Smith v. Smith

KRISTIN M. SMITH, APPELLANT,

v.GERALD H. SMITH, APPELLEE.

No. A-11-495

NEBRASKA COURT OF APPEALS

Filed December 31, 2012

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 Douglas County: JAMES T. GLEASON, Judge. Affirmed.

James R. Welsh and Christopher P. Welsh, of Welsh & Welsh, P.C., L.L.O., for appellant.

Karen S. Nelson, of Schirber & Wagner, L.L.P., for appellee.

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

INBODY, Chief Judge.

I. INTRODUCTION

Kristin M. Smith appeals from the order of the Douglas County District Court dissolving her marriage to Gerald H. Smith (Jerry). Kristin contends that the district court erred in finding that one of Jerry's businesses was premarital property, in finding that the family residence did not increase in value and that she did not contribute to an increase in its value, in its child support calculation, in failing to award her alimony, and in failing to award her attorney fees.

II. STATEMENT OF FACTS

Kristin and Jerry were married in April 2001, and during the marriage, two children were born: a son born in 2003 and a daughter born in 2006. Kristin filed a complaint for dissolution of marriage in February 2009. In May of that year, Kristin was awarded temporary custody of the minor children and Jerry was ordered to pay temporary child support of $1,314.79 per month for the parties' two children and temporary alimony of $1,000 per month. Kristin was also awardedtemporary possession of the family residence, and the court ordered that she was responsible for maintaining the property, including payment of any mortgages and homeowner's insurance incurred during her sole possession of the property.

Trial was held over 3 days in August and November 2010. The parties agreed to matters of custody and visitation, leaving only matters of alimony, child support, and related financial issues such as daycare expenses and income tax exemptions, and the division of property at issue. The parties also agreed that the family residence located on Bennington Road in Omaha, Nebraska, was Jerry's premarital property; however, the parties disagreed as to whether the family residence had increased in value and whether Kristin should be awarded a portion of any increase in value. The parties also sought a determination by the district court as to whether certain businesses owned by Jerry were premarital and, depending on that determination, the division of those assets.

1. FAMILY RESIDENCE

The family residence consisted of two parcels: the first parcel consisted of approximately 16 acres with an additional 10 acres to the west. The property included a ranch-style house with a walkout basement, a 90-year-old barn, a creek running through the property, a machine shed, a chicken coop, corrals, and 100-year-old cottonwood trees. Although the parties agreed the family residence was premarital, Kristin contended that the value of the family residence had increased during the parties' marriage and that she was responsible for increasing the value of the family residence and should be awarded a portion of that increase.

Kristin testified that when they were first married, Jerry told her that the family residence was valued at approximately $180,000. Kristin testified that in her opinion, the current value of the 16 acres upon which the house sits was $500,000, and that she believed the remaining 10 acres were worth $88,000. Thus, in her opinion, the current value of the Bennington property, including both tracts of land totaling approximately 26 acres, was $588,000.

Kristin testified that during the marriage, she started a seasonal pumpkin patch business on the property. To do so, she cleared old car parts out of the barn, cleaned up the property, planted hundreds of flowers turning the property into a "showplace," and sold jams, jellies, apple pies, crafts, and pumpkins out of the barn for about 6 weeks in the fall. Kristin stated that the business started "very slow" with 30 to 40 visitors who happened to drive by to "probably thousands" during the last year of operation, the previous year. Jerry disputed Kristin's testimony that she maintained the family residence and claimed that she basically mowed the lawn and planted flowers while he took care of the majority of issues including reseeding and taking care of damage to trees.

Jerry testified that the value of the family residence at the time of the parties' marriage was about $380,000 and that the property value remained the same at the time of trial. However, in 2010, Jerry listed the value of the family residence as $500,000 on a personal valuation form he completed. Jerry testified that Kristin had let the condition of the family residence deteriorate during the pendency of the proceedings, claiming there were tree limbs on the roof of the residence, weeds and grass standing 2 to 5 feet tall, and approximately 15 to 20 branches ranging from 12 to 24 inches in diameter which had been blown down from windstorms. Kristin disputed Jerry's testimony that she did not take care of the property during the pendency of the dissolutionaction, claiming that Jerry removed the equipment she needed to take care of the property such as the skid loader, the tractor with attachments, the "weed eater," brooms, shovels, rakes, and a "Kubota . . . four by four." However, Kristin admitted that the larger equipment such as the tractors and skid loaders were property belonging to one of Jerry's businesses, which equipment was used in the business for a short period of time, then sold at auction.

2. EXPERT WITNESS TESTIMONY REGARDINGFAMILY RESIDENCE

Patrick Morrissey of Morrissey Appraisal Services testified that he conducted an appraisal of the family residence located on Bennington Road. In 2009, he was able to conduct a walk-through of the residence and he walked the immediate grounds. In August of that year, Morrissey's appraised value of the property was $390,000. He conducted an updated appraisal in August 2010. During this appraisal, he did not have entry into the home, so he was unable to conduct an interior inspection of the house, but he did view the exterior of the property. Morrissey testified that in his opinion, it appeared the property had been neglected during the past year. He testified:

[T]he grass in places was waist high or higher. It looked like it had not been cut the entire season. There was a pretty good size branch on top of the roof of the house. There [were] trees . . . that were damaged by wind storms that were not being taken care of or not being removed . . . . [E]verything was just completely overgrown and just no -- no evidence of any maintenance whatsoever.

In August 2010, Morrissey appraised the property at $380,000 with the assumptions that the interior condition of the property was similar to when he viewed it in 2009 and that there was no flooded basement and no damage to the basement finish.

Morrissey also made a determination that the 2001 value of the property was $350,000, making the assumptions that the condition of the property was approximately the same as it was in 2009 and 2010 and that the kitchen was the only upgrade since 2001, which was the information he was given by Jerry's office.

3. JERRY'S BUSINESSES

Jerry owns several businesses which the parties agree are premarital: Centaur Electrical Contractors, Inc. (Centaur Electrical), a commercial electrical company that works on the electrical systems of new commercial and existing commercial accounts; Centaur Development Corporation (Centaur Development), a development company that owns real estate and buildings; and Taylor Excavating of Nebraska, Inc. (Taylor Excavating), the second largest excavating company in Omaha. The parties disagree about whether another of Jerry's businesses, Cody Equipment, which buys and sells heavy equipment, is premarital. Additionally, Jerry owns S&N Auto and S&N Trucks. There is no accounting for S&N Auto because it is only used for a dealers' license and tax exempt certificate and everything else, including revenue, would fall under Cody Equipment. Similarly, there is no income generated from S&N Trucks.

Cody Equipment was incorporated in March 2005, under the name "Taylor Machinery, Inc.," and was then renamed "Cody Equipment" in April 2007. Jerry testified that Cody Equipment started out as a division of Taylor Excavating to dispose of excess or brokenequipment. When the business became more active, Jerry incorporated it into Taylor Machinery, which he also called "Heavy Equipment." However, vendors were sending bills to Taylor Excavating when they should have been going to Taylor Machinery/Heavy Equipment, so to clear up the confusion, the corporation was renamed "Cody Equipment" in April 2007.

At the time of the marriage, Jerry owned 100 percent of Taylor Excavating, but at the time of trial, he owned only 80 percent of the business. Likewise, at the time of the marriage, Jerry owned 100 percent of Centaur Electrical, but at the time of trial, he owned 85 percent of that business. Jerry has continually owned 100 percent of Centaur Development, and Jerry owned 100 percent of Cody Equipment at the time of trial. Jerry testified that all of the businesses he owned at the time of trial were owned by him at the time of his marriage to Kristin.

Jerry testified that although the businesses started experiencing a little bit of a downturn beginning in 2000, he did not become really concerned until 2005-06. In 2006-07, Taylor Excavating experienced a loss of over $1 million due, in part, to a loss on a job when the client declared bankruptcy. Then, in 2008, there was a slowdown in commercial construction which resulted in Centaur Electrical experiencing a loss of over $600,000 in 2009. In 2010, Centaur Electrical still lost money, but "it has stabilized." Centaur Development, a...