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V. Mack v. C. Mack (8/30/91), 816 P 2d 197
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NOTICE: This opinion is subject to formal correction
before publication in the Pacific Reporter. Readers are
requested to bring typographical or other formal errors to
the attention of the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, in order that corrections
may be made prior to permanent publication.
THE SUPREME COURT OF THE STATE OF ALASKA
VIOLET N. MACK, )
)
)
Appellant, ) File No. S-3751
)
v. ) 3KN 88 823 DR
)
CODY J. MACK, ) O P I N I O N
)
Appellee. )
________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Kenai,
Charles Cranston, Judge.
Appearances: Paula Williams, Anchorage, for
Appellant. Peter F. Mysing, Kenai, for
Appellee.
Before: Rabinowitz, Chief Justice, Burke,
Matthews, Compton and Moore, Justices.
BURKE, Justice.
Violet Mack appeals from two aspects of the superior
court's decision in this divorce action. We affirm as to both
issues.
I
Violet initially appeals the superior court's decision
to deny her a second continuance. Violet filed her complaint for
divorce from Cody Mack on September 28, 1988. Trial was set for
June 8, 1989. Citing serious health problems, Violet requested a
continuance, which the superior court granted. The court
rescheduled trial for August 7, 1989. Prior to trial, however,
Violet's original attorney withdrew from the case. On August 1,
1989, Violet filed a motion for a second continuance of thirty
days to conduct discovery. Violet's new attorney averred that a
second continuance was necessary because Violet's first attorney
had filed no discovery requests in the case.
On August 7, 1989, the date of trial, Judge Charles K.
Cranston first heard oral argument on Violet's motion for a
second continuance and denied the motion. The court specifically
noted that nearly a full year had passed between Violet's filing
of her divorce complaint and the trial. Thus, the court
concluded that Violet had sufficient time to conduct discovery in
the case. The superior court also noted that trial courts have a
substantial interest in maintaining the prompt and orderly
disposition of the cases brought before them.
We review Judge Cranston's denial of Violet's motion
for a second continuance under the abuse of discretion standard.
Siggelkow v. Siggelkow, 643 P.2d 985, 987 (Alaska 1982). "The
particular facts and circumstances of each case determine whether
the denial of a continuance is so unreasonable or so prejudicial
as to amount to an abuse of discretion." Id. Among the policy
considerations relevant to this determination are the "necessity
for orderly, prompt and effective disposition"of the case, and
"hardship to the parties [and] . . . witnesses." Id.
Applying the standards set forth in Siggelkow, we
believe that the trial court here had reason to discount the
hardship that Violet might suffer if denied a second continuance,
because her, or her original attorney's, lack of due diligence
actually caused that hardship.1 The trial court also had reason
to deny a second continuance in the interest of orderly, prompt
and effective disposition of the case. Consequently, we do not
believe that the trial court committed an abuse of discretion by
denying Violet's second request for a continuance.
II
After denying a second continuance, the superior court
tried the property division issues in the case. On August 24,
1989, the court issued its findings of fact and conclusions of
law. The only part of the court's decision that Violet now
appeals concerns the characterization of a debt outstanding on
real property Violet and Cody Mack had purchased in 1986. The
property consisted of one large parcel with a building, out of
which the Macks had operated a retail fur business,2 and two
smaller adjacent parcels. The trial court's findings of fact in
regard to this realty were perfectly consistent with evidence at
trial. The court wrote:
11. On or about October 11, 1986,
the parties entered into a real estate
contract for the purchase of certain property
in . . . Kenai, Alaska. The full purchase
price of the property was $143,000.00 The
parties were credited with a down payment . .
. and other payments . . . . The remaining
balance of $122,000.00 is payable in monthly
installments of $941.62 with interest at the
rate of 8% per annum. The balance due is
secured by a promissory note and deed of
trust.
12. The amount due and owing on
said property is approximately $118,000.00.
13. In the event of default,
paragraph 10 of the real estate purchase
contract provides in part as follows:
It is agreed that the
seller's recourse and the buyer's
liability under this contract is
limited to the real property
described herein, but including any
and all existing and subsequent
improvements and that no deficiency
judgment obtained by sellers shall
be enforceable against the buyers
to collect under this contract. . .
.
14. On the same day the parties
purchased from the same sellers property
adjoining [the above-mentioned parcel for]
. . . $25,000.00 payable in monthly
installments of $209.12 or more at the rate
of 8% per annum. The real estate contract
for that sale contained the same clause
limiting the sellers' recourse as described
in paragraph 13 above.
Violet and Cody owed some $23,800 on the smaller, adjoining
parcels they purchased for $25,000. Their total debt on the
business realty thus amounted to $141,800 ($118,000 plus
$23,800). In April 1989, six months prior to trial, the Borough
of Kenai for tax purposes, appraised the large parcel at $41,800
and the smaller parcels at $10,200. The difference, then,
between the tax appraisal value and the amount the Macks owed on
the business realty was some $89,000. While tax appraisal value
usually is not identical to fair market value, in this instance
it is sufficient to establish that the Mack's held considerable
negative equity in the business realty.
The trial court expressly refused to consider the
negative equity on this realty in its property valuation. The
court explained that it found "the remaining unpaid balance on
the property . . . is not a personal obligation of plaintiff wife
and therefore does not affect the property distribution."
(Emphasis added.) However, the court did assess a balancing
payment of $8,650 against Cody "in recognition of the unique
character of the unpaid debt obligation . . . [and] of the fact
that plaintiff, as sole owner of the [fur] business, is equitably
entitled to some assistance from defendant incident to the
commencement of her sole operation of the business." In effect,
the court included the property with the business but valued the
property at zero, rather than at some negative value, so that the
debt on the property did not affect the court's calculations.3
The trial court has broad discretion in property
division cases. AS 25.24.160(a)(4); Moffitt v. Moffitt, 749 P.2d
343, 346 (Alaska 1988). Here, we review the trial court's
decision to place a value of zero on the business realty. Such a
decision is mainly a factual determination to be upset on appeal
only if there is clear error. Id. (citing Alaska R. Civ. P.
52(a)). "On review, findings of fact are clearly erroneous if,
based on the record as a whole, the court is left with the
definite and firm conviction that a mistake has been made."
Burcell v. Burcell, 713 P.2d 802, 804 (Alaska 1986). We find no
such error in the trial court's assessment of value.
Generally, the debt owed on any particular item of
property will factor into the trial court's determination of the
value of it. Id. at 805 (remanding with instructions to include
marital debt in division analysis); Burgess v. Burgess, 710 P.2d
417, 419-20, 422-23 (Alaska 1985) (ordering amount owed on
mortgage subtracted from value of home to determine portion of
home equity available for distribution and remanding with
instructions to consider all debts in overall division). In the
present case, however, we believe that the peculiar nature of the
Mack's outstanding debt on the business realty justifies the
trial court's decision not to adjust the value of that property
downward by the entire debt amount.
To begin with, we believe the trial court correctly
concluded that Violet would not be subject to a deficiency
judgment if she defaulted on the realty debt. The nonrecourse
language in the contract is unambiguous. One of the sellers of
the realty testified at trial that she intended the sales
contract to provide only for retaking of the property in the
event of default. More-over, we previously have upheld the
enforceability of nonrecourse clauses such as the one at issue
here. Moening v. Alaska Mutual Bank, 751 P.2d 5, 9 (Alaska 1988)
("Any agreement between the parties that the creditor will not
seek a deficiency judgment and will look only to the security is
enforceable.").
Violet thus could have defaulted without incurring
loss. As a result, the trial court had reason to ignore the
negative equity on the realty in its equal division calculations.4
On the other hand, the negative equity also gave the trial court
reason not to assign any positive value to the realty. Cf.
Burcell, 713 P.2d at 805; Burgess, 710 P.2d at 419-20, 422-23.
Accordingly, we conclude that, on the unique facts of this case,
the trial court did not clearly err by assigning a value of zero
to the Mack's business realty for the purposes of a marital
property division.
AFFIRMED.
_______________________________
1. We note that Violet is free to pursue a
professional malpractice action against her original attorney.
2. Cody Mack appears to have been an active
participant in business decisions, such as the purchase of the
real property on which the business currently operates. Violet
Mack, however, was the actual proprietor of the fur business
because, as an Alaskan Native, she has the right to sell seal and
otter furs. Cody, apparently, is not an Alaskan Native. Seal
fur sales constitute a substantial portion of the business.
3. Overall, the court endeavored to divide the
ascertained marital property and allocable marital debt between
Violet and Cody in equal percentages.
4. Indeed, if the court had placed the negative
equity on Violet's side of the ledger, the resulting reduction in
Violet's sum total necessarily would have required the court to
shift assets from Cody's side to Violet's to even out the
division. After final judgment, Violet could have defaulted on
the debt without liability and yet retained the assets shifted to
her as compensation for the presumed negative value of the
property. She thus would have received a windfall.
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