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T. Keffer v. G. Keffer (5/14/93), 852 P 2d 394
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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
THOMAS H. KEFFER, )
) Supreme Court No. S-4699
Appellant, )
) Trial Court No.
v. ) 3HO-84-217 Civil
)
GYPSY KEFFER, ) O P I N I O N
)
Appellee. )
) [No. 3954 - May 14, 1993]
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Kenai,
Jonathan H. Link, Judge.
Appearances: Phil N. Nash, Kenai, for
Appellant. Helen L. Simpson, Anchorage, for
Appellee.
Before: Rabinowitz, Chief Justice,
Burke, Matthews, Compton and Moore, Justices.
COMPTON, Justice.
RABINOWITZ, Justice, with whom MATTHEWS,
Justice, joins dissenting.
The superior court held that a financial agreement
Thomas Keffer and Gypsy Keffer entered into when they
petitioned to dissolve their marriage provided for
permanent spousal support, terminable only on Gypsy's
death or remarriage. The court rejected Thomas'
argument that his obligation to pay support terminated
upon his retirement. Thomas appeals the superior
court's decision to award Gypsy continuing spousal
support until her death or remarriage, and $1,500 in
attorney's fees. We reverse.
I. FACTUAL AND PROCEDURAL BACKGROUND
Thomas' and Gypsy's marriage was dissolved in 1984
after 26 years of marriage. In their petition for
dissolution,1 they agreed to the following:
E. Spousal Support: $400.00 per month
to be paid by [Thomas] until sale of house,
retroactive to 1-1-84.
F. Other Financial Agreements: After
Sale of House. Combined net annual salaries,
less Gypsy L. Keffer's net annual salary
divided by 24 is the amount Thomas H. Keffer
will pay her twice a month. Income earned
outside of primary place of employment will
not be included in this calculation. (See
section IIA for current amounts. These
amounts to be adjusted annually to reflect
the increase/decrease in Anchorage area CPI @
October).
The above formula was obviously incorrect, since it would give
Gypsy all of Thomas' net salary.2 It was never
applied.
After filing the petition, but before the dissolution
hearing, Thomas agreed to pay Gypsy support of $540
twice a month. This figure was calculated by dividing
Thomas' annual salary by two, subtracting Gypsy's
annual salary, and dividing the remainder by 24.3
Apparently this is the formula they intended. Gypsy
concedes as much. Gypsy would not agree to a specific
termination date for support, although Thomas wanted
one. Neither testified to any other financial
arrangements.
Gypsy appeared at the dissolution hearing alone.
Thomas signed a Waiver of Appearance and Notice of
Hearing. The court found that Thomas and Gypsy fully
understood the nature and consequences of the action
and that the agreements were fair. The court
incorporated the agreements in the petition into its
findings. In its decree it ordered Thomas and Gypsy to
perform their agreements as incorporated in the
findings.
Thomas made the payments, recalculating them to reflect
changes in his actual income and CPI. Thomas continued
to use a $675 per month figure for Gypsy's income,
regardless of her actual net income.
In 1986 Thomas sought to terminate the payments. The
basis for his motion was that Gypsy was not attempting
to rehabilitate herself, which he claimed was the
reason for the spousal support. His motion was denied.
Thomas' job with Homer Electric Association was
eliminated on December 31, 1989. Since Thomas was over
age 55, he was eligible for retirement benefits. He
cashed in his retirement, worth $240,558, in 1990.
With an estimated tax liability of $44,718, his net
retirement was $195,840. He reinvested the funds, and
is living off of the interest. His interest income is
approximately $1,175 per month. He sent the last check
to Gypsy in January 1990.4
Gypsy filed a Motion for Order for Delinquency in
Alimony and for Qualified Domestic Relations Order.
The superior court ordered Thomas to make two interim
payments, one of $2,700 on October 11, 1990 and one of
$3,947.16 on January 7, 1991.5 In its final order, the
court concluded that the agreement reached in 1984 was
for permanent spousal support and that Thomas'
voluntary retirement should not alter his obligation to
Gypsy. The court reduced the spousal support award to
a sum certain of "$1,000 per month for life or until
[Gypsy] remarries," and awarded Gypsy $1,500 in
attorney's fees.
II. DISCUSSION
Under AS 25.24.200 - .260, a "husband and wife together
may petition the superior court for the dissolution of
their marriage." AS 25.24.200. The dissolution
procedure is separate from the traditional divorce
procedure, which automatically places the parties in an
adversarial position. In providing a dissolution
procedure, the legislature intended that the parties
involved would be able to resolve their differences
amicably and in their own way. Dissolution of
Marriage, H.B. 873, House Judiciary Committee (March
19, 1976).
Where "incompatibility of temperament has caused the
irremediable breakdown of the marriage," and the
spouses have agreed on child custody and support,
property distribution and spousal support, if any, and
the payment of debts, spouses may petition for the
dissolution of their marriage. AS 25.24.200(a). The
petition must state, inter alia, "in detail the terms
of the agreement between the spouses concerning . . .
spousal maintenance and tax consequences, if any, and
fair and just division of property, including
retirement benefits." AS 25.24.210(e). At the
dissolution hearing, the superior court determines
whether the written agreements relating to property
division, spousal maintenance and the allocation of
obligations are just and fair. AS 25.24.220(d)(3). If
so, the court may grant a final decree of dissolution.
AS 25.24.230.
The decree "may be modified or enlarged as prescribed
by AS 25.24.150 - 25.24.170." AS 25.24.240(b). Alaska
Statute 25.24.170 provides for modification of spousal
support, but not for property divisions incorporated
within divorce decrees.6 O'Link v. O'Link, 632 P.2d
225, 229 (Alaska 1981). "A property division
incorporated within a divorce decree is a final
judgment and is modifiable to the same extent as any
equitable decree of the court." Id. "The provisions
of a decree adjudicating property rights, unlike
provisions for child support, child custody or alimony,
constitute a final judgment not subject to
modification." Allen v. Allen, 645 P.2d 774, 776
(Alaska 1982) (footnote omitted). Neither Thomas nor
Gypsy argue that relief may be granted under Alaska
Civil Rule 60(b), which provides for relief from a
final judgment.
Where a support provision is an integral part of the
property settlement, courts generally hold that the
support provision is not subject to later modification.
John J. Michalik, Annotation, Divorce: Power of Court
to Modify Decree for Alimony or Support of Spouse Which
Was Based on Agreement of Parties, 61 A.L.R. 520, 590
(1975); see, e.g., Keller v. Keller, 671 P.2d 425, 426
(Ariz. App. 1983) (alimony given in exchange for
release of wife's community property interest in a
retirement fund not subject to modification).
Thomas and Gypsy agree that Gypsy voluntarily gave up
any claim she had to Thomas' retirement in exchange for
payments based on their salaries. Thomas testified
that Gypsy told him she was letting him off light by
having him pay her support since she could have gone
after his retirement. Gypsy testified by affidavit
that "I agreed to not take any of his retirement which
I would have been entitled to from the Electrical Union
because we agreed that he was going to be paying me
alimony."7
To the extent retirement benefits have been earned
during the marriage, they constitute marital property.
Rice v. Rice, 757 P.2d 60, 61 (Alaska 1988). Since
Gypsy's support was based on her relinquishment of
Thomas' retirement, we will enforce Thomas and Gypsy's
agreement without modification.
Thomas and Gypsy agree that the financial agreement
they entered into in connection with their dissolution
of marriage proceeding is a contract subject to
interpretation under contract principles. Thomas
asserts "the principals [sic] of contract law apply to
construction of property settlement agreements in
divorce actions,"citing Kendler v. Kendler, 816 P.2d
193 (Alaska 1991); Logghe v. Jasmer, 686 P.2d 694
(Alaska 1984); and Estate of Kuhns v. Kuhns, 550 P.2d
816 (Alaska 1976). Gypsy responds that she "does not
dispute that the dissolution agreement is a contract
and subject to interpretation by the court under
contract principles." The goal in interpreting a
contract is to give effect to the reasonable
expectations of the parties. These expectations are
determined by reviewing the language of any disputed
provisions, other provisions, relevant extrinsic
evidence, and case law interpreting similar provisions.
Jensen v. Ramras, 792 P.2d 668, 670 (Alaska 1990).
If contract language is unambiguous, the meaning of the
contract is decided as a matter of law. Alaska
Northern Dev. v. Alyeska Pipeline Serv., 666 P.2d 33,
39 (Alaska 1983), cert. denied, 464 U.S. 1041 (1984).
"A contract is ambiguous only if, taken as a whole, it
is reasonably subject to differing interpretations."
State v. Fairbanks North Star Bor. Sch. Dist., 621 P.2d
1329, 1331 n.4 (Alaska 1981) (citations omitted).
Under the terms of the agreement, Thomas argues he is
not obligated to Gypsy for payments derived from his
investment income. The agreement refers to the parties'
"combined net annual salaries"and excludes "income
earned outside of primary place of employment."
Thomas' only income is from interest on investments
that were generated from cashing in his retirement,
which is "income earned outside of primary place of
employment." Curiously, Gypsy herself suggests that
"`income earned outside primary place of employment'
sounds more like it is referring to a second job or
interest earnings." (Emphasis added). This echoes
Thomas' own argument.
It is unclear from the Final Order whether the superior
court attempted to examine the intent of the parties
with respect to the effect of Thomas' retirement on his
obligation to pay Gypsy support. The record does not
disclose any extrinsic evidence it might have
considered if it had wanted to do so. The parties
agree that Thomas wanted a specific termination date
for the support, but Gypsy did not. Thomas testified
that he believed retirement would terminate his
obligation to make payments, while Gypsy testified that
the payments were essentially permanent.
With regard to subjective intention, we have stated:
Differences of opinion among the parties
as to their subjective intent, expressed
during the litigation, do not establish an
issue of fact regarding the parties'
reasonable expectations at the time they
entered into the contract, since such self-
serving statements are not considered to be
probative.
Peterson v. Wirum, 625 P.2d 866, 870 (Alaska 1981). To the
extent that the parties' testimony expresses their
subjective intent, it is not probative.
The superior court found that Thomas' "voluntary
retirement"would leave Thomas in control of the amount
and duration of payments. Theoretically, Thomas could
have ended his obligation at any time by quitting his
job. However, in doing so he would have violated the
implied covenant of good faith and fair dealing, which
applies to contracts to settle property rights just as
to any other contract. A covenant of good faith and
fair dealing is implied in all contracts as a matter of
law. Alaska Pacific Assur. Co. v. Collins, 794 P.2d
936, 947 (Alaska 1990).
In response to a question from the court, Thomas
testified:
My technical expertise is accounting and
finance. I have a house in Homer that has
not sold. There aren't that many positions
available in the Homer area. But physically,
there are not a lot of reasons I can't get
another job, no sir.
Gypsy offered no evidence that there were other
employment opportunities in Homer that were available
to Thomas in his line of work, or in any related line
of work.
No evidence indicates that Thomas did not act in good
faith. Thomas' job as an accountant with Homer
Electric Association was abolished. He was eligible
for retirement. He took retirement and opted to cash
in his retirement account, rather than take monthly
payments.8
The superior court implicitly found that Thomas'
retirement was not voluntary. This finding is clearly
erroneous. Civil Rule 52(a). Thomas' job was
abolished. He was eligible for retirement and took it.9
We agree with the superior court that the financial
agreement provides for permanent spousal support. That
does not end our inquiry. We conclude that this
obligation is limited by the "primary place of
employment" term. The financial agreement integrates
all obligations of the parties to each other. The
agreement implicitly provides that Gypsy's support is
to be based on Thomas' income from employment. "Income
earned outside of primary place of employment will not
be included"in the support calculation. Thomas is not
obligated at this time to make support payments to
Gypsy under the original decree.10
III. CONCLUSION
Thomas and Gypsy entered an agreement in 1984 which
provided for spousal support, among other financial
arrangements. Under the terms of the agreement, Thomas
would pay Gypsy an amount of money calculated from
their net annual salaries. His salary included only
what he earned from his primary place of employment.
As long as Thomas, acting in good faith, is not
employed, he is not obligated to support Gypsy. The
superior court's order awarding Gypsy $1,000 per month
for life or until she remarries is REVERSED.
Gypsy is no longer the prevailing party in the superior
court. Therefore, the award of attorney's fees must be
REVERSED.
RABINOWITZ, Justice, with whom MATTHEWS, Justice, joins
dissenting.
I dissent from the majority's adoption and application
in the instant case of the line of authority holding
that: "Where a support provision is an integral part
of the property settlement, courts generally hold that
the support provision is not subject to later
modification." My reasons are as follows:
First, the payments that Thomas was required to make to
Gypsy under Section F of their dissolution agreement
were in the nature of alimony payments rather than a
division of property. Since the parties' dissolution
agreement was incorporated in the superior court's
decree these alimony provisions were subject to
modification pursuant to AS 25.24.170, which provides
that "any time after judgment the court, upon the
motion of either party, may set aside, alter, or modify
so much of the judgment as may provide for alimony
. . . or for the maintenance of either party to the
action." We have held that a material and substantial
change in circumstances generally is required to modify
a support decree under AS 25.24.170. Hinchey v.
Hinchey, 722 P.2d 949 (Alaska 1986). Given Thomas'
present unemployment, the record reflects a material
and substantial change of circumstances has occurred.
Therefore, a remand to the superior court is now
required for the purpose of requiring that court to
determine, with findings, whether alimony remains
appropriate and if so in what amount.
Second, the majority's opinion is based on its
assumption that the spousal support and property
settlement provisions were integrated. Integration in
turn is grounded on the theory that spousal support
was, at least in part, negotiated as a "trade off" for
Thomas retaining sole ownership of his retirement
pension. There is no evidence in the agreement itself
as to such an integration. Instead, the only evidence
of either party's intent is statements of subjective
intent that are susceptible of more than one
interpretation.11 Given this record neither the
parties' testimony nor the relevant documents is
sufficiently clear as to the parties' intent to justify
application of "the integration doctrine".12
_______________________________
1. Although neither Thomas nor Gypsy was represented by
counsel in the dissolution proceeding, Gypsy apparently
received legal advice through Women's Services in
Homer.
2. If Thomas' net annual salary were $100,000 and Gypsy's
$10,000, their combined salaries would be $110,000.
Subtracting her salary would leave $100,000. $100,000
divided by 24 is $4,166.67. $4,166.67 twice a month
times 12 months is $100,000 per year, all of Thomas'
net annual salary.
3. Thomas expressed the calculation as follows:
My monthly net income of $3,510.54 x 12 = $42,126.48
My yearly divided in 1/2 = 21,063.24
Less her monthly net of $675 x 12 = (8,100.00)
Yearly amount necessary to equalize
my income with hers = 12,963.34
Amount for each of my 24 pay periods
at that rate of pay = 540.00
4. Since 1984, Gypsy had received $72,078.54.
5. The superior court arguably erred in ordering interim
payments instead of a judgment for the full amount.
However, Thomas has waived the money paid to Gypsy
under the interim orders, having concluded that it is
not realistically recoverable.
6. AS 25.24.170 provides:
[A]ny time after judgment the court,
upon the motion of either party, may set
aside, alter, or modify so much of the
judgment as may provide for alimony, . . . or
for the maintenance of either party to the
action.
7. At the hearing, Gypsy stepped back from her original
position:
The only thing that was said was, I told
him I wasn't going to ask for half of what
was in his retirement fund at the time of the
divorce. I knew eventually he would retire.
I was trying to be nice, and I wanted him to
have enough money to live comfortably, as
well as keep paying me when he retired.
8. Thomas had the option to take monthly payments of
$1,200 for a fixed term of ten years, i.e. $144,000.
Thomas testified that the retirement program was "not a
very good program."
9. Apparently Thomas could have postponed his application
for retirement benefits. However, he could not have
postponed abolition of his job. In just what manner
Gypsy would have benefitted from Thomas' postponement
of retirement benefits is not apparent.
10. At oral argument the parties' counsel seemed to agree
that in any event Thomas would be required to make
payments if he found another job or became self-
employed, and his earnings were sufficient to satisfy
the agreed upon formula. We concur.
11. Gypsy testified by affidavit that "I agreed to not take
any of his retirement which I would have been entitled
to from the Electrical Union because we agreed that he
was going to be paying me alimony." Gypsy testified
that it was her understanding that the payments would
be made "[u]ntil I remarried, one of us died or I no
longer wanted or needed the money." She explained:
"The only thing said was, I told him I wasn't going to
ask for half of what was in his retirement fund at the
time of the divorce. I knew eventually he would
retire. I was trying to be nice, and I wanted him to
have enough money to live comfortably, as well as keep
paying me when he retired." Thomas testified that
Gypsy told him she was "letting [him] off this light"
by not coming after his retirement, and that based on
this statement, "[t]his basically would be my
understanding, that when my salary stopped, so did
these payments."
At the hearing Thomas was asked the following question:
And you have figured all of these
things, which she may not even really
understand. Was there some reason that you
didn't put in this agreement you drafted that
this would end when you no longer had any
income?
A portion of Thomas' response is particularly significant:
I had hoped, when I appeared before Jim
Hornaday [District Court Judge], to go ahead
and clarify the term of this thing, simply
because this is not my realm of expertise.
This is why no time was put in. Gyp didn't
want one, and I was hoping that if Jim
reviewed this, he would go ahead and insert
one or, you know, send it back to the drawing
board.
12. See Peterson v. Peterson, 434 N.W. 2d 732, 735-36 (S.D.
1989) (rejecting claim that alimony award was a
disguised property settlement not subject to
modification and observing that "when deciding whether
an award of alimony is, in reality, a portion of a
property settlement, a court must scrutinize the
language of the divorce decree, the circumstances
accompanying it, and the end sought to be achieved by
the parties."); Wagner v. Wagner, 607 P.2d 1251, 1254
(Wash. App. 1980) (holding that spousal payments
provided for in a divorce decree were not an integral
part of a property settlement, and therefore were
subject to modification, where payments were termed
alimony, payments would terminate upon the death of
either party or the remarriage of the wife, and the
agreement recognized that the alimony provisions were
subject to the court's approval); cf. Latham v. Latham,
570 So.2d 694, 697 (Ala. Civ. App. 1990) (declining to
find property division and child support payment
schedule integrated absent greater specificity
regarding the parties' intent, and noting that "[a]n
integrated bargain agreement between divorcing parties
is evidenced by a pronounced intent to finally settle
all claim of property rights and maintenance. . . .
This intent must be more specific than that of a
regular property settlement.").
In contrast, Kiffer v. Kiffer, 410 N.W. 2d 454 (Minn.
App. 1987) illustrates the type of documentation that I
would find adequate to establish an intent to enter an
integrated agreement exchanging pension rights for
alimony. In Kiffer, the court properly found such an
exchange where the section of the property agreement
that allocated the husband's military pension rights
stated: "The parties acknowledge that the alimony
payments, as heretofore set forth in [the agreement],
have been computed so as to compensate for Wife's
interest in said pension rights arising by reason of
the seventeen and one-half years of marriage during
which the Husband was in the military service." Id. at
456.
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