Stephens v. Stephens
899 N.W.2d 582
| Neb. | 2017Background
- Robert and Janet Stephens married in 1991; dissolution filed by Robert in 2014 after 25 years of marriage and two children.
- Robert co‑founded Stephens & Smith Construction Co., Inc., owns 34% of its stock; his pre‑marriage interest was valued at ~$298,459 and at dissolution at ~$5,044,934.16.
- Janet suffered a chronic mental illness in the last ~10 years of the marriage, is largely unemployable, and is represented by a guardian ad litem who participated in the proceedings.
- Trial evidence consisted mainly of business records and Robert’s testimony; the district court found many Robert business interests nonmarital and excluded the appreciation of several entities (including Stephens & Smith) from the marital estate.
- The district court nonetheless awarded Janet a $1.1 million "Grace award" payable over time and ordered $1,000/month spousal support for 120 months; Janet appealed classification of Stephens & Smith appreciation, duration of support, and transfers of partnership interests.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether appreciation in value of Robert’s Stephens & Smith stock during marriage is marital | Janet: Appreciation is marital to the extent caused by Robert’s active efforts and should be included in the marital estate | Robert: Appreciation is nonmarital; only appreciation caused by the nonowning spouse should be marital; many business gains were passive/market driven | Court: Adoption of active‑appreciation rule — appreciation during marriage is marital to the extent caused by the efforts of either spouse; reversed exclusion of Stephens & Smith appreciation and vacated Grace award; remand to value and divide the marital portion |
| Validity/term of spousal support under Neb. Rev. Stat. § 42‑362 | Janet: Support should continue so long as her mental illness persists | Robert: (did not contest monthly amount) award for 120 months is proper | Court: Trial court did not abuse discretion in awarding $1,000/month for 120 months; § 42‑362 allows revision and does not mandate support for entire duration of illness; affirmed but court may revisit amount considering changed marital estate |
| Ordering transfer of partnership/business interests instead of cash when other partners’ consent may be required | Janet: Concern transfers may be impracticable because other partners might not consent | Robert: Transfer award appropriate; will execute documents; cash award not required | Court: Affirmed award of ownership interests rather than cash; directed parties may seek modification if transfer does not occur |
Key Cases Cited
- Van Newkirk v. Van Newkirk, 212 Neb. 730 (1982) (discusses treatment of premarital gifts/inheritances and improvements)
- Rezac v. Rezac, 221 Neb. 516 (1985) (held appreciation of premarital corporate stock may be marital when caused by reinvestment/owner efforts)
- Grace v. Grace, 221 Neb. 695 (1986) (recognized equitable "Grace award" as remedy when nonmarital classification produced inequity)
- Meints v. Meints, 258 Neb. 1017 (2000) (articulated three‑step dual classification process for property division)
- Stanosheck v. Jeanette, 294 Neb. 138 (2016) (held investment earnings on nonmarital retirement funds may be nonmarital if traceable and not due to spouses’ efforts)
- Coufal v. Coufal, 291 Neb. 378 (2015) (addressed increase in premarital retirement capital and active appreciation analysis)
- Heald v. Heald, 259 Neb. 604 (2000) (illustrates general rules on marital property accumulation during marriage)
- Buche v. Buche, 228 Neb. 624 (1988) (cited regarding earlier appellate treatment of asset appreciation)
- Black v. Black, 223 Neb. 203 (1986) (interpreting § 42‑362: support for mentally ill spouse should continue only so long as illness continues or spouse remarries)