Eis v. Eis

310 Neb. 243

965 N.W.2d 19

Linda A. EIS, appellee,

v.Donald W. EIS, appellant.

No. S-20-515.

Supreme Court of Nebraska.

Filed October 1, 2021

Jeffrey A. Gaertig and Gregory D. Kratz, of Smith, Schafer, Davis & Gaertig, L.L.C., for appellant.

Steven J. Mercure, Tecumseh, of Nestor & Mercure, for appellee.

Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.

Heavican, C.J.

A decree dissolving the marriage of Donald W. Eis and Linda A. Eis was entered in March 2020. That decree also divided the parties’ personal and real marital property, awarding "Tract No. 2" (Tract 2) to Linda as her sole and separate property, awarding "Tract No. 1" (Tract 1) to Donald as his sole and separate property, and ordering Donald to make an equalization payment to Linda of $165,062.50 to account for the remaining discrepancy in value of the property awarded to each party.

In response to this decree, Linda filed a motion to alter or amend the judgment to account for grain in storage at the time of trial that was not accounted for in the original decree. The district court granted Linda's motion and modified the decree, awarding Linda an increased equalization payment of $176,462.50. Donald filed a motion for new trial, which the district court denied in June 2020. Donald appeals. We affirm.

I. BACKGROUND

Donald and Linda married in November 1984, the second marriage for both. They had no children together and remained married for 33 years before separating in March 2018.

Prior to his marriage to Linda, Donald acquired Tract 1 with his first wife. Tract 1 consists of approximately 120 acres. Upon his marriage to Linda, Donald owned Tract 1 subject to two mortgages in the amount of $68,200 and $5,000. These mortgages were later consolidated in favor of a bank loan under which Donald and Linda were both obligated. The bank loan was satisfied during their marriage using funds from the "farm account." During the course of their marriage, Donald and Linda also acquired Tract 2 from Donald's siblings. Tract 2 consists of approximately 74 acres.

Linda asked the district court to order a sale of both tracts of land. Donald, conversely, asked that the court grant him Tract 1 and grant Linda Tract 2. Donald argues that neither Tract 1 nor the farm account which he uses to finance Tract 1 is marital property and that awarding his one-half interest in Tract 2 to Linda in lieu of an equalization payment would therefore satisfy any value due to Linda for her share of the marital estate.

At trial, Linda presented evidence that in 2007 and 2008, she spent approximately $60,000 of nonmarital funds to renovate the marital home situated on Tract 1. Linda also presented evidence that she and Donald had continually borrowed against Tract 1 throughout the marriage and that the associated liens were satisfied by the wages of both parties. Donald testified that the proceeds from farming both tracts were placed into the farm account to pay for continuing and future farming expenses, including payment of the original mortgage on the property. No evidence was presented regarding the valuation of the tract without the home or the improvements made by Linda during the marriage. After reviewing the evidence, the district court found that both Tract 1 and the funds within the farm account had been commingled and inextricably mixed with marital property, and thus included both in the marital estate.

As noted above, the decree of the district court dissolved the marriage of the parties and divided their real and personal property. Although both tracts were deemed marital property, Linda was awarded the smaller Tract 2 as her sole and separate property and Donald was awarded the larger Tract 1 as his sole and separate property. An equalization payment of $165,062.50 was awarded to Linda to account for the discrepancy in value of property awarded to each party. The district court required the parties to sign quitclaim deeds facilitating the transfer of each tract in accordance with the terms of its decree, but did not specifically order that either piece of property must be sold.

Linda later filed a motion to alter or amend the judgment or for a new trial, asking the district court to alter its decree to account for the grain in storage at the time of trial. The district court found that the grain in storage at trial was marital property, that it had not been properly included in the decree, and that Linda's marital share was valued at $11,400. The district court entered a modified decree in May 2020, awarding Linda an increased equalization payment of $176,462.50. Donald filed a motion for new trial, which the district court denied in June 2020. Donald appealed, and we moved this appeal to our docket.

II. ASSIGNMENTS OF ERROR

Donald assigns that the district court erred in (1) classifying nonmarital property as marital property, (2) failing to divide the marital estate equitably and ordering Donald to make an equalization payment to Linda, and (3) partially granting Linda's motion to alter or amend the judgment and increasing the equalization payment.

III. STANDARD OF REVIEW

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.¹ This standard of review applies to the trial court's determinations regarding custody, child support, division of property, alimony, and attorney fees.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.³ A judicial abuse of discretion exists if the reasons or rulings of a trial judge are clearly untenable, unfairly depriving a litigant of a substantial right and denying just results in matters submitted for disposition.⁴

IV. ANALYSIS

1. CLASSIFICATION

In his first assignment of error, Donald asserts that the district court erred by classifying Tract 1 as marital property rather than nonmarital property. Donald argues that Tract 1 was nonmarital property which he acquired prior to his marriage to Linda, toward which he made $34,000 in premarital contributions, and that it did not transform into a marital asset during his marriage to Linda, because it was not commingled or inextricably mixed with marital property. Donald argues that Linda's contributions to Tract 1 were specifically limited to the $60,000 home renovation and garage construction, which is traceable and can be carved out for equalization purposes, and that Linda did not contribute to Tract 1 outside of this specific renovation. Linda contends that Tract 1 was marital property. She specifically contends that the nonmarital funds she expended during the renovation contributed to the appreciation in value of the entire tract, that funds from Tract 2 contributed to the original mortgage against Tract 1, and that the continued borrowing against Tract 1 was paid in part by wages she earned during the marriage.

In Brozek v. Brozek ,⁵ this court held that separate property becomes marital property by commingling if it is inextricably mixed with marital property or with the separate property of the other spouse. If the separate property remains segregated or is traceable into its product, commingling does not occur.⁶ The burden of proof rests with the party claiming that property is nonmarital.⁷ As the party claiming Tract 1 is nonmarital property, Donald carries this burden of proof.

We turn to the issue of Tract 1's appreciation in value during Donald and Linda's marriage. Donald asserts that Linda's contributions to Tract 1 were limited to the remodel of the home and garage and that Linda did not care for or farm the tract; thus, her share of any appreciated value should be limited to the home and not the entire 120 acres upon which the home is situated.

At trial, Linda presented an appraisal as evidence of the value of Tract 1. The appraisal found that Tract 1, including the marital home and detached garage, was worth approximately $575,000. Despite his burden of proof, Donald presented no evidence regarding the value of Tract 1 as separate from the marital home or garage and was unable to prove that the appreciation in value ($88,200 in 1979 versus $575,000 in 2020) was not linked to Linda's renovations.

We turn next to the issue of shared mortgage obligations and continued borrowing against Tract 1. When Donald married Linda, Tract 1 was subject to two mortgages in the amounts of $68,200 and $5,000. During Donald and Linda's marriage, these liens were discharged when Donald and Linda paid off the original "FHA" loans in favor of a new consolidated bank loan. Donald and Linda were both jointly and severally liable on the new promissory note in the amount of $40,742.19, and the deed of trust for this transaction named both Donald and Linda.

Linda testified that most of the loan amounts, which the parties used to purchase the farm, were paid off using marital funds during her 33-year marriage to Donald. Donald claimed that the yearly mortgage payments for both the original FHA loans and the consolidated bank loan were paid directly from the farm account to which Linda had never contributed. However, Donald also admitted that income from both Tract 1 and Tract 2 went into the farm account and were commingled since at least 2006, thus indicating that Linda's marital income from Tract 2 may have contributed to the mortgage payments when Donald paid from this account.

Donald and Linda also continually borrowed against Tract 1 throughout their marriage: $4,250 in 1985, $15,500 in 1990, and $10,850 in 1995. Both parties testified that these mortgages, each made in favor of Lincoln Telephone Employees Credit Union, were paid either directly with wages of both parties while they were employed by Lincoln Telephone Company or from the "town account," where their assets were commingled.

Having...