Opinion ID: 1444915
Heading Depth: 2
Heading Rank: 3

Heading: Inflation Factor

Text: Finally, we address Wife's contention that the family court erred by awarding Husband 30% inflation based on the Consumer Price Index (CPI) on Husband's category 1 separate property at DOM, which increased Husband's award of the Mauna Luan equity and cash, totalling $75,902, to $101,026, and which increased Husband's share from 85% to 88% and reduced Wife's share from 15% to 12% of the category 2 marital appreciation. The ICA in Cassiday adjusted Husband's property separately owned at the date of marriage for inflation by the use of the CPI. See Cassiday v. Cassiday, 6 Haw. App. 207, 716 P.2d 1145, cert. granted, 67 Haw. 685, 744 P.2d 781 (1985), aff'd in part and rev'd in part, 68 Haw. 383, 716 P.2d 1133 (1986). This court upheld the adjustment stating, [w]e find it unnecessary to set forth a hard and fast rule regarding the use of the Consumer Price Index. We merely find that adjusting for inflation is within the sound discretion of the trial court. Cassiday, 68 Haw. at 390, 716 P.2d at 1138. However, in the present case, although the ICA affirmed the family court's inflationary adjustment, it stated, we now urge all family courts not to adjust Category 1 NMVs (separate property owned at date of marriage) for inflation. Gussin, ___ Haw.App. at ___, 836 P.2d at 504. We agree with the ICA that such property should not be adjusted for inflation and find it necessary to retreat from the position advanced in Cassiday. Professor Oldham indicates that [m]ost equitable distribution states without specific statutes pertaining to separate property appreciation have concluded that appreciation due to inflation or market forces is separate property. Oldham, supra note 3, § 6.04[3] at 6-17. However, we have held that appreciation of property separately owned at the time of marriage or acquired during the marriage by gift or investment and still separately owned at the time of divorce [is] a marital asset subject to division after consideration of all relevant circumstances of the case. Cassiday, 68 Haw. at 387, 716 P.2d at 1136 (citing Takara v. Takara, 4 Haw.App. 68, 71, 660 P.2d 529, 532 (1983)); see also A. Kastely, supra, at 390 (Under that [partnership] model, each spouse is entitled to the return of his or her contribution (the net value of his property at the time of marriage and the date-of-acquisition value of gifts and inheritance) but any income or increase value of that property belongs to the partnership, and thus, is subject to division.). The family court's rationale in not treating the during-marriage appreciation reflected by the inflationary factor as a separate marital asset subject to division is unacceptable. See supra note 4. To bar a non-owning spouse from sharing in the marital appreciation of the owning spouse's separate property merely because the benefits of such property were shared during the marriage would be inconsistent with the partnership model of marriage. The use of such a model accords with the community's general expectations and sense of fairness. It treats marriage as a full commitment of each spouse. If the alternative rule is adopted, and appreciated value of the separate property is not included as marital property, then marriage becomes only a partial commitment, from which each spouse holds back his or her personal property. This alternative may be rejected merely as a matter of sound policy. The concept of marriage as a joint effort, to which each party contributes his financial resources and personal efforts, is gaining prominence, and it has been endorsed by numerous courts. It is appropriate for the law to encourage sharing within marriage and to equalize ownership at the time of divorce. A. Kastely, An Essay in Family Law: Property Division, Alimony, Child Support, and Child Custody, 6 U.Haw.L.Rev. 381, 390-91 (1984); see also Cassiday, 6 Haw.App. at 213 n. 7, 716 P.2d at 1150 n. 7 (citing Kastely, supra ). We now hold that marital appreciation of property separately owned at the time of marriage or acquired by gift, inheritance or investment, which is subject to division, includes that which is due to inflation or other economic factors. Therefore, we conclude that family courts shall not adjust such property for inflation.