Stava v. Stava, 318 Neb. 32

Larry and Carine Stava were married for approximately 18 years; no children were born of the marriage.
Prior to marriage, Larry purchased two adjacent lots (Lots 14 and 15); Lot 14 became the marital home, while Lot 15 was used for a horse business.
Both parties were borrowers on loans secured by the lots, and marital funds were used to pay down significant principal during the marriage.
The value of both properties increased substantially due to passive market forces during the marriage.
The district court characterized the lots as Larry's premarital property (except for a proportionate cash payment to Carine for mortgage principal paydown with marital funds); the Court of Appeals largely affirmed, with some modification regarding improvements on Lot 15.
The Nebraska Supreme Court reviewed whether the source of marital funds used to pay down principal created a proportionate marital interest in the properties and whether passive appreciation attached to that interest.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Lots 14 and 15 are marital property if marital funds paid down the mortgage	Carine: Paying down principal with marital funds creates a marital interest and claim to appreciation	Larry: Owned properties outright before marriage, appreciation was passive, thus nonmarital assets	Use of marital funds to pay down principal creates a marital interest; passive appreciation attaches to it
Whether the active appreciation rule applies to the lots	Carine: Active appreciation analysis is inapplicable; the lots (or parts) are marital due to funding	Larry: No active appreciation; increase was passive and due to market, not marital effort	Active appreciation rule does not apply to the marital-funded portions; passive appreciation is marital
Whether Larry met his burden to classify appreciation as nonmarital	Carine: Larry did not prove appreciation should be nonmarital	Larry: Proved appreciation was passive and thus nonmarital	To the extent equity was created using marital funds, appreciation on that part is marital property
Correct application of "source of funds" rule	Carine: Source of funds rule should be adopted for fairness	Larry: Court should not award full appreciation to marital estate	Supreme Court adopts "source of funds" rule for calculating marital/nonmarital shares and appreciation

Harris v. Harris, 261 Neb. 75 (payments using marital funds on premarital property create marital interest, including appreciation)
Eis v. Eis, 310 Neb. 243 (property purchased before marriage but paid with marital funds during marriage may become marital property)
Parde v. Parde, 313 Neb. 779 (equity in property at time of marriage generally set aside as separate property; appreciation classified based on source of funds/contributions)
Seemann v. Seemann, 316 Neb. 671 (property distribution governed by fairness/reasonableness; reviews de novo for abuse of discretion)
Stephens v. Stephens, 297 Neb. 188 (property can have both marital and nonmarital characteristics; key is tracing contributions)
Gangwish v. Gangwish, 267 Neb. 901 (title form not determinative of marital/nonmarital classification)