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Sickler v. Sickler

Supreme Court of Nebraska

May 13, 2016

MADELINE LORETTA SICKLER, NOW KNOWN AS MADELINE LORETTA SCHMITZ, APPELLEE,
v.
STEVEN DALE SICKLER, APPELLANT

          Appeal from the District Court for Buffalo County: MARK J. YOUNG, Judge.

         Kent A. Schroeder, of Ross, Schroeder & George, L.L.C., for appellant.

         Marsha E. Fangmeyer, of Knapp, Fangmeyer, Aschwege, Besse & Marsh, P.C., for appellee.

         HEAVICAN, C.J., WRIGHT, CONNNNOLLY, MILLER-LERMAN, CASSEL, STACY, and KELCH, JJ.

          OPINION

          [293 Neb. 524] Wright, J.

         I. NATURE OF CASE

         Steven Dale Sickler appeals from an order of contempt sanctioning him with a determinate period of 90 days' incarceration if, within 17 days, he did not pay $37,234.84 to his ex-wife, Madeline Loretta Sickler, now known as Madeline Loretta Schmitz. The sum in question stems from the property division awarding a percentage of Steven's individual retirement account (IRA) to Madeline. Madeline's percentage had not been transferred to her in the 14 years since the decree. Due to withdrawals by Steven, of which Madeline was unaware, the account no longer contains sufficient funds to satisfy the award.

         Steven argues that the order of contempt is an imprisonment for debt in violation of article I, § 20, of the Nebraska Constitution. He also argues that the period of 17 days to purge the contempt was unreasonable. The contempt and sanctions order was stayed on condition that Steven file an appearance bond, and Steven argues the requirement of an appearance bond also violates article I, § 20, of the Nebraska Constitution.

         II. BACKGROUND

         1. Dissolution Decree

         Madeline and Steven were divorced in April 2001. As part of the property division, the court awarded to Madeline 18.6 percent of an IRA held under Steven's name. The dissolution decree listed the amount of the award to Madeline as $45,786. The court denied the " request to reduce retirement benefits for either party by anticipated but nevertheless speculative tax consequences."

         The total balance for the IRA account in April 2001 was $305,587.44. The court's order made no reference to the need for a qualified domestic relations order (QDRO) with respect to the IRA.

         Steven moved for a new trial. As a result of the motion, the court adjusted the award of the IRA by decreasing Madeline's [293 Neb. 525] award by $3,100 and increasing Steven's award by $3,100. Steven appealed the order but later dismissed his appeal.

         2. October 2004 Negotiations

         Nothing occurred until October 2004, when Madeline called Steven about the fact that her percentage of the IRA still needed to be transferred to her. Madeline had apparently been confused about how to proceed with the transfer. Steven sent a letter to Madeline stating that the reason she had not received her share of the retirement account is that her attorney failed to file a QDRO. Steven recognized Madeline's share of the retirement account was $45,786 and offered several options for payment that were amenable to him. He wished to avoid attorney fees. He mentioned opening and reassessing all life insurance and retirement plans listed on the property statement attached to the dissolution decree. He wanted credit for student loans he had incurred on behalf of their children since the decree.

         3. October 2005 QDRO

         Madeline did not accept any of Steven's proposals for payment. A QDRO was filed in October 2005. It stated that the dollar amount of benefits to be paid to Madeline was 18.6 percent of Steven's share of the IRA as of April 25, 2001, the date of the decree of dissolution.

         4. Motion to Set Aside QDRO

         Steven moved to set aside the QDRO on the ground that the amount stated in the QDRO was inconsistent with the dissolution decree as revised after the motion for new trial. At the hearing on the motion, Steven's counsel complained that the QDRO should have been sought sooner.

         5. April 2006 Order Regarding Need for New QDRO

         On April 18, 2006, the court vacated the QDRO filed in October 2005. It explained that the matter was before the [293 Neb. 526] court " because of the failure of one or both parties to submit a [QDRO] at the time the Court entered its amended decree" of dissolution. The court found that a new QDRO should be drafted and submitted by Madeline's counsel, subject to Steven's approval as to form and content.

         The court then made the following findings:

First the final decree entered by the Court awarding a percentage of an IRA to each party means exactly what is set forth in the Court's order. Each party being awarded a percentage of a particular asset then shares in the potential for gain or loss associated with that asset from the date of division. The Court's quantifying the value of the percentage of the asset is solely for the purpose of insuring that an equitable division of the property occurred and is not intended to be an award of a dollar value to a particular party.
As such, the Court finds that [Madeline's] current share of the IRA, upon division, is the original market value of the asset plus or minus the performance of that portion of the asset since the order of division, the final journal entry.

         6. Motion for Order to Show Cause

         On June 6, 2006, Madeline moved for an order to show cause why Steven should not be held in contempt for violating the terms of the September 2001 dissolution decree by withdrawing a total of $209,980 from the IRA.

         7. June 2006 Hearing

         A hearing was held on June 28, 2006, for the purposes of conducting an evidentiary hearing with regard to the proposed revised QDRO and the current value of the IRA, and to determine facts relevant to Madeline's motion to show cause.

         At the hearing, it was discovered that Steven had made the following withdrawals from the IRA since the dissolution decree, leaving the IRA with inadequate funds to cover the property division award: $30,000 in August 2001, $10,000 in [293 Neb. 527] March 2002, $40,000 in April 2002, $20,000 in July 2002, $30,000 in August 2002, and $79,980 in January 2005. After the January 2005 withdrawal, the IRA account was left with a balance of $13,115.25. By September 2005, the balance was $4,748.18. Steven testified that that was the approximate balance as of the date of the hearing. The difference between the balance after the withdrawal in January and the balance in September is apparently due to fluctuations within the investments making up the IRA. The IRA had depreciated due to market fluctuations by about $90,000 since the time of the dissolution decree.

         Steven admitted that he made these withdrawals with the knowledge that Madeline was awarded a percentage of the IRA. Steven testified that he made no attempts to discern whether Madeline had transferred her portion of the IRA out of his accounts prior to making the withdrawals. Madeline testified that she did not attempt to obtain her share of the IRA directly from the bank, noting that the account was in Steven's name. She did not know that Steven was making withdrawals from the IRA account.

         8. July 2006 Contempt Order

         The court found that Steven knew in October 2004, before withdrawing approximately $80,000 from the IRA account, that Madeline had not received her moneys from the account, as required by the dissolution decree. The court reasoned that such knowledge was clearly indicated in Steven's letter to Madeline in October 2004.

         In an order dated July 10, 2006, the court found that " depletion of the account by [Steven] with knowledge of the nonpayment to [Madeline] clearly places [Steven] in contempt of court for willfully violating the court's order requiring that [Madeline] receive her proceeds from the account." Steven was ordered to pay Madeline $37,234.84. The court explained that this amount represented 17.34 percent of all moneys taken by Steven from the account and 17.34 percent of the account balance.

         [293 Neb. 528] 9. August 2006 Motion for Further Sanctions

         On August 24, 2006, Madeline filed a motion for an order imposing further contempt sanctions for the reason that Steven had failed to comply with the July 2006 order to pay Madeline $37,234.84.

         10. May2007 Assignment of Expected Lawsuit Proceeds

         On May 15, 2007, Steven assigned to Madeline a pro rata share, not to exceed $37,234.84, of whatever proceeds Steven received as a result of litigation he had filed. In exchange, Madeline agreed to forbear from pursuing her motion for further sanctions against Steven. Steven's litigation involved claims of malpractice against a law firm and an attorney from another law firm, arising out of alleged negligence in performing the " legal background for the franchises" Steven owned. As a result of the alleged negligence, 15 lawsuits had been filed against Steven for 15 out of the 21 franchises he had sold.

         11. Lawsuits End With No Payment to Madeline

         The lawsuit against the law firm eventually settled for $2.2 million. The lawsuit against the attorney went to trial and resulted in a verdict in the attorney's favor. However, according to Steven, $1.2 million of the settlement with the law firm went to attorney fees and all remaining funds from the settlement were consumed by the liens against him as a result of the underlying suits relating to the 15 franchises. Steven claimed that he still had outstanding judgments against him. No payment was made to Madeline pursuant to the assignment.

         12. April 2014 Stipulation for Repayment Plan

         In April 2014, Madeline and Steven jointly filed a stipulation for a repayment plan whereby Steven would fulfill his [293 Neb. 529] obligation to pay $37,234.84 by paying $6,000 " at the end of each sixth month period" over a 4-year period, with an interest rate of 2 percent on the outstanding balance.

         In an order entered April 3, 2014, the court approved the stipulation and ordered the parties to comply with the terms thereof. The court explained that the matter was before it due to Steven's failure to comply with a court order that he pay Madeline $37,234.84. Pursuant to the stipulation, Madeline's motion for further sanctions was dismissed without prejudice.

         13. February2015 Motion for Further Sanctions and Hearing

         In February 2015, Madeline filed a new motion for further sanctions due to the failure to make any payments under the stipulation for repayment plan. A hearing was held on the motion.

         At the hearing on the motion, Steven's attorney argued that the IRA was not subject to the federal Employee Retirement Income Security Act of 1974 and that thus, a QDRO was never required in order for Madeline to transfer her share out of the account. The implication was that Madeline wasted a lot of time obtaining a QDRO that was never required.

         Steven's attorney also asserted that the July 2006 order directing Steven to pay $37,234.84 to Madeline is " clearly contrary" to the court's April 2006 order pertaining to drafting a new QDRO. This argument was apparently based on the assertion that the April 2006 order was " quantifying the value of the percentage of the asset" " solely for the purpose of ensuring that an equitable division of the property occurred" and was " not intended to be an award of a dollar value to a particular party."

         Steven testified that he did not make any payments under the 2014 stipulation because a contract to work in Newfoundland, Canada, earning $370,000 per year, fell through. Steven also explained that he believed the stipulation " sidesteps the laws [293 Neb. 530] of the IRS," because direct payments to Madeline allowed her to avoid early withdrawal penalties. Lastly, Steven explained that he did not pay under the stipulation because Madeline's attorney allegedly " lied to the Judge" about Steven's depleting the IRA account, insofar as he had originally " never touched that account that made up 25 percent of the value of it."

         Madeline adduced testimony concerning Steven's income in the years since the 2006 contempt order. Steven testified that he was employed in 2006, running his own franchise business. After that, he was unemployed for about a year. He then obtained a job as a sales manager for an electric company, earning $79,000 a year. He worked for that company for about 1 1/2 years before obtaining employment as a project manager for another electric company. He worked there for about 2 years, earning $125,000 per year. In 2013, Steven obtained a 1-year contract with an engineering and construction company as a construction manager, under which contract he earned $287,000. After the contract in Newfoundland fell through, he was unemployed for 2 months. He then worked as a project manager for an engineering company, earning $150,000 per year.

         There was a 6-week gap between the 1-year contract with the engineering and construction company and his employment at the time of the hearing. He was working as a contractor and was being paid $60 per hour. He was anticipating employment with another company, to begin in 2 weeks. He expected to work as a construction manager earning $145,000 per year. His expectation was that he would be working there long term.

         Steven owned his home, but it was mortgaged. It was unclear whether there was any equity in the home. He owned a car, but it was unclear what liens were on the car. Steven admitted that he had made no payments to comply with the July 2006 order. Nor had he made any payments under the stipulated payment plan.

         [293 Neb. 531] 14. June 2015 Order of Contempt and Sanctions

         In an order dated June 8, 2015, the court found that Steven was still in contempt. The court ordered that, as further sanctions, he must report on June 15 to serve a sentence of 90 days' incarceration.

         The sentence could be purged by payment in full of the sum of $37,234.84 to Madeline on or before June 15, 2015. If Steven failed to report on June 15, or failed to pay the sum owed Madeline ...


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