Equitable Division of the Assets: Can Ex-wife Strip Husband of the “Family Business”?

In this case, an ex-husband appealed the trial court’s division of property and order of spousal support on the basis that the court didn't treat the parties equitably and failed to recognize the eccentricities of his “non-conventional marriage and non-conventional business.” The couple had a 30-year relationship that began when they were teenagers, but they had only been married about 13 years before being separated. The couple had two children, now adults, during the relationship. The husband’s father ("Big Earl") owned a strip club and his wife worked there periodically as a dancer. In 1996, the husband began managing the business (after his father was killed) with his wife’s assistance. The couple formed a corporation to operate the club and a subsidiary company to operate a limousine rental business. The businesses grew over the years and the couple purchased several other “clubs” and residential and commercial real estate. 

Most of the proceeds from the businesses was cash and money and were often commingled between business and personal accounts. The couple lived a “comfortable lifestyle” and accumulated both personal and real property. After 13 years of marriage, the couple split up in 2008 and, in 2009, the wife filed for divorce. The ex-husband temporarily agreed to pay his ex-wife $2500/month in spousal support and was ordered to “preserve the assets” of the marriage until the court issued a permanent decree and divided the property. The ex-husband, despite a contempt order from the court, began selling assets and spending significant amounts of money. Also, the income from the clubs and other businesses dramatically decreased after the couple separated. 

At trial, the wife argued that her spouse was deliberately attempting to devalue the businesses. The trial court entered a decree dissolving the marriage and found the husband guilty of contempt for depleting the couples’ assets. The court awarded the husband the businesses, along with the accompanying debt. The wife was awarded real estate with a net value of over $250,000, and the husband was awarded the remaining parcels valued at roughly $60,000. In total, the husband was awarded nearly $218,000, and the wife was awarded close to $298,000. The husband appealed the trial court’s property division and the spousal support award of $1500/month for 15 years. 

The Iowa Court of Appeals first addressed the spousal support issue, addressing the husband’s claims that the trial court impermissibly considered the parties’ premarital relationship, speculated as to his income, and erred in finding his wife needed support to become self-sufficient. The appellate court did agree that the trial court should not have considered the premarital relationship, but the length of the actual marriage. The court rejected the husband’s argument that the court unfairly speculated as to his income. The trial court properly looked at the average income listed on joint tax returns for the three years the couple filed joint returns (2005-2008). The joint return only listed income for the husband, so the only evidence the court had to estimate the parties’ income was the joint tax returns. The appellate court held that the wife proved a need for spousal support, due to her limited education and “lack of work experience outside the couple’s adult-entertainment businesses.” 

As to the property division, the appellate court addressed the husband’s claims that the trial court did not property establish the value of the corporations, the real estate, or the couple's debt.  According to the appellate court, the wife proved that the businesses had value and the majority of the evidence proved that the closely-held businesses would have been making a profit if the husband was not trying to devalue the businesses. In regards to the division of real estate, the appellate court affirmed the trial court’s valuation of the property, except for one parcel which the court declared was overvalued. 

Finally, the couple had substantial marital debt. The husband claimed that the debt was unfairly apportioned by the trial court. On appeal, the court affirmed the debt division. According to the court, the husband was awarded the “family business,” so he should be awarded the debt associated with those businesses. In re Marriage of Bryson, No. 1-525/10-1472 (Iowa Ct. App. Aug. 10, 2011)