Opinion ID: 1156814
Heading Depth: 3
Heading Rank: 1

Heading: Issues Arising Out of The Property Division

Text: Jay Hartland argues that the court possessed insufficient evidence to properly value the parties' retirement benefits. Patricia argues that any lack of evidence on Jay's retirement benefits is due to his own failure to produce additional evidence. As to the claim concerning her retirement benefits, Patricia argues that Jay never refuted the $26,618 figure at trial. She further argues that she fully complied with Jay's discovery requests and that all the terms of her teacher's pension are public information. After being subpoenaed, Jay produced a 1985 statement from Shearson Lehman indicating his accrued retirement benefits as of January 1, 1985. This statement only provided information regarding the annual benefit which he could expect to receive at a retirement age of 65. He stated that he had checked on more recent information and that Shearson hoped to have a 1986 statement out before the end of the year. Patricia then served the office manager of Shearson Lehman Brothers with a subpoena to obtain these documents. She was again told that no information was available on the status of Jay's retirement benefits until a Shearson Lehman audit was completed at the end of 1986. Patricia served a second subpoena for these and related documents just before trial. The judge and counsel had an extended discussion at trial concerning the difficulties in Patricia's obtaining needed documents. The court expressed its skepticism concerning the unavailability of the retirement data and noted that if records were being unreasonably withheld he would resolve any doubt against that party. At trial, Jay did not present any further evidence as to the value of his retirement benefits. Neither party presented evidence as to the present value of future payments under either pension plan. Neither party attempted to discount these future payments to present value terms. Patricia introduced the 1985 statement and questioned Jay concerning it. Patricia also introduced evidence as to Jay's life expectancy. In closing argument, Patricia calculated the amount which Jay could be expected to receive over his life expectancy after age 65 on the basis of the 1985 statement. At trial, Jay made no objection to the calculation. The trial court accepted this valuation in its Findings of Fact and Conclusions of Law.
Alaska Statute 25.24.160(a)(4) grants the trial court broad discretion in fashioning a property division in divorce actions. Laing v. Laing, 741 P.2d 649 (Alaska 1987). In Moffitt v. Moffitt, 749 P.2d 343, 346 (Alaska 1988), this court explained: The division of property by the trial court is a three-step process: Step one  determining what property is available for distribution  is reviewed under the abuse of discretion standard, although it may involve legal determinations to which this court applies its independent judgment. Wanberg v. Wanberg, 664 P.2d 568, 570 (Alaska 1983). The second step  placing a value on the property  is a factual determination that will be upset only if there is clear error. Alaska R.Civ.P. 52(a). Step three  allocating the property equitably  is reviewed purely under the abuse of discretion standard and will not be disturbed unless it is clearly unjust. Wanberg, 664 P.2d at 570. This court will disturb the trial court's valuation of marital property only if it is clearly unjust. Bousquet v. Bousquet, 731 P.2d 1211, 1213 (Alaska 1987). Jay argues that the valuations of the parties' retirement benefits are unjust because the court should have recognized the insufficiency of the evidence presented and required additional evidence before attempting to value these benefits. This argument is without merit. The cases Jay cites involve situations in which neither party presented any evidence as to the value of the retirement benefits. [1] In contrast, Patricia presented the 1985 statement into evidence and presented evidence as to Jay's life expectancy. She did not present further evidence of the plan's terms because Jay failed to supply such information when subpoenaed. In denying Jay's motion for a new trial the trial court noted, This court believes that any error in the valuation was the result of the position taken by plaintiff [Jay Hartland] to not provide complete information about his job benefits. Without such information, expert testimony would have been futile. See B. Goldberg, Valuation of Divorce Assets § 9.4, at 248-49 (West 1984) (Unfortunately, however, there is only one way to value [a pension plan]; by reading the plan in the entirety, so that it will be understood regarding rights granted thereunder). Alaska law clearly permits a trial court to resolve a finding of fact against a party whose vexatious, contemptuous, or obstructive behavior causes the trial court to have insufficient evidence. Moffitt, 749 P.2d at 349 n. 7; Gabaig v. Gabaig, 717 P.2d 835, 842-43 (Alaska 1986). Courts in other jurisdictions have reached similar results. [2] Moreover, regardless of any obstructive efforts by Jay, a party who fails to present sufficient evidence at trial should not be allowed on appeal to challenge the inadequacy of evidence. For example, in National Bank of Alaska v. J.B.L. & K. of Alaska, Inc., 546 P.2d 579, 590 (Alaska 1976), this court noted that the trial court's damage award for the breach of a covenant not to compete was incorrect since the damage award should have only included net lost profits. The court noted, however, that the bank could not challenge the error on appeal since it had failed to produce further evidence and was therefore not in a position to claim the trial court erred in using the figures they supplied. Id. The Illinois courts have held that the parties rather than the court have a duty to present evidence on the value of marital assets. As the court noted in In re Marriage of Smith, 114 Ill. App.3d 47, 69 Ill. Dec. 827, 832, 448 N.E.2d 545, 550 (1983): We here opine that this case presents a situation which this court sees all too often in dissolution cases. Despite the fact that numerous hearings regarding the division of property were held and that only a limited amount of property was involved, neither party presented the trial court with solid evidence of the properties' value so that the trial court could make the fairest possible division of the parties' assets. We again emphasize that it is the parties' obligation to present the court with sufficient evidence of the value of the property. Reviewing courts cannot continue to reverse and remand dissolution cases where the parties have had an adequate opportunity to introduce evidence but have failed to do so. Parties should not be allowed to benefit on review from their failure to introduce evidence at trial. Remanding cases such as the one before us would only protract the litigation and clog the trial courts with issues which should have been disposed of at the initial hearing. As the trial court here said after numerous hearings in this case, at some point we must ring the curtain down. (Citations omitted). [3] In reviewing the record, we concluded that there is sufficient evidence of the value of Jay's retirement benefits to allow the court to consider the issue. Under the cases discussed above, the court had sufficient evidence of the pension's value in the future for it to properly evaluate it in terms of the present property division. The evidence presented was that if Jay were to quit as of January 1, 1985, he would receive an annual retirement benefit of $3,083 beginning when he reached the age of 65, some 22 years after the date of trial. At the age of 65 he would have a remaining life expectancy of 12.4961 years. The court multiplied 12.4961 X $3,083 and valued the fair market value of Jay's pension at the product, $38,525.47. Jay argues that this valuations of his retirement benefits constitutes clear error since it does not discount these future benefits to their present value. [4] We agree. The proper division of a vested pension can be accomplished in either of two ways. The court can either award a lump sum discounted to present value to one party or both, or retain jurisdiction and have payments made to the parties as retirement benefits come due. As we noted in Laing: Realistically, there is such a variety of pension plan designs that it is impossible to develop any one detailed formula that will produce an equitable result in every instance. Once the pension is vested, the trial court can determine whether the present value or the retained jurisdiction approach is appropriate in a given case and adopt that approach to the specific circumstances presented. 741 P.2d at 658. See also Rice v. Rice, 757 P.2d 60, 61 (Alaska 1988) (citing Laing ); Miller v. Miller, 739 P.2d 163, 166 (Alaska 1987) (trial court directed to recalculate retirement benefits on remand using present value method). In this case, the court failed to apply either method of division. Consequently, we remand the issue of Jay's retirement benefits back to the trial court for a determination of the benefits' present value. The court may reconsider any related issues and take such further evidence as it deems appropriate.
Jay argues that the court erred in valuing Patricia's teacher's retirement. This argument is without merit. Unlike the case with Jay's retirement, Patricia's retirement plan was a matter of public record. For whatever reason, he chose not to call his listed actuary witness as to her pension benefits. By not raising at trial the valuation calculation he advocates on appeal, Jay has waived his rights to contest the issue on appeal. Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985).
Jay argues that the superior court impermissibly relied on fault in the breakdown of the Hartland marriage as a factor in dividing the marital property. One of the factors for determining an equitable division of marital assets set forth in Merrill v. Merrill, 368 P.2d 546, 547 n. 4 (Alaska 1962), is the duration and conduct of each [party] during the marriage. In 1968, the Alaska Legislature adopted AS 25.24.160 which provides that the court may provide ... for the division between the parties of their property ... in the manner as may be just, and without regard to which of the parties is in fault.  [5] (Emphasis added). In its findings of fact involving the Merrill factors the superior court stated: The equities favor the defendant over the plaintiff with regard to the conduct of the parties during the marriage. The plaintiff's relationship with a third party was a disruptive event in the parties' marriage which led to differences between them and occurrence of domestic violence incidents. The plaintiff was the aggressor against the defendant during those incidents. During the course of the last year, the plaintiff has used marital property belonging to the parties and manipulated it to his advantage. Despite their separation, the plaintiff used the marital property to maintain the same lifestyle to which he had been accustomed. Because of his profession, the plaintiff is better at manipulating figures, accounts and assets. This court finds that he did manipulate assets for his own benefit. In summarizing its findings, the superior court noted: This Court began with the presumption that a 50-50 split between the parties was the fairest division. However, based on the foregoing findings and the evidence adduced at trial, this Court finds that the 60-40 split advocated by the defendant is a fairer allocation of the marital assets. A division which gives 60% of the marital assets to the defendant and 40% to the plaintiff will compensate the defendant for the financial activities of the plaintiff during the year. We agree with Jay's reading of AS 25.24.160. Under the concept of nofault divorce, a court cannot rely on one party's fault in ending the marriage to justifying awarding a greater portion of the marital property to the other spouse. However, reading the court's above statements in context, we conclude that the trial court did not reduce Jay's share because his actions were disruptive of the marriage. Rather, the court reduced his share for the entirely appropriate reason that he dissipated substantial amounts of marital assets for his own benefit during the parties' separation. [6]
Patricia makes the related argument that the superior court erred in not compensating her for all of the marital assets spent by Jay during the parties' separation. Patricia contends that Jay dissipated some $55,000 in marital assets from the date she left the family home. The superior court judge found that: With regard to the issues posed by ... Schanck v. Schanck, [717 P.2d 1 (Alaska 1986)] ..., this court finds that the Hartlands did not cease functioning economically as a joint enterprise until the date of divorce, which shall be October 31, 1986. ... This Court's understanding of the Alaska law is that the Court must compile a balance sheet as of October 31, 1986 of the parties' assets and liabilities. The Court is not aware of any authority which it has to go back and pick up individual items which have already been disposed of by one of the parties. For example, the Court will not include the various items sold by the plaintiff such as the sailboat, silver, Royalty Trust Units, etc. However, the conduct of the parties during the past year is a factor which will be factored into the Court's decision by virtue of the Merrill factors which the Court must use in its decision-making. Although Patricia does not challenge the court's finding as to the date the couple ceased functioning as a joint enterprise, she contends that the court erred by not fully compensating her for the property Jay spent for his own separate purposes after their separation. In Brooks v. Brooks, 677 P.2d 1230 (Alaska 1984), this court recognized the ability of a court to recapture dissipated marital property. In Brooks, the husband had transferred certain marital property in his name to his children from a former marriage without the wife's consent. The trial court included the property in the marital estate and credited the husband with having received the value of the property. Id. at 1232. This court approved of the practice as appropriate under the conduct during marriage factor. The trial court sought to compensate Patricia for the dissipated assets by giving her a larger percentage of the remaining marital estate because it did not believe it had the authority to recapture previously dissipated assets. Because of this incorrect conclusion, we reverse the court's property division and remand the issue to allow the trial court the opportunity to recapture any dissipated assets and then determine the appropriate division of property using the Merrill factors. In doing so, the court should take care that it does not double count, that is, recapture dissipated assets and make a preferential award to Patricia because assets have been dissipated.
Patricia argues that the trial court erred in failing to include in the marital estate $14,000 in commissions earned by Jay prior to October 31, 1986. The trial court considered the commissions deferred income but reasoned that since Jay had not yet received them, the commissions should not be included as marital property. Both parties agree that the income was for past services rendered. Jay had been put on a form of probation by Shearson Lehman Brothers for his inadequate performance in 1985. Under this probation, a certain portion of commissions were withheld until he met a certain dollar level in transactions. Patricia argues that the issue presents a question of law reviewable under the substitution of judgment standard. She cites Schober v. Schober, 692 P.2d 267 (Alaska 1984), for the proposition that vested or earned compensation which has yet to be received is divisible property. In Schober, this court held that unused personal leave, which could be converted into cash by the person accruing it, is a marital asset. The fact that the unused leave could not all be converted into cash until a number of years after the divorce did not prevent the court from holding that the leave was a marital asset. Id. Under Schober, Jay's deferred commissions resulting from his employer's probation program should be considered marital property. Consequently, the superior court erred as a matter of law in excluding these commissions from the marital estate. We reverse the court's exclusion of this income from the marital estate and remand for an appropriate division of the asset.
Patricia argues that Jay had a transaction cancelled and then reinstated after the divorce so as to retain his commission as separate property. Before trial, Patricia learned of the cancellation of the impending transaction and argued at trial that Jay was manipulating his compensation so as to avoid division of the commission. In its findings the superior court noted: [T]here is no evidence in the record to support the contention that plaintiff did anything wrong with respect to the $500,000 transaction. The court has no equitable concern over plaintiff's conduct with regard to that sale... . The Court will not speculate about the cause of the cancellation and finds that there was no calculated policy of income-deferment. This factual finding is properly reviewed under the clearly erroneous standard. A finding of fact is clearly erroneous if after reviewing the entire record the reviewing court is left with a definite and firm conviction that a mistake has been made. Martens v. Metzgar, 591 P.2d 541, 544 (Alaska 1979). Considering the record before Judge Craske, it cannot be said that the court's findings are clearly erroneous. The parties' argument over subsequent evidence of the transaction's reinstatement and the reasons for it were never properly presented to the trial court. Patricia first raised the issue as part of her motion for attorney's fees. Jay responded in his opposition papers, and attached his affidavit and that of the customer purchasing the annuity explaining why the transaction was cancelled and then reinstated. Patricia also raised the issue in her opposition to Jay's motion for a new trial. She indicated that if the court granted a new trial on the issue of the retirement benefits, then she would be forced to seek a similar reopening of the issue of the ... $24,000 commission. The superior court never ruled on the issue of the new evidence as to the commission's reinstatement. Since it was not properly raised and not considered by the superior court, the issue is not properly before us on appeal.
The superior court awarded Patricia $5,000 of attorney's fees and 25% of her costs arising from the divorce action. Patricia incurred $19,000 in actual fees. The court also awarded Patricia $1,100 resulting from her motion to enforce the judgment. Jay argues that the court erred in awarding any fees to Patricia. Patricia argues that the court erred in not awarding her all, or substantially all, of her attorney's fees. The prevailing party rule used for determining attorney's fee awards under Rule 82 does not apply to fee awards in divorces. Burrell v. Burrell, 537 P.2d 1 (Alaska 1975). The relevant considerations are the relative economic situation and earning power of each party. Id. at 7. Normally, where both parties have adequate income and are in comparable economic situations, each side should bear their own costs in the divorce action. See Rhodes v. Rhodes, 754 P.2d 1333, 1335-36 (Alaska 1988); Jones v. Jones, 666 P.2d 1031, 1035 (Alaska 1983). In this case, however, the court specifically found that Jay had engaged in unwarranted delay and had imposed unnecessary costs in the course of the action. Therefore, we conclude that it was not an abuse of discretion to award Patricia $5,000 attorney's fees and 25% of her costs. See Horton v. Hansen, 722 P.2d 211 (Alaska 1986). The award of $1,100 raises a different issue since it arises out of fees generated in enforcing the judgment and not from the divorce action itself. L.L.M. v. P.M., 754 P.2d 262, 264 (Alaska 1988). In L.L.M., we noted that the divorce judgment exception to Civil Rule 82 does not extend to post-judgment modifications and enforcement motions. Id. The trial court awarded Patricia twenty hours of attorney's fees at $55.00 an hour for a total of $1,100 for her efforts to enforce the divorce decree. Such an award does not constitute an abuse of discretion under Rule 82. In conclusion, we affirm the $5,000 award of fees in the divorce action and the $1,100 award of fees for the enforcement of the decree.