and
Jessica A. Zupp of Zupp & Zupp Law Firm, P.C., Denison, for appellee.
Considered by Danilson, C.J., and Doyle and McDonald, JJ.
2
DANILSON, Chief Judge.
Angela Johnston appeals from the district court orders dismissing her
application for contempt and denying her application for declaratory judgment
asserting her former husband, Jeremy Johnston, was in contempt for failure to
refinance debts and pay her a portion of the proceeds from 2012 corn sales as
ordered in the decree of dissolution of marriage. Angela contends the district
court orders are illegal because they are not supported by substantial evidence.
We find the district court did not err in refusing to find Jeremy in contempt and
affirm. We reverse the district court order as to its findings regarding the division
of the proceeds from the 2012 corn sales, and remand for entry of an order
granting the application for declaratory judgment and for further proceedings.
I. Background Facts & Proceedings.
Angela and Jeremey were married in July 2007. Angela filed the petition
for dissolution of marriage on December 2, 2012. Trial was held July 16 and 17,
2013, and the district court entered the decree of dissolution of marriage on
August 19, 2013. Among other provisions, the decree ordered:
All corn on hand shall be sold within ninety days after the date of
this Decree of Dissolution is filed . . . The debt owing to FSA on the
sealed corn shall be paid first from the gross sale proceeds. . . .
After the deduction of commissions and hauling expenses, the
balance of the sale proceeds from the corn shall be divided equally
between Jeremy and Angela. Jeremy and Angela shall be
separately responsible for any income taxes due and owing as a
result of the sale of the corn.
The court found there were 90,487 bushels of corn on hand. The court
also ordered Jeremy to refinance the debt on the marital residence within ninety
days of the date of the decree so as to remove Angela’s name from that debt.
3
Jeremy was also ordered to hold Angela harmless as to the debts on a vertical till
and his vehicle, 2013 prepaid seed, 2013 operating note, and bin loans.
At an October 2, 2013 hearing on posttrial motions filed by the parties,1
the district court learned that in February 2013, Jeremy entered into contracts for
the sale of 3000 bushels of the 2012 corn crop, ultimately selling 2980.35
bushels and earning a net amount2 of $16,987.38; and that in June 2013, Jeremy
entered into a contract for the sale of 15,000 bushels, selling 14,943.94 bushels
and earning a net amount of $83,550.78. The district court also learned Angela
had executed a security agreement with Landmands National Bank (Landmands)
in February 2013 to secure the bank’s security interest in property, including all
accounts and other rights to payment, inventory, farm products, and “all rights to
crop related income or assets from the 2013 growing season.” A check was
issued to Jeremy, Angela, and Landmands for the August/September sale of
58,994.60 bushels3 of the 2012 corn crop in the net amount of $336,070.94.
Despite her initial refusal to do so, Angela endorsed the check shortly after the
October 2, 2013 hearing. The proceeds of the check were applied to the
principal of the debt to Landmands in the amount of $187,710.12 and to the
accrued interest in the amount of $5774.50.
On October 15, 2013, the district court entered an order clarifying portions
of the dissolution decree. The court acknowledged in the October 15, 2013 order
1
Jeremy filed a motion for the court to take additional evidence on July 29, 2013. On
September 3, 2013, Jeremy filed a second motion for additional evidence and a motion
to amend the dissolution decree. Also on September 3, 2013, Angela filed a “motion
regarding grain sales and proceeds and request for escrow of proceeds with clerk.”
2
The net amount of each sale reflects the amount of funds issued after deductions were
taken for payment of the debt owing to the Farm Security Administration (FSA).
3
Jeremy contracted for the sale of 72,000 bushels.
4
that Jeremy was “to hold Angela harmless from all debts owing to Landmands
National Bank.” The court stated:
Angela is not a signor on Jeremy’s 2013 operating note with the
Bank. Jeremy expects to realize over $741,000 from the 2013
crop. Jeremy does not intend to share income from the 2013 crop
with Angela, and that position is reasonable given the agreement to
sever her from the farming operation as of December 31, 2012. In
light of that agreement, it is not equitable that money drawn against
the 2013 operating note be deducted from Angela’s portion of
marital assets.
Despite this understanding, the remaining proceeds from the August/September
sale of 2012 corn were put toward Jeremy’s 2013 operating loan debt with
Landmands.
With respect to the amount of bushels of 2012 corn on hand that were
sold, the court stated:
Jeremy asserted in his motion for court to take additional evidence,
which was filed July 20, 2013—twelve days after the trial, that “[t]he
parties own 90,487 bushels of corn which is in storage, waiting to
be sold.” In his September 3, 2013 motion, Jeremy suggested that
there may be as little as 64,771 bushels on hand. At the October 2,
2013 hearing, Jeremy presented evidence that 3000 bushels of the
2012 corn crop had been sold in February 2013, that 15,000
bushels of the 2012 corn crop had been sold in June 2013, and that
72,000 bushels of the 2012 corn crop had been sold in August
2013.
While these various numbers and positions reflect on
Jeremy’s reliability as a witness, the court concludes that Jeremy
has sufficiently accounted for the 2012 corn crop. The three sales
during 2013 amount to 90,000 bushels. Some corn was used for
silage and there is a shrinkage factor as the corn dries. Angela’s
allegations that corn is missing or was commingled with corn
owned by Jeremy’s father have not been proven. The disposition
of the 2012 stored corn in the decree of dissolution of marriage is
confirmed.
5
Jeremy filed a petition for bankruptcy on November 12, 2013, and a
bankruptcy stay order was entered. The bankruptcy action was dismissed with
prejudice on December 22, 2014.
Upon Angela’s request for further explanation, the district court entered a
February 5, 2014 order, modifying the equalization payment to correct
mathematical errors. The February order did not address the 2012 corn crop
division. Jeremy appealed, and this court issued an opinion in December 2014,
considering issues affecting the equalization payment and lowering the
equalization payment amount.
Angela filed the application for contempt and application for declaratory
judgment on September 14, 2015. The application for contempt asserted Jeremy
was in contempt for failing to pay the mortgage on the martial residence;
refinance the marital residence; refinance debts on the vertical till, machine
sheds, and grain bins; and pay Angela for her one-half of the 2012 corn crop.
The application for declaratory judgment requested the district court to declare
Angela’s share of the 2012 corn crop amounted to $255,886.10—which would
account for the sale of the entire 90,487 bushels of corn—but not less than
$218,304.55—one-half of the proceeds from the February, June, and August
2013 corn sales. In two orders entered November 9, 2015, the district court
dismissed the application for contempt and denied the application for declaratory
judgment. Angela filed a motion to amend and enlarge findings, which was
denied by the district court in an order entered December 22, 2015. Angela now
appeals.
6
II. Standard of Review.
We employ a unique standard of review in contempt actions. In re
Marriage of Swan, 526 N.W.2d 320, 326 (Iowa 1995). “If there has been a
finding of contempt, we review the evidence to assure ourselves that the court’s
findings are supported by substantial evidence.” Id. at 326-27. “A different
standard of review exists on appeals from the trial court’s refusal to hold a party
in contempt under a statute that allows the trial court some discretion.” Id. at
327. Iowa Code section 598.23(1) (2015) provides “[i]f a person against whom a
temporary order or final decree has been entered willfully disobeys the order or
decree, the person may be cited and punished by the court for contempt.”
Therefore, the trial court is afforded broad discretion and “unless this discretion is
grossly abused, the [trial court’s] decision must stand.” Swan, 526 N.W.2d at
327 (citation omitted).
“Our review of actions for declaratory judgment depends upon how the
action was tried to the district court.” Passehl Estate v. Passehl, 712 N.W.2d
408, 414 (Iowa 2006). “To determine the proper standard of review, we consider
the ‘pleadings, relief sought, and nature of the case [to] determine whether a
declaratory judgment action is legal or equitable.’” Id. (citation omitted).
Where there is uncertainty, a litmus test we have applied is whether
evidentiary objections were ruled on by [the] trial court. If so, the
action is one at law. Another indication that the action is a legal
one is the parties’ filing of motions normally made in legal actions.
Further, a trial court generally issues a “decree” in an equitable
action and a “judgment” in a legal action.
Van Sloun v. Agans Bros., Inc., 778 N.W.2d 174, 178 (Iowa 2010) (citations
omitted).
7
Jeremy asserts both parties made, and the district court ruled upon,
objections at the hearing on the applications for contempt and declaratory
judgment. Thus, Jeremy contends the proper standard of review is for correction
of errors at law. Angela does not dispute this assertion. We, therefore, review
the district court’s denial of the application for declaratory judgment for correction
of errors at law.4 “Under this standard of review, the trial court’s findings carry
the force of a special verdict and are binding if supported by substantial
evidence. We are not, however, bound by the trial court’s legal conclusions.” Id.
at 179 (citations omitted). We first review the denial of the application for
declaratory judgment.
III. Order Denying the Application for Declaratory Judgment.
Angela contends substantial evidence does not support the district court’s
erroneous determination she was paid for her portion of the 2012 corn crop
proceeds or that the issue was in some fashion considered by subsequent district
court orders or by our prior ruling in In re Marriage of Johnston, No. 13-1751,
2014 WL 6977201 (Iowa Ct. App. Dec. 10, 2014).
In the order denying the application for declaratory judgment, the district
court stated, “The corn on hand was sold, and the proceeds were divided
pursuant to the decree of dissolution.” The district court held:
[T]he district court’s dissolution decree and subsequent orders and
the court of appeals ruling have dealt with the issue of the parties’
grain distribution. This court finds that the sale of the grain and the
distribution of those proceeds has been accomplished pursuant to
the decree of dissolution and the district court’s subsequent orders,
4
In any event, were we to review the order denying the application for declaratory
judgment for an abuse of discretion, we would reach the same result.
8
as well as the court of appeals’ opinion. The petitioner’s application
for declaratory judgment is denied.
Jeremy contends Angela is precluded from bringing claims regarding the
division of the 2012 corn crop at this time because the issue has already been
addressed by the district court orders and this court on appeal. However, on
appeal, this court approved the property and debt division by the district court
and only addressed issues affecting the equalization payment. Johnston, 2014
WL 6977201, at *6. Specifically, we addressed whether the district court gave
appropriate consideration to gifts the parties received and the value of their
premarital property. Id. at *3. We also considered Jeremy’s request to review
the district court’s declination to liquidate all of the assets. Id. at *5.
We acknowledge our court has concluded that crops that constitute
“income,” even growing crops, are an asset subject to equitable property division
pursuant to Iowa Code section 598.21. In re Marriage of Erpelding, No. 10-1445,
2011 WL 3480978, at *5 (Iowa Ct. App. Aug. 10, 2011). But it is abundantly clear
that the 2012 crop on hand at the time of the dissolution trial was not included in
district court’s calculation of the equalization payment. We reach this conclusion
because the 2012 crop is not identified in the chart calculating the equalization
payment in the decree or in the chart in the court’s order filed October 15, 2013.
The crop was, however, equally awarded to the parties in the decree. And,
although we affirmed the entire property division as modified, there is no specific
reference or modification of the award of the 2012 crop in our prior ruling. See
Johnston, 2014 WL 697720, at *1-6.
9
Moreover, because the 2012 crop was divided equally between the
parties, it had no effect on the calculation of the equalization payment under
these facts. The division of the 2012 corn crop was simply an issue that was
considered separately from the determination of the appropriate equalization
payment by both the district court and the court of appeals.5 Thus, our opinion in
Johnston does not affect Angela’s ability to bring these claims. Additionally, our
review of the district court’s orders reflects the district court did not modify the
original decree requiring the 2012 corn crop be divided equally between the
parties, as the district court explained that its earlier ruling in the decree was
“confirmed.”
We agree the order denying Angela’s application for declaratory judgment
was in error. Jeremy has not presented evidence of payment, and the 2012 corn
crop was not considered in determining the amount of the equalization payment.
As a result, the district court failed to address Angela’s assertions in the
application for declaratory judgment regarding the amount she is owed for her
portion of the 2012 corn crop proceeds. Therefore, we reverse the district court’s
denial of the application for declaratory judgment, and remand for entry of a
declaratory judgment declaring Angela’s continued entitlement to the proceeds of
one-half of “all corn on hand,” which was the remaining 2012 crop that the parties
and district court believed existed at the time of entry of the decree, 90,467
bushels, less the deduction for commissions and hauling expenses and the
5
If the 2012 crop on hand had been incorporated into the chart and calculation set forth
in the decree, the asset’s net value would have been at best an estimate because not all
of the crop was sold, and the deductions from the gross proceeds would have also been
estimates.
10
amount repaid to FSA on the sealed corn.6 We also remand for a hearing to
determine the proper amount of such deductions and a new payment schedule.
IV. Order Dismissing the Application for Contempt.
Angela also contends the district court’s order dismissing her application
for contempt filed in September 2015 is “illegal” because it is not supported by
substantial evidence. Specifically, Angela contends the court abused its
discretion by failing to find Jeremy in contempt for his failure to hold Angela
harmless from the mortgage debt on the marital acreage. Angela also contends
the district court failed to address, and should have found Jeremy in contempt for
his failure to divide the proceeds, or pay Angela one-half of the net proceeds for
the 2012 corn crop.
“In order to find a person guilty of contempt, a court must find beyond a
reasonable doubt that the individual willfully violated a court order or decree.” In
re Marriage of Jacobo, 526 N.W.2d 859, 866 (Iowa 1995); see Iowa Code
§ 598.23(1).
A party alleging contempt has the burden to prove the contemner
had a duty to obey a court order and willfully failed to perform that
duty. If the party alleging contempt can show a violation of a court
order, the burden shifts to the alleged contemner to produce
evidence suggesting the violation was not willful. However, the
person alleging contempt retains the burden of proof to establish
willfulness beyond a reasonable doubt . . . .
6
In our use of the phrase “at the time of the entry of decree,” we specifically include the
90,487 bushels each party believed existed at that time. This quantity of bushels
includes the crops sold in February and June 2013—as shown by the sales contracts
included in the record as exhibits 133A and 133B.The sales of some of the crop in
February and June were facts unbeknownst and undisclosed to the decretal court at the
time of trial.
11
Ary v. Iowa Dist. Ct., 735 N.W.2d 621, 624 (Iowa 2007) (citation omitted). There
are two ways a contemnor may show that a failure to comply with a court order
was not willful: (1) by showing that the order was indefinite on the issue; or (2) by
showing that the contemnor was unable to perform the act ordered. Christensen
v. Iowa Dist. Ct., 578 N.W.2d 675, 678 (Iowa 1998).
A. Failure to hold Angela harmless as to the mortgage. Angela asserts
the district court erred in determining Jeremy was not in contempt for his failure
to assume payment of the mortgage on the marital acreage.
In response to Angela’s application for contempt, Jeremy argued his
petition for bankruptcy and the resulting bankruptcy stay order prevented him
from paying the mortgage. Additionally, Jeremy asserted Angela contributed to
her damages with respect to the mortgage. Although Jeremy was awarded the
marital residence in the August 2013 dissolution decree, Angela continued living
in the home until January 2014 when she was found in contempt for failing to
vacate the residence. Additionally, Jeremy contends Angela hindered Jeremy’s
ability to obtain financing to pay the mortgage because she refused to provide
the mortgage information to Jeremy and bank representatives. Jeremy also
contends Angela hindered the sale of the home by objecting to two sales due to
her understanding that Jeremy was not following the proper bankruptcy
procedure. By the time Angela’s application for contempt was filed, the martial
residence had been disposed of by execution of a deed in lieu of foreclosure.
After Angela executed the deed as requested, the bank released her under the
note, released her from liability for missed payments on the mortgage, and
released her from liability for attorney fees incurred by the bank.
12
In its order dismissing the application for contempt, the district court did
acknowledge Jeremy “failed to pay approximately three mortgage payments on
the residence.” However, the court also noted Jeremy “testified that his failure
was based on his dire financial situation that resulted in his declaring
bankruptcy.” Therefore, the court held Angela had “not met her burden to show
[Jeremy] [wa]s in willful violation of the court’s orders” and dismissed the
application for contempt.
We conclude the district court’s determination that Jeremy did not willfully
violate the decree is supported by substantial evidence from which a rational trier
of fact could determine beyond a reasonable doubt Jeremy was not in contempt.
Jeremy was legally prevented from making any payments on the mortgage by
the bankruptcy stay order. Additionally, once the matter was resolved on appeal
and the bankruptcy action was dismissed, Jeremy refinanced his debts as
ordered by the decree and made a substantial payment to Angela. Rather than a
willful violation, Jeremy’s actions exhibit a reasonable effort to comply with the
requirements of the decree of dissolution. We thus affirm the district court’s
determination Jeremy was not in contempt for failure to hold Angela harmless as
to the mortgage.
B. Failure to divide the proceeds from the 2012 corn on hand. Angela also
contends the district court’s order dismissing her application for contempt failed
to address Jeremy’s failure to pay Angela for one-half of the proceeds from the
sale of the 2012 corn on hand. Angela’s motion to enlarge and amend requested
the court address this issue, but the motion was denied without explanation.
Angela asserts substantial evidence does not support the finding that Jeremy
13
was not in contempt for failure to pay her for one-half of the 2012 corn crop
proceeds.
We have previously addressed Jeremy’s claim that Angela was precluded
by past court orders and our prior ruling from initiating the contempt proceedings.
None of the post-decree orders by the district court modified or relieved Jeremy
of his duty to pay Angela for one-half of the proceeds from the 2012 corn crop.
Neither party disputes that Angela did not receive a cash payment for her portion
of the 2012 corn crop proceeds after reduction for commissions, hauling
expenses, and the debt owing to FSA.
Rather, Jeremy asserts Angela’s one-half of the proceeds were properly
taken by Landmands due to Angela’s March 2013 security agreement with
Landmands. However, while the March 2013 security agreement secured
Landmand’s interest in the proceeds, it did not relieve Jeremey of the duty to
hold Angela harmless as to the 2013 operating loan and to pay Angela for one-
half of the 2012 corn crop proceeds. A portion of Angela’s proceeds from the
2012 corn crop was paid toward the 2013 operating loan despite the order in the
dissolution decree that she be held harmless for that debt.
In respect to the issue of Jeremy’s willful failure to pay, we note there was
a bankruptcy stay order7 pending from November 12, 2013, until December 22,
2014, when the bankruptcy proceeding was dismissed. At least until
December 23, 2014, we would not conclude Jeremy’s nonpayment was willful.
We conclude, however, that in light of the terms of the decree, post-decree
orders, and our own ruling, there was sufficient indefiniteness or confusion of
7
See 11 U.S.C. § 362(a).
14
Jeremy’s obligations to withhold a finding of contempt. We observe an
experienced district court judge also concluded Jeremy’s payment obligation had
been resolved. Accordingly, we affirm the district court’s order dismissing
Angela’s application for contempt. However, Jeremy is not shielded from future
applications should he fail to follow the district court’s new payment date or
schedule.
V. Attorney Fees.
Angela also requests attorney fees pursuant to Iowa Code section 598.24,
which allows for a discretionary award of attorney fees to a party bringing a
successful action for contempt. Angela was not successful on appeal in respect
to her application for contempt and, therefore, we decline Angela’s request for
attorney fees.
VI. Conclusion.
We affirm the district court’s finding that Jeremy was not in contempt for
failure to hold Angela harmless as to the mortgage and payment for one-half of
the 2012 corn on hand at the time of the entry of the decree, as we have defined
that amount. However, we find the district court erred in determining Angela has
been paid for one-half of the 2012 corn on hand. We reverse the district court’s
order denying the application for declaratory judgment on the issue of division of
the 2012 corn on hand, and we remand for entry of an order granting the
application, fixing a new payment date or schedule, and further proceedings
consistent with this opinion. We decline to award attorney fees.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
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