In re Marriage of Lewis

IN THE COURT OF APPEALS OF IOWA

No. 22-0169
Filed March 8, 2023

IN RE THE MARRIAGE OF MELISSA KAY LEWIS
AND DAVID EDWARD LEWIS

Upon the Petition of
MELISSA KAY LEWIS,
Petitioner-Appellee/Cross-Appellant,

And Concerning
DAVID EDWARD LEWIS,
Respondent-Appellant/Cross-Appellee.
________________________________________________________________

Appeal from the Iowa District Court for Polk County, Jeanie K. Vaudt, Judge.

A husband and wife appeal the economic terms of their dissolution decree.

AFFIRMED ON APPEAL; AFFIRMED AS MODIFIED ON CROSS-APPEAL.

Andrew B. Howie, Steven H. Shindler, and Jonathon P. Tarpey of Shindler,

Anderson, Goplerud, & Weese, P.C., West Des Moines, for appellant.

Anjela Shutts and Anna E. Mallen of Whitfield & Eddy, P.L.C., Des Moines,

for appellee.

Heard by Tabor, P.J., and Schumacher and Chicchelly, JJ.
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CHICCHELLY, Judge.

This appeal involves the economic terms of the decree dissolving the

marriage of David and Melissa Lewis. David appeals the division of marital

property. Melissa cross-appeals, arguing she should be awarded spousal support

and an accelerated timeline to receive the property equalization payment. Both

parties request appellate attorney fees, and Melissa argues the district court failed

to do equity in denying her request for trial attorney fees. Upon our de novo review,

we affirm the district court order with respect to the division of marital property,

spousal support, and trial attorney fees. However, we modify the property

equalization award to include interest on the installment payments and decline to

award appellate attorney fees.

I. Background Facts and Proceedings.

Melissa and David were married in 1986 and have three adult children.

Melissa obtained her bachelor’s degree in accounting in 1991. She worked part-

time in the accounting field over the next several years. David obtained two

bachelor’s degrees, one in 1989 and another in 1990, as well as a master’s degree

in business administration in 2000. He worked as an engineer from 1989 to 2002.

In 2002, the parties jointly purchased Creativision, Inc., an Iowa corporation

under which they do business as Performance Display & Millwork (PDM). Since

then, David and Melissa have worked full-time for the company, which

manufactures commercial millwork, cabinetry, and retail displays. They formed

two additional entities for the purpose of holding real estate for PDM: Merge Right

LLC in 2008 and Merge Left LLC in 2017. Melissa and David exclusively own all

three businesses. Melissa is the chief executive officer and president of PDM and
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is responsible for accounting and financial operations. David is the executive vice

president and generally responsible for sales and operations.

Over the years, Melissa and David typically paid each other equal salaries,

although some years were disproportionate depending on the needs of the

business. At the time of purchase, PDM was averaging about $2 million in annual

sales and had roughly nine employees. Under the parties’ ownership, the business

grew to about sixty employees and approximately $9 to $10 million in annual sales.

David and Melissa acknowledged PDM has experienced ups and downs, variably

earning a net profit or loss. They have personally loaned nearly $400,000 to PDM.

The parties’ marital issues and the COVID-19 pandemic negatively impacted PDM

in 2020. David testified that PDM would have gone out of business without the

financial aid it received from governmental relief programs. But trial testimony

established that a PPP loan taken out in 2020 was forgiven the same year, and

PDM expected a second PPP loan of $915,000 would also be forgiven. And by

the time of trial, PDM had seen an uptick in sales, reporting nearly $7.5 million by

the third quarter of 2021.

Melissa filed for divorce in June 2020 and informed PDM’s executive

leadership team that she would be stepping down from the company after the

dissolution was finalized. A two-day Zoom trial was held in November 2021, at

which time Melissa was fifty-seven years old and David was fifty-six years old.

Both parties reported being in relatively good physical and mental health. The

district court granted the parties’ business holdings to David. It denied Melissa’s

request for spousal support but purported to find her valuation of PDM more

credible. The court awarded David certain marital assets and assigned those
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assets a net value of $3,814,064. The court awarded Melissa certain marital

assets and assigned those assets a net value of $759,508.1 To equalize the

property distribution, the court ordered a $1,527,278 property settlement against

David to be paid in $75,000 annual installment payments for the first six years

following entry of the decree and then satisfied entirely by a lump sum payment at

the end of the seventh year in the amount of $1,077,278. David filed a timely

appeal, and Melissa cross-appealed.

II. Review.

Because dissolutions of marriage are equitable proceedings, our review is

de novo. In re Marriage of Mauer, 874 N.W.2d 103, 106 (Iowa 2016). We give

weight to the factual findings of the district court, especially when considering the

credibility of witnesses, but are not bound by them. Id. We will disturb those

findings only if they fail to do equity. Id. “There are no hard and fast rules

governing the economic provisions in a dissolution action; each decision depends

upon the unique circumstances and facts relevant to each issue.” In re Marriage

of Gaer, 476 N.W.2d 324, 326 (Iowa 1991).

In addition, “[w]e review the denial of attorney fees for an abuse of

discretion.” In re Marriage of Kimbro, 826 N.W.2d 696, 698 (Iowa 2013). “We

reverse the district court’s ruling only when it rests on grounds that are clearly

unreasonable or untenable.” Id.

1 The trial court adopted the valuations set forth in Melissa’s exhibit 46.
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III. Discussion.

A. Division of Marital Property.

David contends the district court inequitably divided the parties’ marital

property by awarding a property settlement to Melissa based upon her

unsubstantiated valuation of the parties’ business holdings. Effectively, David

does not challenge the fact that the district court attempted to equalize the

distribution of property but disputes the underlying valuations for PDM and the

holding companies used to calculate that equalization. See In re Marriage of

Fennelly, 737 N.W.2d 97, 102 (Iowa 2007) (“Although an equal division is not

required, it is generally recognized that equality is often most equitable.” (citation

omitted)).

David presented expert testimony regarding the value of the companies

using an asset-based approach, which essentially valued the companies as if they

were being liquidated for sale. Among other challenges to David’s figures, Melissa

asserted David’s valuation approach was improper because he testified that he

wants to stay in business. See In re Marriage of Friedman, 466 N.W.2d 689, 691

(Iowa 1991) (“In the case at bar, the problem with considering tax

consequences . . . is that there was no evidence that a sale was pending or even

contemplated.”); see also In re Marriage of Treimer, No. 09-1390, 2010 WL

1579646, at *5 (Iowa Ct. App. Apr. 21, 2010) (declining to account for the costs of

sale and capital gains tax in the valuation of the parties’ farmland because there

was no evidence that the receiving party planned on selling the farm).

After acknowledging Melissa’s critiques of David’s valuations, the court

explicitly adopted Melissa’s “valuations” of all three companies as more credible.
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However, Melissa provided no third-party valuations. Her requested relief listed

the values for PDM and Merge Left as “unknown” and indicated Merge Right’s

value was $12,497. Melissa explained that she accounted for the businesses in

this way because she was requesting spousal support, so PDM should be valued

using an income approach to calculate David’s ability to pay alimony. Ultimately,

the district court declined to award alimony and needed to divide the value of the

businesses. By basing its order upon the numbers Melissa provided for the parties’

business and personal assets, the court effectively assigned a value of zero dollars

for the companies Melissa labelled as “unknown.”

After a careful review of the evidence, we find the district court’s valuations

of property and property distribution were equitable. See In re Marriage of Vieth,

591 N.W.2d 639, 641 (Iowa Ct. App. 1999) (“[W]e give strong deference to the trial

court which, after sorting through the economic details of the parties, made a fair

division supported by the record.”). “Although our review is de novo, we will defer

to the trial court when valuations are accompanied with supporting credibility

findings or corroborating evidence.” Id. at 640. Here, the district court made an

express credibility finding in favor of Melissa. Specifically, it noted that David’s

expert valued PDM as negative $1,515,000 based upon reductions to the accounts

receivable and value of inventory informed by figures David provided “with little, if

any, verification.” In fact, the reductions to the accounts receivable and inventory

total more than the negative value of the business put forth by David and would

actually support a positive valuation for PDM if removed altogether. Moreover,

David’s valuations of Merge Right and Merge Left included a ten-percent reduction

for lack of marketability and setoffs for capital gains taxes despite the fact that
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David testified at trial that he did not wish to sell the companies. Given these

unsubstantiated deductions, the district court’s decision to value PDM and Merge

Left at zero dollars and Merge Right at $12,497 was within the permissible range

of evidence, and we will not disturb it on appeal. See In re Marriage of Hansen,

733 N.W.2d 683, 703 (Iowa 2007) (“[A] trial court’s valuation will not be disturbed

when it is within the range of permissible evidence.”).

As for the payment terms ordered for the property equalization award, we

take issue only with the lack of interest imposed. Melissa contends that spreading

the payments out over seven years without interest effectively forces her to finance

David’s continued operation of the business. She suggests ordering the payments

be made over four years with interest accruing at a rate of five percent. Although

we decline to adjust the payment timeline, we modify the award to reflect that it

shall be considered a judgment and accrue interest at the statutory rate beginning

six months from the date of this opinion until such time as it is paid in full. See In

re Marriage of Galles, No. 16-2211, 2017 WL 6026474, at *7 (Iowa Ct. App. Nov.

22, 2017) (“Payment of a property equalization in installments has been approved

by our supreme court, see In re Marriage of Conley, 284 N.W.2d 220, 223 (Iowa

1979), as long as the court provides for interest on the delayed payments.”). We

affirm the court’s distribution of property save for our imposition of interest.

B. Spousal Support.

Spousal support depends on the circumstances of each case and factors

the comparative earning capacities of the parties. See In re Marriage of

Schenkelberg, 824 N.W.2d 481, 486–87 (Iowa 2012). Because the court has

“considerable latitude” in determining an award of spousal support, we only disturb
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the award if it fails to do equity. Id. at 486. Melissa requested David pay her

traditional alimony in the amount of $6250 per month, which is equivalent to her

most recent salary from PDM. She testified that she anticipated difficulty finding a

new position with a comparable salary. Melissa also testified that she had no

definite plans for seeking new employment after leaving PDM and had not begun

searching for a new job because she did not know when she would be leaving

PDM. The district court found that Melissa is self-sufficient and “does not have a

significantly lower earning capacity than David.” Furthermore, the court did not

“anticipate that spousal support will be necessary for either party to maintain their

respective lifestyle following this dissolution.”

“[T]he imposition and length of an award of traditional alimony is primarily

predicated on need and ability.” In re Marriage of Gust, 858 N.W.2d 402, 411

(Iowa 2015). Melissa has no physical or mental conditions that would prevent her

from engaging in full-time employment. She has a bachelor’s degree and twenty-

nine years of accounting experience. Despite Melissa’s lack of concrete prospects

for future employment, we find her earning capacity does not support a need for

alimony. See id. (“In determining need, we focus on the earning capability of the

spouses, not necessarily on actual income.”). Under these circumstances, we

cannot find the district court’s decision to deny spousal support inequitable.

Therefore, we affirm on this issue.

C. Attorney Fees.

Melissa argues the district court abused its discretion in declining to award

her trial attorney fees. She explained that she paid the first $5000 of her attorney

fees on a business credit card but paid the rest personally. Prior to trial, David
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paid $10,000 in attorney fees from the parties’ joint checking account and another

$10,000 with a business credit card. Therefore, Melissa requested $15,000 to

equalize the financial impact of the dissolution proceedings. However, the district

court held that “[n]either party here has the ability to pay the other party’s attorney

fees.” See Kimbro, 826 N.W.2d at 704 (“Whether attorney fees should be awarded

depends on the respective abilities of the parties to pay.” (citation omitted)). Any

personal payment for attorney fees should have been reflected in the accounts

identified for division between the parties. Therefore, we find Melissa’s

equalization argument without merit. Because the parties were earning

comparable incomes at the time of trial, we find no abuse of discretion in the district

court’s decision to deny Melissa’s request for trial attorney fees. We affirm on this

issue.

Additionally, each party requests an award of their appellate attorney fees.

Such an award is not a matter of right but rests in our discretion. See In re Marriage

of McDermott, 827 N.W.2d 671, 687 (Iowa 2013). In exercising this discretion, we

consider the needs of the party seeking appellate attorney fees, the other party’s

ability to pay, and the merits of the claims made on appeal. See id. Given the

comparable financial positions of the parties and combination of arguments

asserted on appeal, we decline to award either party appellate attorney fees.

IV. Disposition.

In summary, we affirm the district court’s valuation and equitable distribution

of the marital property but modify the terms to include interest on the installment

payments. Because Melissa has failed to establish an ongoing need for spousal

support, we affirm the court’s decision not to award alimony. We likewise affirm
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the court’s decision to deny Melissa’s request for trial attorney fees. We

furthermore decline to award appellate attorney fees to either party.

AFFIRMED ON APPEAL; AFFIRMED AS MODIFIED ON CROSS-

APPEAL.