Foster v. Foster

1

Kathleen A. Foster, appellant, v. Lyle D. Foster, appellee.

No. A-22-873

Court of Appeals of Nebraska

October 31, 2023

THIS OPINION IS NOT DESIGNATED FOR PERMANENT PUBLICATION AND MAY NOT BE CITED EXCEPT AS PROVIDED BY NEB. CT. R. APP. P. § 2-102(E).

Appeal from the District Court for Saunders County: Christina M Marroquin, Judge.

Sally A. Rasmussen, of Mattson Ricketts Law Firm, for appellant.

Taylor L. Kidwell and Vanessa J. Gorden, of GordenLaw, L.L.C., for appellee.

PIRTLE, Chief Judge, and MOORE and RIEDMANN, Judges.

MEMORANDUM OPINION AND JUDGMENT ON APPEAL (MEMORANDUM WEB OPINION)

MOORE Judge

I. INTRODUCTION

Kathleen A. Foster appeals from the decree of dissolution entered by the district court for Saunders County, dissolving her marriage to Lyle D. Foster. Kathleen challenges the district court's determination and division of the marital estate in several regards. Kathleen also claims the district court erred in failing to restore her maiden name. We modify the decree to restore Kathleen's maiden name to her. We further modify the decree with regard to the classification and valuation of certain assets and debts, and we modify the amount of equalization payment Lyle is ordered to pay to Kathleen.

II. STATEMENT OF FACTS

Kathleen and Lyle were married in September 2004. It was the second marriage for both, and no children were born of this marriage. The parties separated, and Kathleen filed a complaint for dissolution in December 2019.

Trial was held before the district court in June and July 2022. The following evidence was adduced.

1. RESTORATION OF MAIDEN NAME

Kathleen testified that she was seeking the restoration of her maiden name. She stated and spelled her maiden name for the record and Lyle offered no objection.

2. REAL ESTATE

The parties owned, either separately or jointly, 11 pieces of real property and they had debts collateralized against the property. The trial court determined that the Yutan Road property was marital, which neither party disputes on appeal. The court determined that the remaining 10 rental properties were nonmarital assets. The court awarded all of the real estate to Lyle. The court determined that all of the debts associated with all of the real estate was marital debt and assigned it to Lyle. Kathleen asserts that 2 of the rental properties should have been classified as marital property. She also asserts that the debts associated with the remaining 8 rental properties were improperly categorized as marital debts.

(a) Yutan Road

Four years prior to the marriage, Lyle purchased 39 acres of land on Yutan Road for $136,000. Sometime between the purchase of Yutan Road and the parties' marriage in 2004, Lyle sold off portions of the property. At the time of the marriage Yutan Road consisted of 21 acres of land. Throughout their marriage the parties constructed several improvements on the property, including a family home (not yet completed at the time of trial), a steel building used for the parties' various small businesses, and a pole barn. After the parties were married, Kathleen was added to the deed. A September 2005 warranty deed listed Lyle and Kathleen as both the grantors and grantees of Yutan Road.

(b) LDF Homes

Lyle started LDF Homes as a sole proprietorship in 1988, 16 years prior to the parties' marriage. Through LDF Homes, Lyle purchased, renovated, and rented out properties. At the time of the marriage, LDF Homes owned 8 rental properties. Two more were purchased after the date of the marriage. At the time of trial, there were 10 rental properties under LDF Homes. Kathleen does not challenge the trial court's determination that 8 of the rental properties were Lyle's premarital assets; she only challenges the court's determination that the Anderson Way and Cypress Street properties were nonmarital assets, since they were purchased after the parties were married.

(c) Kathleen's Inheritance

Kathleen inherited farm real estate from her father's estate in 2001. Lyle's name was added to the deeds after the parties' marriage. Kathleen testified that she sold the two sections of inherited farmland and used some of the proceeds from the sales to finance the improvements to Yutan Road. Two seller's closing statements reflect that Kathleen sold a section of inherited farmland for $642,139.52 in 2006, and another section for $678,799.75 in 2007. Kathleen testified that she placed the proceeds from the 2006 sale in certificates of deposit (CDs) and the proceeds from the 2007 sale in a money market account. A First National Bank statement dated March 31, 2007, reflects a deposit of $678,871.51 into a money market account held jointly by Kathleen and Lyle. A handwritten note next to the deposit line-item states, "Sale of Quarter Colon Farm." Kathleen acknowledged that money other than her nonmarital inheritance was deposited into the joint First National Bank account, including Lyle's earnings. With the funds from the money market account, the parties bought several new vehicles, and a small amount went into another CD. Kathleen testified, "after that there were other purchases, and I'm not sure where [the remainder of the money] really went." Kathleen indicated that "some of it" went into more improvements for LDF Homes properties.

No documentary evidence related to the proceeds of the 2006 sale and corresponding CDs was offered at trial. Kathleen testified that the parties had almost $1,000,000 in CDs and that they later had the CDs "broken up" to purchase three more CDs for $250,000 each. According to Kathleen, a remainder of $200,000 from the original CDs paid off Yutan Road's construction loan for the home, the steel building, and the pole barn. In roughly 2008, the parties moved money from their remaining three CDs into an E-Trade account. Kathleen was unable to recall the initial amount in the E-Trade account, but checks written from the account by both Lyle and Kathleen from May 2009 to February 2014, totaled over $265,000.

(d) Real Estate Valuation

Lyle hired a real estate agent in November 2021 to perform a market analysis for each of the parties' properties. The real estate agent testified that she physically inspected each property and gave a fair market valuation based on the property's present condition. The real estate agent conceded that she did not have any certifications in real estate appraisals. The district court received the market analysis into evidence and indicated that it would give the exhibit the appropriate weight as to the agent's opinion.

The market analysis, dated December 2, 2021, stated that Yutan Road had a fair market value of $400,000. The market analysis also noted that if Yutan Road were to be placed on the market in its current condition, there would be significant resistance to finding a buyer due to "the house continuing to sit unfinished for 14+ years, with no utilities to the property, along with deterioration of the 3-sided machine shed building."

(e) Real Estate Mortgages

Both the joint property statement and the mortgage balance statement reflect that there were mortgages on all 10 of the LDF Homes properties. Cross referencing the loan numbers listed in the parties' joint property statement with the mortgage balance statement for the parties' properties demonstrates that the parties owed $678,518.13 in mortgages on the 10 LDF Homes properties.

The parties' joint property statement also lists loan number 39101, for $32,208.46, and number 39158, for $55,050, as operating notes. Lyle explained that the operating notes attached to Yutan Road, as well as to all properties Lyle owned. The total mortgage and operating note debt was $765,776.59.

According to the parties' joint property statement and the mortgage balance statement, Yutan Road did not have a mortgage at the time of trial. The only debt associated with Yutan Road are the two operating notes.

(f) Anderson Way Property

Kathleen provided no testimony regarding the property at Anderson Way at trial, however, in a previous deposition received in evidence at trial, Kathleen testified that Anderson Way was purchased by the parties in 2018. The down payment for Anderson Way was made through an operating note from the bank and Anderson Way's mortgage now had its own separate note. Kathleen testified that LDF Homes paid Anderson Way's mortgage.

Lyle did not testify that Anderson Way was nonmarital property. He testified only that he had hired the real estate agent to conduct a market analysis of the property. The agent's market analysis shows that Anderson Way was presently valued at $35,000 to $40,000, as the home is currently uninhabitable and there would be significant resistance to finding a buyer in its current state. The agent testified that if Anderson Way were to be refurbished, it could be sold for a price between $155,000 and $160,000.

The joint property statement noted that Anderson Way was "deeded joint ownership, Lyle and Kathleen." The mortgage balance statement includes a $70,000 debt for loan number 38759, which is tied to this property according to the parties' joint property statement.

(g) Cypress Street Property

Kathleen provided no trial testimony regarding the property at Cypress Street, however, in a previous deposition received in evidence at trial, Kathleen testified that Cypress Street was purchased after the parties were married, though she was unable to recall the source of the property's down payment. Kathleen conceded that the deed to Cypress Street listed only Lyle's name and, because she had trusted Lyle, she had not insisted that the property be titled in her name as well.

The joint property statement reflects that Cypress Street was purchased on October 25, 2004, roughly 1 month after ...