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IN THE COURT OF APPEALS OF IOWA No. 6-364 / 05-0571 Filed January 31, 2007 IN RE THE MARRIAGE OF CONSTANCE ANN PATTERSON AND DALLAS EUGENE PATTERSON Upon the Petition of CONSTANCE ANN PATTERSON, Petitioner-Appellee/Cross-Appellant, And Concerning DALLAS EUGENE PATTERSON, Respondent-Appellant/Cross-Appellee. ________________________________________________________________ Appeal from the Iowa District Court for Polk County, Carla T. Schemmel, Judge.

Dallas Patterson appeals, and Constance Patterson cross-appeals, challenging various economic provisions of the decree dissolving their marriage. AFFIRMED AS MODIFIED ON APPEAL; AFFIRMED ON CROSS-APPEAL.

James J. Beery, Star, Idaho, and Thomas D. McMillen, West Des Moines, for appellant. Pamela A. Vandel, Des Moines, for appellee.

Considered by Sackett, C.J., and Huitink and Miller, JJ.

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MILLER, J. Dallas Patterson appeals, and Constance (Connie) Patterson crossappeals, from various economic provisions of the decree dissolving their marriage. Dallas claims the district court erred in (1) valuing certain assets and dividing assets, (2) not placing an asset value on degrees and licenses earned by Connie during the marriage, (3) awarding Connie alimony, (4) not considering income tax consequences of the court's asset division, (5) dividing property attributable to gifts and inheritances he received, and (6) ordering him to pay support for the parties' twenty-two-year-old son. Connie claims the court erred in (1) not awarding her an equitable share of the parties' property, (2) awarding her an inadequate amount of alimony, (3) not requiring Dallas to provide medical support for the parties' twenty-two-year-old son, and (4) not awarding her trial attorney fees. Connie requests an award of appellate attorney fees. We affirm as modified on Dallas's appeal, affirm on Connie's cross-appeal, and deny Connie's request for appellate attorney fees. I. BACKGROUND FACTS The parties were married on June 15, 1974, when each was twenty years of age and a sophomore at the University of Northern Iowa. Dallas quit school after the first semester of that year. The parties moved to the Des Moines area after Connie had completed her sophomore year. They then attended Drake University. Dallas quit school after another year, having attended college for a total of less than three years, and has not acquired a college degree. Dallas's father gave him an initial $5,000, plus an additional $10,000 over the following year, to assist Dallas in starting an insurance agency. Connie

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continued her school and graduated magna cum laude from Drake with an elementary education degree in 1976. In 1977 Dallas inherited $10,000 from his mother, which the parties used as the majority of a down payment on their first home. After receiving her degree from Drake, Connie taught school until 1979 when Heather, the first of the parties' two children, was born. second, was born in November 1981. From 1979 until 1987 Connie did not work outside the home. She then took three additional classes at Drake, received a "reading endorsement," and began doing substitute teaching. In 1985 Dallas sold his insurance agency to Home Plan Savings & Loan and worked for Home Loan as a vice-president for its insurance operations from 1985 to 1989. In 1989 he bought the insurance agency part of Home Plan. In subsequent years he purchased three more insurance agencies. Dallas sold the insurance business in 1999, using $235,000 of the net sale proceeds to purchase a one-half interest in a real estate development project and the remainder of the proceeds for stock market investment. The real estate development project has at various places in the record been referred to as the "Hubbell" project, "Altoona," "Hubbell Patterson," and "Country Cove." We will refer to the project as "Country Cove." Since October 1999 Dallas has been employed as a vicepresident of Community State Bank, serving as its business development officer. His annual salary is $96,000. The parties' son, Grant, was diagnosed at age twelve as having a brain tumor. He had two surgeries, in 1994 when he was twelve and in 1995 just before he was fourteen. As a result he has right-side weaknesses, disabilities, Grant, their

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and lessened mobility. Grant has little use of his right hand, wears a brace on his right lower leg because his foot drags, may have to use a cane, experiences pain with prolonged physical activity, and tires with physical exertion. Following his surgeries he has had some difficulties learning. He testified to some difficulty with speech, but his trial testimony shows little evidence of such difficulty. Despite early struggles following his surgeries Grant's academic performance thereafter improved. He graduated from high school with a

cumulative grade point average of 3.318. Grant was student body president of Johnston high school. He achieved a ninety-second percentile composite score on a college entrance examination, taken during his junior year in high school. Connie was substitute teaching when Grant was diagnosed as having a brain tumor. She thereafter continued teaching part-time while spending large amounts of time caring for Grant and assisting in his rehabilitation. During the course of Grant's surgeries and rehabilitation Connie began taking classes toward a nursing degree at Des Moines Area Community College and Mercy School of Nursing. She received her nursing degree, magna cum laude, from Mercy in 1999. At some point Connie also acquired an Iowa realtor's license. She has sold real estate in Iowa. The trial court found Connie had earned

commissions of $25,000 in 2001 and $21,000 in 2002. Connie has worked as a nurse in Iowa for a few months, at a starting salary of $36,000 per year. Grant began his college studies at California State University at Long Beach in August 2000. He lived in a dormitory, with a roommate who helped with certain physical tasks that Grant found difficult or impossible. At the start of the 2003-2004 school year Grant lived by himself for about three months. Although

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Connie accurately testified that Grant "really is a bright person" he does have some difficulty processing information, participates in disabled student services, and is considered a full-time student although he is limited to taking nine credit hours per semester. After spending four years in college Grant had acquired the credits to be classified as a junior. It appears he may require an additional three to four years to earn a bachelor's degree. Grant is majoring in Spanish. He hopes to eventually teach Spanish or own and operate his own business. At the time of the August 2004 dissolution trial Grant was working parttime for the summer in retail clothing sales, earning eight dollars and fifty cents per hour. He had at earlier times worked in two other retail clothing stores. Grant receives $601 per month in Supplemental Security Income from the Social Security Administration. In about November 2001 Dallas was uncertain whether he would continue working at the Community State Bank and considered moving to California. The parties sold their family home, the third home they had owned, and bought a home in Carlsbad, California. However, Dallas remained employed at the bank. Connie moved to the parties' new California home in August 2002. She acquired a California realtor's license, but had no success selling despite six months' efforts. Connie decided to get back into nursing. She took six weeks of classes, did sixty hours of clinical work in a hospital, and in May 2003 acquired a nursing license in California. She filed her petition for dissolution of marriage in October 2003. In November 2003 Grant moved into the parties' California home. At the time of the mid-August 2004 trial Connie had secured employment at a hospital in LaJolla, California, starting in September 2004. She would be paid

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$29.50 per hours for nights, $25.50 per hour for other shifts, and would receive substantial fringe benefits. She would initially work on the night shift, thus

earning at a rate of $61,360 per year plus benefits. Other facts, relevant to the issues presented, will be set forth in our discussion of the district court's decision and the numerous issues presented on appeal. II. THE DISTRICT COURT DECISION Certain portions of the district court's decision are relevant to the issues presented. The court awarded each party certain tangible personal property, subject to any debts or encumbrances, awarded each party their bank accounts, and made each responsible for certain credit card debts. These assets and debts are relatively small in the overall scheme of the parties' property and are not involved in the issues presented on appeal. The district court awarded Connie and Dallas each certain additional assets at net values the court placed on them. The court's values totaled

$272,015.26 for Connie and $253,923.31 for Dallas. It then ordered that Connie receive forty percent, and Dallas sixty percent, of anticipated future revenues from the Country Cove project, with each party to be responsible for the tax liability arising from distributions to that party. The district court awarded Connie "traditional alimony in the amount of $1,500 per month until she or Dallas dies, until Dallas reaches the age of sixtyfive, or until Connie remarries, whichever occurs sooner." The district court ordered that each party provide Grant directly with monthly support payments of $360 until Grant obtains his undergraduate degree, for so long as Grant continued to be registered for at least two full semesters per

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year maintaining at least nine credit hours per semester and Grant provided Dallas with a written monthly report covering his classes, activities, work, and future plans. The court further provided that, if Grant and Connie so agreed, she could meet her monthly financial obligation to Grant by continuing to provide him with room and board. Finally, the district court ordered that each party be responsible for their own attorney fees. III. SCOPE AND STANDARDS OF REVIEW In this equity case our review is de novo. Iowa R. App. P. 6.4. We examine the entire record and adjudicate rights anew on the issues properly presented. In re Marriage of Smith, 573 N.W.2d 924, 926 (Iowa 1998). We give weight to the fact-findings of the trial court, especially when considering the credibility of witnesses, but are not bound by them. Iowa R. App. P. 6.14(6)(g). This is because the trial court has a firsthand opportunity to hear the evidence and view the witnesses. In re Marriage of Will, 489 N.W.2d 394, 397 (Iowa 1992). IV. MERITS A. Asset Values

Included in the assets awarded to Dallas as part of the $253,923.31 previously referred to are a "Johnston Lot" at $72,530, a "Clover Ridge" property at $42,000, a "Quick & Reilly" stock account at $51,257.43, and a "Kane Co." retirement account at $18,244.01. Dallas claims the district court erred in finding these values.

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The "Johnston Lot" is assessed at $72,530 by the county assessor. Dallas believes it to have a market value of $50,000, and testified it is subject to a $7,800 debt. The Iowa Department of Natural Resources will not allow this residential lot, which has not had a home built on it, to have a septic system. The lot has no frontage on a city street and a tract purchased by Dallas to provide the frontage required for a building permit remains encumbered by the prior owner's mortgage. The parties owe $7,800 of a $15,600 debt to a potential purchaser for work done on the lot. It would cost about $10,000 to hook up to a contemplated but not yet constructed city sewer extension. Connie agrees the lot's value does not approach $72,000. We find the district court overvalued the "Johnston Lot" and that its fair market value is approximately $60,000, subject to a debt of $7,800, a net value of $52,200. The "Clover Ridge" property is a time share purchased by the parties long ago for $7,000 and never used. Neither party lists it as an asset, neither party places a value on it, and neither party wants it. Dallas claims it has no value, and Connie does not disagree. We find it has no value. In ruling on Dallas's Iowa Rule of Civil Procedure 1.904 motion, the district court found that the parties agreed the Quick & Reilly account should be valued at $31,982.01 rather than $51,257.43. We therefore find its value to be the agreed-to $31,982.01. Somewhat similarly, in ruling on Dallas's rule 1.904 motion the district court found that Dallas asserted, and Connie did not disagree, that the Kane Co. retirement account should be valued at $11,735.80 rather than the $18,244.01 used by the court. We thus find its value to be $11,735.80.

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B.

Degrees and Licenses

Dallas claims the district court erred in not placing an asset value on the degrees and licenses Connie earned during the marriage. Although the future earning capacity flowing from an advanced degree or professional license is a factor to be considered in property division and a request for alimony, the degree or license is not an asset for property division purposes. In re Marriage of

Francis, 442 N.W.2d 59, 62 (Iowa 1989). We therefore reject this assignment of error. C. Income Tax Consequences

Dallas claims the district court erred in not considering the income tax consequences of the asset division. He complains that Connie will not have to pay income tax on any future sale of a major asset awarded to her, the parties' California residence, and he will have to pay capital gains tax of fifteen percent on any sale of the "Johnston Lot." He also notes that the parties' shares of gross distributions from the Country Cove project will be subject to and reduced by income taxes, although he does not state or argue how this fact suggests error by the trial court. Iowa Code section 598.21(1)(j) (2003) provides that in dividing property the court is to consider the tax consequences to each party. However, in In re Marriage of Friedman, 466 N.W.2d 689, 691 (Iowa 1991) our supreme court rejected the trial court's reduction of the value of certain corporate stock to take into consideration capital gains taxes and costs of selling the stock, noting there was no evidence a sale was pending or contemplated and that the trial court had not ordered a sale. In making a property division we have taken into

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consideration the tax consequences a party is expected to face in satisfying a property distribution. See, e.g., In re Marriage of Miller, 552 N.W.2d 460, 465 (Iowa Ct. App. 1996). We also have held that where payment of a lump sum of cash to a spouse will in all probability require the liquidation of capital assets, the income tax consequences of such a sale should be considered by the trial court in assessing the equities of the property and spousal support award. Marriage of Hogeland, 448 N.W.2d 678, 680-81 (Iowa Ct. Ap. 1989). The key to these and other cases is that where sale of an asset is ordered, necessary, or otherwise relatively certain, consideration of tax consequences is appropriate, and where sale will not occur or is rather doubtful, consideration of tax consequences in inappropriate. In this case no sale or In re

liquidation of the California residence or the "Johnston Lot" has been ordered, is necessary to effectuate property division, or is relatively certain to occur within the reasonably foreseeable future. We conclude the district court did not act inequitably or otherwise err in not considering income tax consequences of a speculative and uncertain sale of the "Johnston Lot," or any lack of such consequences upon a speculative and uncertain sale of the California residence. The district court's decree does in fact consider the income tax consequences of the distributions from the Country Cove project, and makes each party responsible for the income taxes attributable to that party's share of such distributions. We find nothing inequitable or erroneous in this action by the court.

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D.

Gifts and Inheritances

In addition to the previously noted $15,000 in gifts from his father and $10,000 inheritance from his mother, between 1990 and 1999 inclusive Dallas inherited an additional $299,000 from an uncle, a great aunt, his father, and two sets of grandparents. Dallas claims the trial court erred by dividing property attributable to his gifts and inheritances rather than setting aside to him the $324,000 of gifts and inheritances and then dividing remaining property approximately equally. Property inherited by either party or gifts received by either party prior to or during the course of the marriage is the property of that party and is not subject to property division except upon a finding that refusal to divide the property is inequitable to the other party or to the children of the marriage. Iowa Code

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