Kunnemann v. Kunnemann

DEBORAH K. KUNNEMANN, APPELLEE, v. MARLON K. KUNNEMANN, APPELLANT.

No. A-13-276

NEBRASKA COURT OF APPEALS

Filed June 10, 2014

MEMORANDUM OPINION AND JUDGMENT ON APPEAL

NOTICE: 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 Chase County: DAVID URBOM, Judge. Affirmed.

Jeffrey S. Armour, of Armour Law, P.C., L.L.O., for appellant.

Gregory J. Beal for appellee.

MOORE, PIRTLE, and RIEDMANN, Judges.

MOORE, Judge.

Marlon K. Kunnemann appeals from the decree of dissolution entered by the district court for Chase County. In this appeal, Marlon challenges the district court's property division and the court's awards of alimony and attorney fees to Deborah K. Kunnemann. For the reasons set forth in our opinion below, we affirm the district court's decree.

I. FACTUAL BACKGROUND

At the time of trial, Marlon was 52 years old and Deborah was 51. They met while attending junior college in Sterling, Colorado. Each graduated from junior college: Marlon with an associate's degree of applied science in production agriculture and Deborah with an associate's degree in business. After his graduation, Marlon moved to Imperial, Nebraska, to work on his family's farm operation. Deborah remained in Sterling to complete her degree and then joined Marlon in Imperial following her graduation. Deborah initially worked at an insurance agency, and Marlon eventually began his own farming operation. They were married on August 1, 1981, in Brighton, Colorado. Deborah wanted to continue her education after receiving her associate's degree, and Marlon supported that desire, but the family's financesnever allowed that to happen. Three children were born of the marriage, all of whom had reached the age of majority at the time of the divorce proceedings.

For the majority of their marriage, Marlon and Deborah rented a home that was owned by Marlon's parents. In approximately the spring of 2000, Deborah received a $20,000 gift from her mother and used these funds to finish the home's basement. Deborah's mother also gifted a sectional couch and some tables to furnish the basement. Deborah claimed these gifts as nonmarital property. Deborah testified that she applied the $20,000 to finish the basement based upon Marlon's representations that he and Deborah would eventually receive ownership of the home from his parents. Her mother also testified that she made the gift based on Marlon's direct representations to her that he and Deborah would one day own the home. Marlon disagreed that these gifts were solely given to Deborah. He claimed that he had a strong relationship with Deborah's mother and that the money and furniture were gifts to the entire family. Marlon also testified that the home was still owned by his parents.

Deborah worked outside the home until the couple's first child was born in 1983. Two more children were born in the next 5 years. Deborah remained a stay-at-home parent until all of the children began to attend school. During this time, Deborah took care of the children and the home. Her duties included transporting the children to their various activities, maintaining the family garden, cooking meals, doing laundry, and cleaning the home. She also completed occasional projects, such as fencing and painting the barn, to assist Marlon with his farming operation.

When their youngest child reached school age, Deborah returned to work outside the home. Deborah held positions at a local bank, the children's school as a teacher's aide, the family's church as a secretary, and a dental office. All of these positions were on a part-time basis. Since the parties' separation in 2009, Deborah returned to Colorado and has held part-time positions at a hospital, bank, and physical therapy office. At the time of trial, she was earning $13 per hour at the physical therapy office and working approximately 24 to 28 hours per week. Deborah testified that she was looking for a full-time position and had submitted "over 100 plus" applications in the Denver, Colorado, area, but had not obtained any full-time position. She also testified that she researched going back to school to become a medical assistant and obtain a medical encoding degree. Deborah needed some minor surgery at the time of trial because of skin cancer and had a few other health concerns, including a thyroid condition and an enlarged heart.

Marlon farmed throughout the couple's marriage. However, his personal farming operation experienced significant financial difficulties in 2002. In fact, the financial situation deteriorated to the point where there was not enough margin to adequately secure the operation's lending needs and the bank would not loan Marlon additional funds unless further collateral was pledged. In order to continue farming, Marlon formed a partnership with his brother Myron Kunnemann. This partnership, known as M Kunnemann Brothers, combined the assets from Marlon's and Myron's personal farming operations. Marlon and Myron were the only partners in the partnership, and they never created a written partnership agreement.

When the partnership was formed in February 2002, Myron contributed significantly more financially than did Marlon. The balance sheets from each farming operation prior to the partnership formation were entered into evidence at trial. These balance sheets, which wereprepared by Adams Bank & Trust, showed that Myron contributed $471,066 in equity to the partnership while Marlon added $80,526. After subtracting the value of personal property from their initial contributions, Myron's net equity totaled $463,866 and Marlon's net equity was $30,650. The value of the real estate contributed to the partnership was $312,000 by Myron and $48,000 by Marlon. John Paisley, the southern regional president of Adams Bank & Trust, testified that he had been involved with Marlon's and Myron's banking and lending for 20 years. Paisley created the initial balance sheet for the partnership. This balance sheet shows real estate valued at $360,000 and a total net equity in the partnership of $556,415. Paisley confirmed the amount of each partner's initial contribution to the partnership.

At trial, Marlon and Myron asserted that their respective interests in the partnership were determined by the amount of their initial contributions. Based on these original contributions, Marlon testified that he had a 13-percent interest in the partnership and that Myron's interest was 87 percent. Marlon also testified that Myron would not have agreed to form a partnership if he would have known that his interest would be equal to Marlon's interest despite the substantial contribution discrepancy. Myron's testimony mirrored Marlon's; he would not have entered into a partnership with Marlon unless the return on his investment was equal to the amount of initial contribution. Marlon and Myron also believed that a written partnership agreement was not necessary because they were brothers.

Numerous financial records and tax documents from M Kunnemann Brothers were received into evidence at trial. The partnership was considered a general partnership, and the income was passed through to the partners, who each reported the income tax liability on their individual tax returns. The partnership would in turn reimburse the partners for the tax liability paid by them. The various tax documents showed that Marlon and Myron shared equally in profits, losses, and depreciation. Marlon and Myron also reported to the U.S. Department of Agriculture that they were equal partners for purposes of various farm programs. They both testified that they made the equal partner disclosures based on advice they received from the various entities they dealt with. Paisley testified that he listed them as equal partners on the partnership balance sheets for convenience of banking purposes. Paisley indicated that because he was lending to the entire partnership and also had personal guarantees from each partner, the exact percentage split did not matter for lending purposes. Additionally, the partnership's tax preparer testified that she allocated depreciation equally between the partners for ease in tax preparation.

During the course of the partnership, additional real estate was purchased. In 2007 and 2008, real estate with a total value of $505,000 was added to the partnership assets. Additional long-term debt was added for these purchases. The partnership assets varied each year as cattle and machinery were bought and sold. The amount of short-term debt fluctuated each year as well.

Deborah hired an expert to determine the value of M Kunnemann Brothers and Marlon's specific interest in the partnership. Her expert, Steven Groeteke, reviewed the historical and prospective financial information of the partnership and determined that its value was $2,283,100 as of January 1, 2010, the date closest to the parties' separation. After adjusting for the partners' disproportionate initial contributions, Groeteke concluded that Marlon's share was valued at $946,280. Marlon disagreed with Groeteke's valuation, but did not retain his own expert toprovide a competing valuation. Additional details of the valuation of the partnership will be discussed in the analysis section below.

II. PROCEDURAL HISTORY

In October 2009, the parties separated and Deborah filed a complaint for dissolution of marriage. On September 1, 2010, the district court entered an order awarding Deborah $500 per month in temporary spousal support and $350 in temporary attorney fees.

Trial was held on November 14 and 15, 2012. The majority of the evidence at trial focused on two issues: (1) the valuation of Marlon's share of the farming partnership he had formed with his brother Myron and (2) whether the $20,000 monetary gift from Deborah's mother in 2000 was nonmarital property. Deborah also maintained her requests for alimony and attorney fees. Marlon...