                  IN THE COURT OF APPEALS OF IOWA

                                 No. 14-2065
                            Filed August 19, 2015

IN RE THE MARRIAGE OF JOHN AARON LIVINGSTON
AND JENNIFER ELAINE LIVINGSTON

Upon the Petition of
JOHN AARON LIVINGSTON,
      Petitioner-Appellee,

And Concerning
JENNIFER ELAINE LIVINGSTON,
     Respondent-Appellant.
________________________________________________________________

     Appeal from the Iowa District Court for Story County, Michael J. Moon,

Judge.



     A former wife challenges the economic aspects of the dissolution decree.

AFFIRMED AS MODIFIED.



     Joseph R. Cahill of Cahill Law Office, Nevada, for appellant.

     Angelina M. Thomas of Newbrough Law Firm, L.L.P., Ames, for appellee.



     Considered by Tabor, P.J., and Bower and McDonald, JJ.
                                         2



TABOR, P.J.

      Jennifer Livingston appeals from the district court’s distribution of assets in

the decree dissolving her marriage to John Livingston, asserting she is entitled to

a larger share of the marital estate.     Because we find John gifted separate

property (specifically the net value of his premarital home) to Jennifer, we modify

the distribution as to that property. We find the remainder of the decree achieved

equity between the parties and affirm as modified.

I.    Background Facts and Proceedings

      John and Jennifer were married in April 1996.1 Before their marriage, the

parties entered into an antenuptial agreement detailing the premarital assets they

considered “separate property.” John’s assets included a forty-five percent stake

in R & L Automatic Services, Inc., a family business operating coin laundries and

a car wash in Ames. John also owned a forty-five percent stake in Livingston

Investments, LLC, which owned the property on which R & L operated. John’s

parents, Lee and Gail Livingston, owned the remaining fifty-five percent of both R

& L and Livingston Investments. Additionally, John owned a home on White Oak

Drive in Ames and an IRA account.

      After they married, John deeded the White Oak Drive home to Jennifer

and himself as joint tenants. Later, they sold the home and used the proceeds to

purchase a house on Idaho Avenue in Ames. In 2007 the parties paid off the

mortgage on that house with $200,000 borrowed from John’s parents.               His

parents did not take a lien on the property, but the parties signed a promissory


1
 They have one child together. Custody and visitation rights were resolved through
mediation before trial and are not at issue on appeal.
                                           3



note which remains outstanding; an $875 interest-only payment on the note is

due monthly.

       In addition to being an owner of R & L, John has worked for the company

since the beginning of the marriage. In 1998 R & L purchased a laundromat

business and its associated lease in the North Grand Mall in Ames. John and

Lee testified that since the purchase, R & L had not been profitable and was

being supported by contributions from Lee. In 2011, once the North Grand lease

was sold, Lee gave John his ownership stake and stopped making contributions

directly to R & L. But Lee continued lending money to John to support the

business. John receives an income from his position at R & L—in 2012 he

earned $12,692 and in 2013 he earned $2100. John worked part time for UPS

during 2011 and at a convenience store in Des Moines during 2011 and 2012,

earning twelve to thirteen dollars an hour.

       In addition to these more traditional lines of work, John fancies himself an

entrepreneur. He has used funds received from sales of premarital assets and

loans or gifts from friends and family to fund his entrepreneurial pursuits, most of

which have resulted in substantial losses.           With borrowed money he has

purchased non-publicly traded stocks and day traded2 public stocks. He has

bought cars over the internet to resell.          He has purchased many cheap,

potentially valueless, properties online, hoping to strike it rich. In partnership with

his father, he has purchased distressed real estate to rehabilitate and resell. In


2
  Black’s Law Dictionary defines “day trading” as, “The act or practice of buying and
selling stock shares or other securities on the same day, esp[ecially] over the internet,
usu[ally] for the purpose of making a quick profit on the difference between the buying
price and the selling price.” Black’s Law Dictionary 1725 (10th ed. 2014).
                                         4



January 2013 John became a licensed real estate agent. At the time of trial, he

had earned $27,566 in commissions in 2014. According to John, expenses for

his real estate business total $3282 per month. For child support purposes, John

agreed to an assigned annual income of $35,000.

      In contrast to John’s varied pursuits, Jennifer was steadily employed as a

dental hygienist throughout the marriage. She earned $54,581 in 2013. At the

time of trial, she had reduced her hours to cope with an injury to her index finger

resulting from an automobile accident in 2009. Jennifer testified the injury may

require future medical care and, at times, interferes with her work. She received

a personal injury settlement as a result of the accident; a portion of the funds she

received from the settlement are at issue on appeal.

      John filed a petition for divorce on July 16, 2013. Discovery revealed to

Jennifer that John had incurred significant debts to his parents, other family

members, friends, and his paramour Tracy Cook. Tracy’s husband, presumably

in an effort to resolve the dissolution of his own marriage, filed a motion to

intervene in the current action, claiming Tracy had loaned John upwards of

$260,000 of their marital assets between 2011 and 2013. The court denied the

motion to intervene. John claims the majority of the funds he received were gifts

from Tracy, though he acknowledges in May 2013 Tracy loaned him $87,000, as

evidenced by a promissory note.

      Following two days of testimony, the court issued its dissolution decree on

October 3, 2014, and divided the parties’ marital debts and property as follows:

                                Original Distribution
             Marital Property                           John   Jennifer
                                             5



               Marital Home                          $142,500      $142,500
               Promissory Note                       (200,000)           -

               Personal Property                         6,678       14,000
               Investment Accounts                         160       18,794
               Checking and Savings                        690        1,969
               Retirement Accounts                      32,550       31,448

               Marital Debts                          (51,825)       (1,044)
                                                      (69,247)      207,667

               John's Personal Property
               Marital Home Equity                      7,3633            -
               R & L Assets                              1,868            -
               Wells Fargo IRA                             -              -
               Personal & Business Debt              (191,396)            -
                                                     (182,165)            -

       In accordance with the parties’ antenuptial agreement, the district court

excluded R & L’s debts and assets from the distribution. In addition, the court

assigned solely to John his personal debts owed to his family, friends, and Tracy

Cook. The court awarded the marital home to the parties as cotenants. But, as

the custodial parent of their daughter, Jennifer was awarded sole possession of

the home until the daughter graduated from high school, at which time the home

was to be sold.

       Both parties filed a motion to amend and enlarge under Iowa Rule of Civil

Procedure 1.904(2). On November 14, 2014, the court issued a post-trial order,

granting several of John’s requests. The court divided the $200,000 house debt




3
  The decree states that John would not receive an offset for his equity in the White Oak
home, but the court included a partial offset in the list of John’s personal property without
reducing the total equity of the marital home. This resulted in a double counting of
$7363.
                                         6



owed to John’s parents equally between the parties. Rethinking the delay of ten

years until the parties’ daughter graduated from high school, the court ordered

the home be listed for sale on May 1, 2016.             Upon sale of the home, the

$200,000 debt was to be paid first, and then John was to receive $7363 to

compensate him for his contribution of antenuptial assets toward the purchase of

the home. The court ordered any remaining sale proceeds be divided equally

between the parties. The court granted John’s request that his Wells Fargo IRA,

valued at $1103 and funded by another IRA account that was listed as his asset

in the antenuptial agreement, be set aside as his sole property. The court further

awarded John sole ownership of an investment account funded by a portion of

Jennifer’s personal injury settlement, valued at $7701.

      The post-trial order distributed assets as follows:

                                Modified Distribution
             Marital Property                        John       Jennifer
             Marital Home                       $138,819      $138,819
             Equity Offset                          7,363           -
             Promissory Note                    (100,000)     (100,000)

             Personal Property                      6,678       14,000
             Investment Accounts                    7,861       11,093
             Checking and Savings                     690        1,969
             Retirement Accounts                   31,447       31,448

             Marital Debts                       (51,825)       (1,044)
                                                   41,033       96,284
                                            7




                 John's Personal Property
                 Marital Home Equity                  -            -
                 R & L Assets                       1,868          -
                 Wells Fargo IRA                    1,103          -
                 Personal & Business Debt       (191,396)          -
                                                (188,425)          -


       Jennifer urges three modifications on appeal. She claims we should rule

(1) John dissipated marital assets, (2) John is not entitled to an offset of $7363 in

the equity of the home, and (3) John is not entitled to an account funded by a

portion of her personal injury settlement.

II.    Standard of Review

       Because the district court hears dissolution of marriage proceedings in

equity, our review is de novo. In re Marriage of McDermott, 827 N.W.2d 671,

676 (Iowa 2013); see also Iowa Code § 598.3 (2013); Iowa R. App. P. 6.907.

Although we are not bound by them, we give weight to the factual findings of the

district court, especially its findings of credibility. Iowa R. App. P. 6.904(3)(g);

McDermott, 827 N.W.2d at 676. Despite our de novo review, “’we accord the trial

court considerable latitude in making its determination and will disturb the ruling

only when there has been a failure to do equity.’” McDermott, 827 N.W.2d at 676

(quoting In re Marriage of Schriner, 695 N.W.2d 493, 496 (Iowa 2005)).

III.   Dissipation

       Jennifer claims she is entitled to a greater share of the distributed property

due to John’s dissipation of assets. “A court may generally consider a spouse’s

dissipation or waste of marital assets prior to dissolution when making a property

distribution.”    In re Marriage of Kimbro, 826 N.W.2d 696, 700 (Iowa 2013).
                                          8



Dissipation occurs “when a spouse’s conduct during the period of separation

‘results in the loss or disposal of property otherwise subject to division at the time

of divorce.’” Id. at 700–01 (Iowa 2013) (quoting In re Marriage of Burgess, 568

N.W.2d 827, 828 (Iowa Ct. App. 1997)). Upon a finding of dissipation, the value

of the dissipated asset is included in the marital estate and awarded to the

spouse who squandered the asset. Id. at 701.

       After establishing the assets in question were otherwise subject to

division, Iowa courts must decide whether the alleged purpose of the expenditure

is supported by the evidence, and if so, whether that purpose amounts to

dissipation under the circumstances. In re Marriage of Fennelly, 737 N.W.2d 97,

104 (Iowa 2007); see Burgess, 568 N.W.2d at 829 (“We do not believe the focus

should be whether or not a spouse is personally responsible for a debt incurred

by the other spouse, but whether the payment of the obligation was a reasonable

and expected aspect of the particular marriage.”).

       In support of her dissipation claim, Jennifer points to deposits made into

John’s three checking accounts. According to her math, John deposited a total

of $850,718 into the accounts between July 2012 and August 2014,

approximately one year on each side of his July 2013 filing of the divorce petition.

Jennifer claims the deposits, when compared to his modest income during that

period, show John must be hiding marital assets.         John questions Jennifer’s

accounting methods, as do we.         During the marriage, John had a habit of

borrowing from one source to pay off loans to others, borrowing money in

anticipation of incoming funds, and shifting funds from one account to another as
                                         9



expenses came due. Tracking only the deposits from these transactions could

make a modest sum appear to be a considerable fortune. Totaling the deposits

within the three accounts does not provide a reliable accounting of John’s assets.

       We are not only skeptical of Jennifer’s overarching complaints concerning

John’s diversion of assets, but when reviewing her specific claims, we do not

believe she has made the threshold showing that the allegedly dissipated assets

were otherwise subject to division in the dissolution decree. Instead, we are

persuaded by John’s appellate argument that his financial ventures were not

funded with marital money, but rather with assets subject to the antenuptial

agreement or with individual gifts. John does recognize the loan he received

from Tracy Cook may be considered marital property, but emphasizes that he

has agreed to take sole responsibility for that debt, as well as all remaining

liabilities resulting from his unsuccessful endeavors.       Finally, he contends

Jennifer is not entitled to credit for his unrealized gains, when the decree did not

assign her any of his actual losses. We agree.

       We will address each of Jennifer’s dissipation claims in turn.

       A.     The NewLink Genetics Stock Sale in March of 2013

       Jennifer contends John dissipated $64,962 he received from the sale of

stock in March of 2013 because he cannot account for the use of the funds. In

2007 John and his father Lee anticipated R & L would receive a substantial profit

from the sale of the lease it held at the North Grand Mall in Ames. John sought

an advance from Lee for his share of the profit in the form of NewLink Genetics

stock. Lee purchased $50,000 worth of NewLink stock for John; Lee held the
                                         10



stock in his name because John was not qualified to own the stock before its

public offering. The two agreed John would repay the $50,000 to Lee with a

portion of his share of the profit from the anticipated lease sale. After they sold

the lease for much less than anticipated, they memorialized the debt in a $50,000

promissory note dated December 4, 2012, which required John to pay the

balance when the price of NewLink stock reached $100 per share. NewLink then

went public, allowing Lee to transfer the stock to John’s name. John sold the

stock in March of 2013, receiving the $64,962 at issue.

       At trial, John first guessed he placed $50,000 of those funds into his

Scottrade account. When presented with the statements for that account, John

could not show when those funds were deposited. Admitting he must have been

wrong about where the funds went, John testified the Scottrade account was

funded by a loan from Tracy Cook. The account had a minimal balance until May

2013, when $78,000 was deposited. The timing of the deposit coincided with a

loan of $87,000 that John received from Tracy Cook, without Jennifer’s

knowledge, memorialized with a promissory note on May 15, 2013. John used

those loaned funds to day trade the now-public NewLink stock. After a volatile,

and at times successful, thirteen months of trading, the account value had

dwindled to $28,435 by May 2014. John withdrew $28,350 from the account,

and after fees, only $60 remained in the account at the time of trial.

       As evidenced by a promissory note dated June 18, 2014, John used the

$28,350 from closing the account to partially pay off the original $50,000

borrowed from Lee—$21,650 remains outstanding on the note. Combining this
                                         11



debt with the $87,000 promissory note outstanding to Tracy Cook, John still owes

$108,650.00 as a result of his stock trading. The district court gave John sole

responsibility for the debt without an offset for marital asset distribution, which he

does not contest.

        In support of her dissipation claim, Jennifer cites In re Marriage of

Newlander, No 06-0115, 2006 WL 3314532, at *7 (Iowa Ct. App. Nov. 16, 2006),

where the husband filed for divorce in 2004, and the district court found the

husband “as early as 2002 . . . had been maneuvering assets in anticipation of

seeking divorce,” including secreting funds from a brokerage account.             On

equitable grounds, the Newlander court attributed the value of the brokerage

account to the husband when distributing marital assets, and this court affirmed.

Newlander, 2006 WL 3314532, at *7. We do not find Newlander persuasive

here.   Unlike the present case, in Newlander the record did not show any

outstanding debt on the brokerage account. See id.

        John argues the stock-sale proceeds of $64,962 are not subject to

distribution because the $50,000 he used to purchase the NewLink stock was

collateralized by an asset subject to the parties’ antenuptial agreement (proceeds

from the anticipated R & L lease sale). We agree with John’s characterization of

the asset: John and Lee both testified the loan was to be repaid using R & L

proceeds; Jennifer’s name was not on the promissory note made to Lee

memorializing the debt; once the company went public, the stock was held in

John’s name alone; and the note was partially repaid using borrowed funds.

Importantly, John has accepted sole responsibility for the outstanding debts
                                         12



outside the marital estate. Under these circumstances, we agree with the district

court’s decision not to offset John’s share of assets by the stock-sale proceeds of

$64,962.15.

       B.     The Balance of John’s Scottrade Account

       John’s day trading was not altogether unsuccessful. By March 2014 John

had turned the original $87,000 he borrowed from Tracy Cook into $155,857.

Around this time, John made an offer to Jennifer, using this money to “help

facilitate” a settlement of their divorce.    No settlement was reached.     John

continued to trade on the account. As described above, by May 2014 John had

reduced the account’s value to $28,435; he used the majority of the remaining

funds to partially pay off the $50,000 debt to Lee.

       Describing John’s day trading as “irresponsible” and “reckless,” Jennifer

claims John’s losses amount to dissipation of marital assets. She cites In re

Marriage of Martens, where this court affirmed a finding of dissipation based on

the husband’s gambling habit and inability to account for funds that were clearly

marital property. No. 03-0549, 2004 WL 358889, at *3-4 (Iowa Ct. App. Feb. 27,

2004). To justify a $60,000 dissipation offset, this court considered the marital

property for which the husband could not account. Id.

       Jennifer urges us to find dissipation based on a snapshot of the value of a

very volatile account—essentially she asks for a finding that John dissipated

marital assets by failing to step away from the table while he was ahead. When

the account, funded by a loan from Tracy Cook and now reduced in value, was

liquidated, John used the funds to pay off his personal debt to Lee. The district
                                         13



court assigned John the outstanding debt to Tracy Cook without making a

corresponding offset to his marital property.       Because we deem this debt

assignment to be equitable, we agree with the district court’s refusal to grant

Jennifer an offset for dissipation based on John’s day trading of the loaned funds.

       C.     Promissory Note from Lee Livingston

       Jennifer argues John dissipated an additional $50,000 lent to him by Lee

in December of 2012 by failing to account for the funds. At the time of trial, John

had not repaid this loan to Lee, and Lee testified that he expected repayment.

John and Lee had differing accounts of what this money was used for. Lee

testified he thought John was going to use the money to purchase more NewLink

stock. John testified the promissory note was a consolidation of several smaller

debts John had outstanding with Lee at the time. The district court ordered John

to take sole responsibility for the debt—making what the funds were used for

immaterial.   See Fennelley, 737 N.W.2d at 106 n. 6 (assigning the debt

associated with the squandered asset to the dissipating party as a remedy). The

district court correctly assigned the debt to John, outside of the distribution of

marital assets, and correctly denied Jennifer any additional offset for dissipation.

       D.     Out-Of-State Real Estate

       Throughout 2012 John purchased numerous parcels of out-of-state real

estate over the internet, sight-unseen, and with no due diligence. John spent

$67,734 on the properties and held them in R & L. John testified that in 2013 he

discovered the properties were worthless for various reasons—tax deficiencies,

environmental restrictions, or ongoing litigation. When John told his accountant
                                         14



about the properties, John learned R & L would incur significant legal fees to

legitimately own property in states other than Iowa or to transfer title to John

personally. At the time of trial John had not sold the properties but testified he

intended to forfeit the properties by not paying their real estate taxes. John wrote

the properties off as a near total loss on R & L’s taxes.

       Jennifer claims marital assets must have been used to purchase the

properties because R & L did not have the resources to make the purchases, but

she did not offer evidence that marital assets were used. When asked where the

money to purchase the properties came from, John denied marital funds were

used, explaining he spent “either funds that were already in [R & L’s] checkbook,

funds that my father infused into the company, [or] monies that I borrowed from

Tracy.” A finding of dissipation requires that the squandered assets would have

been subject to distribution. Burgess, 568 N.W.2d at 828 (stating the supposedly

dissipated property must be “subject to distribution at the time of divorce”).

Jennifer’s assertion by inference—weakened substantially by John’s testimony of

the antenuptial source of the funds—is insufficient to establish these funds would

have been subject to distribution. Additionally, even if John borrowed the money,

he was given sole responsibility for the associated debt outside the marital

distribution, thus, any additional compensation to Jennifer for dissipation would

be inequitable.

IV.    Award of Home Equity to John

       Jennifer asserts the trial court erred by awarding John $7363 to

compensate him for the equity from his White Oak Drive home. The White Oak
                                           15



Drive home was listed as separate property in the parties’ antenuptial agreement.

The net value of the home, as stated on the agreement, was $27,363. At trial

and in his post-trial motion, John sought an offset for this equity, which he

testified was used to purchase the couple’s marital home on Idaho Avenue.

       The original decree stated that the “act of deeding the property to Jennifer

removed that residence and the proceeds from its subsequent sale from the

protections afforded by the antenuptial agreement.” The final post-trial order,

though, granted John $73634 from the sale of the home before any sale

proceeds were divided.

       Antenuptial contracts are to be liberally construed to carry out the

intentions of the parties. In re Marriage of Pillard, 488 N.W.2d 714, 715 (Iowa Ct.

App. 1989). We interpret the agreements as we do an ordinary contract. Id.

Pertinent sections of the Livingstons’ agreement provide:

              The parties agree that replacement of, or additions to,
       Separate Property can occur an unlimited number of times so long
       as the property and proceeds can be traced with reasonable
       accuracy.
              ...
              It is further agreed that nothing herein shall be construed to
       be a bar to either party to this agreement giving any property of
       which they may be possessed to the other party by will or
       otherwise, it being understood that each party to this agreement
       shall control his or her personal estate.

       We agree with the district court’s initial assessment; John intended to gift

half of the White Oak Drive home to Jennifer, thereby subjecting it to distribution.



4
 It is unclear whether the district court considered the equity subject to the antenuptial
agreement and made a typographical error by awarding John $7363 rather than $27,363
or if the district court considered the equity beyond the antenuptial agreement and
awarded John $7363 on equitable grounds. We proceed assuming the former.
                                        16



Months after their marriage, John deeded the home to Jennifer and himself as

joint tenants. At trial he produced no evidence of the sale price of the home or

the amount contributed to the purchase of the Idaho Avenue home. The offset

he sought was based only on the equity in the home as described in the

antenuptial agreement. Had he intended to maintain the equity as his separate

property, he would have kept an accounting so that the proceeds could be

“traced with reasonable accuracy” as required by the antenuptial agreement.

       Considering the factors set forth in Iowa Code section 598.21(5)—

especially the length of the marriage and the contribution of each party to the

marriage—an equal division of the proceeds from the house sale is more

equitable. Accordingly, we modify the post-trial order; proceeds from the sale of

the Idaho Avenue home, after payment of the $200,000 debt to John’s parents,

shall be divided equally between the parties—with no offset.

V.     Award of Personal Injury Funds to John

       Jennifer disputes the district court’s award to John of a Scottrade

brokerage account, valued at $7701 and funded by a portion of her personal

injury settlement. The original decree awarded the account to Jennifer. Jennifer

argues the change was clearly an oversight by the court because John did not

request the account in his post-trial motion. But John’s motion did argue the

original “asset/debt reconciliation” was inequitable. While the order did not state

its rationale, it was explicit in ordering, “The Scottrade account ending in 9769

shall be John’s sole property.”
                                         17



       As the Iowa Supreme Court has said, “proceeds of a personal injury claim

are marital assets, to be divided according to the circumstances of each case.”

In re Marriage of McNerney, 417 N.W.2d 205, 206 (Iowa 1987). The remainder

of Jennifer’s personal injury settlement, $23,015 in a savings account, was

allocated to Jennifer outside of the couple’s property distribution.       Given the

overall lopsided allocation of assets (and debts) between the parties and the

explicit nature of the order, we find the court awarded the account to John in

response to his request for a more equitable distribution. We affirm the district

court’s award of the Scottrade account to John.

VI.    Attorney Fees

       John requests we order Jennifer to pay his attorney fees associated with

this appeal. Iowa Code section 598.36 grants us discretion in awarding appellate

attorney fees, but an award is not a matter of right. In re Marriage of Gonzalez,

561 N.W.2d 94, 99 (Iowa Ct. App. 1997). To address a request for attorney fees

we consider “the needs of the party seeking the award, the ability of the other

party to pay, and the relative merits of the appeal.” In re Marriage of Geil, 509

N.W.2d 738, 743 (Iowa 1993). Jennifer prevailed in part on appeal. Considering

the merit of her claims and the relative resources of the parties, we decline to

award John appellate attorney fees.

VII.   Conclusion

       In sum, we affirm the district court’s distribution of assets in large part and

modify only the allocation of proceeds from the sale of the marital home. After
                                       18



paying the home-related debt to John’s parents, John and Jennifer shall receive

an equal share of the proceeds from the sale.

      Costs are divided equally between the parties.

      AFFIRMED AS MODIFIED.
