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C. Ramsey v. S. Ramsey (7/24/92), 834 P 2d 807
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Notice: This 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
CLAIR J. RAMSEY, )
) Supreme Court Nos. S-4206/4207
Appellant/ )
Cross-Appellee, ) Trial Court No.
) 3AN-89-3707 Civil
v. )
) O P I N I O N
SANDRA S. RAMSEY, )
)
Appellee/ )
Cross-Appellant. )
______________________________) [No. 3870 - July 24, 1992]
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
Karl S. Johnstone,
Judge.
Appearances: Kathleen A. Weeks, Law
Offices of Kathleen A. Weeks, Anchorage, for
Appellant/Cross-Appellee. Sharon L. Gleason,
Rice, Volland & Gleason, P.C., Anchorage, for
Appellee/Cross-Appellant.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton, and Moore,
Justices.
MATTHEWS, Justice.
FACTS AND PROCEEDINGS
Clair and Sandra Ramsey were married on April 11, 1964.
At the time the divorce decree was issued, August 27, 1990, both
were 47 years old. Clair earns at least $120,000 a year as a
real estate agent for Jack White Company. Sandra has operated
her own interior design business since 1979. In 1989 the net
earnings from her business were $7,829.
The parties physically separated in the summer of 1988.
Clair filed for divorce in May 1989. After trial in August 1990,
Judge Johnstone issued the decree and findings at issue in this
appeal.
In those findings, the court concluded that the parties
did not cease functioning as an economic unit until the summer of
1990. Neither party was given credit for payments made before
that date to preserve marital assets or provide spousal support.
The court awarded Sandra rehabilitative alimony in the
amount of $1,500 a month for four years. The award was designed
to facilitate her plan to make her interior design business self-
supporting. Based on the Merrill1 factors and in light of the
alimony award, the court made an "approximately equal division of
the assets." In addition, the court awarded Sandra $5,000 for
attorney's fees and expert costs.
DISCUSSION
A. Credit for Post-Separation Payments
Clair argued below that the economic partnership
created by the marriage ended upon separation, thus he was
entitled to credit for post-separation payments made to maintain
the marital estate and to support Sandra. Judge Johnstone,
however, found that due to the extensive commingling of finances,
"the parties continued to function economically as a single unit
until the summer of 1990." Based on that finding, the court
identified all of the parties' marital assets as of May 11, 1990.
We find that the court's economic unit finding was clearly
erroneous.
The first step in the process of marital property
division is to determine "what property is available for
distribution." Chotiner v. Chotiner, ___ P.2d ___, Op. No. 3827
at 5 (Alaska, April 3, 1992). Specifically, the court must
"identify what marital property, as distinct from separate
property, exists at the distribution date." Id. In Ogard v.
Ogard, 808 P.2d 815, 819 (Alaska 1991), we distinguished between
the date marital property is identified as such and the date it
is valued; the latter should "be as close as practicable to the
date of trial."
A valuation date should be chosen
which will provide the most current and
accurate information possible and which
avoids inequitable results. It is distinct
from the date marking the termination point
for inclusion of property within equitable
distribution. The latter date marks the end
of the marital team effort. Since this date
may be well in advance of the dissolution
proceedings, a valuation date linked to it
may result in stale financial information.
L. Golden, [Equitable Distribution of
Property,] at 7.01 [(1983)].
Id.
In Schanck v. Schanck, 717 P.2d 1, 3 (Alaska 1986), we
stated the general rule for determining when property acquired
after separation is properly excluded from the category of
marital property:
As a general rule, we hold that property
accumulated with income earned after a final
separation that is intended to, and does in
fact, lead to a divorce is excluded from the
category of marital property, as long as it
is obtained without the invasion of any pre-
separation marital asset.
(Emphasis supplied.)
In this case, the parties separated permanently in the
summer of 1988. That point represented "a final separation that
[was] intended to, and [did] in fact, lead to a divorce."
Sandra's continuing economic dependence alone does not indicate
the continuance of the marital economic unit. The court's
determination that the marital enterprise continued until May 11,
1990, was clearly erroneous.2
We have required that trial courts consider payments
made to maintain marital property from post-separation income
when dividing marital property. Doyle v. Doyle, 815 P.2d 366,
369 n.5 (Alaska 1991). We have not, however, held that the
spouse who makes such payments must necessarily be given credit
for them in the final property division. Clair argues that there
are public policy reasons which require that some credit be given
for such payments. He argues that not doing so tends to promote
hostile relations between the parties and may result in a
potential wasting of marital assets. While these arguments have
some weight, it is our view that no fixed rule requiring credit
in all cases should be imposed. Instead, the fact that one party
has made payments from non-marital income to preserve marital
property should be considered as one of the circumstances to be
weighed by the trial court in dividing the marital property.
This rule is consistent with our treatment of payments made from
separate property acquired prior to the marriage which are used
to acquire marital property. See Chotiner, Op. No. 3827 at 13-14
(court did not abuse its discretion in failing to give credit for
separate property contribution of husband, but on remand court
was authorized to grant credit).
Since the trial court erred in determining the termin
ation date of the marital partnership, this case must be
remanded. On remand the court should consider whether Clair
should be given credit for contributions he made from separate
property in order to preserve marital property, and should make
written findings on this point.
B. Rehabilitative Alimony
Based on the business plan Sandra presented to the
court, Judge Johnstone awarded her rehabilitative alimony for
four years. The award was designed to "enable her to more fully
provide for her own future needs through job development."
In general, "our decisions have established a
preference for meeting the parties' needs with the division of
property, rather than with alimony, where marital assets are
adequate to do so." Schanck, 717 P.2d at 5 (citing Bussell v.
Bussell, 623 P.2d 1221, 1224 (Alaska 1981) and Malone v. Malone,
587 P.2d 1167, 1168 (Alaska 1978)). Although the preference does
not apply to awards of alimony for a limited duration, Bays v.
Bays, 807 P.2d 482, 485 (Alaska 1991), "where marital assets are
adequate to equitably provide for both parties, . . .
rehabilitative alimony is properly limited to job training or
other means directly related to the end of securing for one party
a source of earned income." Schanck, 717 P.2d at 5.
Here Sandra has operated an interior design business
since 1979. She is an experienced designer. In addition she had
a transition period of two years between separation and divorce
to develop the business into a self-sufficient enterprise. Under
these circumstances her need for rehabilitative alimony seems
both speculative and unwarranted.3 We therefore vacate the award
of rehabilitative alimony. On remand the court is authorized to
adjust the property division if equitably required by this
change.
C. Property Division
In light of our conclusion that the marriage terminated
as a joint enterprise on the date of separation, the court must
adjust the allocation of property. "The rule that has evolved in
Alaska for dividing assets acquired after a separation resulting
in a divorce is based on the source of the payment with which
those assets are acquired." Schanck, 717 P.2d at 2. The rule
states that "property accumulated with income earned after a
final separation that is intended to, and does in fact, lead to a
divorce is excluded from the category of marital property, as
long as it is obtained without the invasion of any pre-separation
marital asset." Id. at 3.
In accordance with this rule, any business-related
commissions Clair earned after the summer of 1988 are his
separate property. Schanck, 717 P.2d at 3. Also, post-
separation earnings Clair contributed to his Keogh account should
not be considered part of the marital estate.
D. Attorney's Fees
Sandra claims that the court erred by awarding her only
$5,000 of $17,500 in outstanding attorney and expert witness
fees. AS 25.24.140 authorizes the court to award attorney's fees
based on economic need. This court has interpreted that
provision to give broad discretion to the trial courts. "`An
abuse of discretion is established where it appears that the
trial court's determination as to attorney's fees was manifestly
unreasonable.'" Kowalski v. Kowalski, 806 P.2d 1368, 1372
(Alaska 1991) (quoting Palfry v. Rice, 473 P.2d 606, 613 (Alaska
1970)). Here the court's award of $5,000 was not "manifestly
unreasonable." See Mann v. Mann, 778 P.2d 590 (Alaska 1989)
(affirming a lower court's refusal to award attorney's fees to a
spouse despite lesser earning capacity and a smaller award of
marital property). Nonetheless, in light of the significant
adjustments which may be required as a result of this opinion,
the award of attorney's fees should be vacated so that the
superior court may recalculate fees once it determines an
appropriate property division.
CONCLUSION
The Ramseys' marriage terminated as a joint enterprise
on the date of separation. The award of rehabilitative alimony
is vacated. We remand the case for the trial court to equitably
allocate the marital property in light of the proper date of
termination, Clair's post-separation contributions to the marital
estate from post-separation income, and Sandra's needs in the
absence of rehabilitative alimony. The award of attorney's fees
is vacated.
_______________________________
1 Merrill v. Merrill, 368 P.2d 546 (Alaska 1962).
2 The decision to value the parties' assets as of May 11,
1990 was defensible. The court found "that upon consideration of
all the facts and circumstances . . . all of the parties' assets
should be valued on the same approximate date as close to trial
as possible."
3 This case resembles Schanck v. Schanck, 717 P.2d 1 (Alaska
1986), where the court awarded the wife rehabilitative alimony
for an eighteen-month period after the wife had re-entered the
job market as a nurse. We found that since the wife was pursuing
her chosen occupation she had no further need for rehabilitative
alimony. Id. at 5.
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