Stephens v. Stephens
297 Neb. 188
| Neb. | 2017Background
- Robert and Janet Stephens married in 1991; dissolution filed by Robert in 2014 after a 25‑year marriage with twin sons. Janet has a long‑term mental illness and limited income; a guardian ad litem/guardian and conservator represented her.
- Robert co‑founded and was president of Stephens & Smith Construction Co., Inc., owning 34% of the stock; his 34% interest was worth ~$298,459 at marriage and ~$5,044,934 at dissolution.
- Robert worked full time as president throughout the marriage, participated in high‑level decisions, guaranteed loans, selected and trained leadership, and acknowledged being integral to company success.
- Several related entities (R.I.P., Infinity, Heritage, Aardvark Partners, and specific real estate properties) were at issue; the trial court treated many of these as nonmarital but treated three properties as marital and ordered joint ownership transfers.
- The district court found the entirety of the appreciation in Robert’s business interests (including Stephens & Smith) to be nonmarital and awarded Janet a $1.1 million "Grace award" payable in installments; it also awarded Janet $1,000/month alimony for 120 months under § 42‑362.
- Janet appealed, challenging (1) exclusion of Stephens & Smith appreciation from the marital estate, (2) the limited duration of spousal support, and (3) ordering transfers of partnership interests when organizational documents might restrict transfers.
Issues
| Issue | Plaintiff's Argument (Janet) | Defendant's Argument (Robert) | Held |
|---|---|---|---|
| Whether appreciation of Robert’s Stephens & Smith stock during marriage is marital property | Appreciation during marriage should be marital because it resulted from Robert’s active efforts; district court erred excluding it | Appreciation of premarital business should be nonmarital unless the nonowning spouse caused the growth; court relied on prior cases to exclude growth | Court held appreciation during marriage is marital to the extent caused by either spouse’s active efforts; reversed exclusion and vacated Grace award; remanded to include marital portion of the 34% interest and redivide equitably |
| Grace award (equitable lump sum despite classification as nonmarital) | Grace award improper if appreciation is marital; cannot substitute a Grace award when active‑appreciation rule applies | District court used equitable Grace award to address fairness after treating appreciation as nonmarital | Court held Grace awards are generally unnecessary under the modern dual‑classification/active appreciation rule; vacated Grace award and directed reevaluation on remand |
| Duration of spousal support under Neb. Rev. Stat. § 42‑362 (mental illness) | Support should continue so long as Janet remains mentally ill | Trial court discretion to set duration; awarded 120 months | Court affirmed award amount and duration (120 months) as not an abuse of discretion, noting § 42‑362 does not mandate support for the entire duration of illness but may be revised; court may reconsider alimony amount on remand given changed asset classification |
| Ordering transfer of partnership/business interests where org documents may limit transfers | Transfer may be impractical if other partners won’t consent; trial court erred in ordering transfers rather than cash | Court ordered transfers and gave Robert 30 days to document joint ownership; if transfer fails, parties may seek modification | Court affirmed district court’s decision to award ownership interests (not cash) and noted parties may seek modification if transfers cannot be effectuated |
Key Cases Cited
- Van Newkirk v. Van Newkirk, 212 Neb. 730 (1982) (addressed treatment of property acquired before marriage and exceptions for spouse contributions)
- Rezac v. Rezac, 221 Neb. 516 (1985) (treated appreciation of premarital corporate stock as marital where husband’s contributions caused growth)
- Grace v. Grace, 221 Neb. 695 (1986) (recognized equitable lump‑sum awards in limited circumstances despite nonmarital classification)
- Meints v. Meints, 258 Neb. 1017 (2000) (articulated three‑step dual classification process for equitable property division)
- Stanosheck v. Jeanette, 294 Neb. 138 (2016) (held investment earnings on nonmarital retirement accounts may be nonmarital if traceable and not due to either spouse’s efforts)
- Coufal v. Coufal, 291 Neb. 378 (2015) (applied active appreciation analysis to premarital retirement account growth)
- Black v. Black, 223 Neb. 203 (1986) (interpreted § 42‑362 to award support for mentally ill spouse only so long as illness continues unless court exercises discretion differently)