Opinion
No. 3-885 / 02-1791
Filed March 10, 2004
Appeal from the Iowa District Court for Polk County, Eliza J. Ovrom, Judge.
Douglas Smitley appeals the decree dissolving his marriage to Sherry Smitley, contending the court improperly failed to include certain tax liabilities in its division of the assets and liabilities. AFFIRMED.
Kent Balduchi of Hockett-Clark Law Office, West Des Moines, for appellant.
Michael Holzworth of Holzworth Law Firm, Des Moines, and Jeanne Johnson, Des Moines, for appellee.
Considered by Vogel, P.J., and Hecht and Vaitheswaran, JJ.
Sherry and Douglas Smitley were married on August 24, 1984, and separated in October of 2000. Prior to and during the marriage Sherry was employed at Qwest Communications, earning approximately $42,000 at the time of trial. Douglas was a self-employed painting contractor. In the years between 1999 and 2001, his net income was between approximately $46,000 and $56,000. In the years 1999, 2000, and 2001, he did not pay any taxes on this business income. At trial on this matter, Douglas testified that he had just "recently caught up on [his] income taxes and the filings of those." However, he still owed $46,691 in back state and federal income taxes.
On October 1, 2001, Sherry filed a petition to dissolve the marriage. The parties stipulated that Sherry would have physical care of their daughter, Sheena. Following a trial, the court issued a decree dissolving the parties' marriage. In dividing the parties' assets and liabilities, the court awarded Sherry assets worth $112,000 and ordered her to assume debts totaling $38,342, for a total net equity of $74,158. It awarded Douglas $159,670 worth of assets and ordered him to assume $61,145 in liabilities, for a total net equity of $98,525. It then ordered Douglas to make an equalization payment of $12,000 to Sherry, such that each party would end up with approximately $86,000 in marital assets. The court then ordered each to pay any debts incurred since the separation and specifically ordered Douglas to assume his debt to the Internal Revenue Service stemming from his business. Douglas appeals this decree, only challenging the court's treatment of the tax debts.
Our review of this equitable proceeding is de novo. In re Marriage of Benson, 545 N.W.2d 252, 253 (Iowa 1996). The partners to a marriage are entitled to a just and equitable share of the property accumulated through their joint efforts. In re Marriage of Dean, 642 N.W.2d 321, 325 (Iowa Ct.App. 2002). Iowa courts do not require an equal division or percentage distribution. In re Marriage of Bonnette, 584 N.W.2d 713, 714 (Iowa Ct.App. 1998). The determining factor is what is fair and equitable in each circumstance. In re Marriage of Campbell, 623 N.W.2d 585, 586 (Iowa Ct.App. 2001).
Upon our de novo review of the record, we agree with the court's treatment of Douglas's tax debts. We first note the district court found that Douglas acknowledged the tax debt, but did not seek to have Sherry pay any of it. On appeal, Douglas maintains his comments, from which this conclusion was drawn, were taken out of context by the court. Our review of the testimony indicates the following exchange occurred:
Q. You have the debts of your own to MBNA and Bank of America; is that right? A. Yes.
Q. Then your tax? A. Correct.
Q. Are you willing to assume all those debts? Q. Yes.
We believe this passage alone supports the district court's disposition of Douglas's tax debts. Douglas's claim his statement was taken out of context is not borne out by the record. The district court's resolution was a reasonable interpretation of Douglas's trial position.
Regardless, we find the court's treatment of the tax liability to be equitable in all respects. Douglas and Sherry separated in 2000. The tax liability was thus incurred by Douglas largely during a time when the parties were not living together or supporting one another financially. Although generally we use the date of trial to value assets and debts of the parties, in this case, because Douglas was self-employed and controlled his own income tax reporting during the parties' separation, any fault for the failure to pay taxes must be attributable to him, and not Sherry. See Campbell, 623 N.W.2d at 586 (noting we use the date of trial as the most appropriate date to value assets, while recognizing the need for flexibility in making equitable distributions based on the unique circumstances of each case). Moreover, for at least thirteen months during this time frame Douglas was not making any child support payments. We therefore agree the district court's ultimate assignment of this debt to Douglas was equitable under the circumstances and affirm on this issue.
Sherry requests an award of appellate attorney fees. An award of appellate attorney fees is not a matter of right, but rests within the court's discretion. In re Marriage of Kurtt, 561 N.W.2d 385, 389 (Iowa Ct.App. 1997). We consider the needs of the party making the request, the ability of the other party to pay, and whether the party making the request was obligated to defend the district court's decision on appeal. In re Marriage of Maher, 596 N.W.2d 561, 568 (Iowa 1999). We award Sherry $1000.00 in attorney fees. Costs are assessed to Douglas.