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R. Zimin v. M. Zimin (7/31/92), 837 P 2d 118
<![CDATA[
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
RALPH EDWARD ZIMIN, ) Supreme Court File Nos.
) S-4425/S-4443
) Superior Court File No.
Appellant/ ) 3AN-89-5107 Civil
Cross-Appellee, )
)
v. ) O P I N I O N
)
MARTHA LEE ZIMIN, )
)
Appellee/ )
Cross-Appellant. )
______________________________) [No. 3872 - July 31, 1992]
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage, Peter A. Michalski, Judge.
Appearances: M. Ashley Dickerson,
Dickerson & Gibbons, Inc., Anchorage, for
Appellant/ Cross-Appellee. Janet D. Platt,
Law Offices of Janet D. Platt, Anchorage, for
Appellee/ Cross-Appellant.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
MOORE, Justice.
In this divorce proceeding, Ralph Zimin challenges two
aspects of the trial court's division of marital property. He
first argues that equitable division is inappropriate in this
case because the parties were only married for 32 months.
Alternatively, he claims that the court erred in valuing the
property available for distribution. He also appeals the court's
custody and child support awards. Martha Zimin cross-appeals,
arguing that the court erred in denying her request for
attorney's fees and costs. We find no fault in the trial court's
handling of all these issues and therefore affirm.
I. Facts and Proceedings
Martha and Ralph were married in October 1986. Their
daughter, Stacey Lee Zimin, was born October 3, 1987. The
parties permanently separated almost three years later in June
1989, when Martha filed for divorce.
During the marriage, Ralph worked as a commercial
fisherman in South Naknek. When he was not fishing, Ralph also
worked for an oil service company on the North Slope. Martha
worked as a telephone apprentice prior to the marriage. During
the marriage, she was a homemaker and the primary caretaker of
Stacey. After the parties separated, Martha returned to work as
a telephone apprentice on a seasonal basis.
Both parties brought property into the marriage.
Ralph's premarital property included a timeshare in Hawaii, a
Gillnetter boat, and a 1984 truck. Martha entered the marriage
with a house and a neighboring lot in Palmer and a 1980 Chevy
Citation. All of this premarital property was burdened with
outstanding debt which the parties made payments on during the
marriage.
The parties also acquired property during the marriage,
including a lot in South Naknek, two fishing skiffs,
miscellaneous fishing equipment and a 1983 Ford LTD. They
constructed a house on the South Naknek property. They also
built a shed on Martha's Palmer property. The parties opened a
number of bank accounts during the marriage, both joint and
individual, and also maintained separate accounts which they had
opened prior to the marriage.
A divorce trial was held before Judge Michalski. At
trial, Ralph proposed that he and Martha simply retain the
property in their possession, arguing that equitable division was
inappropriate for a short marriage under this court's decision in
Rose v. Rose, 755 P.2d 1121 (Alaska 1988). He therefore offered
no evidence establishing the current value of any of the
property.1 Martha agreed that they should retain the property in
their possession, but argued that the marital contributions to
the property should be equitably divided. She explicitly argued
that appraisals of many of the assets were not feasible in this
case because of their remote location and therefore proposed that
the value of the marital share of the parties' property be
determined by calculating how much the outstanding debt on each
item had been reduced during the marriage.
In addition to the property dispute, Ralph sought joint
custody of Stacey. Martha opposed joint custody on the grounds
that she and Ralph had a history of poor communication following
the separation. The child custody investigator recommended
giving Martha sole legal and physical custody of Stacey. The
investigator testified that Martha and Ralph had significant
problems discussing the child's welfare. He also concluded that
joint custody would not be successful.
Finally, the parties disputed the proper income figure
which should be used to calculate Ralph's child support. Martha
argued that Ralph's adjusted income in 1990 was approximately
$50,205. Ralph argued that $25,651 which he placed in a Capital
Construction Fund (and later withdrew for the purpose of buying a
boat engine) was properly deducted from his adjusted annual
income.2 He further maintained that his child support obligation
should be based on his average income over the past ten years
(approximately $32,045) because, as a fisherman, his income
fluctuates from year to year.
At the close of the trial, Judge Michalski awarded
Martha sole legal and physical custody of Stacey. He granted
Ralph visitation rights3 and ordered him to pay child support
based on an adjusted annual income of $50,205. He ruled that the
$25,651 deposited in Ralph's Capital Contribution Fund should be
included in Ralph's income for the purposes of determining child
support. Judge Michalski also adopted Martha's
proposed property division. He found that the marital funds used
to make payments on premarital property, the marital funds used
to acquire new property during the marriage and the marital funds
deposited in accounts during the marriage were all part of the
marital estate and available for distribution. He valued the
total marital estate at $99,887.78. He calculated this figure
based solely on the amount of payments made during the marriage
and did not attempt to place a present value on the assets
themselves. Since the marital contribution to the property
retained by Ralph gave him a greater share of the marital estate,
Judge Michalski ordered Ralph to pay Martha $33,700.60 to
effectuate a 50/50 division. Both parties were ordered to pay
their own attorney's fees.
On February 5, 1991, Judge Michalski issued his written
findings of fact and conclusions of law. Ralph appealed the
court's decision on all issues. Martha cross-appealed the trial
court's denial of her request for attorney's fees and costs.
II. Discussion
1. The Division of Property
In general, trial courts are expected to use a three-
step process when equitably dividing marital property. Wanberg
v. Wanberg, 664 P.2d 568, 570 (Alaska 1983). First, the court
determines what property is available for distribution. Second,
the court values the property. Third, the court equitably
divides the property. Id. However, we have recognized an
alternative approach for marriages of short duration where there
has been no significant commingling of assets. Rose v. Rose, 755
P.2d 1121 (Alaska 1988).4
Ralph argues that the trial court erred in failing to
apply the Rose approach in this case. His position is without
merit. Unlike the parties in Rose, Ralph and Martha
significantly commingled their assets.5 Furthermore, Martha
stopped working as a telephone apprentice during the marriage to
become a homemaker. It is clear that Ralph and Martha did not
maintain "completely separate economic identities"during their
32 month marriage. See Bell v. Bell, 794 P.2d 97, 102 (Alaska
1990) (holding that the Rose approach is inappropriate where
parties bought and improved property together and jointly made
payments on premarital property). Therefore, the trial court
properly made its property division under the three-step Wanberg
analysis.
Ralph's second challenge is to the methodology the
court adopted in determining the value of the marital estate.6
In the absence of evidence establishing the current value of any
of the assets, the court valued the marital portion of the
various assets based on the debt payments made during the
marriage. In doing so, the trial court recognized that this
method did not take into account the post-marital appreciation or
depreciation of the property.
We have previously disapproved of property divisions
which fail to consider appreciation and depreciation. See Bell
v. Bell, 794 P.2d 97 (Alaska 1990).7 However, in this case, the
parties failed to present any evidence of the present value of
the disputed property, making such a determination impossible.
It is the duty of the parties, not the court, to ensure that all
necessary evidence is presented at trial. Hartland v. Hartland,
777 P.2d 636, 640 (Alaska 1989) (reviewing courts cannot continue
to reverse and remand dissolution cases where the parties had an
adequate opportunity to introduce evidence but failed to do so).
Furthermore, in this case, the court specifically found that
current appraisals of much of this property would not be
economically feasible because of its remote location. On this
record, we conclude that the trial court did not abuse its
discretion in valuing the marital estate as it did.
2. Child Support
The trial court determined Ralph's child support
obligation based on an adjusted gross income of $50,205. It
based this figure in part on the nine month 1990 tax estimate
prepared by Ralph's accountant. However, the court also included
in this figure the $25,651 which Ralph had deposited in a Capital
Construction Fund and deducted from his projected 1990 income.
We conclude that the trial court properly included the
$25,651 as part of Ralph's 1990 income for the purpose of
calculating his support obligation.8 The commentary to Civil
Rule 90.3 states that certain amounts the IRS permits a taxpayer
to deduct from income (such as the accelerated component of
depreciation expenses, depreciation of real estate, investment
tax credits, or any other business expenses determined by the
court to be inappropriate) should not be deducted from the
obligor's income when calculating child support. Alaska R. Civ.
P. 90.3, Commentary III (B). Since the goal of the Rule 90.3
guidelines is to obtain a realistic estimate of an obligor's
adjusted annual income, these funds should be included in Ralph's
1990 income for the purposes of calculating child support. To
hold otherwise would severely understate Ralph's most current
income figures.
Ralph also argues that the trial court should have
based its calculation on his average income over the past ten
years because, as a fisherman, his income fluctuates from year to
year. The commentary to Rule 90.3 states that in cases where an
obligor's income is erratic, the trial court may choose to
average the obligor's income over a number of years. Alaska R.
Civ. P. 90.3, Commentary III (E). We recognize that it is
difficult to apply the Rule 90.3 guidelines to an obligor parent
who works in a seasonal business. Nevertheless, although income
averaging is clearly appropriate in such cases, a ten-year
average is generally not a reliable indicator of an obligor
parent's current earning capacity.9 We therefore conclude that
the trial court did not err in rejecting Ralph's proposed ten-
year average and basing its support award on his 1990 projected
earnings. If Ralph is unable to meet his support obligation in
the future, he may move to modify the award. See Kowalski v.
Kowalski, 806 P.2d 1368, 1372 (Alaska 1991).
3. Custody
The trial court awarded Martha sole legal and physical
custody of Stacey. On appeal, Ralph argues that the trial court
abused its discretion in failing to award joint custody.10
We have previously held that cooperation between
parents is essential if joint custody is to be in the child's
best interests. Lone Wolf v. Lone Wolf, 741 P.2d 1187, 1189
(Alaska 1987). In this case, there is ample evidence in the
record supporting the trial court's finding that the parties
could not communicate sufficiently to make a joint custody
arrangement work. We conclude that the trial court did not abuse
its discretion in awarding sole custody to Martha.
In the alternative, Ralph argues that the court erred
in not allowing him to keep Stacey during the day when Martha is
working.11 In Lone Wolf, 741 P.2d at 1190-91, we held that, in
the absence of specific findings indicating that more liberal
visitation was inappropriate, it was an abuse of discretion to
limit an unemployed father to weekend visitation when the mother
worked a seven day work schedule during which time she rarely saw
the children. We observed that "[t]he cooperation necessary to
allow more liberal visitation is far less than that needed for
joint custody."Id. at 1191. However, in this case, the trial
court specifically found that the parties' inability to
communicate would make even the level of visitation ordered by
the court a challenge.
We conclude that the trial court did not abuse its
discretion either in awarding sole custody to Martha or in
failing to award Ralph greater visitation than it did.
4. Attorney's Fees and Costs
The trial court's discretion in awarding attorney's
fees is broad and its decision will not be disturbed on appeal
unless it is "arbitrary, capricious, manifestly unreasonable, or
stems from an improper motive." Tobeluk v. Lind, 589 P.2d 873,
878 (Alaska 1979); Rostel v. Rostel, 622 P.2d 429, 432 (Alaska
1981).
On cross-appeal, Martha contends that the trial court
erred in denying her request for attorney's fees because her
earning capacity is significantly lower than Ralph's. On the
record presented, Ralph does appear to have a greater earning
capacity than Martha.12 However, in deciding whether a fee award
is appropriate, the court must also consider the parties'
relative economic situations as well as their earning capacity.
See Rhodes v. Rhodes, 754 P.2d 1333, 1336 (Alaska 1988). As a
result of the divorce, Ralph must pay Martha approximately
$33,000. This award is substantial when compared to Ralph's
annual income. In light of this, we conclude that the court's
denial of fees and costs did not constitute an abuse of
discretion.13
AFFIRMED.
_______________________________
1. During trial, Ralph did attempt to present expert
testimony as to the value of the Gillnetter boat, but the trial
court refused to hear this testimony because Ralph had not
complied with Martha's discovery requests for this information.
A trial court has broad discretion to sanction a party who evades
discovery. See Bachner v. Pearson, 479 P.2d 319 (Alaska 1970)
(court has discretion to exclude evidence for failure to comply
with discovery order).
2. The Merchant Marine Act of 1936 permits a taxpayer who
owns an eligible vessel to set up a Capital Construction Fund by
agreement with the Secretary of Transportation or the Secretary
of Commerce. See 46 U.S.C. 1177 (1989). The fund is
established for the construction or reconstruction of American
vessels. Id. Taxable income is reduced by certain amounts
deposited for the taxable year in such a fund. 26 U.S.C.
7518(c)(1)(A) (1989). Withdrawals from the funds for
construction or reconstruction of a vessel are not taxable, but
the amount of such withdrawals reduces the basis of the vessels.
26 U.S.C. 7518(f)(2)-(3) (1989). Other non qualifying
withdrawals are taxable. See generally J Fed. Tax Coordinator 2d
(Res. Inst. Am.) 30,091-94 (1991).
3. These rights are as follows: Ralph has visitation during
alternate weekends, alternate major holidays, and two weeks of
continuous visitation during the winter, spring and summer prior
to the time Stacey is in school. Once Stacey starts school,
Ralph may have six continuous weeks of visitation during the
summer.
4. In Rose, the parties were married for eighteen months.
During the marriage, they maintained separate savings and
checking accounts. Id. at 1124. Both parties continued working
and their pay checks were deposited directly to their respective
accounts. Each party made payments on premarital property out of
their own accounts. Id. The trial court found that the parties
had not functioned economically as a unit and awarded each party
the assets each had acquired with premarital funds as well as
money earned during the marriage but kept in separate bank
accounts. Id. at 1123-24. On appeal, we observed:
[I]n marriages of short duration, where
there has been no significant commingling of
assets between the parties, the trial court
may, without abusing its discretion, treat
the property division as an action in the
nature of rescission, aimed at placing the
parties in, as closely as possible, the
financial position they would have occupied
had no marriage taken place.
Id. at 1125.
5. Ralph and Martha maintained a number of joint accounts.
They bought the South Naknek property together. Both parties
contributed to improvements on the South Naknek and Palmer
properties. Both parties made payments on premarital property
from marital earnings.
6. On appeal, Ralph does not specifically challenge the
trial court's failure to classify each asset as either marital or
separate property. The trial court's approach is unusual in that
it did not identify whole assets as marital or separate property.
Instead the court identified the "marital portion"of the various
assets as being available for distribution.
Essentially, the trial court used a version of the
"source of funds"approach adopted in a number of jurisdictions.
See Tibbetts v. Tibbetts, 406 A.2d 70 (Me. 1979); Shank v. Shank,
387 S.E.2d 325 (W. Va. 1989). Under this approach, property is
classified according to the classification of the funds used to
purchase it: property acquired with separate funds is separate;
property acquired with marital funds is marital. Property
purchased on debt is classified according to the funds used to
pay off the debt. Thus it is "acquired" over time. See
generally Brett R. Turner, Equitable Distribution of Property
5.07 (Supp. 1991).
Although we do not adopt the source of funds rule per
se, it is not inconsistent with our statutes and caselaw. AS
25.24.160 (a)(4) places all property acquired during the
marriage, whether joint or separate, before the court for
purposes of division. This statute also authorizes invasion of
premarital holdings "when the balancing of the equities between
the parties requires it." Id. When one spouse has made
pecuniary contributions to the separate property of the other
spouse, all or some of that property may be equitably divided on
divorce. Vanover v. Vanover, 496 P.2d 644, 648 (Alaska 1972);
Brooks v. Brooks, 733 P.2d 1044, 1053 (Alaska 1987).
Since it is clear that the trial court could have
reached the same result under our rules of equitable division and
it is also clear that the court deviated from the traditional
analysis because the parties failed to present any evidence
establishing the current value of the property, we do not believe
that the trial court's analysis constitutes an abuse of
discretion.
7. In Bell, the trial court applied the Rose approach and
permitted each party to retain the assets in his or her
possession. However, the court ordered the husband to reimburse
the wife for contributions made by the wife for property retained
by the husband. We reversed, holding that the lower court had
erred in applying the Rose approach because the parties had
significantly commingled their assets and instructed the trial
court to divide the property under Wanberg on remand. We also
held that reimbursement was inappropriate when it failed to
account for appreciation and depreciation, noting:
We also doubt the propriety of using a
reimbursement remedy where the value of the
assets to which there has been mutual
contribution by the parties greatly
depreciate or appreciate in value. To do so
may result in one party bearing the entire
loss (should there be depreciation) or
enjoying the entire gain (should there be
appreciation).
Id. at 102 (citation omitted).
8. Child support determinations are within the broad
discretion of the trial court and will only be reversed when we
are left with a definite and firm conviction that a mistake has
been made. Pattee v. Pattee, 744 P.2d 658, 662 (Alaska 1987);
Richmond v. Richmond, 779 P.2d 1211, 1216 (Alaska 1989).
9. Ralph rejected Martha's offer to average his income over
a three-year period. However, we believe that a three-year
average would provide an accurate estimate of a parent's current
earning capacity when a parent's income is subject to yearly
fluctuations.
10. The trial court is vested with broad discretion in child
custody decisions. Gratrix v. Gratrix, 652 P.2d 76, 79 (Alaska
1982). Such decisions will only be reversed for abuse of
discretion or erroneous factual findings. Id. at 79-80.
11. We review visitation awards under the same standard
applied in other custody matters. Lone Wolf, 741 P.2d at 1190.
12. The court determined that Ralph had an annual adjusted
income of $50,205 in 1990. Although the court did not make
specific findings concerning Martha's earning capacity, she
apparently earned approximately $30,000 in 1990 working as a
telephone apprentice.
13. Martha also argues that her fees were unreasonably
increased by Ralph's vexatious and bad faith conduct. In
Kowalski v. Kowalski, 806 P.2d 1368 (Alaska 1991), we observed
that "[c]onduct justifying [an increased fee award for bad faith
or vexatious conduct] must be such that the parties are prevented
from litigating the action on an equal plane." Id. at 1373.
Although the record does indicate that Ralph repeatedly failed to
provide Martha with basic financial information during discovery,
his conduct was not so egregious that the trial court's denial of
fees was manifestly unreasonable.
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