Court Opinion

ID: 4127178
Source: CourtListenerOpinion
Date Created: 2017-02-17 18:07:08.909175+00
Date Added: 2024-06-11T07:46:25.807048
License: Public Domain

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
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                THE SUPREME COURT OF THE STATE OF ALASKA

SHANDA HORNING,                                     )
                                                    )    Supreme Court No. S-16110
                       Appellant,                   )
                                                    )    Superior Court No. 3AN-15-05396 CI
       v.                                           )
                                                    )    OPINION
DONOVAN HORNING,                                    )
                                                    )    No. 7152 – February 17, 2017
                       Appellee.                    )
                                                    )

               Appeal from the Superior Court of the State of Alaska, Third
               Judicial District, Anchorage, Erin B. Marston, Judge.

               Appearances: Eva Khadjinova, Pro Bono Program — Alaska
               Legal Services Corp., Anchorage, for Appellant. Vikram N.
               Chaobal, Law Office of Vikram N. Chaobal, Anchorage, for
               Appellee.

               Before: Stowers, Chief Justice, Winfree, Maassen, Bolger,
               and Carney, Justices.

               BOLGER, Justice.

I.     INTRODUCTION
               Shanda Horning is eligible for healthcare from the Indian Health Service
(IHS) because she is an Alaska Native. Donovan Horning has unvested post-retirement
healthcare benefits through the military’s TRICARE program. When the superior court
divided the marital estate after the couple’s divorce trial, it did not classify, value, or
distribute either party’s healthcare, finding instead that each had “an equal benefit that
[was] in essence a wash for the purpose of dividing the marital estate.”
             Shanda now appeals. She argues that her eligibility for IHS healthcare is
separate property, that Donovan’s TRICARE benefit is marital property, and that it was
therefore error for the superior court to use her separate property to offset Donovan’s
marital property.   We agree.     We therefore vacate the superior court’s property
distribution order and remand for further proceedings.
II.   FACTS AND PROCEEDINGS
             Donovan and Shanda Horning were married in October 2000 and separated
in March 2013. Donovan enlisted in the United States Air Force in January 2001, soon
after the couple married. Donovan’s monthly gross income is around $7,400; Shanda’s
monthly gross income is around $2,600.
             As an active member of the military, Donovan has health insurance through
TRICARE. If Donovan retires from the military with more than 20 years of service, he
will continue to have health insurance through the TRICARE program for the rest of his
life.1 Shanda is an Alaska Native and is therefore eligible to receive healthcare provided
by IHS.
             Donovan filed for divorce in March 2015. Before the divorce trial began,
Shanda requested costs to pay for an expert valuation of Donovan’s military pension and
his post-retirement TRICARE benefit. Shanda argued that both of those assets were
marital property and that they needed to be valued in order to divide the marital estate.
The superior court denied Shanda’s request, concluding that an expert was not necessary
and there was “enough information to go forward” with the distribution analysis.

      1
             See Burts v. Burts, 266 P.3d 337, 339-40 (Alaska 2011).

                                           -2-                                       7152

             The superior court’s final property distribution order divided the marital
estate “[w]ith the goal of an equitable distribution of 50/50.” The order required Shanda
and Donovan to equally split the marital portion of Donovan’s military pension. But the
superior court did not divide the marital portion of Donovan’s post-retirement TRICARE
benefit.
             Instead the superior court found that Donovan’s post-retirement TRICARE
benefit and Shanda’s eligibility for IHS healthcare provided “an equal benefit that is in
essence a wash for the purpose of dividing the marital estate.” The superior court
therefore concluded that it was “not necessary to value either coverage with more
specificity and would needlessly dissipate limited marital assets without the probability
of achieving meaningful values.”
             Shanda now appeals. She argues that the superior court implicitly treated
her separate property — her eligibility for IHS-provided healthcare — as marital property
by using it to offset Donovan’s TRICARE benefit, and that this error requires us to vacate
the superior court’s property division order. She also argues that the superior court
abused its discretion when it denied her request for costs to pay for an expert valuation
of Donovan’s military retirement benefits.
III.   DISCUSSION
             “The equitable division of marital assets involves three steps:
(1) determining what property is available for distribution, (2) finding the value of the
property, and (3) dividing the property equitably.”2 The first step requires the court to
characterize property as either separate or marital.3 “Marital property includes all

       2
            Limeres v. Limeres, 320 P.3d 291, 296 (Alaska 2014) (citing Beals v. Beals,
303 P.3d 453, 458 (Alaska 2013)).
       3
             Hansen v. Hansen, 119 P.3d 1005, 1009 (Alaska 2005).

                                           -3-                                      7152

property acquired during the marriage ‘excepting only inherited property and property
acquired with separate property which is kept as separate property.’ ”4
              In making its equitable division, “the trial court must render findings of
ultimate fact that support any decreed property division.”5 Those “findings must be
explicit and sufficiently detailed to give this court a clear understanding of the basis of
the trial court’s decision.”6
              The superior court did not provide those detailed findings in this case.
While the superior court used Shanda’s eligibility for IHS healthcare to offset the value
of Donovan’s post-retirement TRICARE benefit, the court did not explain whether it was
classifying the parties’ healthcare as marital property or separate property. This is
reversible error and typically requires a remand to the trial court for additional findings.7
But additional findings are unnecessary here because we can classify both parties’ health
benefits as a matter of law based solely on the existing record.8

       4
             Id. (quoting Lewis v. Lewis, 785 P.2d 550, 558 (Alaska 1990)); see also
AS 25.24.160(a)(4) (stating that “[i]n a judgment in an action for divorce . . . the court
may provide . . . for the division between the parties of their property . . . acquired only
during marriage”).
       5
              Doyle v. Doyle, 815 P.2d 366, 368 (Alaska 1991).
       6
              Id.
       7
             See, e.g., Cox v. Cox, 882 P.2d 909, 915 (Alaska 1994); Murray v. Murray,
788 P.2d 41, 42 (Alaska 1990).
       8
              See Beals v. Beals, 303 P.3d 453, 459 (Alaska 2013) (explaining that we
review the “[u]nderlying factual findings as to the parties’ intent, actions, and
contributions to the marital estate” for clear error, but “whether the trial court applied the
correct legal rule . . . is a question of law that we review de novo” (citing Hanson v.
Hanson, 125 P.3d 299, 304 (Alaska 2005))).

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              First, we have previously held that “[h]ealth insurance benefits earned
during the marriage are a marital asset of the insured spouse,”9 and in Burts v. Burts we
held that this rule applied to a post-retirement TRICARE benefit to the extent that the
benefit was earned during the marriage.10 We reaffirm Burts and hold that Donovan’s
post-retirement TRICARE benefit is marital property to the extent that it was earned
during the marriage.
              Second, while we have not previously decided whether eligibility to receive
IHS-provided health services is marital property, this question is easily resolved under
our existing case law. Property acquired by one spouse before marriage is generally
considered separate property, not marital property.11 Here, Shanda is eligible to receive
IHS-provided health services because she is an Alaska Native.12 Shanda has been an
Alaska Native for her entire life. Shanda’s eligibility to receive IHS healthcare was
therefore acquired before marriage and is separate property.13
              The superior court’s order effectively invaded Shanda’s separate property
(i.e., her eligibility for IHS healthcare) by using that property to offset the value of the
couple’s marital property (i.e., Donovan’s post-retirement TRICARE benefit). We only
permit such an invasion “when the balancing of the equities between the parties requires

       9
              Hansen v. Hansen, 119 P.3d 1005, 1015 (Alaska 2005).
       10
              266 P.3d 337, 341-46 (Alaska 2011).
       11
              Schmitz v. Schmitz, 88 P.3d 1116, 1124 (Alaska 2004).
       12
              See generally 25 U.S.C. §§ 1601, 1602, 1603(13)(B) (2012).
       13
              Having reached this conclusion, we need not reach Shanda’s related
arguments that the court lacked jurisdiction to classify her eligibility for IHS healthcare
as marital property and that the trial court’s classification of her eligibility to receive IHS
healthcare as marital property violated equal protection.

                                             -5-                                         7152

it.”14 But the opposite balance occurs in this case — the superior court found that Shanda,
not Donovan, would bear the greater economic impact of the divorce.
              We therefore vacate the superior court’s order and remand this case with
instructions to classify Donovan’s post-retirement TRICARE benefit as marital property,
to classify Shanda’s eligibility for IHS healthcare as separate property, and to equitably
divide the marital property based on these findings.
              Shanda also argues that the superior court abused its discretion when it
denied her request for costs to pay for an expert valuation of Donovan’s pension and post-
retirement TRICARE benefit. The proposed valuation was “not to order any [present]
payment”15 but rather “to determine how the retirement should be split so that . . . when
[Donovan] vests in retirement, that percentage would go . . . into effect . . . for the future.”
              The superior court has broad discretion to award costs and fees in a divorce
action.16 This is meant to ensure that “both spouses have the proper means to litigate the
divorce action on a fairly equal plane.”17 In exercising that discretion, the court “must
focus on the parties’ relative economic situations and earning capacities.”18 The superior
court also “has broad discretion to provide for the equitable division of property between

       14
              AS 25.24.160(a)(4).
       15
              We have previously rejected awarding present day, lump sum payments for
unvested retirement benefits. Laing v. Laing, 741 P.2d 649, 657-58 (Alaska 1987); see
also Ethelbah v. Walker, 225 P.3d 1082, 1088 (Alaska 2009) (summarizing approaches
for unvested and vested retirement benefits).
       16
             See Stevens v. Stevens, 265 P.3d 279, 290 (Alaska 2011); see also
AS 25.24.140(a) (permitting award of attorney fees and costs during the pendency of a
divorce action).
       17
            Stevens, 265 P.3d at 290 (quoting Fernau v. Rowdon, 42 P.3d 1047, 1059-60
(Alaska 2002)).
       18
              Id. (citing Fernau, 42 P.3d at 1059).

                                              -6-                                         7152

the parties in a divorce,” including adopting a distribution method that is most appropriate
given the specific circumstances of the case.19 We will reverse the superior court’s
decisions on these matters only if they amount to an abuse of discretion.20
              But whether the superior court has applied the correct legal rule in
exercising its discretion is a legal question that we review de novo.21 In this case the
superior court denied Shanda’s request for costs because it believed that it could use
Shanda’s eligibility for IHS healthcare to offset the value of Donovan’s TRICARE
benefit, and that it therefore did not need to value either parties’ benefits with specificity.
As we explained above, this belief was incorrect as a matter of law because Shanda’s
eligibility was separate property and Donovan’s benefit was marital property. We
therefore vacate the superior court’s denial of Shanda’s motion for expert costs and
instruct the superior court to reconsider Shanda’s request on remand.
IV.    CONCLUSION
              For the reasons stated above, we VACATE the superior court’s property
distribution order and REMAND for further proceedings consistent with this opinion.

       19
              Ethelbah, 225 P.3d at 1086-87.
       20
              Limeres v. Limeres, 320 P.3d 291, 296 (Alaska 2014); Ethelbah, 225 P.3d
at 1086.
       21
             Beals v. Beals, 303 P.3d 453, 459 (Alaska 2013); see also Haines v. Cox,
182 P.3d 1140, 1143 (Alaska 2008) (“[W]e review for legal error [whether] the trial court
simply failed to exercise its discretion.”).

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