Kauk v. Kauk

310 Neb. 329

966 N.W.2d 45

Marcia A. KAUK, appellant,

v.Randall G. KAUK, appellee.

No. S-20-867.

Supreme Court of Nebraska.

Filed November 5, 2021

Mark L. Eurek, Loup City, of The Law Office of Eurek & Peterson, L.L.C., for appellant.

John B. McDermott, of Wolf, McDermott, Depue, Sabott, Butz & Porto, L.L.C., Grand Island, for appellee.

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

Cassel, J.

INTRODUCTION

Marcia A. Kauk appeals from a marital dissolution decree, arguing the court erred in its marital classification determinations and in awarding Randall G. Kauk the marital homestead acreage. We find no abuse of discretion. Most of the issues turn on credibility assessments where we give weight to the district court's findings. We cannot say that the court's ultimate division was unreasonable or unfair. Therefore, we affirm the decree.

BACKGROUND

Marcia and Randall were married for 34 years. Marcia is a retired kindergarten teacher, and Randall is a farmer. Prior to separation, the parties lived on an acreage on the corner of a quarter section of real estate that Randall farmed. In 2018, Randall told Marcia that he was "done" and moved into a different house. Marcia then filed for dissolution of the marriage.

During the proceedings, the parties stipulated to the value and division of most of the parties’ property and debts. The district court conducted a trial regarding the remaining issues relating to division of property and debts.

Following the trial, the court entered a decree. Pertinent to this appeal, the court decided three issues: (1) whether a marital asset resulted from payments made during the marriage regarding a quarter section of real estate, (2) whether crop-related expenses were marital expenses because they related to crops grown in 2018 (2018 crops) or were nonmarital because they stemmed from those grown in 2019, and (3) how the marital homestead acreage should be allocated. Each will be discussed in turn.

REAL ESTATE OF KAUK FAMILY L.L.C.

The district court determined that Randall's payments regarding a quarter section of real estate were rental payments and therefore were not marital assets. Before the divorce, Randall farmed this land and made yearly payments to Kauk Family L.L.C. (LLC), which owned the land. The LLC's members consisted of Randall and his siblings. They had inherited their membership rights from their parents.

Marcia argued that Randall's payments should be included in the marital estate, because they were made pursuant to a land installment contract. She did not seek the specific performance of the contract. Instead, Marcia sought the payments to be included in the marital estate for purposes of equitable division.

Marcia presented two unsigned contracts that she asserted were drafted and agreed to by the LLC and Randall—a deed of trust agreement from 2013 and a land installment contract from 2015. The drafting attorney's correspondence in 2015 noted that the parties preferred to structure the transaction as a land installment contract. The terms of the land installment contract stated that Randall agreed to purchase the property from the LLC for $612,000. It mandated that Randall pay $100,000 as a downpayment and make yearly payments thereafter of $40,577.17. The contract noted that Randall had already paid $202,000 to the LLC (the downpayment and subsequent yearly payments). The contract also required Randall to pay real estate taxes for 2015 and subsequent years and to repay the LLC $16,755.32 for the 2012, 2013, and 2014 property taxes.

At trial, both Randall and his sister (a member of the LLC) authenticated the documents and admitted that the parties originally contemplated for the LLC to sell the real estate to Randall. Randall testified that he paid the $100,000 downpayment and made three yearly payments of $40,577.17, but he denied making an additional $102,000 payment that was reflected in the land installment contract. Randall also testified that he never paid the property taxes for the real estate.

However, Randall and his sister refuted the enforceability of the contracts, because neither they nor their siblings ever signed either contract. Further, Randall's sister explained that they abandoned the plan for Randall to purchase the property after he failed to make payments and pay the property taxes, which forced the LLC to pay them. At that point, Randall and the LLC agreed to a rental agreement, applying all of Randall's payments as "rent." Randall testified that he has paid the LLC $35,000 in yearly rent since 2018.

The court found that the contracts were not enforceable because they were barred by the statute of frauds, explaining that neither contract was signed nor was there sufficient evidence that the parties partly performed either contract. The court emphasized that Marcia failed to prove the existence of an oral contract whose terms were clear, satisfactory, and unequivocal. Further, the court found that the parties had abandoned any plans for a potential oral purchase agreement, and instead, they had allowed Randall to rent the real estate. Therefore, the court concluded that the payments made toward the real estate were not considered a marital asset.

CROP EXPENSES AND JORGENSEN PAYMENT

The parties disputed the valuation of the 2018 crops. Marcia presented testimony from an accountant who reviewed the farm's bank statements to calculate the total revenue generated from the 2018 crops. The court agreed with Marcia's valuation of the crops, but deducted $46,158.44 from the valuation. The court's deduction was for four payments that Randall made in the spring of 2019—two payments for seed ($3,477.23 and $26,061.10), one for fuel ($3,736.88), and one for land ($12,883.23) the parties referred to as the "Jorgensen farm."¹ The court found that these payments resulted from growing the 2018 crops and characterized the Jorgensen payment as rent.

Marcia argued that it was more reasonably inferable that the fuel and seed payments were for crops grown in 2019, which were not marital assets. Further, Marcia claimed that the Jorgensen payment was actually for real estate that she and Randall were purchasing. She points to three items of real estate and a corresponding marital debt shown on the joint property statement, which were allocated by the court to Randall.

MARITAL ACREAGE

Finally, the court awarded Randall the marital acreage. The marital acreage is a 7-acre tract of land that Marcia and Randall owned, which features the marital home. While Randall presented no testimony regarding the acreage, Marcia's counsel stated at the beginning of the trial that both parties sought the marital acreage.

The court stated that it "underst[ood Marcia's] attachment to the home she has made over the last 30 years." It summarized Marcia's testimony regarding her use of the home and her plans for the future. Although the court noted Randall's argument that his workshop and machinery were located nearby, the parties essentially conceded at oral argument that the record contains no direct evidence regarding the location of Randall's workshop and machinery.

The court explained that it was "mindful" of an unpublished decision of the Nebraska Court of Appeals.² In the case cited by the court, the appellate court modified a decree which had awarded a tract of land, including the marital house, to the nonfarming spouse.³ The district court's decree here characterized that appellate decision as having determined that awarding the home property to the nonfarming spouse would needlessly interfere with the farming spouse's operation, based upon the home property's location near tracts of real estate used to feed and pasture cattle and which included a barn, outbuildings, and equipment used in the farming operation.

Thus, "[i]n light of the [Court of Appeals’] decision, and after considering the evidence presented," the court here awarded "the marital home and acreage" to Randall. We note that no precise legal description of the disputed tract appears in the record.

Marcia filed a timely appeal, which we moved to our docket.⁴

ASSIGNMENTS OF ERROR

Marcia assigns, restated and reordered, that the district court abused its discretion by (1) "failing to include in the marital estate any amount for the contract or payments made by [Randall] with marital assets toward purchase of real estate"; (2) classifying four payments as payments of marital debts in valuing marital assets; and (3) awarding the marital acreage, including the home, to Randall.

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.⁵ This standard of review applies to the trial court's determinations regarding custody, child support, division of property, alimony, and attorney fees.⁶ 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.⁷

When evidence is in conflict, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another.⁸

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.⁹

ANALYSIS

In a dissolution action, the equitable division of property is a three-step process.¹⁰ The first step is to classify the parties’ property as either marital or nonmarital, setting aside the nonmarital property to the party who brought the property to the marriage.¹¹ The second step is to value the marital assets and marital liabilities of the parties.¹² And the third step is to calculate and divide the net marital estate equitably between ...