Opinion
No. 4-128 / 03-1131.
August 26, 2004.
Appeal from the Iowa District Court for Linn County, Kristin L. Hibbs, Judge.
John Schriner appeals the property and alimony provisions of a dissolution decree. AFFIRMED.
James W. Affeldt and Robert M. Hogg of Elderkin Pirnie, P.L.C., Cedar Rapids, for appellant.
Matthew J. Brandes and Elizabeth V. Croco of Simmons, Perrine, Albright Ellwood, P.L.C., Cedar Rapids, for appellee.
Heard by Vogel, P.J., and Hecht and Vaitheswaran, JJ.
John Schriner appeals the property and alimony provisions of a dissolution decree. He contends the district court acted inequitably in 1) subjecting his workers' compensation award to property distribution, 2) fixing spousal support, and 3) requiring him to maintain life insurance. We affirm, after our de novo review.
I. Background Facts and Proceedings
John and DeAnn Schriner married in 1970 and divorced in 2003. Both were fifty-five years old at the time of trial. Both had a high school education. In addition, John received almost a year of electronics training in the Marine Corps, and DeAnn earned a certificate in word processing from Kirkwood Community College.
Following graduation from high school, DeAnn worked in the purchasing department of a manufacturing company and as a teletype operator. From 1972 to 1984, she stayed at home to raise the parties' three children. In 1984, she began working in the clerk of court's office at the county courthouse. At the time of trial, she was earning $15.86 per hour.
John worked on electric forklifts, then worked at a packing plant, and next spent two years performing general maintenance for another company. In 1990, he was offered a position as an apprentice electrician at Quaker Oats. At the time of trial, he earned $24.21 per hour, but expected an imminent increase to $25.38 per hour. He also received a premium of $.35 per hour for working evening and night shifts.
John sustained an on-the-job neck injury in 2001 for which he sought workers' compensation benefits. A physician determined that he suffered a permanent partial disability. Quaker Oats agreed to pay John benefits for 125 weeks at $730.26 per week. At the time of trial, he had received $59,151.06 of these benefits and expected to receive another $32,131.44.
John later suffered a second on-the-job injury — a ruptured disk in his lower back. John's employer agreed to pay benefits. DeAnn claims no entitlement to any portion of the benefits associated with this injury.
DeAnn petitioned for a divorce. She requested temporary and permanent spousal support. The district court ordered John to pay DeAnn $900 per month in temporary child support. After undergoing surgery on his lower back in connection with his second injury, John applied to modify the temporary support award. The district court dismissed the application as moot because "[t]he court was assured that counsel had a plan for paying temporary alimony until trial. . . ."
Following trial, the district court ordered John to pay DeAnn $1400 per month in alimony until retirement and, thereafter, $700 per month until she dies, he dies, or she remarries. The court divided the parties' assets and then awarded DeAnn $22,109 of John's workers' compensation benefits as an equalizing payment. John was ordered to provide life insurance in an amount of at least $200,000 and at least $80,000 after he reached age sixty-six. John appealed.
II. Treatment of Workers' Compensation Benefits
John challenges the district court's treatment of his workers' compensation benefits from his first work-related injury. He contends the benefits should be treated as income rather than property and he argues that "the trial court erred by counting John's workers' compensation payments as `marital property' subject to the equitable division." Notably, John did not make the same argument before the district court. There, he contended that the workers' compensation benefits were property subject to division but needed to be allocated to him. Because his present argument differs fundamentally from his argument before the district court, we have serious concerns as to whether John preserved error. See Top of Iowa Coop. v. Sime Farms, Inc., 608 N.W.2d 454, 470 (Iowa 2000) (stating we will consider whether error was preserved whether or not raised by opposing party). However, we will bypass our error preservation concerns and proceed to the merits.
His financial affidavit filed before trial, two exhibits offered at trial, and his statement of requested relief filed several days after the district court filed its decree, listed his workers' compensation benefits as an asset and included them in the property subject to division.
We begin with our law on construction of statutes. That law defines "property" as "personal and real property." Iowa Code § 4.1(24) (2003). "Personal property" includes "money, goods, chattels, evidences of debt, and things in action." Id. § 4.1(21); In re Marriage of Ruter, 564 N.W.2d 849, 851 (Iowa Ct.App. 1997). Under these broad definitions, workers' compensation benefits could constitute "property."
Turning to the dissolution statute, Iowa Code section 598.21(1) authorizes the district court to "divide all property [of the parties], except inherited property or gifts received by one party, equitably between the parties," after considering a list of enumerated factors. By its terms, this provision subjects all property to division, with two limited exceptions. The wording of the statute, therefore, would suggest that workers' compensation benefits are subject to division.
The Iowa Supreme Court has endorsed this "wording of the statute" or "mechanistic" approach to determining what should and should not be included among the assets subject to division. In In re Marriage of McNerney, 417 N.W.2d 205, 207 (Iowa 1987), the court was asked to decide whether "proceeds of a personal injury claim, although omitted from the statute, should be withheld from division between the parties." The court examined two approaches to resolving this question. It stated that, under the "mechanistic" approach, "the court looks to the wording of the statute for the items expressly deleted from the property to be equitably distributed." McNerney, 417 N.W.2d at 207. Under the "analytic" approach, "the inquiry is into what the personal injury award was intended to replace." Id. at 207-08. See, e.g., Queen v. Queen, 521 A.2d 320, 326 (Md. 1987); Mistler v. Mistler, 816 S.W.2d 241, 249 (Mo.Ct.App. 1991); Crocker v. Crocker, 824 P.2d 1117, 1123 (Okla. 1991). The court concluded the "analytic" approach was "actually more mechanical than the so-called mechanistic approach which leaves courts with more flexibility in dividing the property." McNerney, 417 N.W.2d at 208. Accordingly, the court adopted the mechanistic approach, stating "it is more just to allow a trial court the flexibility to divide the property equitably on a case-by-case basis." Id. See, e.g., Lopiano v. Lopiano, 752 A.2d 1000, 1010-11 (Conn. 1998) (construing "property" broadly to include personal injury award); Marsh v. Marsh, 437 S.E.2d 34, 36-37 (S.C. 1993) (holding proceeds of personal injury settlement acquired during marriage are marital property subject to family court's jurisdiction). Having adopted this approach, the court held that the proceeds of a personal injury settlement were subject to the court's property division and the court affirmed the district court's division of the award. McNerney, 417 N.W.2d at 208.
McNerney resolves the question of whether John's workers' compensation benefits should be included in the property division. Whether it is denominated a "wording of the statute," "mechanistic", or "flexible" approach, the McNerney approach dictates that the benefits be included. Cf. In re Marriage of Swan, 526 N.W.2d 320, 325 (Iowa 1995) ("We think it is unwise to establish one rule to be applied in all cases. The appropriate treatment of a lump-sum payment of workers' compensation benefits depends on the circumstances of each case."); In re Marriage of Plasencia, 541 N.W.2d 923, 926 (Iowa Ct.App. 1995) (stating "proceeds of a personal injury claim are divided according to the circumstances of each case").
We reach this conclusion notwithstanding the fact that workers' compensation awards have been treated as income in some contexts. See Swan, 526 N.W.2d at 325. As DeAnn points out, the fact that workers' compensation benefits have been treated as income for purposes of calculating child support does not preclude their inclusion as property for other purposes.
We also are not persuaded by John's argument that workers' compensation awards for permanent partial disability are distinguishable from personal injury awards in that they compensate for lost earning capacity rather than actual lost earnings. An analysis of what an award is intended to replace is peculiar to the "analytic" approach that the court rejected in McNerney. 417 N.W.2d at 208.
We turn to the district court's division of the award. The total award for the first injury was $91,250. The court included the entire sum in the property subject to distribution. Of the $59,151.06 in accrued and paid benefits, the court allocated $37,041.07 to John and ordered him to give the remaining $22,109.99 to DeAnn. As for the $32,131.44 in yet-to-be-paid workers' compensation benefits, the court awarded the entire sum to John.
We believe this allocation was equitable. It resulted in an equal distribution of property, which was justified based on the length of the parties' marriage, their respective contributions to the marriage, and their relative financial situations at the end of the marriage.
III. Spousal Support
The district court ordered John to pay DeAnn $1,400 per month in spousal support until she is sixty-six. At that point, the court reduced his obligation to $700 per month, to continue until John's death, DeAnn's death or DeAnn's remarriage, whichever event occurs first.
John contends the award of spousal support was inequitable because the order 1) assumed he would be able to work significant overtime, 2) failed to account for his higher housing costs relative to DeAnn's, 3) did not consider his obligation to make an equalizing payment based on his receipt of workers' compensation benefits, and 4) did not account for the speculative nature of his post-retirement investment income.
With respect to overtime, we are sympathetic to John's claim that he should not be forced to work overtime in order to pay his obligation. See, e.g., In re Marriage of Geil, 509 N.W.2d 738, 742 (Iowa 1993) (stating overtime excluded from guideline calculation of child support where party forced to work extra hours to meet obligation); In re Marriage of Brown, 487 N.W.2d 331, 333-34 (Iowa 1992) (holding father's overtime pay should be considered income for child support purposes because it was "not an anomaly or speculative," but noting that "he is not required to work overtime to satisfy his child support obligation"); In re Marriage of Close, 478 N.W.2d 852, 854-55 (Iowa Ct.App. 1991) (refusing to base father's child support obligation in part on his overtime pay because it would "clearly be requiring him to work overtime to satisfy his obligation"); In re Marriage of Heinemann, 309 N.W.2d 151, 152-53 (Iowa Ct.App. 1981) (ordering father to pay twenty-five percent of his overtime income as child support and noting that "this provision reflects our belief that petitioner's child support obligation should not be so burdensome that he is required to work overtime to satisfy it"). However, John admitted he had "been working for many, many years, close to 30 years, six and seven days a week." He further admitted he continued to work six days a week after his back surgery. On this record, we conclude that John's overtime pay was not speculative, his back pain did not prevent him from handling more than forty hours per week, and he did not work overtime solely to satisfy his spousal support obligation. Should John's physical health change substantially, he is not foreclosed from filing an application to modify the alimony award.
As for John's housing costs, those costs were included in his affidavit of financial status filed with the court before trial, as were DeAnn's home-related expenses.
The same holds true for the "equalizing payment" John was obligated to pay. The district court presumably factored in the property distribution in deciding whether spousal support was appropriate. In re Marriage of Siglin, 555 N.W. 2d 846, 850 (Iowa Ct.App. 1996) (stating that property division is considered when awarding alimony).
We conclude an award of spousal support was appropriate. We now turn to the amount of the award.
As noted, the pre-retirement award was $1,400 per month until DeAnn turns sixty-six. This amount is equitable. This was a long marriage. John received many of the income producing assets. His employment income is more than twice DeAnn's. Finally, DeAnn retained an expert who opined that $1400 per month in pre-retirement spousal support "was reasonable to allow both her and John to maintain their lifestyles, to put them in a position equal to where they were when they were married." This opinion was essentially uncontroverted.
As for the post-retirement award, DeAnn's financial expert testified that DeAnn would receive $1,702 per month and John would receive $2,759 in pension and social security income. The expert noted that these benefits would continue to grow and she estimated that John would have an additional $350,000 to $500,000 in assets at retirement. Given this testimony, we believe the district court's award of $700 per month in post-retirement spousal support was equitable.
IV. Life Insurance
The district court required John to maintain life insurance "so long as he has a support obligation owed to DeAnn." The court ordered John to insure his life for at least $200,000 and name DeAnn as the sole beneficiary on the policy until he reaches the age of sixty-six, at which time the amount of insurance may be reduced to $80,000. John claims this portion of the decree was inequitable "because the trial court did not find any facts that would require John to support DeAnn after his death." In the alternative, he argues that he should not have been required to maintain life insurance in an amount above that of his employer-provided life insurance.
The district court's insurance order is tied to its award of spousal support, which is supported by fact findings. Specifically, the court found that "[a] reasonable amount of alimony is needed to supplement DeAnn's earnings to allow her to be self-supporting in a standard of living reasonably comparable to that enjoyed during the marriage."
We turn to John's alternate argument that insurance should be limited to that provided by his employer. At the time of trial, John had life insurance through his employer in an amount equal to 150% of his annual base earnings, had the option of purchasing supplemental insurance from his employer at an undisclosed cost, and had additional policies paying death benefits of approximately $42,000. In the absence of evidence that increasing the death benefit to $200,000 would be cost prohibitive, we decline to modify the insurance requirement. See In re Marriage of Weinberger, 507 N.W.2d 733, 736 (Iowa Ct.App. 1993) (recognizing that Iowa Code section 598.21(3) is broad enough to permit alimony payments after death).
V. Attorney Fees
DeAnn seeks appellate attorney fees. An award rests within our discretion. In re Marriage of Benson, 545 N.W.2d 252, 258 (Iowa 1996). As DeAnn has prevailed on all issues and John has the financial ability to pay, we order him pay $1000 toward her appellate fees.
AFFIRMED.
Vogel, P.J., concurs; Hecht, J., specially concurs.
I concur in the result only because I am compelled to follow our supreme court's precedents. I write specially to call attention to the incongruity perceived when one compares the rule we are required to apply here with the one applied in dissolution of marriage cases involving high-income earners. It is well-settled that compensation for a permanent partial disability of the type suffered by John is designed to reimburse an injured employee for a loss of earning capacity. The quantification of that loss expressed as "industrial disability" requires a determination of the extent to which the claimant is employable, if at all, in the competitive labor market after the injury. Thilges v. Snap-On Tools Corp., 528 N.W.2d 614, 617 (Iowa 1995).
An industrial disability award should be viewed as a liquidation of a portion, or the entirety in cases of permanent total disability, of an injured employee's earning capacity as narrowly defined by Iowa Code chapter 85.
The "wording of the statute" or "mechanistic" approach to determining what should and should not be included among the assets subject to division allows the district court to treat the partial liquidation of John's future earning capacity as an asset subject to division in this dissolution action. The appropriateness of such a rule is, in my view, called into question when the earning capacity of higher-income earners is not similarly reduced to present value and divided in dissolution cases. If an injured laborer's loss of earning capacity can be liquidated in a workers' compensation case and divided as property in dissolution cases, shouldn't consistency allow dissolution courts to similarly quantify and divide a physician's earning capacity? I do not raise this question in furtherance of a rule that would treat earning capacity as an asset subject to division in dissolution cases. I raise the question instead to emphasize this case provides an opportunity to reconsider whether the advantage of flexibility offered by the mechanistic approach justifies treating laborers whose earning capacity has been partially or fully liquidated in workers' compensation cases differently than professionals who are permitted to shield their greater future earning capacities from the property division process in dissolution actions.
Should the determination of divisibility of the value of earning capacity in dissolution actions turn on whether that value has been partially or completely liquidated in a workers' compensation proceeding? I think not, for whether liquidated or unliquidated the present values of the earning capacities are calculable. Indeed, courts and juries are routinely expected to quantify them in civil cases. Given that property division in dissolution proceedings is to be driven by equitable considerations, we should be able to explain to the worker's compensation laborer-claimant why it is fair to require him to divide the value of his diminished post-injury earning capacity in a dissolution action when uninjured professionals with substantially greater earning capacities are permitted to shield theirs from division.