In re Marriage of Marasco, 2023.

The property division provisions of their marital dissolution decree of the district court was appealed by the husband and cross-appealed by the wife. The appellate court affirmed the appeal as modified and affirmed the cross-appeal. The district court was correct in not treating any part of the parties’ business as separate property of the husband “because of the length of the marriage; the wife’s contributions to the marriage; the comparably inconsequential value of the business at the time of the marriage and the early years of it; and the value of the business at the time of trial.” The business was valued accurately by the district court at $5,979,800, established by the wife’s expert among other things based on the business’s ability to obtain a $10 million loan for capital improvements. 

Discussion.

During the 17-year marriage, three of the husband’s businesses became  successful. At trial, both parties presented expert witnesses who opined on the value of the  three businesses. The district court awarded the businesses to the husband with a property equalization payment to the wife. The parties, on appeal, disagreed as to how to divide their property. 

The appellate court reviewed the district court’s actions de novo (In re Marriage of  McDermott). Additionally, the appellate court will affirm the district court’s valuation of assets  if it was in the range of permissible evidence.  

First, the appellate court addressed the husband’s claim that Summit (one of the  businesses) should have been treated as premarital property or that at least the value at  marriage should be set aside. Premarital property was divisible in an Iowa divorce (In re Marriage of Schriner). However, property brought into a marriage was a factor in determining an equitable distribution that can be used to set aside property brought into a marriage (In re Marriage of Wendell). The appellate court here saw no inequity in the district court’s decision not to carve out any portion of the value of Summit. 

During the marriage, the husband paid his prior wife $10,000 for her 50% interest in Summit, showing that it had little value at the date of marriage to the wife. The balance in equity at the 2005 date of marriage was about $60,000, but its tax return for 2020 showed business income of about $971,000. The parties’ experts valued Summit at between $3,748,000 and $5,979,800. For the reasons outlined above, the appellate court “find[s] the district court was correct in not treating any part of the value of Summit as Albert’s separate property for purposes of determining an equitable property division.” 

The husband’s backup argument was that the district court valued Summit incorrectly. Some  of the purported factual inaccuracies would not change the valuation of Summit. The wife counterappealed whether the experts properly considered a $1.8 million loan between Summit and sister company Fresco. 

The appellate court concluded that the district court accurately valued Summit at  $5,979,800. The wife’s expert was found to be more consistent than the husband’s expert.  The husband’s expert used “fawning terms” in describing the businesses, and “[the husband’s expert] used two methodologies without an explanation of why one was more reliable than the other.” As was normal in such appellate review situations, the appellate court deferred to the district court’s judgment. (See In re Marriage of Shildberg.) “We reject both parties’ contentions that the loan from Summit to Fresco was not properly considered when valuing the marital assets. As such, we affirm as to Julie’s cross-appeal.” 

The appellate court dealt with some smaller non-business-valuation issues and returns to  the issue of the Summit valuation. Once again, the appellate court noted that it was in  agreement with the district court’s decision to credit only the wife’s expert in valuing Summit. The husband argued that the cash flow of the business was insufficient to pay a large equalization payment. The appellate court noted that the district court took note of that and fashioned a 15-year term to pay the equalization payment.