Court Opinion

ID: 3175208
Source: CourtListenerOpinion
Date Created: 2016-02-05 18:06:46.752432+00
Date Added: 2024-06-11T14:28:33.638667
License: Public Domain

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
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               THE SUPREME COURT OF THE STATE OF ALASKA

NEIL D. GUNN,                                  )
                                               )        Supreme Court No. S-15648
                      Appellant,               )
                                               )        Superior Court No. 3AN-09-10497 CI
              v.                               )
                                               )        OPINION
NONA S. GUNN,                                  )
                                               )        No. 7080 - February 5, 2016
                      Appellee.                )
                                               )

              Appeal from the Superior Court of the State of Alaska, Third
              Judicial District, Anchorage, Mark Rindner, Judge.

              Appearances: Allison Mendel, Mendel & Associates, Inc.,
              Anchorage, for Appellant. Richard W. Maki, David H.
              Shoup, and Amy E. Kropp, Tindall Bennett & Shoup, P.C.,
              Anchorage, for Appellee.

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

              MAASSEN, Justice.

I.    INTRODUCTION
              A divorcing couple disputed the nature of their marital interest in a limited
liability company. They eventually agreed that the husband would retain the ownership
interest but the wife would receive 25% “of the net commission” from certain sales if
they occurred within a limited time after the divorce. When a sale occurred the parties
disagreed on how to define “net commission”: the wife contended that it meant the
commission received by the company, but the husband contended that it meant only his
share of it. The wife sought discovery in support of her interpretation of the agreement.
The husband moved for a protective order, and the parties’ attorneys compromised on
some limited production. Although the husband produced information that appeared to
satisfy the compromise, the wife filed a motion to compel. The court granted the motion
to compel and awarded the wife attorney’s fees for having had to file it. Then, following
an evidentiary hearing, the superior court agreed with the wife’s interpretation of the
settlement agreement.
             The husband appeals both the decision on the merits and the award of
attorney’s fees on the motion to compel. Because the language of the agreement and
relevant extrinsic evidence favor the wife’s interpretation of “net commission,” we affirm
the superior court’s decision of that issue. But because we cannot see the rationale for
the superior court’s award of attorney’s fees to the wife on her motion to compel, we
remand that issue to the superior court for reconsideration.
II.   FACTS AND PROCEEDINGS
      A.     The Property Agreement And The Post-Divorce Commission
             Neil and Nona Gunn1 were married in 2005. During the marriage, Neil and
a company called Sun Consulting, LLC formed Venture North Group, LLC to broker
mergers and acquisitions of other companies. Neil and Sun Consulting each held a 50%
interest in Venture North. Neil worked part-time for the company during the marriage
while also working for an unrelated corporation. Nona, a stay-at-home mother, also did
some work for Venture North, though she was not named as a member on its company
documents. At the time the parties separated in September 2009, Venture North had two

      1
             Nona’s last name is now Wilson.
                                           -2-                                      7080
clients for which it was attempting to broker deals: Brice, Inc., a construction company,
and Great Northern Engineering.
                 In 2010 Neil and Nona divorced and divided their property through what
the superior court termed an “amicable settlement” incorporated into the court’s findings
of fact and conclusions of law. The agreement noted the parties’ “disagree[ment] as to
whether they jointly ha[d] accrued a 50% marital interest, or whether [Neil] alone ha[d]
accrued a 50% interest in the business operations and potential profits of Venture Group
North [sic], LLC.” And while the parties agreed that “the efforts invested in the business
through the date of separation [were] marital earnings,” they disagreed on the extent of
those efforts.
                 Nonetheless, Neil and Nona were able to agree on a division of the Venture
North ownership interest. Neil would “retain sole ownership and control of” the interest.
But if Venture North succeeded in selling either of its two clients, Brice and Great
Northern, “on or prior to June 30, 2011, [Nona] shall be paid 25% of the net commission
from each such sale and [Neil] shall ensure that such payment is timely made.” If a sale
occurred “on or after July 1, 2011 and before January 1, 2013, [Nona] shall be paid 20%
of the net commission from each such sale.” And for any sale after January 1, 2013,
Nona would receive nothing. The agreement also required that Neil give Nona his
personal tax returns and those for Venture North for the tax years 2010 through 2012.2

       2
                 The relevant portion of the agreement reads in full:
                 [The superior court finds t]hat the parties disagree as to

                 whether they jointly have accrued a 50% marital interest, or

                 whether the husband alone has accrued a 50% interest in the

                 business operations and potential profits of Venture Group

                 North [sic], LLC, an Alaskan joint venture in concert with

                 third parties. Regardless, the parties agree that the efforts

                                                                              (continued...)
                                              -3-                                     7080

                In July 2010 Venture North successfully brokered the sale of Brice and
received a commission of $1,875,000. There is no dispute that Neil’s membership
interest entitled him to half this commission, and he wrote Nona a check for 25% of his
half (that is, 12.5% of the commission earned by Venture North).3 The check apparently
contained a restrictive endorsement.4

      2
          (...continued)
                 invested in the business through the date of separation are
                 marital earnings. In connection with this specific asset, the
                 parties have agreed that the Defendant husband shall retain
                 sole ownership and control of said business interest, however
                 characterized. He shall, however, report on the sales of any
                 “existing client assets” or “existing clients” to the Plaintiff
                 wife until December 31, 2012 and, for a period of three years
                 (i.e. tax years 2010, 2011 and 2012) shall provide a true and
                 accurate copy of the Venture North Group, LLC federal tax
                 return to her as well. In the event of full or partial sale of one
                 or both clients or assets of said existing clients on or prior to
                 June 30, 2011, the Plaintiff wife shall be paid 25% of the net
                 commission from each such sale and the Defendant husband
                 shall ensure that such payment is timely made. In the event
                 that a sale shall occur on or after July 1, 2011 and before
                 January 1, 2013, the Plaintiff wife shall be paid 20% of the
                 net commission from each such sale.
A footnote defined “existing client” to mean “any business or person who retained the
services of Venture Group North, LLC on or before February 14, 2010.” The entities
meeting the definition were identified as Brice and Great Northern.
      3
            The parties have stipulated to the amounts due Nona under their differing
arguments, and the amounts are therefore irrelevant to this appeal.
      4
               The record does not contain a copy of the check, but the parties appear to
agree that it was tendered in full satisfaction of Neil’s obligations under the settlement
agreement.
                                                -4-                                   7080

              Nona refused to accept the check; she contended that the agreement entitled
her to 25% of Venture North’s commission, not 25% of Neil’s share of it. Neil provided
another check without any restrictions, and Nona accepted it while continuing to
maintain she was entitled to more. There followed several years’ hiatus in the parties’
communications on this issue; Nona then contacted Neil through her attorney in
September 2013, reiterating her belief that Neil owed her 25% of Venture North’s
commission. She told Neil that unless he paid her the additional amount due she would
commence discovery related to the dispute, then file a motion to enforce the parties’
2010 agreement. Neil responded that he had satisfied the agreement and that Nona had
waived or abandoned any claim to the contrary.
      B.      The Discovery Dispute And Attorney’s Fees Award
              In November 2013 Nona served Neil with interrogatories seeking
information about the sale of Brice and the commission Venture North received from the
sale; asked that Neil produce a broad set of documents; and gave notice of the deposition
of Venture North’s accountant. Neil responded that “[Nona] ha[d] no right to discovery
because the case is closed, and she does not have a judgment on which she is seeking
execution.”
              In December 2013 Neil moved for a protective order. Shortly thereafter
Nona’s attorney wrote Neil’s attorney, stating that the discovery dispute could be
resolved if Neil provided “documentation that would show (1) whether [Great Northern]
was sold and the timing of such a sale, (2) the actual amount actually received by
Venture North for the Brice sale, and when, and (3) [Neil’s] tax returns for the other two
years in question.” But the discovery dispute remained unresolved, and Nona filed an
opposition to the motion for protective order, as well as a motion to show cause why Neil
should not be held in contempt for failing to respond to her discovery requests.

                                           -5-                                      7080

             The parties’ attorneys exchanged emails in January 2014. On January 14,
Nona’s attorney wrote that he “ need[ed] Neil Gunn’s personal tax returns for 2010, 2011
and 2012, documentation of the full amount of the commission on the Brice sale, [and]
documentation showing there was no sale of the second company during the relevant
time period.” He continued: “I am agreeing that if you will produce the things listed
herein, we will review the materials and determine whether we need anything else. . . .
If I do not receive these materials shortly, I will be forced to file a motion to compel.”
Neil’s attorney responded the next day that she would “forward [the documents] . . . this
week,” to which Nona’s attorney immediately replied, “Thank you for agreeing to send
the documents this week.” (Emphasis in original.)
             Two days later Neil’s attorney hand-delivered to Nona’s attorney the
following documents: (1) Neil’s 2011 and 2012 tax returns;5 (2) a “Brice letter dated
12.18.13”; and (3) a “Great Northern Engineering Biennial Report.” Neil’s later notice
to the court described the “Brice letter” as “stating the total commission Venture North
Group, LLC received upon successful brokerage of Brice’s sale,” and the Great Northern
biennial report as “showing no change in the company’s ownership.”
             Without further communication between the parties on the subject, Nona
filed a motion to compel discovery on February 4. The motion asserted that Neil had
failed to provide documentation of the sale of Brice, the non-sale of Great Northern, or
any commissions paid; had not provided responses to interrogatories; and had “provided
only partial responses” to Nona’s other discovery requests. The motion also asserted that
Nona’s counsel had “undertaken reasonable efforts to meet and confer with opposing
counsel to obtain without court intervention the requested documentation of the sales and

      5
             Venture North’s returns for the three years at issue, and Neil’s personal
return for 2010, had already been produced.
                                           -6-                                      7080
commissions for Brice, Inc. and Great Northern Engineering.” In opposition, Neil
explained that the parties had discussed whether a more limited production would satisfy
Nona’s demands; that his counsel had produced some responsive documents in hopes of
furthering this discussion; and that Nona had made no objection to the adequacy of the
materials produced, leading Neil to believe that the limited production was sufficient.
The superior court granted Nona’s motion to compel and awarded Nona “reasonable
attorney’s fees incurred by plaintiff in litigating the motion to compel.”6 On the same
day, the court denied Neil’s motion for a protective order.
      C.     The Evidentiary Hearing And Decision
             In May 2014 the superior court held an evidentiary hearing to determine
how much of the commission from the Brice sale was due Nona under the settlement
agreement. The court heard argument from counsel as well as testimony from Nona and
Neil about their respective roles in Venture North. In a written decision, the superior
court concluded that Nona was entitled to 25% of the net commission paid to Venture
North rather than 25% of Neil’s half of that commission. In support of this decision the
court cited the language of the agreement, a discussion between counsel and the court
at the time the agreement was put on the record in 2010, and the parties’ circumstances
at the time. The court observed that Nona could have been awarded 25% of the company
if the case had gone to trial; her agreement instead to stepped-down percentages of sales
made within three years of the divorce, with the attendant risk that she would receive
nothing if no sales occurred, supported her claim to the higher amount.

      6
            Neil moved for reconsideration, which was denied. A later order specified
the amount of fees awarded.
                                           -7-                                     7080
              Neil appeals. He challenges the superior court’s interpretation of the
settlement agreement and its decisions to grant Nona’s motion to compel and to award
her attorney’s fees on the motion.
III.	 STANDARDS OF REVIEW
              “Contract principles govern the interpretation of property settlement
agreements incorporated in dissolution decrees.”7 The proper meaning of a contract is
a legal question.8 We interpret a contract de novo; “[w]here the superior court considers
extrinsic evidence in interpreting contract terms, however, we will review the superior
court’s factual determinations for clear error and inferences drawn from that extrinsic
evidence for support by substantial evidence.”9
              “We review discovery rulings and awards of attorney’s fees for abuse of
discretion.”10 “A decision constitutes abuse of discretion if it is ‘arbitrary, capricious,
manifestly unreasonable, or . . . stems from an improper motive.’ ”11
IV.	   DISCUSSION
       A.	    The Superior Court’s Interpretation Of The Settlement Agreement
              Was Not Erroneous.
              Neil argues that the superior court erred in deciding that Nona was entitled
to 25% of Venture North’s commission from the Brice sale rather than 25% of Neil’s

       7
            Mahan v. Mahan, 347 P.3d 91, 94 (Alaska 2015) (quoting Villars v. Villars,
277 P.3d 763, 768 (Alaska 2012)).
       8
              Rockstad v. Erikson, 113 P.3d 1215, 1222 (Alaska 2005).
       9
              Mahan, 347 P.3d at 94 (quoting Villars, 277 P.3d at 768).
       10
              Kestner v. Clark, 182 P.3d 1117, 1121-22 (Alaska 2008) (internal citations
omitted).
       11
              Roderer v. Dash, 233 P.3d 1101, 1107 (Alaska 2010) (quoting Shea v.
State, Dep’t of Admin., Div. of Ret. & Benefits, 204 P.3d 1023, 1026 (Alaska 2009)).
                                            -8-	                                     7080

50% interest in that commission. We conclude that the superior court correctly
interpreted the parties’ agreement.
              1.	    The text and structure of the agreement support Nona’s
                     interpretation.
              When interpreting a contract, a court “begin[s] by viewing the contract as
a whole and the extrinsic evidence surrounding the disputed terms, in order to determine
if those terms are ambiguous — that is, if they are reasonably subject to differing
interpretation[s].”12 Here, the relevant sentence of the parties’ agreement states that “[i]n
the event of a full or partial sale of one or both clients or assets of said existing clients
on or prior to June 30, 2011, [Nona Gunn] shall be paid 25% of the net commission from
each such sale.” The simple phrasing favors Nona’s argument: it is Venture North that
would receive a “commission,” whereas its members would receive portions of that
commission. As the superior court noted at the evidentiary hearing, the agreement
“doesn’t say the net commission received by Neil Gunn [from] each sale. It says ‘the net
commission.’ ”
              Of course, the “interpretation of a contract term does not take place in a
vacuum, but rather requires consideration of the provision and agreement as a whole.”13
Neil argues that the structure of paragraph 14 supports his position because it frames the
issue as the parties’ disagreement “as to whether they have jointly accrued a 50% marital
interest, or whether the husband alone has accrued a 50% interest” in Venture North,
then states that the parties have reached agreement “[i]n connection with this specific
asset.” He argues that Nona’s “25% of the net commission from each such sale” is

       12
             Tesoro Alaska Co. v. Union Oil Co. of Cal., 305 P.3d 329, 333 (Alaska
2013) (alteration in original) (quoting Hartley v. Hartley, 205 P.3d 342, 347 (Alaska
2009)).
       13
              Mahan, 347 P.3d at 95.
                                            -9-	                                       7080

therefore correctly framed in terms of the marital asset under discussion — his 50% of
Venture North — rather than Venture North’s commission. But there is nothing
inconsistent in defining the marital asset as half the business, then valuing Nona’s
interest in that asset by reference to something else — here, a share of the commissions
received by the business during a specified period of time.
              2.	    The superior court’s factual findings are not clearly erroneous,
                     and the inferences it drew from those findings are supported by
                     substantial evidence.
              The superior court also considered extrinsic evidence in reaching its
decision. “Where the superior court considers extrinsic evidence in interpreting contract
terms, . . . we will review the superior court’s . . . inferences drawn from that extrinsic
evidence for support by substantial evidence,”14 which means “such relevant evidence
as a reasonable mind might accept as adequate to support a conclusion.”15
                     a.     Nona’s interest in Venture North
              The superior court found that Nona could have been awarded half the
marital interest in Venture North (that is, 25% of the company) at trial, and that “[i]f this
had occurred she would have been entitled to her 25% share for as long as Venture North
earned commissions.”16 Instead, Nona agreed to a gradual step-down of her interest in

       14	
              Mahan, 347 P.3d at 94 (quoting Villars, 277 P.3d at 768).
       15
            Seybert v. Cominco Alaska Exploration, 182 P.3d 1079, 1089 (Alaska
2008) (quoting DeYonge v. NANA/Marriott, 1 P.3d 90, 94 (Alaska 2000)) (internal
quotation marks omitted).
       16
               Neil agreed at the evidentiary hearing and in his arguments to this court
that, had the case gone to trial, Nona could have received half of the marital 50%
membership interest in Venture North. Venture North is a limited liability company, and
interests in limited liability companies are personal property, AS 10.50.370, which may
be assigned “in whole or in part.” AS 10.50.375(a). While Neil’s counsel contended at
                                                                           (continued...)
                                            -10-	                                      7080

the company, “reducing [her claim for commissions] from 25% to 20% after 18 months
and to zero after three years.” By doing so she “took the risk that she might not receive
any commission received by Venture North from a sale of an ‘existing client.’ ”
According to the superior court, these circumstances — Nona’s waiver of a claim that
could have been much more valuable in the long run — supported her interpretation of
the agreement: that she settled for a chance at a larger share if the commissions were
quick to materialize. Neil argues that the superior court erred by taking into account the
possibility that Nona would have a continuing interest in the company because his
membership interest in Venture North was separately valued at $1,500 and assigned to
him by agreement; he contends that the provisions at issue must therefore be interpreted
as discussing only the value of future commissions, not the value of the marital interest
in the company.
             But the parties’ agreement was specifically premised on their failure to
agree on “whether the husband alone has accrued a 50% interest in the business
operations and potential profits of Venture Group North.” (Emphasis added.) We see
no reason why they could not agree to assign different values, or different methods of
determining value, to “potential profits” on the one hand and every other aspect of
“business operations” on the other; this appears to be what they did.
             Neil also argues that, because the superior court found that more than 50%
of the work on the Brice sale was done after separation, the parties must have intended
that Nona receive less than half of Neil’s share of the commission. He analogizes to
“active appreciation” — in which separate property’s increase in value during the

      16
        (...continued)
oral argument that the LLC’s operating agreement may have affected Neil’s ability to
assign half his share to Nona, there is no evidence of that in the record.
                                          -11-                                      7080

marriage can itself become marital property17 — and argues that this case is one of
“active depreciation,” in which work occurring after separation needs to be subtracted
from the value of the marital asset before it is divided.
             To support this argument Neil cites Young v. Kelly.18       In that case, a
husband and wife worked together on a fishing boat.19 Eight years after they divorced,
the federal government created the individual fishing quota (IFQ) program, and the
husband received quota shares based on his five highest “landing” years, one of which
had been during the marriage.20 The wife argued that because a marital year had been
used to determine the IFQ shares’ value, a portion of the shares must be marital
property.21 We held, however, that the wife had no marital interest in the IFQ shares
because “[t]he ‘real value’ at issue . . . [was] the value [the wife’s] work added to the
value of the IFQ shares[, and] that value was not created until the IFQ program came into
existence, eight years after the marriage ended.”22 Young is inapposite: while the IFQ
program did not yet exist when the marriage in Young ended, it is undisputed that
Venture North was a marital asset acquired during Neil and Nona’s marriage, and the
only question was how that marital asset should be valued. In answering that question,
the parties could reasonably rely on anticipated commissions.

      17
             See, e.g., Harrower v. Harrower, 71 P.3d 854, 857-58 (Alaska 2003)
(“Active appreciation occurs when marital funds or marital efforts cause a spouse’s
separate property to increase in value during the marriage.”).
      18
             334 P.3d 153 (Alaska 2014).
      19
             Id. at 154.
      20
             Id.
      21
             Id. at 155-56.
      22
             Id. at 160.
                                           -12-                                    7080

              We conclude that the superior court did not clearly err when it found that
the parties intended Nona to give up a continuing interest in Venture North in exchange
for a 25% share of the commissions received from certain sales within a limited time
frame.
                    b.     Neil’s lack of control over Venture North’s commission
              Neil also argues that the superior court, in finding Nona entitled to 25% of
Venture North’s commission, failed to consider that Neil did not control the company,
and that his share of the commission could have been reduced during the period covered
by the agreement by the addition of new members to the LLC. He contends that under
Nona’s interpretation he could be forced to pay her 25% of a commission under
circumstances in which he was entitled to receive less than 50% of it himself, whereas
if Nona’s entitlement was based on his share only, he could carry out the agreement
(giving Nona 25% of his share) regardless of how Venture North’s commission was
distributed among the members.
              This theoretical argument is unconvincing, as it ignores the “goals sought
to be accomplished[] and surrounding circumstances when the contract was
negotiated.”23 Although it is possible that Neil could have received less than 50% of the
commission from the Brice sale if circumstances had changed, that has no bearing on the
case before us. Nowhere in the record is there any evidence that the parties considered
the possibility of a reduction in Neil’s membership interest or its effect on his share of
a commission. Even if the parties had considered such a scenario, the fact that Neil
might receive a smaller share of Venture North’s commission would not have prevented

         23
           Zamarello v. Reges, 321 P.3d 387, 393 (Alaska 2014) (quoting Miller v.
Handle Constr. Co., 255 P.3d 984, 988-89 (Alaska 2011)) (internal quotation marks
omitted).
                                          -13-                                      7080

him from promising to pay Nona an amount based on the full commission that arguably
reflected what she was owed at the time of the divorce.24
                    c.     The structure of the LLC for tax purposes
             The parties’ agreement requires Neil to “provide a true and accurate copy
of the Venture North Group, LLC federal tax return” to Nona. The superior court noted
that both parties relied on this provision as supporting their interpretation of the
agreement, but the court concluded that the provision was not “helpful in determining
the reasonable expectations of the parties as to the amount of commission Nona was to
receive.” Instead, the court found that the “evidence suggest[ed] an intent that neither
party disputes; i.e., that the percentage Nona was to receive was to be based on the net
commission after taxes rather than the gross commission received by Venture North.”
(Emphasis in original.)
             Neil contends, however, that Venture North’s structure for tax purposes
supports his position. He explains that Venture North, as an LLC, is a pass-through
entity that does not pay income taxes; instead, its members are taxed personally on
distributions from the company. Neil argues that if Nona’s share were to be calculated
on Venture North’s commission, determining the “net commission” would require
determining the individual tax rates of each member — a task that would be practically
difficult given that the other members were not parties to the divorce action. Therefore,
he argues, Nona’s interpretation cannot reflect the parties’ intent, and “[t]he only

      24
             See Burns v. Burns, 157 P.3d 1037, 1039-40 (Alaska 2007) (“[The
husband] also maintains that the agreement would be unconstitutional if it required him
to remain a dentist for five years. But as [the wife] agreed at oral argument, [the
husband] need not remain a dentist as long as he pays spousal support based on a
percentage of imputed income based on his past earnings as a dentist.”).
                                          -14-                                     7080

reasonable way to interpret ‘commission’ is . . . that it refers to the commission Neil
receives through his fifty percent interest in Venture North Group.”
             The parties did not further define the term “net commission” in their
agreement. Nona contends that the net commission received by the company — what
she argues was the basis of the agreement — is not affected by the tax liabilities of
members, paid individually on their distributed shares. She posits that the term “net
commission” could reflect deductions other than taxes, such as “expenses incurred to
earn the commission.” She further argues that the LLC’s tax structure supports her claim
to a larger share; if the parties had agreed that the amount due Nona would be based on
Neil’s share of the commission alone, his individual tax returns would have been all she
needed to verify this information, making the mandated disclosure of Venture North’s
returns unnecessary. We find Nona’s arguments persuasive, and we conclude that the
superior court did not err in deciding that the LLC’s tax structure did not support Neil’s
position.
                    d.	    The parties’ statements when placing the agreement on
                           the record
             The superior court also relied on a discussion of the settlement in 2010
when the parties placed their agreement on the record, finding that it supported Nona’s
position. The court noted in particular the statement of Nona’s counsel that the
agreement would entitle his client to “25% of the ‘net after-tax commission received
from that sale or sales,’ ” not limiting it to the amount of the commission received by
Neil. Neil claims that the superior court’s inference is not supported by the full
discussion, in which Nona’s counsel also said that she had “discounted essentially what
she would be taking from any eventual sale.” (Emphasis appellant’s.) He contends that
Nona’s share would not be “discounted” (from the presumptive 50/50 sharing of the

                                          -15-	                                     7080

marital asset) unless she took less than he did, meaning that she must have agreed to take
25% of Neil’s 50% interest rather than 25% of Venture North’s commission.
              Neil is correct that, because he and Nona were entitled to equal shares of
the Brice commission if it was earned before July 1, 2011, Nona’s interest was not
“discounted” during that time. But we disagree that the full discussion supports Neil’s
interpretation. After saying that Nona “ha[d] discounted essentially what she would be
taking from any eventual sale,” her counsel went on to describe that discount in terms
of the step-down provisions: from 25% to 20% to zero over the course of three years.
Her counsel summed up: “So there’s a break in here as far as a discount for additional
work that might have to be done. The parties cannot guarantee and there is no guarantee
that there will be any proceeds whatsoever.”
              This language supports the superior court’s findings about the parties’
intent. As reasonably read, Nona’s counsel’s remarks identified the “discount” as
Nona’s willingness to forgo any continuing interest in Venture North and to assume the
risk that she would receive a smaller percentage of any commission as time went by and,
ultimately, no commission at all if sales did not materialize in the three years after
divorce (as in fact happened with regard to Great Northern). To the extent the superior
court relied on the discussion in 2010 as supporting Nona’s interpretation of the
agreement, it did not clearly err.
              3.	    The superior court did not err in interpreting the settlement
                     agreement
              “Because the superior court’s . . . inferences drawn from extrinsic evidence
are otherwise supported by substantial evidence, and because the plain text of the
[settlement] agreement supports the superior court’s interpretation,”25 the superior court

       25
              Mahan v. Mahan, 347 P.3d 91, 97 (Alaska 2015).
                                          -16-                                      7080
did not err in finding that the agreement entitles Nona to 25% of the net commission
received by Venture North from the Brice sale. We affirm the superior court’s decision
of this issue.
       B.	       We Remand The Award Of Attorney’s Fees For A Determination
                 Whether Neil’s Position In Discovery Was Substantially Justified.
                 Neil contends that the superior court abused its discretion when it awarded
Nona attorney’s fees for having to bring a motion to compel discovery.26 Neil argues
that the parties agreed to a more limited production than what Nona initially demanded;
that he provided information he reasonably believed would satisfy their agreement; and
that Nona filed her motion to compel without informing him first that the discovery he
provided was insufficient. Nona responds that the award of attorney’s fees was proper
because Neil’s disclosures were deficient and he provided more information only after
she filed her motion to compel.
                 Alaska Rule of Civil Procedure 37(a)(4)(A) provides that, if a motion to
compel is granted or discovery is provided after the motion is filed, “the court shall, after
affording an opportunity to be heard, require the party or deponent whose conduct
necessitated the motion . . . to pay to the moving party the reasonable expenses incurred
in making the motion, including attorney’s fees.” The rule also provides, however, that
an award of fees is not appropriate if “the opposing party’s nondisclosure, response or

       26
                Neil also argues that it was error to grant the motion to compel, but he does
not identify any prejudice other than the award of fees. Even if it was error to grant the
motion, the error would be harmless absent the fee award. See Peterson v. Swarthout,
214 P.3d 332, 342-43 (Alaska 2009) (“[The wife] argues that Judge Cutler should not
have granted [the husband’s] motion to compel. . . . [B]ut this mistake did not prejudice
[the wife] . . . . Granting the motion was harmless error.”). We therefore address only
the fees issue.
                                             -17-	                                     7080

objection was substantially justified.”27 We have not explicitly addressed substantial
justification under Civil Rule 37(a)(4), but the United States Supreme Court, discussing
the analogous federal rule, has held that an action is substantially justified “if there is a
‘genuine dispute,’ or ‘if reasonable people could differ as to [the appropriateness of the
contested action].’ ”28
              The factual background for the superior court’s award of fees in this case
appears to be undisputed. Nona served her discovery requests in November 2013.
Although Neil’s initial position was that she was not entitled to discovery, and although
he filed a motion for a protective order on that ground in early December, the parties
nonetheless communicated about whether some limited production would be sufficient
to resolve the dispute. In their initial exchange on the subject, Nona’s attorney stated that
he saw “cooperation on these issues as a possibility” and that the discovery dispute could
be resolved if Neil would “provide documentation that would show (1) whether the other
business [Great Northern] was sold and the timing of such a sale, (2) the actual amount
actually received by Venture North for the Brice sale, and when, and (3) [Neil’s] tax
returns for the other two years in question.” The attorneys’ follow-up email exchange
in January 2014 confirmed this limited production as the basis of the parties’ agreement.
Nona’s attorney concluded, “I am agreeing that if you will produce the things listed

       27
              Alaska R. Civ. P. 37(a)(4)(A).
       28
             Pierce v. Underwood, 487 U.S. 552, 565 (1988) (alteration in original)
(citations omitted) (quoting Fed. R. Civ. P. 37(a)(4) advisory committee’s note to 1970
amendment; Reygo Pac. Corp. v. Johnston Pump Co., 680 F.2d 647, 649 (9th Cir.1982)).
Stated another way, “[m]aking a motion, or opposing a motion, is ‘substantially justified’
if the motion raised an issue about which reasonable people could genuinely differ on
whether a party was bound to comply with a discovery rule.” 8B CHARLES ALAN
WRIGHT, ARTHUR R. MILLER ET AL., FEDERAL PRACTICE & PROCEDURE § 2288 (3d ed.
2002).
                                            -18-                                       7080

herein, we will review the materials and determine whether we need anything else. . . .
If I do not receive these materials shortly, I will be forced to file a motion to compel.”
(Emphasis added.) Within a few days Neil’s counsel hand-delivered materials ostensibly
responsive to Nona’s compromise demands: Neil’s tax returns for 2011 and 2012, a
letter on Brice letterhead stating the amount of Venture North’s commission, and a Great
Northern biennial report reflecting that the company had not changed ownership. In
early February, however, with no more correspondence about discovery in the interim,
Nona filed her motion to compel.29
             On these facts, it is difficult to see why Neil’s position was not
“substantially justified” for purposes of avoiding an award of fees under Civil Rule
37(a)(4)(A).30 The documents Neil provided appeared to satisfy the general requirements
repeatedly specified in the parties’ efforts toward compromise. Nona’s attorney, in his
final substantive communication about the matter, stated that he would “review the
materials and determine whether [he] need[ed] anything else” and that “if [he did] not
receive these materials shortly,” he would file a motion to compel, implying that he

      29
              Nona’s counsel represented at oral argument that before the motion to
compel was filed the parties discussed alleged continuing deficiencies in Neil’s
disclosures at one or more status hearings, but the record does not show any hearings
occurring between Nona’s filing of her discovery requests and the superior court’s grant
of the motion to compel.
      30
              At oral argument Nona’s attorney argued that the award of fees was
justified because Neil had failed to provide documentation of the total price of the Brice
sale. Although Neil did not provide this information, there is no indication that Nona
reasonably expected it; when the attorneys discussed compromising the discovery
dispute, Nona asked for information about “the actual amount actually received by
Venture North for the Brice sale, and when,” later phrased as “the full amount of the
commission on the Brice sale,” information Neil provided. The full price of the Brice
sale was not a part of Nona’s demands.
                                          -19-                                      7080

would not file the motion without first advising Neil of a deficiency and giving him the
opportunity to correct it.
                 The superior court did not explain its decision to award fees to Nona, and
we cannot discern its rationale from the record. We remand the issue to the superior
court for an express determination whether Neil’s position in discovery was substantially
justified. If upon reconsideration the superior court concludes that Neil’s position was
substantially justified, it has the discretion to modify its decision. We retain jurisdiction
on this issue.
V.     CONCLUSION
                 The superior court’s decision that Nona is entitled to 25% of Venture
North’s commission on the Brice sale is AFFIRMED. The issue of attorney’s fees on
the motion to compel is remanded for further proceedings consistent with this opinion,
and we retain jurisdiction.

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