Stephens v. Stephens
297 Neb. 188
| Neb. | 2017Background
- Robert and Janet Stephens married in 1991; Robert co‑founded and was president (34% owner) of Stephens & Smith, a construction C corporation, before and during the marriage. The stock was valued at ~$298k at marriage and ~$5.045M at dissolution.
- Janet suffered a mental illness during the last ~10 years of the marriage, is largely unemployable, and was represented by a guardian ad litem who appealed the decree.
- Trial evidence consisted largely of 166 exhibits and Robert’s testimony; Robert conceded some subsidiaries/properties were marital but claimed most business appreciation was nonmarital.
- The district court classified many of Robert’s business interests (including Stephens & Smith and its subsidiary R.I.P.) as nonmarital, but awarded Janet a $1.1M “Grace award” payable in installments; it classified certain properties as marital and ordered transfers; it awarded Janet $1,000/month alimony for 120 months under Neb. Rev. Stat. § 42‑362.
- Janet appealed only the classification of Stephens & Smith appreciation, the duration of spousal support, and the court’s order to transfer 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 the marriage is marital | Appreciation due to Robert’s active efforts should be treated as marital; district court erred in excluding the increase | Only appreciation attributable to the non‑owning spouse’s efforts should be marital; Robert argued the growth was passive or premarital | Court adopted active appreciation rule: appreciation during marriage presumed marital unless owning spouse proves growth traceable to nonmarital portion and not due to active efforts of either spouse; reversed exclusion of Stephens & Smith appreciation and vacated Grace award; remanded for equitable division |
| Duration of spousal support under § 42‑362 | Support should continue so long as Janet’s mental illness continues | Court may limit duration; trial court chose 120 months | Award of $1,000/month for 120 months affirmed as within trial court’s discretion; court may revisit alimony amount on remand given reclassification of marital assets |
| Ordering transfer of ownership interests when articles may restrict transfers | Transfers may be impractical if partners won’t consent; court erred to order transfers rather than cash | Transfer of ownership was an equitable division; court trusted cooperation and allowed remedy if transfers fail | Affirmed: ordering transfer (with the contingency that parties may seek modification if transfer cannot be effectuated) was not an abuse of discretion |
Key Cases Cited
- Van Newkirk v. Van Newkirk, 212 Neb. 730 (Neb. 1982) (discusses when premarital property may be treated as marital under equities)
- Rezac v. Rezac, 221 Neb. 516 (Neb. 1985) (upheld treating appreciation of premarital corporate stock as marital where owning spouse’s efforts caused growth)
- Grace v. Grace, 221 Neb. 695 (Neb. 1986) (recognized exceptional ‘‘Grace award’’ to achieve equity when nonmarital assets produce marital benefit)
- Meints v. Meints, 258 Neb. 1017 (Neb. 2000) (adopted three‑step dual classification process for equitable division)
- Heald v. Heald, 259 Neb. 604 (Neb. 2000) (property accumulated during marriage presumptively marital)
- Coufal v. Coufal, 291 Neb. 378 (Neb. 2016) (applied active appreciation rule in analyzing retirement account appreciation)
- Stanosheck v. Jeanette, 294 Neb. 138 (Neb. 2016) (held investment earnings on nonmarital retirement assets can be nonmarital if readily traceable and not due to spouses’ efforts)