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Lundquist v. Lundquist (8/16/96), 923 P 2d 42
Notice: This opinion 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, telephone (907) 264-0607, fax (907)
THE SUPREME COURT OF THE STATE OF ALASKA
GEORGE LUNDQUIST, )
) Supreme Court No. S-6761
) Superior Court No.
) 3KN-92-987 CI
) O P I N I O N
JEAN LUNDQUIST, )
) [No. 4392 - August 16, 1996]
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Kenai,
Charles K. Cranston, Judge.
Appearances: Allan Beiswenger, Robinson,
Beiswenger & Ehrhardt, Kenai, for Appellant.
Linn J. Plous, Kenai, for Appellee.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh and Fabe, Justices.
This appeal is from a judgment dividing property in a
divorce proceeding. George Lundquist disputes the trial court's
determinations as to the character, value, and proper distribution
of the marital property. We affirm in part and reverse in part.
II. FACTS AND PROCEEDINGS
George Lundquist has worked as a commercial fisherman in
Alaska since the 1960s. He has held a limited entry permit (EN1)
for drift net fishing in the upper Cook Inlet. In 1985 George's
fishing boat sank near Kodiak Island. In March 1986, George
purchased a new fishing vessel, the F/V Koosh-da-kaa. The purchase
price for the F/V Koosh-da-kaa was $95,000; George paid $25,000 in
cash, $20,000 of which represented the insurance proceeds from the
sinking of his old vessel. George financed the balance with a
promissory note in the amount of $70,000. Title was in George's
According to George, he and Jean Lundquist began living
together in March 1987 when they rented an apartment and opened a
joint bank account. Jean claims that they started living together
in April 1986. George and Jean were married in Reno, Nevada, on
February 7, 1988. It was George's second and Jean's fifth
marriage. At the time, George was forty-nine years old. Jean was
forty-three years old and had worked as a bartender.
George and Jean purchased a residence, built a shop on
the premises, and directed money into various investment and
retirement accounts. They used marital funds to lengthen the F/V
In 1987 the Glacier Bay spilled oil in Cook Inlet, and
George received a settlement payment for damages sustained as a
result of that spill. In 1989, the Exxon Valdez oil spill
prevented George from fishing for salmon in the Cook Inlet. He
received a partial payment from Exxon for lost income as a result
of that spill. George also participated in a lawsuit against
Exxon, seeking damages for lost income from fishing for 1989 and
1990, as well as punitive damages.
In 1990 George purchased a motor home. According to
George, the purchase was paid for with the proceeds of the Glacier
Bay oil spill settlement. Jean was aware that George had received
funds from the Glacier Bay spill but was unsure where those funds
went. Although she was uncertain about what funds were used to
purchase the motor home, she contended that it was most likely
purchased with the proceeds from the Exxon Valdez oil spill. Title
to the motor home was held jointly, and Jean contends that joint
funds were used to purchase it.
When George's mother, Frieda Eklund, died in 1990, George
was named executor of her estate. Eklund's will left George her
interest in a checking account. The remainder of the estate was to
be divided between George, his daughter Laura, and his niece
Suzanne Lundquist. Apparently Suzanne removed substantial funds
from Eklund's checking account prior to her death. According to
George, he and Jean went to California, and Jean assisted him by
going through the checks to determine how much Suzanne had taken.
On June 25, 1992, George received a check for $64,000 from his
mother's estate. He deposited the check into his "separate"
account, (EN2) and issued his daughter a check for $22,710,
representing her share of the estate. George then paid Jean $1,000
for her work on the estate. George retained approximately $40,000
that remained in his separate account.
Jean tells a somewhat different version of the events
surrounding the death of George's mother. She claims that George
asked her to assist him in the probate proceedings and promised her
that anything she got out of the estate would be hers.
George and Jean separated in August 1992 when Jean moved
out. Both parties sought an interim award of occupancy of the
marital residence. Judge Cranston entered an order granting George
the right to live in the marital home. George claimed that a
number of items of his personal property had been removed from the
house by Jean.
At trial, Jean conceded that George's limited entry
permit was his pre-marital property but claimed that the F/V Koosh-
da-kaa was a marital asset. George argued that because part of the
boat was paid for with the insurance proceeds and the rest with
money derived from the limited entry permit, the boat was his
separate property. Both parties agree that the house was a marital
asset. Jean valued the house and shop building at $125,000.
George valued the house and shop at $115,000. Jean claimed that
the inheritance from George's mother should be treated as marital
property. The parties disagreed about who was responsible for the
items missing from the residence.
After trial, Judge Cranston asked for annotated arguments
from counsel. The court then entered its Findings of Fact,
Conclusions of Law, and Order. It found the value of marital
property to be $379,855. The court found that the F/V Koosh-da-
kaa, the inheritance, the several bank and retirement accounts, the
damage awards from the Glacier Bay and Exxon Valdez oil spills, and
the motor home were marital assets. The court divided the property
on a 50-50 basis, awarding George the F/V Koosh-da-kaa, his Capital
Construction account, his inheritance, and other marital funds in
his separate checking account. Jean was awarded the investment
accounts, the marital residence, and the motor home. The court
found that a piece of property George owned in Whittier was
partially marital and partially separate. The court also found
that Jean should be held responsible for the missing items of
George's personal property.
Based on George's motion for clarification or
reconsideration of several aspects of the court's decision, the
court entered an order changing the date of the parties' marriage
from February 1987 to February 1988 and the initial loan amount on
the F/V Koosh-da-kaa from $75,000 to $70,000. The court denied the
remainder of George's motion. George appeals.
On appeal George disputes the trial court's
characterization of the F/V Koosh-da-kaa, motor home, inheritance,
and Exxon Valdez damages as marital property. He also finds fault
with the trial court's valuation of the marital residence, Whittier
parcel, his separate checking account, and his fishing gear.
Finally, he takes issue with the trial court's 50-50 distribution
of the marital assets.
A. Standard of Review
Property division in Alaska consists of three steps:
determining what property is available for distribution, placing a
value on that property, and allocating the property equitably.
Moffitt v. Moffitt, 749 P.2d 343, 346 (Alaska 1988); Wanberg v.
Wanberg, 664 P.2d 568, 570 (Alaska 1983).
B. Did the Trial Court Err in Its Characterization of the
The first step in any property division is determining
what property will be divided. The trial court determines what
property is marital. Moffitt, 749 P.2d at 346. The available
property will include all assets acquired during marriage. (EN3)
Rhodes v. Rhodes, 867 P.2d 802, 804 (Alaska 1994). If the parties
by their actions demonstrate an intent to treat any separate
property as a marital holding, it must also be treated as marital
property. Id.; Chotiner v. Chotiner, 829 P.2d 829, 832 n.4 (Alaska
1992); Wanberg, 664 P.2d at 571. Once the trial court determines
that the property was treated as a marital holding, it may not
refuse to treat the property as marital and distribute it.
Wanberg, 664 P.2d at 571; Compton v. Compton, 902 P.2d 805, 812
(Alaska 1995); Lowdermilk v. Lowdermilk, 825 P.2d 874, 878 (Alaska
The trial court's characterization of property as marital
or separate is reviewed for an abuse of discretion. See Jones v.
Jones, 835 P.2d 1173, 1175 (Alaska 1992); Doyle v. Doyle, 815 P.2d
366, 368 (Alaska 1991). However, when the trial court makes a
legal determination in the course of carrying out this step, that
determination is reviewed de novo. Cox v. Cox, 882 P.2d 909, 913
(Alaska 1994); Moffitt, 749 P.2d at 346.
1. Characterization of the F/V Koosh-da-kaa
George bought the F/V Koosh-da-kaa for $95,000, putting
$25,000 down and executing a note for the balance of the purchase
price. At the time of the parties' marriage, George owed $60,094
towards the purchase of the F/V Koosh-da-kaa. When the parties
separated, the principal balance was $36,106. The value of the
vessel at the time of the divorce was $80,000. The trial court
found that the equity in the F/V Koosh-da-kaa was $43,893. The
trial court then determined that the F/V Koosh-da-kaa was marital
Jean presented evidence of the parties' intent to treat
the F/V Koosh-da-kaa as marital property. Jean testified that she
took an active role in the fishing venture and contributed
substantial efforts towards it. She detailed her contributions as
"working on the boat, working on the fishing gear, frequent grocery
shopping and cooking for the crew, going out on the boat and
working as a deck hand, tending to the business needs of the
enterprise while George was out fishing, and helping to pay for the
boat by contributing to the growing equity in the Koosh-Da-Kaa."
Jean further argues that the parties always referred to
the fishing business as "our business"and agreed that whatever
they acquired during marriage would be marital property. Further,
the improvements to the boat were paid for with marital funds.
Marital funds were used to pay off a substantial portion
of the loan on the F/V Koosh-da-kaa, as well as to fund a major
capital improvement. Jean presented evidence that she made
substantial contributions to the fishing enterprise and the
operation of the F/V Koosh-da-kaa. While George disputed Jean's
version of events, the trial court apparently gave more weight to
her testimony than to his. Based on these facts, it was not an
abuse of discretion for the trial court to characterize the F/V
Koosh-da-kaa as marital property.
2. Characterization of the motor home
On January 10, 1990, George executed a purchase order for
a 1978 Sportcoach 33' motor home for a price of $21,200. The
registration lists George and Jean as the owners. George claims
that he paid for the motor home with the proceeds of the Glacier
Bay oil spill settlement and that those funds were his separate
property. Jean claims that the funds came from joint funds and
that even if Glacier Bay proceeds were used, those funds were
marital. Jean also argues that because the asset was acquired
during marriage, it is marital regardless of the source under AS
While holding joint title is not determinative of intent
to treat property as a marital holding, it does create "rebuttable
evidence that the owner intended the property to be marital." Cox,
882 P.2d at 916, citing Chotiner, 829 P.2d at 833. Jean presented
evidence that could have allowed the trial court to conclude that
marital funds were used to purchase the motor home and that she and
George made significant improvements to the motor home during their
marriage. Based on this evidence, it was not an abuse of
discretion for the court to characterize the motor home as marital
3. Whittier real property
In 1974, George purchased a parcel of property in
Whittier for $7,100. George made monthly payments of $47 on the
property, and in 1986, he owed $5,289 on it. At trial, George said
that he did not know the value of the property, but that the last
appraisal or assessment valued it at $9,000. Jean's post-trial
proposed property division accepted George's $9,000 value.
The trial court found that the Whittier property was
partially marital and partially separate. It found the value of
the marital property to be $7,100 and the marital equity to be
$4,500. The record reveals no rational basis for these
First, it was error for the trial court to characterize
the property as partially marital and partially separate. As we
noted recently in Compton v. Compton, 902 P.2d 805 (Alaska 1995),
"the entire equity in a piece of joint property should be
allocated." Id. at 812. (EN4) Property that at first glance
appears to be separate, because it was originally acquired outside
of the period of coverture or because it was purchased with
separate funds, will be characterized as a marital holding if the
parties demonstrate an intent to treat it as such. (EN5) For
example, in Chotiner, we held that joint ownership, substantial
efforts at joint management, maintenance, or improvement of the
property, or written or oral agreements, were all factors that
could lead a court to conclude that the parties intended to treat
a piece of property as a marital holding. Chotiner, 829 P.2d at
833. Additionally, in Rhodes, we held that the assumption of joint
and several liability for debt on a vessel and the use of marital
funds to pay that debt justified finding intent to treat the vessel
as marital property. Rhodes, 867 P.2d at 805.
Because the trial court applied the incorrect legal
standard in dividing this piece of property, a remand is necessary
for the trial court to determine if the Whittier property is
marital. In addition, we note that the trial court may need to
take additional evidence to determine the equity in the property,
should it find that the property is in fact marital.
4. Characterization of the inheritance
As of August 31, 1992, George's bank account at National
Bank of Alaska had a balance of $116,878. Of this, George contends
that approximately $40,700 was an inheritance from his mother's
estate, which should have been considered to be his separate
property. The trial court found that these funds were marital
George, when asked at trial if he had told Jean she would
be entitled to a share of the inheritance, answered:
No. No, I never said this. Everything we
done was -- she was my wife. It was supposed
to be mutual. I never told her this, no.
Later he elaborated by stating:
I assumed this was to be mutual. I did not
tell her that this would be hers. That's what
I meant. . . .
. . . .
Well, whatever we gleaned during our marriage
should have been [both of ours].
George also testified that the inheritance was in fact
his separate property.
The trial court found:
On or about June 25, 1992 Husband received
$64,000.00 from his mother's estate. The
parties, through their efforts, discovered the
named executor had fraudulently obtained the
estate's money. Wife claims her efforts
resulted in payments back to the estate.
Husband, though claiming that he paid Wife
$1,000.00 for her efforts on behalf of the
estate, also testified he intended any funds
received as an inheritance to be marital. The
Court finds that the proceeds of the Eklund
estate paid to Husband, amounting to
$40,700.00 constitute marital property.
George's statements that he assumed that the proceeds of
the inheritance would be "mutual"are nothing more than a
restatement of the general proposition that property acquired
during marriage is presumptively marital property. Rhodes, 867
P.2d at 804. But a strong exception to this rule exists for
inheritances. We have held that
an inheritance received by one spouse during
marriage is not property acquired during
coverture within the meaning of AS
25.24.160(a)(4), but constitutes a non-marital
asset of the inheriting spouse. As such, an
inheritance will not be subject to
distribution unless a balancing of the
equities requires it.
Julsen, 741 P.2d at 648 (footnote omitted).
George received the inheritance check less than two
months prior to the time of separation. Although he paid Jean
$1,000 for her help in going through the checking records to
discover that money had been removed improperly, he took no actions
upon receipt of the money to treat it as marital property. While
the trial court based its decision on George's subjective "intent"
that he and Jean share what they received during the marriage,
George's testimony that he assumed that all property received
during the marriage should be shared is not sufficient to overcome
the strong presumption that an inheritance is separate property.
(EN6) It was an abuse of discretion for the court to characterize
the inheritance as marital property.
5. The Exxon Valdez damages
George was one of a large number of plaintiffs who sued
Exxon over the Exxon Valdez oil spill. George received a payment
of $34,766 from Exxon in 1989 in partial payment of compensatory
damages. In addition, George is one of 10,000-15,000 plaintiffs
who have won a portion of a $5 billion award of punitive damages
from Exxon. George argues that all of these monies are his
separate property; Jean argues that they are all marital.
a. Compensatory damages
George contends that the Exxon damages came to him solely
as a result of his status as a holder of a limited entry permit,
which both parties agree is George's separate pre-marital property.
Additionally, George claims that part of the Exxon award was
actually for the devaluation of his limited entry permit.
In Alaska, a tort recovery is classified according to
what it is intended to replace. Bandow, 794 P.2d at 1348. Bandow
provides the rule for how to characterize awards of compensatory
damages. When an award "compensates for losses to the marital
estate it is marital property. To the extent the recovery
compensates for losses to a spouse's separate estate, it is his or
her separate property." Id.
George testified at trial that he received the payment
from Exxon because he was not able to fish for salmon in the Upper
Cook Inlet in 1989. George also admitted that permit holders who
had never fished before would not have received the same payment.
George never testified that the payment was intended to compensate
him for any devaluation of the permit. Thus no evidence was
presented to the trial court to demonstrate that the compensatory
damages were for devaluation of the limited entry permit. The
evidence presented indicates that the award replaced lost fishing
income during a period when the parties were married. Because the
award replaced income that would have been marital, the entire
compensatory damages award is marital under Bandow.
The trial court was correct in its characterization of
the compensatory damages George collected from Exxon as marital
b. Punitive damages
George also expects to receive punitive damages from the
Exxon Valdez oil spill. The trial court held that "[t]he Court
finds no difference between the character of the award, whether
punitive or otherwise"and classified the punitive damages as
marital property. George argues that just as damages for non-
economic injuries result from "fortuitous circumstances,"so do
punitive damages. See id. at 1350. He thus concludes that
punitive damages are separate property. George also claims he is
entitled to the punitive damages as a result of his holding a
limited entry permit since 1973.
Our decision in Bandow does not directly control this
case because punitive damages are not compensation for personal or
pecuniary losses. Barber v. National Bank of Alaska, 815 P.2d 857,
864 (Alaska 1991). Punitive damages are awarded for the impact
they have on the wrongdoer, not the wrongfully injured party. We
are not aware of any relevant decisions that address the issue of
characterization of punitive damages in property division cases.
We decline to adopt George's proposed rule that punitive
damages are always the separate property of the spouse receiving
them. While punitive damages are not acquired by the joint efforts
of the parties in the same sense that wages or property are, they
are paid to persons who have suffered compensable injury. Because
there is a link between the payment of compensatory and punitive
damages, (EN8) in cases where the underlying compensatory damages
would be marital property, it would be improper to award all of the
punitive damages as separate property.
We also reject a bright-line rule that all punitive
damages recovered during marriage are marital property. Such a
rule would be easy to apply and in accord with the general rule
that all property acquired during coverture is marital property.
See AS 25.24.160(a)(4). One commentator has suggested that because
punitive damages can be viewed as a "bounty"for bringing an action
against a wrongdoer, they could properly be characterized as
marital property. Kirk H. Nakamura, The Classification of Personal
Injury Damages Under California Community Property Law: Proposals
for Application and Reform, 14 Pac. L.J. 973, 996 (1983).
However, punitive damages are not received as a result of
the parties' joint efforts in the same sense that marital income
is. See Portwood v. Copper Valley Elec. Ass'n, Inc., 785 P.2d 541,
543 (Alaska 1990) (stating punitive damages intended to punish
defendant not compensate victim); Hennis, supra note 6, at 54
(noting punitive damages generally recognized as windfall to
plaintiff); W. Page Keeton, et al., Prosser and Keeton on the Law
of Torts 2, at 9 (5th ed. 1984) (punitive damages punish
defendant and are "over and above"full compensation). The fact
that inheritances are not received as a result of the parties'
joint efforts was one of the reasons we found that inheritances are
not marital property. Julsen, 741 P.2d at 648. The commentator we
cited in that case wrote that "[i]f property is acquired without
the joint efforts of the parties such property arguably should not
be subject to division." Id. (citing Lawrence J. Golden, Equitable
Distribution of Property 5.19, at 113 (1983)). We concluded that
"our view of equitable distribution in general, . . . recognizes
the partnership theory of marriage and considers the mutual effort
and tangible contributions of the parties rather than the mere
existence of the marital relationship." Julsen, 741 P.2d at 648.
Characterizing all punitive damages as marital property
could be inequitable. If one party to the marriage is wrongfully
injured, and under Bandow all of the damages for that injury are
classified as separate property, we see no reason why it would be
proper to characterize any punitive damages awarded as marital
property. We believe that adopting a rule that punitive damages
are always marital suffers from the same failings as the
mechanistic approach to classification of compensatory awards that
we rejected in Bandow.
The rule we adopt today is that punitive damages can be
partially marital and partially separate, or even entirely one or
the other, depending on the facts. An award of punitive damages
should be apportioned in the same manner as the underlying
compensatory damages award. See Hennis, supra note 6, at 55.
Under Alaska law, the Bandow determination of what proportion of
the compensatory damages are marital would also determine the
proportion of the punitive damages that are marital.
We believe that this method of apportioning punitive
damages in property divisions is the most equitable. Because the
underlying compensatory damages award in this case was properly
characterized as marital property, the punitive damages award was
also properly characterized as entirely marital property. The
trial court's characterization of the punitive damages as marital
property was not error.
C. Did the Trial Court Err in Its Valuation of the Marital
The second step of a property division is the valuation
of the marital property. Wanberg, 664 P.2d at 570. The trial
court's determinations of the value of property are factual
decisions that will be reversed only if clearly erroneous. Doyle,
815 P.2d at 368; Cox, 882 P.2d at 913-14.
1. House equity
At trial, Jean testified that the fair market value of
the marital residence was $105,000 and that the shop building's
value was $20,000, for a total of $125,000. George testified that
the house and shop together were worth $115,000. The trial court
valued the property at $115,000. George now argues that the trial
court's determination was erroneous. His basis for this argument
is apparently that the trial court's findings of fact mistakenly
state that Jean valued the property at $105,000 while George valued
it as $125,000. Appellant speculates that the trial court reached
its $115,000 valuation through the process of averaging the
It is difficult to understand the basis of George's
appeal of this valuation. The trial court valued the property at
precisely the $115,000 estimated by George at trial. Since the
trial court's valuation of the house was supported by George's
testimony, it was not an abuse of discretion.
2. NBA account
George's account at National Bank of Alaska was also
allocated as a marital asset by the court. This is the same
account into which he deposited the inheritance he received from
his mother. On June 25, 1992, George deposited $64,000 in proceeds
from his mother's estate into this account. On July 10, 1992, he
wrote a check for $22,710 to his daughter, representing her share
of the estate. This left the balance of the account as of July 31,
1992, at $40,687. On August 4, 1992, George deposited $25,900 into
the account. On August 31, 1992, he deposited an additional
$50,000 into the account. There seems to be no dispute that these
additional deposits represented fishing proceeds. As of August 31,
1992, the date of the parties' separation, the account balance was
After the parties' separation, George made payments of
$16,125 to his deck hand for work performed during the 1992 fishing
season, $15,763 for the loan on the F/V Koosh-da-kaa, and $27,085
for back taxes to the IRS. He also paid marital debts accrued on
charge cards and revolving accounts of $14,707. The trial court
found that most payments made from the account were for marital
debts, marital business, or were related to George's mother's
estate. The court further found that "two payments from the
account directly related to husband's commercial fishing activity,
the boat payment and the crew share payment."
In her post-trial proposed asset distribution, Jean
argued that it was unfair for George to claim deductions for all of
the expenses he paid from the account. This is because George
charged his fishing expenses for the entire year against the
account, while only his fishing income deposited in August 1992 was
included in the property division. The trial court apparently took
this concern to heart and attempted to fashion a formula to account
for the payments out of the account which could be attributed to
post-marital fishing expenses. (EN9) The trial court devised the
The court will allow deductions from the
account in the ratio of the balance of the
account as of separation over the total
fishing income for 1992, 0.83. The boat
payment deduction is $13,083.00 and the crew
share deduction is $13,384.00. The Court
finds that the funds received as Husband's
share of his mother's estate are marital
property, (see Finding 28). Based on the
foregoing analysis, the Court finds that
$25,910.00 of the monies in the NBA account as
of the date of separation represent marital
George argues that he should have been allowed full
credit for all payments from the account, and that he was "double-
charged"for his inheritance.
There are several problems with the trial court's
approach. First, there is no evidence in the briefs or the trial
court's decision that indicates whether any fishing income was
earned after the parties' separation. (EN10) Second, even assuming
that George earned fishing income after separation, and it was thus
his separate property, the 83% ratio could bear no relationship to
it, since there is no evidence of any breakdown of marital and
post-marital income. If the trial court did believe that the
expenses George paid from the account prior to separation were for
the entire fishing season, including a portion of the season after
the date of separation, it could properly have taken that into
account and added back into the account that portion of crew shares
that were paid for the crew's work after separation. However, the
formula employed by the trial court does not achieve this result.
Additionally, it appears that the trial court's formula
is inconsistent with other portions of its decision. In assessing
what portion of the payments on the F/V Koosh-da-kaa were made
during the parties' marriage, the court took into account the full
amount of the payments made in 1992. Thus, the $15,763 payment was
counted as fully marital by the trial court in characterizing the
F/V Koosh-da-kaa as marital property. By contrast, the court
counted only $13,083 of the payment as an appropriate payment of
marital debt. The trial court must reconcile this inconsistency.
Finally, George claims that the 0.83 ratio results in his
being credited twice for the inheritance. The court awarded George
$25,910, representing its determination of the marital portion of
the NBA account after the court-allowed expenses. This figure, as
we noted above, included the fishing income deposited into the
account, as well as the inheritance, less deductions for payments
of marital debts. The court then separately assigned to George's
column of assets the $40,700 inheritance; thus, George was credited
twice with the receipt of the inheritance.
The trial court abused its discretion in valuing the NBA
account. On remand, the court should make detailed findings about
its basis for valuing the account. Furthermore, based on our
decision that the inheritance was not marital property, the court
shall characterize $40,700 of the NBA account as George's separate
3. Fishing gear
The trial court's detailed listing of the personal
property assigns to George's fishing gear a value of $2,500. In
her post-trial proposed distribution, Jean valued the gear at
$5,000, while George gave it a value of zero, claiming that the
gear was included within the appraised value of the F/V Koosh-da-
kaa and that most of it was pre-marital.
The trial court is required to state the basis for its
findings of value. See Johnson v. Johnson, 836 P.2d 930, 933
(Alaska 1992) (holding trial court must make sufficiently detailed
findings to allow Supreme Court to understand basis of decision).
When, for example, the parties obtain divergent appraisals of a
piece of property, it may be appropriate to average those
valuations. However, a blanket policy of averaging divergent
values encourages parties to submit the most extreme values they
can imagine, knowing that the court will simply average the two
figures. In this case, an average of the two figures has no
rational basis. Jean's valuation was dependent on the fact that
the fishing gear was not included in the appraisal of the boat,
while George's was based on the fact that the gear was included
within the appraised value. Although the trial court need not
accept either party's valuation of the gear, it must have a
rational basis for the value it chooses. The trial court abused
its discretion in valuing the fishing gear.
D. Did the Trial Court Err in Making an Equitable
Distribution of the Property?
The final step in the property division process is
determining if an equitable distribution of the property is
possible. (EN11) The trial court's decision on the equitable
allocation of the property is reviewed under an abuse of discretion
standard, and will be reversed only if clearly unjust. Cox, 882
P.2d at 914; Doyle, 815 P.2d at 368.
In this case, the trial court divided the property on a
50-50 basis. The law presumes that a 50-50 split of marital
property is equitable. Carlson v. Carlson, 722 P.2d 222, 225
(Alaska 1986). George claims that the trial court should have
explicitly considered the Merrill factors in determining the
appropriate division of property. Jean points out that the court's
findings, when read in their entirety, demonstrate that the court
considered many factors, including the details of the purchase of
the F/V Koosh-da-kaa, the marital residence, and the parties'
ability to maintain the residence.
We find no error in the trial court's 50-50 property
The trial court's characterization and valuation of the
Whittier property, characterization of the inheritance, and
valuation of the NBA account and fishing gear are REVERSED and
REMANDED for further proceedings consistent with this opinion. The
remainder of the trial court's determinations are AFFIRMED.
1. In 1973, Alaska initiated a program to limit commercial
fishing. See AS 16.43.010. Under the system, only holders of
limited entry permits may engage in commercial fishing in
particular fisheries. See AS 16.43.140. Such permits are
transferable, subject to certain substantive and procedural
requirements. See AS 16.43.170.
2. George maintained a separate bank account at National Bank of
Alaska for business and personal use. He deposited marital fishing
income into the account as well as the inheritance. The account
was used to pay marital debts, fishing expenses, and back taxes.
3. There are exceptions to this rule. For example, a spouse's
inheritance is not usually considered to be marital property.
Julsen v. Julsen, 741 P.2d 642, 648 (Alaska 1987).
4. There are exceptions to this rule. For instance, we have
routinely affirmed trial court decisions that divided pensions,
retirement accounts, and stocks or other capital, into marital and
separate portions. See Wainwright v. Wainwright, 888 P.2d 762, 763
(Alaska 1995) (finding pension partially marital and partially
separate); Chotiner, 829 P.2d at 832 (finding annuity both marital
and separate based on how much earned during marriage); Lowdermilk,
825 P.2d at 877 (holding increase in assets of husband's premarital
business during marriage marital, but otherwise business separate);
Bandow v. Bandow, 794 P.2d 1346, 1348-49 (Alaska 1990) (holding
annuity given as payment for tort damages could be partially
marital and partially separate); Lewis v. Lewis, 785 P.2d 550, 556
(Alaska 1990) (finding portion of contingent stock interest earned
during marriage was marital property); Brooks v. Brooks, 733 P.2d
1044, 1053-54 (Alaska 1987) (finding active appreciation in
separate asset is marital property).
Additionally, in Bandow we established that compensatory
damage awards may be divided into marital and separate portions.
See Bandow, 794 P.2d at 1350.
5. Such property, although marital, may be divided in a manner
different from the other marital property of the parties in
recognition of the contribution of one of the parties. Brett R.
Turner, Equitable Distribution of Property, 8.05 at 566 (2d ed.
6. Jean's testimony that George promised to give her all of the
money she helped to recover was not mentioned in the trial court's
findings nor does it appear to be the basis of the court's decision
on this issue.
7. Two cases have raised the issue of division of punitive
damages without actually deciding the question. See Mears v.
Mears, 406 S.E.2d 376, 380 (S.C. App. 1991), aff'd, 417 S.E.2d 574
(S.C. 1992), overruled by Marsh v. Marsh, 437 S.E.2d 34 (S.C. 1993)
and Amie v. Amie, 796 P.2d 233, 234 (Nev. 1990). One Texas case,
Rosenbaum v. Texas Bldg. & Mortgage Co., 167 S.W.2d 506, 508 (Tex.
1943), dealt with the question, but that case occurred before Texas
recognized that at least some tort recoveries received during
marriage could be separate property. See Scott A. Hennis, Punitive
Damages: Community Property, Separate Property, or Both, 14
Community Prop. J. 51 (1987).
8. When evaluating the appropriateness of a punitive damages
award, among the factors we examine are "the magnitude and
flagrancy of the offense, the importance of the policy violated,
and the defendant's wealth." Cameron v. Beard, 864 P.2d 538, 551
(Alaska 1993) (citing Clary Ins. Agency v. Doyle, 620 P.2d 194, 205
(Alaska 1980)). Another relevant factor is the ratio of the
compensatory damages to the punitive damages. Ben Lomond, Inc. v.
Campbell, 691 P.2d 1042, 1048 (Alaska 1984) (quoting Clary Ins.,
620 P.2d at 205). With the exception of the question of the
defendant's wealth, all of these factors relate in some manner to
the harm that was visited upon the victim. This reinforces our
view that it is proper to distribute a punitive damages award in
the same manner as the underlying compensatory damages award.
9. The trial court seems to have viewed this as a "recapture"
issue. When marital assets are spent for non-marital purposes
subsequent to the parties' separation "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." Foster v. Foster, 883 P.2d 397, 400 (Alaska 1994).
10. Further, assuming that George did earn post-separation fishing
income for 1992, there is no evidence that the $16,125 payment to
the deck hand was related to the production of post-separation 1992
11. It is in this final step that the trial court applies the
Merrill factors. See AS 25.24.160(a)(4) and Merrill v. Merrill,
368 P.2d 546, 548 n.4 (Alaska 1967).