Sellers v. Sellers
294 Neb. 346
| Neb. | 2016Background
- Krista and Ryan Sellers remarried in 2010 and divorced in 2014; district court entered a dissolution decree that divided marital property.
- At remarriage Ryan owned a cattle herd (~$130,000); at separation the herd value exceeded $600,000. Ryan used about $104,000 of an inheritance to buy additional cattle and financed operations with a joint operating line of credit.
- On the day of remarriage Ryan executed written assignments purporting to transfer interests in three LLCs (5 Star Pawn, Royal Colonial Inn, Western Mobile Home Park) to "Ryan and Krista, as joint tenants," describing each transfer as a gift; wording indicated 50% to each spouse.
- The district court found: (1) the entire cattle operation was Ryan’s nonmarital property (premarital ownership and inheritance-funded purchases traced); (2) Ryan gifted 50% interests in the LLCs to Krista during the marriage, and the court treated Krista’s 50% as marital property but retained Ryan’s 50% as nonmarital; (3) only half of LLC-related debts should be treated as marital debt; and (4) Ryan was not entitled to a deduction for a $200,000 promissory note (Gifford debt).
- District court distributed net marital assets and ordered Krista to receive an equalization payment; both parties appealed that portion of the decree concerning classification and division of the cattle, LLC interests, and LLC-related debts.
Issues
| Issue | Plaintiff's Argument (Krista) | Defendant's Argument (Ryan) | Held |
|---|---|---|---|
| Whether cattle herd is marital property | Herd value increased during marriage and activity (buy/sell) plus joint credit made herd marital | Herd was largely premarital and increased by market forces and inheritance purchases traceable to Ryan | Court affirmed: herd is Ryan's separate (nonmarital) property because premarital ownership, market appreciation, and traceable inheritance purchases supported set-aside |
| Whether Ryan’s transfers of LLC interests were gifts and how interests should be classified | Krista argued transfers made her owner and should be treated as her property (she sought inclusion) | Ryan said transfers were estate planning; intended to keep interests as his separate property | Court found transfers were gifts from Ryan to Krista, so Ryan’s finding of intent to gift was upheld |
| Whether Krista’s 50% LLC interests are marital or nonmarital | Krista argued her 50% should be nonmarital separate property | Ryan argued the LLCs (or 100%) should be treated as his separate property or as marital depending on intent | Court held error: after finding a gift, the court should have treated each party’s 50% interests as that party’s separate (nonmarital) property; reversed and remanded to treat 50/50 interests as nonmarital |
| Treatment of LLC-related debts and Gifford promissory note | Krista acknowledged debts and that LLC income services them; she accepted inclusion of appropriate marital portion | Ryan argued debt treatment/deduction was incorrect; court’s rationale unclear on Gifford debt | Court struck portions of decree allocating only half of specified LLC debts and struck the finding denying Ryan a deduction for the Gifford debt; remanded to reexamine classification of LLC debts and recalculate property division consistent with § 42-365 |
Key Cases Cited
- Despain v. Despain, 290 Neb. 32, 858 N.W.2d 566 (equitable three-step property-division framework under § 42-365)
- Brozek v. Brozek, 292 Neb. 681, 874 N.W.2d 17 (separate property, inheritance, and commingling principles)
- Coufal v. Coufal, 291 Neb. 378, 866 N.W.2d 74 (de novo appellate review and abuse-of-discretion standard in dissolution matters)
- Schuman v. Schuman, 265 Neb. 459, 658 N.W.2d 30 (title alone does not control classification; equitable facts determine division)
- Shafer v. Shafer, 16 Neb. App. 170, 741 N.W.2d 173 (premarital cattle can be set aside as separate without tracing specific animals; herd treated as single asset)