Opinion ID: 2572638
Heading Depth: 2
Heading Rank: 1

Heading: Failure to raise active appreciation

Text: The Opinion deals with this issue in footnote 28. It notes Michael's claim that the issue was not raised in the trial court, but finds the argument without merit because Christina argued in substance that the court should apply the active appreciation standard and because we first used the label active appreciation in Martin v. Martin , [1] a case that was decided after the Schmitz divorce trial. I respectfully suggest that both reasons fail close scrutiny.
This court discussed active appreciation in at least two cases before Martin. In Brooks v. Brooks, [2] we stated that [m]any courts have recognized two types of `causes' for the appreciation of separate propertypassive and active.... [ A]ctive appreciation is the result of some affirmative action taken by one or both spouses which caused the increased value of the separate property. [3] Finding that the appreciation in that case was passive, and noting that [w]e have never held that a non-titled spouse is entitled to share in the passive appreciation of separate property, [4] we held that the non-titled spouse in Brooks was not entitled to share in the appreciation of the subject property. [5] Along the same lines, we held against the non-titled spouse in Miles v. Miles [6] because [t]he superior court found that [the wife's] efforts were de minimis and did not constitute an active interest in [the husband's premarital properties], and her efforts did not contribute to the active appreciation of the properties. [7] And in Lowdermilk v. Lowdermilk , [8] while not using the phrase active appreciation, we held that an increase in the value of the husband's separate business owing to the husband's contributions of time and energy [9] during the marriage was marital property. (Indeed, in Martin we cited Lowdermilk, a 1992 case, to support application of the doctrine of active appreciation. [10] ) Under these circumstances, the suggestion that Christina did not have notice that the doctrine was available to her is simply not tenable.
The fact that active appreciation was a term (and a doctrine) used in our jurisprudence before the trial in Schmitz will not necessarily bar Christina from raising the issue on appeal if, as the Opinion says, despite Christina's failure to use [the] precise phrase, she argued in substance that the court should apply the active appreciation standard. [11] Although a party may not present new issues or advance new theories on appeal, we have adopted a liberal approach towards determining whether an issue or theory of a case was raised in a lower court proceeding. [12] We will allow a party to use an issue or a theory on appeal that was not used at the trial level if the underlying arguments (1) are not dependent on new facts, (2) are closely related to the trial pleadings, and (3) could have been gleaned from the pleadings. [13] Analysis of the proceedings in the superior court shows that Christina satisfied none of these three requirements.
Christina did allege a few facts at trial that were relevant to a claim for active appreciation. Christina's trial brief notes that Michael was primarily the breadwinner, and spent a great deal of time working away from home. He devoted much of his marital efforts to the accounting business, while Tina had primary responsibility for the child and the home during the marriage. But she did not meet the first Zeman requirement because she did not submit sufficient evidence to prevail on the theory of active appreciation. Specifically, as discussed below at 1134, Christina failed even to introduce evidence of the value of the accounting business. [14] Because the theory of active appreciation requires a showing that an asset has increased in value, it is dependent here on new facts not introduced at trial.
Christina also fails to satisfy the second and third requirements of Zeman. She asserts on appeal that she clearly made and relied upon an active appreciation theory in her brief and proposed findings of fact, [15] albeit without expressly using that term. But contrary to Christina's assertions, the theory of active appreciation is not closely related to her trial pleadingswhich are directed solely to transmutation, a different theoryand active appreciation is not readily discernible from her trial submissions. Christina argued only a theory of transmutation in the trial court. [16] She stated that the separate property of one spouse ... can be converted to marital property by the parties' intents or actions, and listed evidence often used to infer the intent to transmute separate property into marital property. She discussed several items of initially separate property [that] were clearly converted into marital property, and other non-converted assets that are not marital, [but] subject to invasion if an equitable division of marital property requires it. Christina then discussed the equitable factors for awarding her a share of Michael's property. But she never mentioned the appreciation of the property, the sine qua non of any active appreciation argument, whether explicit or inferred. As further support for the conclusion that Christina did not advance an active appreciation theory, her evidentiary submissions at trial were devoid of any information showing the value of the business in question. Christina admits in her briefing to this court that [n]o business valuation was done prior to trial for [the] business. A party arguing for the division of otherwise separate property under the theory of active appreciation must present evidence of the increase in value of separate property owing to marital efforts. [17] Accordingly, without such evidence, the claim must fail. Christina's failure to present such evidence also shows that she did not make such a claim (and is an independent reason to affirm the superior court's decision, for the lack of evidence of value is a separate basis to reject an active appreciation theory, had one been presented). Christina's proposed findings of factwhich in any event were submitted after the trial [18] and were therefore too late to raise a claim of active appreciationsimilarly suggested a transmutation argument, downplaying or ignoring any appreciation of the various properties at issue, and instead focusing on their total value at the time of trial or separation. Christina further implied a transmutation argument by stressing that deposits to the First National Bank accounts were from clearly marital sources, that it is not possible to segregate or identify separate and marital assets in the account[s], and that marital expenses were clearly paid from both First National accounts ... Finally, Christina's proposed conclusions of law explicitly mentioned transmutation, based on the actions and intent of the parties, and made abundant use of the terms commingled, transmute, and converted. They did not suggest appreciation. If Christina made an active appreciation argument at trial, it was not done sufficiently clearly as to be gleaned from her pleadings. Christina argues that she relied on Lowdermilk [v. Lowdermilk ]  [19] at trial, thus presenting an active appreciation argument to the trial court as completely as anyone could have prior to the Martin decision. Christina's attorney did mention Lowdermilk in the opening statement. But the mere fact that Christina cited Lowdermilk at trial does not necessarily mean that she raised the active appreciation issue, because Lowdermilk involved both active appreciation and transmutation. [20] And in fact Christina's counsel raised Lowdermilk as support for her contention that Michael's assets under the law should be viewed as having been converted to marital property. Furthermore, Christina's attorney also cited Green v. Green , [21] a case dealing exclusively with transmutation, in the same sentence as Lowdermilk, to support the same transmutation argument. Christina's attorney's opening statement referred to conver[sion] and commingl[ing] of separate property, which go to transmutation. The opening statement did not suggest that Michael's separate property should be considered marital as a result of active appreciation. In sum, Christina did not plead enough facts at the trial level to support an active appreciation argument, such an argument is not closely related to her trial arguments, and it cannot be gleaned from her pleadings. Rather, Christina's case at trial focused only on the conversion of Michael's separate property to marital property, and did not even allude to the appreciation of any separate property as being a marital asset, much less present the evidence necessary for the trial court to rule on that basis (and that would have alerted the trial court to the theory that Christina now wishes to present). Thus, Christina did not raise the claim of active appreciation at the trial level. The proposition that a party may not raise new arguments on appeal is almost as old as this court [22] and has been re-affirmed as recently as last month. [23] Even where the party failing to raise an issue is a pro se litiganta class for whom this court relaxes the rules [24] the requirement that an issue be preserved by being presented in the superior court arises out of notions of judicial finality and efficiency, as well as fairness to the opposing party. [25] Christina is not a pro se litigant; indeed, she is represented here and was represented below by counsel for the appellant in Lowdermilk. Because Christina did not raise the claim of active appreciation at the trial level, I would resolve both the Schmitz & Buck and the Nugget Men's Store claims on that basis and affirm the decision of the superior court.