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R. Skvarch v. P. Skvarch (7/8/94), 876 P 2d 1110
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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.
THE SUPREME COURT OF THE STATE OF ALASKA
RICHARD SKVARCH, )
) Supreme Court No. S-5690
Appellant, )
) Superior Court No.
v. ) 3KN-91-164 DR
)
PAULETTE SKVARCH, ) O P I N I O N
)
Appellee. ) [No. 4103 - July 8, 1994]
______________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Kenai,
Jonathan H. Link,
Judge.
Appearances: Allan Beiswenger,
Robinson, Beiswenger & Ehrhardt, Soldotna,
for Appellant. Peter F. Mysing, Kenai, for
Appellee.
Before: Moore, Chief Justice,
Rabinowitz, Matthews and Compton, Justices.
[Burke, Justice, not participating.]
MATTHEWS, Justice.
Richard Skvarch seeks to modify his obligation to pay
Paulette Skvarch $500 a month for thirty-six months under a
property settlement agreement reached between the parties in
connection with their divorce.
Richard and Paulette Skvarch were divorced April 23,
1992, after twenty-six years of marriage. At the time of the
divorce decree Richard resided in Alaska, where he earned in
excess of $100,000 per year, and Paulette lived in Pennsylvania,
where she was being trained as a medical stenographer. The
Skvarchs' marital property was divided between them according to
the terms of a property settlement agreement they had reached.
The agreement awarded Paulette assets with a total value of
$108,308.09 and Richard assets with a total value of $81,372.27.1
Paulette's total includes $18,000 for "temporary rehabilitative
alimony in the sum of $500.00 per month, without interest, for a
period of thirty-six months, commencing on the 10th day of the
month following the entry of a decree of divorce herein."
Similarly, Richard's total property distribution includes an
$18,000 credit for "temporary rehabilitative alimony"payments to
Paulette.
On February 3, 1993, Richard moved to modify the decree
of divorce to eliminate his obligation to pay rehabilitative
alimony. In support of this motion, Richard alleged that
Paulette had completed her vocational training, had obtained
employment as a medical secretary, and had remarried and that
therefore the purpose for the rehabilitative alimony no longer
existed.2 Paulette opposed this motion, arguing that the monthly
"rehabilitative alimony" payments were part of the parties'
property settlement, that vacating the payments would render the
settlement inequitable, and that even if the payments were
alimony, they were just and necessary to her rehabilitation.
The superior court denied Richard's motion to modify
the divorce decree. In a footnote, the court found "that these
are rehabilitative alimony payments." Richard appeals.3
This court has recognized that "[w]here a support
provision is an integral part of the property settlement, courts
generally hold that the support provision is not subject to later
modification." Keffer v. Keffer, 852 P.2d 394, 397 (Alaska 1993)
(citing 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. 3d 520, 590 (1975)); see also
Voyles v. Voyles, 644 P.2d 847, 849-50 (Alaska 1982) ("We wish to
make it clear, however, that this rule [requiring termination of
alimony on remarriage] does not apply . . . where the award is an
integral part of a property settlement and thus a property right
vested in the dependent spouse . . . ."). The primary question,
therefore, is whether the payments provided for were integrated
into the property settlement or are part of a separable
provision. Alimony payments are integrated into the property
settlement when they constitute part of the consideration given
for other property benefits. Keffer, 852 P.2d at 399
(Rabinowitz, J., dissenting) ("Integration . . . is grounded on
the theory that spousal support was, at least in part, negotiated
as a 'trade off' for [other property benefits]."). Where a party
receives alimony in exchange for claims on other property, it
would be unjust to modify the alimony while leaving the remaining
property distribution untouched. We conclude that the
"rehabilitative alimony payments"are an integral part of the
division of property.
First, the payments are provided for in an exhibit to a
document titled "Property Settlement Agreement." The agreement
refers to the exhibits as distributing "the real and personal
property acquired during this marriage." The payment provision
is not treated any differently than any other asset.
Second, the settlement agreement exhibits include the
full amount of all payments as Paulette's property, and also
reduce Richard's property total by the full amount of all
payments. This strongly indicates that the payments were
primarily intended to balance the property division.
Third, if these payments are excluded from the property
calculations, Richard receives $9,064.18 (or 4.78%) more property
than Paulette. This might be considered an inequitable division,
given Richard's far greater earning capacity.4 See, e.g., Ramsey
v. Ramsey, 834 P.2d 807, 810 (Alaska 1992) (authorizing superior
court on remand "to adjust property division if equitably
required"after rehabilitative alimony award was vacated); Dixon
v. Dixon, 747 P.2d 1169, 1173 (Alaska 1987) ("When a couple has
sufficient assets, the spouse with the smaller earning capacity
can and should receive a larger share in the property
distribution to aid him or her in this transition.").
Fourth, neither the property settlement agreement nor
the parties' settlement correspondence explicitly links the
monthly payments to Paulette's rehabilitation efforts. The
agreement also does not explicitly provide that the payments
would be subject to subsequent modification. While Paulette's
original suggestion of monthly payments did refer to them as
"spousal support,"it also required that the principal amount be
backed by a deed of trust on the marital residence and that
interest be charged. Richard's counter-proposal reduced the
principal amount to $12,000, eliminated the interest charge, and
proposed to either place the money in a trust account or prepay
the entire amount.5 Apparently, the phrase "temporary
rehabilitative alimony"was first used to describe the payments
in the final property settlement agreement.
Fifth, it appears that Richard and Paulette negotiated
the period of time over which the payments were to be made as
part of their property settlement. Paulette originally suggested
$500 per month for forty-eight months, for a principal amount of
$24,000. Richard counter-proposed $500 per month for twenty-four
months, or $12,000. The final agreement calls for $500 per month
for thirty-six months, or $18,000. All versions explicitly set
out the principal amount of payment and use it to adjust the
property settlement.
Sixth, there appear to be particular reasons based on
the circumstances of the parties for using alimony-type payments
to adjust the property settlement, rather than simply providing
for the different needs of the parties entirely through the
property division.6 Although the Skvarchs had accumulated
substantial marital assets, a significant amount of these assets
were in Richard's ARCO accounts.7 The remaining assets
apparently were also largely in Richard's possession in Alaska.
In July 1991, Richard informed Paulette that only $73,000 could
be withdrawn from his ARCO accounts while he was still employed.8
This restriction set an upper limit on how much of Paulette's
share of the Skvarchs' marital assets could come from the ARCO
accounts. The nature and location of most of the couple's
remaining assets made them ill-suited for use in properly
balancing the property division. Therefore, it was logical for
the parties to rely on payments from future income to better
balance the settlement.9
Seventh, the purpose Richard now claims for the
rehabilitative alimony ("allowing [Paulette] to relocate, and go
back to school to receive training as a medical secretary so that
she could find suitable employment to support herself at an
acceptable standard of living") would not support the alimony
provision as originally formulated.10 At the time that Richard
entered the agreement, Paulette's attorney had notified him that
Paulette had already relocated to Pennsylvania and that she had
begun a one-year course of study toward becoming a medical
secretary at least eight months before. Under these
circumstances, Richard could not reasonably believe that thirty-
six monthly payments were for future relocation and training
assistance.
These indications that the monthly payments were an
integral part of the Skvarchs' property settlement outweigh the
countervailing indications, which are 1) the fact that the
payments are called "temporary rehabilitation alimony" in the
settlement agreement and 2) the references to the payments as
"spousal support" in the letters negotiating the settlement.11
Courts which have applied the "integration doctrine"have found
payment provisions integrated even where the payments were called
"spousal maintenance"or "alimony,"so long as there was evidence
that the payments were given in exchange for reduced property
claims. See, e.g., States v. States, 603 P.2d 81, 82 (Ariz.
1981) ("The fact that the word 'alimony' is used is not
dispositive of whether in fact the payments were for temporary
support or as consideration for relinquishment of all claims to
community property."); Keller v. Keller, 671 P.2d 425, 426-27
(Ariz. App. 1983) (allowing party to "consistently maintain that
the payments were alimony"and still contend "that the alimony
couldn't be altered because it was given in consideration of the
property settlement"); Kiffer v. Kiffer, 410 N.W.2d 454, 457
(Minn. App. 1987) ("[A] dissolution provision ordering monthly
payments termed 'alimony' or 'maintenance' but bearing the
characteristics of a property settlement, is ambiguous.").
The superior court's order denying Richard Skvarch's
motion to modify his obligation to pay Paulette Skvarch $500 a
month for thirty-six months is AFFIRMED. The provision requiring
the monthly payments is an integral part of the Skvarch's
property settlement and therefore is not modifiable based on a
change in Paulette's circumstances.
_______________________________
1 This is a 57.1% / 42.9% division in favor of Paulette.
2 Paulette has not denied any of these allegations.
3 A trial court's denial of a motion to modify a support
obligation is reviewed for an abuse of discretion. Hinchey v.
Hinchey, 722 P.2d 949, 954 (Alaska 1986). This court will find
an abuse of discretion only if it is "left with a definite and
firm conviction, after reviewing the whole record, that the trial
court erred in its ruling."Id. (quoting Jones v. Jones, 666 P.2d
1031, 1035 (Alaska 1983)).
4 The parties are, of course, free to agree to any
division of property, even one which this court might view as
inequitable if made by the superior court. Murphy v. Murphy, 812
P.2d 960, 965 (Alaska 1991). However, the inequity of the
property settlement if the payment provision is treated
separately is some evidence that the payment provision was
integral to the actual agreement. We also note that Paulette
rejected as inequitable a settlement proposal from Richard which
was identical to the settlement agreement without the payment
provision.
5 Richard's insistence in his counter-proposal that
Paulette acknowledge that his proposed $12,000 payment was
"prepaid spousal support"does not necessarily indicate anything
more than Richard's desire to secure certain tax advantages as
part of the settlement agreement. See Internal Revenue Code
71(a), 215. His proposals to either prepay the amount or deposit
it into a trust account are not consistent with a belief that the
payments would be subject to later modification.
6 This court has expressed a preference for fully
providing for both parties through property division if possible,
without a need for additional alimony payments. See Schanck v.
Schanck, 717 P.2d 1, 5 (Alaska 1986). The court has recognized,
however, that under certain circumstances, it is not possible to
equitably provide for both parties through division of property
alone. See Dixon, 747 P.2d at 1173-74 (recognizing possibility
that where substantial marital assets were burdened by
substantial debt, "'reorientation alimony' may be the only
feasible method of achieving an equitable resolution of the
parties' financial affairs"); Laing v. Laing, 741 P.2d 649, 654
(Alaska 1987) (affirming trial court's order that husband make
loan payments for two years on property awarded wife, because
such alimony was just and necessary so that wife could avoid
foreclosure of property awarded her).
7 Richard's ARCO accounts contained a total of
$118,982.66, or 62.73% of the couple's total assets.
8 The final property settlement agreement did grant
Paulette close to $73,000 from the ARCO accounts.
9 This is not to say that these reasons would necessarily
support a court order of alimony rather than a property division
more favorable to Paulette. However, they do support a
conclusion that the Skvarchs intended the monthly payments to
adjust the equities of the property division, rather than as true
"rehabilitative alimony."
10 In addition, Richard's statements in his affidavit
concerning the purpose of the payment provision are merely
statements of his subjective intent with little probative value.
See Keffer, 852 P.2d at 398.
11 Other than Richard's self-serving affidavit testimony
as to the purpose of alimony provision, there is no other
evidence indicating that the provision was intended to be
separable.
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