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J. Foster v. E. Foster (10/21/94), 883 P 2d 397
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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
JAMES E. FOSTER, )
) Supreme Court No. S-4927
Appellant, )
) Superior Court No.
v. ) 3AN-90-3076 CI
)
EVELYNN C. FOSTER, ) O P I N I O N
)
Appellee. ) [No. 4137 - October 21, 1994]
______________________________)
Appeal from the Superior Court of the
State of Alaska, Third Judicial District,
Anchorage,
John Reese, Judge.
Appearances: James E. Foster, pro se,
Anchorage. Karla F. Huntington, Mendel &
Huntington, Anchorage, for Appellee.
Before: Moore, Chief Justice,
Rabinowitz, Matthews, Compton, Justices, and
Bryner, Justice, pro tem.*
MATTHEWS, Justice.
In this divorce case all of the issues concern the
division of the parties' property. Appellant, James Foster,
contends that the court made a number of errors which, taken
together, have resulted in a division of property grossly skewed
in favor of the appellee, Evelynn Foster. We conclude that some
of the court's findings are erroneous, that additional findings
are needed, and that no judgment concerning whether the overall
division of marital property was clearly unjust can be made until
the erroneous findings are corrected and the necessary additional
findings are made. We remand for these purposes and authorize
the superior court to change the property division as required by
the interests of justice in light of the corrected and additional
findings.
James and Evelynn Foster were married in 1966. They
separated in November of 1986. At the time of trial in September
of 1991, Evelynn was forty-six and James was fifty-six. They
have no minor children. James is unable to work and receives
workers' compensation and disability payments. Evelynn works
full time for the Alaska Native Health Services and earns
approximately $1,500 per month. She has serious health problems,
however, and the court found that she could not expect to work on
a full-time basis much longer.
James' benefits include $2,000 per month from a
workers' compensation settlement and $729 per month in social
security disability payments. These payments will continue until
his death. In addition, James will receive a lump sum payment of
$40,000 in 1994 as part of the workers' compensation settlement.
James receives monthly payments of $962.84 from his "Piledriver's
Union"1 pension. These payments will continue until his or
Evelynn's death, whichever occurs later. James is also entitled
to receive between $500 and $600 per month for the rest of his
life from an as yet undistributed pension administered by the
Laborer's Union.
The parties own a house situated on three acres of land
in Anchorage and a small amount of personal property. In
addition, Evelynn owns 130 acres of unimproved land on the Parks
Highway north of Anchorage which she obtained under the Alaska
Native Allotment Act.
We reproduce the following table set forth in the trial
court's findings which reflects the property distribution ordered
by the court:
"Awarded to Mrs. Foster
DESCRIPTION VALUE
House and 3 acres $98,000.00
Piledriver's Union Pension;
100% of all benefits beginning
December 1991. Including
survivor rights. $962.84/m
Laborer's Union Pension 50%
Automobile $4,500.00
Cash received $10,000.00
Cash received $5,000.00
Native Land Claims;
separate property (negligible)
Awarded to Mr. Foster
Union Pension; defined
contribution $3,057.00
Piledriver's Union Pension;
cash received through November
30, 1991. $52,325.68
Nabor's Drilling, cash received $14,000.00
[W]elding machine and truck $13,000.00
[H]ousehold furnishings (in home) $3,000.00 "
[Laborer's Union Pension 50%]2
The court found that Evelynn's 130-acre Native
allotment and James' workers' compensation settlement were
separate property. The court also found that Evelynn's land had
little or no value.
The "cash received" amounts awarded to Evelynn,
$15,000, and to James, $66,325.68, reflect cash which was marital
property received by the parties after their separation in
November of 1986. Except for small amounts still held at the
time of trial, these funds had been spent and thus were not
available for division.
James challenges the trial court's characterization and
valuation of certain assets and the overall allocation of the
marital property. We turn first to James' contentions concerning
the specific assets.
The Welding Machine and Truck
Although the welding machine and truck are separate
items of personal property, the court valued them together at
$13,000. James testified that the truck was worth approximately
$2,000 and that he sold the welding machine for $1,500. At
trial, James submitted two 1988 appraisals valuing the truck at
$1,500 and $2,200 to $2,500 and welder at $200 and $300 to $500.
Evelynn submitted evidence showing that a similar truck in
average condition was worth $7,200. She did not testify
regarding the condition of this particular truck. Without
stating its reasons, the trial court concluded that the value of
the truck and the welding machine together was $13,000. There is
no evidence to support the court's finding and it is thus clearly
erroneous. On remand the truck and welder should be valued in
accordance with the evidence.
Ordinarily, marital property should be valued as close
to the time of trial as possible. Ogard v. Ogard, 808 P.2d 815,
819 (Alaska 1991). The date that the marriage has ceased to
function as a single economic unit, often the date of separation,
is the date after which newly acquired property should be
considered non-marital property. Id. Where marital property is
sold subsequent to the parties' separation but prior to trial,
the sale proceeds should retain their character as marital
property. However, if the proceeds are then spent for a marital
purpose or necessarily expended for normal living expenses, they
need not be taken into account in the final property division.
Brett R. Turner, Equitable Distribution of Property 8.15, at
374 (Cum. Supp. 1993). Where there is evidence that a marital
asset was dissipated, wasted, or converted to a non-marital form,
the court can "recapture"the asset by giving it an earlier
valuation date and crediting all or part of it to the account of
the party who controlled the asset. Jones v. Jones, 835 P.2d
1173, 1176 (Alaska 1992); Oberhansly v. Oberhansly, 798 P.2d 883,
885 (Alaska 1990); Hartland v. Hartland, 777 P.2d 636 (Alaska
1989); Pattee v. Pattee, 744 P.2d 658, 661-62 (Alaska 1987);
Brooks v. Brooks, 677 P.2d 1230, 1232 (Alaska 1984). In
assigning value to the truck and welding machine on remand, the
court should apply these principles.
The Anchorage Residence
The court valued the parties' residence at $98,000.
James argues that the property is worth at least $120,000 based
on an appraisal done shortly before trial. His argument,
however, does not take into consideration the mortgages on the
property totalling approximately $22,000. James recognized the
existence of the mortgages when he testified at trial. Further,
James' counsel acknowledged that the equity in the home was
approximately $100,000 rather than $120,000. We conclude,
therefore, that the court did not err in valuing the equity of
the residence at $98,000.
The Piledriver's Union Pension
The Piledriver's Union pension pays $962.84 per month
for the joint lives of James and Evelynn. At the time of trial
James had already received $52,325.68 from the pension.3 The
trial court credited him with receiving this sum and awarded
Evelynn all future payments.
James argues that this pension should not have been
considered marital property since it is based on his disability
rather than his earnings and length of service. Evidence from
the pension administrator, however, indicates that the benefits
are true retirement payments rather than payments on account of
disability. Therefore, the court's determination that the
pension is marital property is not clearly erroneous.
The court erred, however, in "recapturing"the payments
which had been made to and spent by James before trial without
making findings that circumstances existed which warranted their
recapture. Our discussion of this point concerning the welding
machine and truck also governs here. We also note that the trial
court did not value the pension. It is impossible to judge the
overall fairness of the property distribution unless the amount
of the income stream awarded to Evelynn is reduced to present
value.4 On remand, the trial court should make findings on both
of these issues.
The 130-Acre Native Allotment
Evelynn owns a 130-acre parcel of unimproved property
bisected by the Parks Highway. She obtained this property under
the provisions of the Alaska Native Allotment Act of 1906, 34
Stat. 197 (formerly codified at 43 U.S.C. 270-1 (1970),
repealed with savings clause under the Alaska Native Claims
Settlement Act, 43 U.S.C. 1617). The purpose of the Alaska
Native Allotment Act was to provide a means by which individual
Alaskan Natives could obtain title to the lands they occupied.
United States v. Atlantic Richfield Co., 435 F. Supp. 1009, 1015
(D. Alaska 1977), aff'd 612 F.2d 1132 (9th Cir. 1980).
Allotments can be sold, although the Secretary of the Interior
must approve their sale to insure that each transaction is fair.
43 C.F.R. 2561.3 (1993); David S. Case, Alaska Natives and
American Laws 152 (1984). When sold, the buyer receives
unrestricted title to the land. Case, supra at 152. Evelynn's
allotment was confirmed by the Bureau of Land Management on March
1, 1989. Decision of Bureau of Land Management regarding Native
Allotment Application AA-7791 (Mar. 1, 1989). Although Evelynn
filed for the allotment in April of 1972, the allotment related
back to her initial occupancy in August of 1964, two years prior
to the parties' marriage. Id.; see also State of Alaska, Dep't
of Transp. & Pub. Facilities, 125 IBLA 291, 294-95 (1993). The
confirmation of Evelynn's allotment was appealed by the State of
Alaska and, at the time of the trial, the case had been submitted
to the Interior Board of Land Appeals and was pending decision.5
James claims that the allotment should be regarded as
marital property. Alternatively, he claims that if it is not
marital property he should be awarded some amount in recognition
of his services in improving the property and that the value of
the property should be taken into account in assessing Evelynn's
financial status. Further, James argues that the court erred in
determining that the property was of negligible value.
Courts dealing with Indian allotments under the Indian
General Allotment Act of February 8, 1887, 24 Stat. 388 (codified
as amended in part at 25 U.S.C. 331-34, 339, 341, 342, 348,
349, 354, 381 (1983)), applicable to the lower forty-eight
states, have held that property acquired as an allotment is
separate property, even when acquired during marriage, and that
state courts lack the authority to adjudicate title to such
property or to order its transfer. In re Marriage of Wellman,
852 P.2d 559 (Mont. 1993); Sheppard v. Sheppard, 655 P.2d 895
(Idaho 1982). We agree with these authorities and thus affirm
the trial court's determination that the allotment was the
separate property of Evelynn.6
James also argues that the court should have awarded
him the value of the work which he performed over the years to
augment the value of the allotment. In Sheppard the Supreme
Court of Idaho permitted a recovery in a divorce context of one
party's share "of the community contributions that have gone into
[allotment] property." 655 P.2d at 914. There is, however, no
factual basis for the application of such a rule in this case.
While James did some work on the property, there was no evidence
that the improvements made by James added to the fair market
value of the property.7
James argues that if the allotment is not marital, at
least its value as Evelynn's separate property should be taken
into account in assessing her overall financial condition and
thus her need for a greater than equal share of marital property.
No authority is cited by Evelynn which suggests that the
allotment should not be considered on the question of her
financial condition. It is our view that the allotment should
have been so considered.8 Failing to do so carries a risk of
accepting a distorted and inaccurate view of the relative
economic positions of the parties.9
James' final argument concerning the allotment is that
the court erred in concluding that its value was negligible.
James presented an appraisal and testimony that the fair market
value of the property was $137,700. Both were based on the
assumption that Evelynn owned and would be entitled to sell all
of the property. The validity of this assumption was in doubt as
of the time of the trial because of the State's administrative
appeal. No evidence as to the value of the property was
submitted at trial because of the uncertainty caused by the
appeal.
In our view the trial court committed clear error in
determining that the allotment had a negligible value. There was
no evidence supporting this conclusion. The trial court should
have notified the parties of this evidentiary void and required
that evidence be submitted. See Root v. Root, 851 P.2d 67, 69
(Alaska 1993) (court should direct parties to supply evidence
concerning value of significant assets). On remand, the court
should make findings concerning the value of the allotment
property based on the evidence submitted and take this into
account in assessing the relative economic positions of the
parties.
We now turn to James' arguments pertaining to the trial
court's overall allocation of the marital property.
The Overall Allocation of Marital Property
James argues that the overall allocation of marital
property was unjust. He contends specifically that heavily
weighting the division in favor of Evelynn was erroneous because
Evelynn is ten years younger than he, holds a full-time job, is a
high school graduate with at least one year of college, and has
free medical care as an Alaska Native. He, in contrast, is
totally disabled, has only a seventh grade education, and must
pay for much of his medical care.
Trial courts have broad discretion in dividing the
property of divorcing parties. Laing v. Laing, 741 P.2d 649
(Alaska 1987). Such a division must be just, AS 25.24.160(a)(4),
and will only be disturbed on appeal if it is clearly unjust.
Root, 851 P.2d at 68. In determining a just division the trial
court must consider a number of factors which are enumerated by
statute.10 Those pertinent here relate to the age and health of
the parties, their earning capacity, educational background,
employment skill, financial condition including availability and
cost of health insurance, and the general circumstances and
necessities of each party.
The trial court generally addressed these factors,
stating that the reason for its allocation in favor of Evelynn
was "because of the parties' economic positions and their needs
in the future." The court noted that Evelynn was forty-one
percent disabled and was with great difficulty making only $1,500
per month. The court found that "her present ability to work is
quite tenuous. Her financial situation for the future is quite
insecure; her future income is very doubtful.[11] She has almost
no cash." In contrast, the court found James' "financial
situation for the future is quite secure based on [his social
security and workers' compensation benefits] . . . . Evidence
indicates that he has some cash presently and the Court finds
that he is likely to have much more cash than that."
The only statutory factor identified by James that was
not explicitly addressed by the trial court was the cost of
health insurance for James. On remand, the court should take
this into account.12
What remains is James' argument that the property
division is so heavily weighted in favor of Evelynn that it is
clearly unjust. As the case stands this is an argument of some
force. It appears that Evelynn has received marital property
which is valued at approximately $280,000.13 By contrast, James'
award, including his half of the Laborer's pension and
considering only property actually available for division as of
the time of trial, is likely to be less than $50,000.
We have held that the norm in dividing marital property
is an equal division. Gabaig v. Gabaig, 717 P.2d 835, 842
(Alaska 1986). However, deviations from this norm are permitted
where justified by consideration of relevant factors. It would
be premature to rule at this time whether the court's analysis of
relevant factors justifies the property division it ordered.
Instead, we remand this case to the trial court with instructions
to redetermine the value of the truck, welder, and allotment in
accordance with the evidence, to consider whether recapture of
the marital assets which had been expended before trial is
warranted, to place a present value on the Piledriver's and
Laborer's pensions, and to make explicit findings concerning the
cost of health care to James. If, in light of these changes, the
court believes that an adjustment of the division of property
should be made, the court is authorized to make it.
REVERSED and REMANDED.14
_______________________________
* Sitting by assignment made pursuant to article IV,
section 16 of the Alaska Constitution.
1 These benefits are actually payable under the Northern
Alaska Carpenter's Retirement Fund and the Northern Alaska
Carpenter's Defined Contribution Pension Plan. However, the
parties and the superior court use the indicated terminology and
we do so as well to avoid confusion.
2 Although omitted at this point in the findings this was
awarded to James. The omission clearly was an oversight.
3 The first payment James received on this pension was
$24,411.81 in May of 1989. Subsequent payments were in the
indicated monthly sum.
4 Assuming for purposes of illustration a 32-year life
expectancy for Evelynn and a seven percent discount rate, the
1991 value of the Piledriver's pension awarded to Evelynn was
approximately $146,000. We emphasize that this figure is merely
an illustration. The trial court should determine the
appropriate discount rate and life expectancy based on the
evidence presented by the parties.
5 Subsequently, on March 9, 1993, the Interior Board of
Land Appeals rejected the State's appeal. State of Alaska, Dep't
of Transp. & Pub. Facilities, 125 IBLA 291 (1993). The Board
granted reconsideration but affirmed its decision without
modification. The record does not indicate whether the State
continues to challenge the allotment.
6 See Heffle v. State, 633 P.2d 264 (Alaska 1981) (state
courts lack jurisdiction to decide ownership conflict relating to
Native allotment land).
7 At trial, both James and Evelynn testified that James
worked on the property intending to improve the land. James
constructed two iron gates across a roadway leading to the
property, built a culvert on the property, and cleared a road in
anticipation of building a home on the land. However, at the
time of trial all of the improvements were in a state of
disrepair and were not considered by an appraiser to have
increased the value of the property.
8 The financial condition of the parties is one of the
statutory factors which should be considered in dividing marital
property. AS 25.24.160(a)(4)(D).
9 The court took into account James' separate property
(the workers' compensation settlement and his social security
payment) in determining that Evelynn should have the bulk of the
marital property. By failing to consider Evelynn's separate
property as well, the court could not accurately assess the
relative economic positions of the parties.
10 AS 25.24.160(a)(4) requires consideration of the
following factors:
(a) In a judgment in an action for
divorce . . . the court may provide
. . . .
(4) for the division between the parties of
their property, including retirement benefits,
whether joint or separate, acquired only during
marriage, in a just manner and without regard to
which of the parties is in fault; however, the
court, in making the division, may invade the
property, including retirement benefits, of either
spouse acquired before marriage when the balancing
of the equities between the parties requires it;
. . . the division of property must fairly
allocate the economic effect of divorce by being
based on consideration of the following factors:
(A) the length of the marriage and
station in life of the parties during the
marriage;
(B) the age and health of the parties;
(C) the earning capacity of the parties,
including their educational backgrounds, training,
employment skills, work experiences, length of
absence from the job market, and custodial
responsibilities for children during the marriage;
(D) the financial condition of the
parties, including the availability and cost of
health insurance;
(E) the conduct of the parties,
including whether there has been unreasonable
depletion of marital assets;
(F) the desirability of awarding the
family home, or the right to live in it for a
reasonable period of time, to the party who has
primary physical custody of children;
(G) the circumstances and necessities of
each party;
(H) the time and manner of acquisition
of the property in question; and
(I) the income-producing capacity of the
property and the value of the property at the time
of division.
11 James challenges this finding as clearly erroneous.
However, three physicians testified concerning Evelynn's mental
and physical state. The cumulative effect of this evidence can
be reasonably interpreted to mean that Evelynn probably could not
expect to continue to work on a full-time basis in the future.
The trial court's finding on this point is therefore not clearly
erroneous.
12 The trial court need not make findings on all the
statutory factors so long as it addresses the factors which are
germane to the particular case. Laing v. Laing, 741 P.2d 649,
652 (Alaska 1987).
13 This assumes that the Laborer's pension is worth some
$72,000 based on a $550 per month pay-out for a 21 year period
(James' life expectancy) and a seven percent discount. These
assumptions, again, are for illustrative purposes only. See note
4, supra.
14 We retain jurisdiction to save the parties' expense and
delay in the event that either party is dissatisfied by the
rulings made by the trial court on remand.
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