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Gallant v. Weed (9/30/94), 882 P 2d 1252
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NOTICE: This is subject to formal 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
A. JOHN GALLANT, )
) Supreme Court No. S-4797
Appellant, )
) Superior Court No.
v. ) 3AN-88-12539 CI
)
SHANNON T. GALLANT, now )
known as SHANNON T. WEED, ) O P I N I O N
)
Appellee. ) [No. 4122 - September 30,
1994]
______________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
James A. Hanson,
Judge.
Appearances: A. John Gallant, pro se.
Mark Butterfield and Michael Gershel, Alaska
Legal Services Corporation, Anchorage, for
Appellee.
Before: Moore, Chief Justice,
Rabinowitz, Matthews and Compton, Justices,
and Bryner, Justice pro tem.*
COMPTON, Justice.
This appeal arises out of a divorce proceeding. The
trial court determined the adjusted income levels for each party
in order to set child support, divided the husband's pensions
evenly, allocated all marital debt to the husband, ordered
reorientation alimony paid to the wife for five years and ordered
the parties to bear their own attorney's fees and costs. After
the court's order on the division of the pensions, but before
issuance of a Qualified Domestic Relations Order (QDRO)
implementing the order, the husband filed for bankruptcy. The
husband challenges the adequacy of the factual findings and
argues that the QDRO violates the automatic bankruptcy stay.
We affirm the trial court's issuance of the QDRO. We
affirm the adaptation of Civil Rule 90.3 to this third-party
custodial situation. We remand for further findings on the
issues relating to the parties' adjusted incomes, the allocation
of marital debt and the award of reorientation alimony.
I. FACTUAL AND PROCEDURAL BACKGROUND
John Gallant and Shannon Gallant (now Shannon Weed)
were married in 1975. They permanently separated in September
1988. They have three children: John Jr., Joshua and Carli.
The marriage suffered from severe financial
mismanagement which included the accumulation of substantial
credit card debt. Shannon alleged that John made the faulty
financial decisions and kept information from her, leaving her
without financial control. John alleged that Shannon mismanaged
at least some of the finances. In the divorce proceeding, he
sought credit for payments made on the debt after separation and
for an apportionment of the debt existing at the time of trial.
The trial court assigned all marital debt "accrued up until
December"1988 to John.
The primary assets of the marriage were John's Alaska
Public Employees' Retirement System (PERS) and Supplemental
Benefit System (SBS) pension accounts. The court made no
findings regarding the value of any assets except the pension
accounts. Shortly after John and Shannon separated, John
withdrew all of the approximately $27,000 in the PERS account.
John testified that he incurred a $2,271.32 tax liability from
the premature withdrawal of the PERS funds. The court made no
specific findings on this tax liability.
The trial court valued the SBS account at $55,0001 and
awarded Shannon $41,000 of the account, "which simply represents
half of that account and half of the $27,000 PERS account already
received and spent by [John]." The trial court found that John
and Shannon had adjusted monthly incomes of $3,350 and $1,200
respectively, although the findings do not explain the
calculation of the adjusted income figure for either party.2
Before trial, the parties agreed that John would have
physical custody of Joshua and Carli and that Shannon's sister,
Mari Kae Mertz (Mertz), would have physical custody of John Jr.
until his majority. Because Civil Rule 90.3 does not provide
procedures for calculating support to third-party custodians, the
trial court was forced to improvise. The court adopted Shannon's
proposed formulation. Each party contributed 33% of his or her
income to a pool, which was split between John and Mertz in
proportion to the 20% and 27% figures established by Rule 90.3
for one and two children.
The trial court ordered each side to bear its own
attorney's fees and awarded reorientation alimony to Shannon.
[T]he fact is that [Shannon] is going to
need some assistance in entering the real
world. Her job skills at this time allow
only for existence. So that she can improve
her prospects and alleviate some of the
obvious stress she is currently experiencing
because of her financial condition, [John] is
to pay to her the sum of $300 per month for
the next five years beginning September 1,
1991.
The trial was held on July 10-12, 1991.3 The
possibility that John would file for bankruptcy was recognized
throughout the trial. On July 18, the trial court issued a
Memorandum Order which determined custody, alimony, property
division and attorney's fees, and allocated $41,000 of John's SBS
pension to Shannon. On August 9, John filed for bankruptcy. On
August 23, the trial court entered findings and conclusions and
the decree of divorce. On September 13, the trial court entered
a QDRO ordering the SBS administrator to transfer $41,000 from
John's account to Shannon, plus interest from the date of the
Memorandum Order.
II. DISCUSSION
A. SUFFICIENCY OF FINDINGS RELATING TO CHILD SUPPORT,
DIVISION OF MARITAL PROPERTY, REORIENTATION
ALIMONY AND ATTORNEY'S FEES AND COSTS.
John challenges the trial court's determination of the
parties' income, the allocation of the debt, the award of
reorientation alimony and the failure to award attorney's fees.
Shannon defends each of these determinations as supported by the
record. We remand for further findings on each of these issues.
A trial court is required to make specific findings to
support a determination of adjusted income under Civil Rule 90.3.
Wright v. Gregorio, 855 P.2d 772, 773 (Alaska 1993); Terry v.
Terry, 851 P.2d 837, 837-38 (Alaska 1993). The trial court in
this case simply set the adjusted income without explaining its
calculation of gross income or the amounts and types of
deductions. We remand for specific findings on the parties'
adjusted income. See Adrian v. Adrian, 838 P.2d 808, 812 (Alaska
1992).
A trial court is required to make specific findings to
support an equitable division of marital property, including
debt. Lang v. Lang, 741 P.2d 1193, 1195 (Alaska 1987); Merrill
v. Merrill, 368 P.2d 546, 548 (Alaska 1962). A court should
consider a number of statutory and case law factors in dividing
the marital property. AS 25.24.160(a)(4); Oberhansly v.
Oberhansly, 798 P.2d 883, 884-85 (Alaska 1990); Merrill, 368 P.2d
at 547-48 & n.4. In the present case, the trial court allocated
all of the marital debts to John, split the pensions, allowed the
parties to keep their personal possessions and made no findings
regarding any other assets or liabilities. This is insufficient.
Even an equal division of property requires some findings to
support it. Money v. Money, 852 P.2d 1158, 1160-61 (Alaska
1993). We remand for specific findings on the value of
significant items of marital property and an explanation of the
basis for the distribution of the marital property and debts. On
remand, the trial court should value assets such as that portion
of the SBS pension that is marital property as of the date of
trial, not separation.4 Doyle v. Doyle, 815 P.2d 366, 369
(Alaska 1991). Because John raised the issue of tax liability
for the early withdrawal of his PERS pension, the trial court
should also address this issue.5 Oberhansly, 798 P.2d at 887-88.
A trial court is required to make specific findings to
support a determination that an award of alimony is just and
necessary. Jones v. Jones, 835 P.2d 1173, 1179 (Alaska 1992). A
court should consider a number of statutory and case law factors
to determine alimony. AS 25.24.160(a)(2); Messina v. Messina,
583 P.2d 804, 805 (Alaska 1978); Merrill, 368 P.2d at 547-48 n.4.
Although a trial court need not make findings regarding every
factor, we have remanded awards of alimony when there is an
insufficient analysis of the needs of the alimony recipient or
the means of the paying party. Jones, 835 P.2d at 1179; Renfro
v. Renfro, 848 P.2d 830, 834 (Alaska 1993). In the present case,
the trial court briefly discussed Shannon's lack of job skills
and need for reorientation assistance. This provides adequate
support for the decision to award reorientation alimony, but does
not assist this court in reviewing the correctness of the amount
or duration of alimony. We remand for specific findings to
support the amount and duration of reorientation alimony.
Finally, a court should analyze the relative earning
powers and economic situations of the parties in awarding or
refusing to award attorney's fees and costs in a divorce case.
See Lone Wolf v. Lone Wolf, 741 P.2d 1187, 1192-93 (Alaska
1987). There is support in the record for the general
proposition that John has a greater relative earning power and a
better economic situation than Shannon. Nonetheless, we conclude
that the decision regarding attorney's fees and costs should be
vacated and reevaluated following the court's decision on
remanded issues.
B. THE QDRO WAS VALID.
John argues that the QDRO assigning Shannon an interest
in his SBS pension violated the automatic stay imposed from the
filing of a bankruptcy action. Shannon responds with a number of
legal theories to uphold the QDRO. Initially, we reject
Shannon's argument that she received insufficient notice of the
bankruptcy filing. A bankruptcy stay is enforceable from the
date of filing regardless of notice. Richard v. City of Chicago,
80 B.R. 451, 453 (N.D. Ill. 1987); Butzloff v. Quandt, 397 N.W.2d
159, 160 (Iowa 1986).
John filed for bankruptcy between the time of the
court's initial order granting Shannon a portion of the pension
and the issuance of the QDRO.6 John argues that the automatic
stay stops all proceedings relating to pension assets, despite
the prior order apportioning those assets. Courts have applied a
number of theories to sustain QDROs in similar situations. One
theory would hold that the initial order transferred full title
of that portion of the pension plan to Shannon and therefore that
portion was no longer part of John's debtor estate. See In re
Resare, 142 B.R. 44, 46 (Bankr. D.R.I. 1992), aff'd, 154 B.R. 399
(D.R.I. 1993). Another theory would hold that Shannon had an
equitable property right to request and receive a QDRO. This
equitable property right is not dischargeable in bankruptcy. See
In re Long, 148 B.R. 904, 908 (Bankr. W.D. Mo. 1992). Yet
another theory would hold that the order transferred equitable
title to the property to Shannon and John held that portion of
the pension in a constructive trust for Shannon's benefit. See
Bush v. Taylor, 912 F.2d 989, 992-93 (8th Cir. 1990); Long, 148
B.R. at 909. Property held in constructive trust by the debtor
is not considered to be part of the debtor's estate. 11 U.S.C.
541(d) (1992). Regardless of which theory is used, the order
transferred something to Shannon -- a full ownership interest, an
equitable right, or a constructive title -- thereby putting the
interest outside of John's bankruptcy estate.7
While courts have taken a number of different paths,
the destination reached is usually the same. A spouse should not
be able to defeat or delay the effect of a property division
order by filing bankruptcy. The following quote has been cited
frequently to sustain this result:
We doubt that Congress ever intended
that a former wife's judicially decreed sole
and separate property interest in a pension
payable to her former husband should be
subservient to the Bankruptcy Code's goal of
giving the debtor a fresh start.
Bush, 912 F.2d at 994.
We agree. A valid court order dividing a spouse's
pension benefits has an immediate legal effect. The subsequent
issuance of a QDRO to meet ERISA requirements is a formality.
Shannon's portion of the pension was never part of John's
bankruptcy estate. The automatic stay did not apply to that
portion and the QDRO affecting Shannon's portion was valid under
federal bankruptcy laws. Because we are not faced with the
issue, we do not consider the effect of filing for bankruptcy
before the divorce trial or the propriety of a court making the
initial division of marital pensions while under a bankruptcy
stay. We conclude that the QDRO was valid as issued.8
C. THE TRIAL COURT APPLIED A REASONABLE ADAPTATION
OF CIVIL RULE 90.3 TO A NOVEL SITUATION.
Determination of child support is governed by Civil
Rule 90.3. Alaska R. Civ. P. 90.3 cmt. I(C) ("Rule 90.3 applies
to all proceedings involving child support.") However, no
provision of Rule 90.3 covers third-party custody arrangements.
Therefore, third-party custody arrangements fall under the
"unusual circumstances" rubric of 90.3(c)(1)(A). In these
situations, trial courts should set the parents' child support
payments and allocate the support between the children based on
the equities of the case. In the present case, the trial court
made a reasonable and practical adaptation of the rule.
The court created a pool of support money by requiring
each parent to pay in 33% of his or her income. Under Civil Rule
90.3, this is the percentage of income the parents are expected
to pay to support three children living together. The percentage
is 27% for two children and 20% for one child. The percentages
reflect the assumption that it is less costly per child to care
for an additional child in the same household. The court used
this assumption to divide the support pool. Rather than divide
the support equally between the children, the court allocated the
money proportionally according to these percentages. John, with
custody of two children, was awarded 57% (27%/(27% + 20%)) of the
pool and Mertz, with one child, was awarded 43% (20%/(27% +
20%)). This proportional allocation of a combined support pool
was not an abuse of discretion in this case.9 Equities of other
cases may require different approaches.10
III. CONCLUSION
The superior court's judgment relating to child
support, division of marital property and debt, reorientation
alimony and attorney's fees and costs is VACATED and the case
REMANDED for further proceedings consistent with this opinion.
There was no error in the issuance of the QDRO. The original
QDRO may be modified on remand as appropriate. Child support was
calculated by a reasonable and practical adaptaton of Civil Rule
90.3 and therefore that determination is AFFIRMED.
IN THE SUPREME COURT OF THE STATE OF ALASKA
A. JOHN GALLANT, )
) Supreme Court No. S-4797
Appellant, )
) O R D E R
v. )
)
SHANNON T. GALLANT, now )
known as SHANNON T. WEED, )
)
Appellee. )
______________________________)
Superior Court No. 3AN-88-12539 Civil
Before: Moore, Chief Justice, Rabinowitz,
Matthews and Compton, Justices, and Bryner,
Justice Pro Tem.***********
On consideration of the petition for rehearing filed on
July 29, 1994,
IT IS ORDERED:
1. The petition is GRANTED with regard to issue one;
the opinion is modified by the addition of a new footnote 9 at
page 11 and the following footnotes are renumbered.
2. The petition is DENIED with regard to issue two.
3. Opinion No. 4098 published on July 1, 1994, is
WITHDRAWN.
4. Opinion No. 4122 is issued on this date in its
place.
Supreme Court Order
Re: Gallant v. Gallant
File No. S-4797
Page Two
Entered by direction of the Court at Anchorage, Alaska,
on September 30, 1994.
CLERK OF THE SUPREME COURT
__________________________
JAN HANSEN
_______________________________
*Sitting by assignment made pursuant to article IV, section
16 of the Alaska Constitution.
1 At trial, John originally stated that the SBS account
was worth "in the area of $57,000 at the time of separation."
After reviewing his notes over lunch, he testified that the real
value was $52,000. John's application for a debt consolidation
loan in September 1988 listed the SBS account at "$52,000+". In
his 1989 financial statement portion of his petition for divorce,
John listed the value as $60,130 on May 1989.
2 The pay stubs submitted by Shannon at trial show a net
monthly income of $1,204 for April of 1991. John emphasizes that
her pay during January, February, and March was higher than
$1,200. The evidence shows that her net monthly pay for 1990 was
generally lower than $1,200. The figure for John's income seems
to have been adopted from Shannon's post-trial memorandum on
child support. John testified at trial that he made a baseline
salary of "about $3,400." He testified that he was not currently
working much overtime but had made as much as $1,000 per month in
overtime pay. In his post-trial memorandum, he calculated his
gross income as $3,810 and his net income as $2,690. Shannon
disputes the propriety of John's proposed deductions from his
gross income.
3 In the points on appeal, John assigns error in the
trial court's refusal to extend the time for trial testimony.
The trial court has broad discretion to manage its trial
calendar. See Siggelkow v. Siggelkow, 643 P.2d 985, 987-88
(Alaska 1982) (denying continuance). John's opening brief
devotes substantial discussion to the possible prejudicial effect
of comments made by the trial court. We do not reach this issue
because it was not raised in the points on appeal. Alaska R.
App. P. 210(e); Oceanview Homeowners Ass'n v. Quadrant Constr. &
Eng'g, 680 P.2d 793, 797 (Alaska 1984).
4 A pension, like any other marital asset, should be
valued as of the date of trial. The earlier date when the
marriage has functionally terminated, often the date of permanent
separation, is the date used for segregating marital from post-
marital property. Hanlon v. Hanlon, 871 P.2d 229, 231 (Alaska
1994). The SBS pension thus has a marital and a non-marital
component determined by the date of functional termination of the
marriage. The value of the marital component should be assessed
as of the trial date by adding net gains to the marital component
as determined by the date of functional termination of the
marriage. See Schanck v. Schanck, 717 P.2d 1, 4 (Alaska 1986).
5 Even though the PERS pension did not exist as of the
date of trial, its "recapture"for purposes of property division
is not contested as John has acknowledged Shannon's entitlement
to one-half of the PERS funds. See Jones v. Jones, 835 P.2d
1173, 1175-76 (Alaska 1992).
6 Drafting a QDRO is a more detailed process than
drafting other orders because the QDRO must meet specific federal
requirements to be valid under ERISA.
7 Alternatively, an obligation to transfer a portion of a
pension may not be a debt dischargeable in bankruptcy because the
obligation is not payable until the maturity of the pension. In
re Petersen, 133 B.R. 508, 511 (Bankr. W.D. Mo. 1991); Bush, 912
F.2d at 993. Under this view, bankruptcy does not disturb
Shannon's equitable interest or lien, because the pension asset
was not payable during bankruptcy. In addition, at least one
court has read a broad policy exception to the bankruptcy laws
for pension allocations in divorce proceedings. DiGiacomo v.
DiGiacomo, 607 A.2d 186, 190-91 (N.J. Super. 1992).
8 John argues that the QDRO violated various Alaska Rules
of Civil Procedure. None of these arguments have merit. First,
he complains that the court did not allow him time to respond to
the proposed QDRO before it was entered. We find no prejudicial
effect because he filed objections to the QDRO and a motion for
reconsideration detailing his arguments. See Johnson v. Johnson,
544 P.2d 65, 71 (Alaska 1975). Second, he mischaracterizes the
QDRO as an untimely motion to amend the judgment under Civil Rule
59(f). The QDRO did not modify the original order, but simply
clarified that Shannon's share would continue to grow as the
pension account grew with interest. Third, John argues that no
motion preceded the order; however, under Civil Rule 78(a), the
successful party submits proposed findings, conclusions, and
orders without an accompanying motion.
9 The parties agree that once John, Jr. reaches majority
child support for Joshua and Carli should be calculated by an
application of Rule 90.3 rather than the court's modification of
the Rule. We agree.
10 The proportional division used in this case meant that
each parent contributed about 14% of his or her income to support
the one child in third-party custody with Mertz and about 19% to
support the two children living with John. John originally
contended that the pool should have been divided equally between
the children, rather than proportionally between the households.
He abandoned this argument on appeal. An equal division of the
pool would have given Mertz 11% for one child and John 22% for
two.
***********Sitting by assignment made under article IV,
section 16 of the Alaska Constitution.
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