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Ferguson v. Ferguson (12/20/96), 928 P 2d 597
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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, phone (907) 264-0607, fax (907)
264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
DONALD J. FERGUSON, )
) Supreme Court No. S-6764
Appellant, )
) Superior Court No.
v. ) 1JU-93-1821-DR
)
LORI BETH FERGUSON, ) O P I N I O N
)
Appellee. ) [No. 4449 - December 20, 1996]
______________________________)
Appeal from the Superior Court of the State of
Alaska, First Judicial District, Juneau,
Walter L. Carpeneti, Judge.
Appearances: G. R. Eschbacher, Anchorage,
for Appellant. James E. Curtain, Olmstead &
Conheady, Juneau, for Appellee.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
COMPTON, Chief Justice.
I. INTRODUCTION
This appeal presents two related questions: (1) whether
an interest in an Individual Fishing Quota (IFQ) for halibut and
sablefish is property subject to division if marital, and (2) how
the marital portion of this interest should be determined. We hold
that the superior court correctly treated the interest in the IFQ
as property subject to division if marital, but abused its
discretion in determining that the entire interest in the IFQ at
issue was marital property.
II. FACTS AND PROCEEDINGS
Donald J. Ferguson and Lori Beth Ferguson were married in
December 1988. They separated in December 1993. The superior
court divided their property in divorce proceedings held in October
of 1994. One of the items the court determined to be marital
property is an interest Donald holds in an IFQ for halibut and
sablefish.
The IFQ program is a federal regulatory response to
various problems in the halibut and sablefish fisheries, including
allocation conflicts, discard mortality, safety, and economic
stability. Pacific Halibut Fisheries; Groundfish of the Gulf of
Alaska; Groundfish of the Bering Sea and Aleutian Islands; Limited
Access Management of Fisheries Off Alaska, 58 Fed. Reg. 59,376
(1993). In the interest of promoting "the conservation and
management of halibut and sablefish resources,"the program
replaces the previous "open access"regulatory regime with a
limited access system. Id. To qualify for an IFQ, a person must
have owned or leased a vessel that made fixed gear landings of
halibut or sablefish during 1988, 1989, or 1990. 50 CFR 
676.20(a)(1)(i) (1994). Once people qualify, their initial "quota
shares"are determined in proportion to their history of landings
from 1984 to 1990 for halibut, and from 1985 to 1990 for sablefish.
50 CFR  676.20(b) (1994).
The superior court determined that the interest Donald
holds in the IFQ is marital property, because the time spent in the
fisheries during the qualifying years which created the interest
was spent during the marriage. Because the court determined that
Donald's interest in the IFQ is marital property, it ruled that
Lori is entitled to half the total value of this interest. (EN1)
Donald appeals the superior court's award of half the
value of his interest in the IFQ to Lori.
III. DISCUSSION
A. Standard of Review
A trial court's determination of the property available
for distribution in a property division "is reviewed under the
abuse of discretion standard, although it may involve legal
determinations to which this court applies its independent
judgment." Moffitt v. Moffitt, 749 P.2d 343, 346 (Alaska 1988).
B. The IFQ Is Property Subject to Division if It Is a
Marital Asset.
Donald argues that the IFQ conveys no property rights and
therefore should not be the subject of a property division. He
supports this argument with language from the Federal Register
stating that the IFQ "regulations do not convey property rights in
the fishery resources,"that "the IFQ program is not irreversible,"
and that "the IFQ program does not establish an entitlement to
[quota shares] and IFQ, which, if 'taken' by the government,
requires just compensation under the Fifth Amendment of the U.S.
Constitution." 58 Fed. Reg. 59,400 (1993).
The superior court never attempted to divide any property
interest in the fishery resources themselves. It could not have,
since fish do not become the property of individuals until reduced
to capture. Instead, the court merely divided the interest in the
IFQ that has value independent of any fish that may or may not be
caught. Furthermore, the fact that an interest in an IFQ does not
constitute "property"for Fifth Amendment purposes is not
determinative of whether such an interest is "property"for the
purpose of a marital property division.
In Moffitt this court observed that business good will
should be considered in a property division "if the evidence
suggests that it has value and is marketable." 749 P.2d at 347.
The same considerations are relevant here. An interest in an IFQ,
while it may not be property under the Fifth Amendment, has value
and is marketable. The IFQ has a value independent of the value of
the fishery resources because it grants the holder the right to
compete in an industry to which entry is limited. Furthermore, the
holder is free to market this independent value, for a person
holding an IFQ "may sell, lease, or otherwise transfer all or part
of their [quota share] or IFQ to another person [] in accordance
with [] transfer restrictions and procedures . . . ." 50 CFR 
676.21 (1994).
Finally, we see no reason why Donald's interest in the
IFQ should not be the subject of a finding that it is divisible
marital pr (EN2) can be the subject of such a finding. (EN3) See
Brosnan v. Brosnan, 817 P.2d 478, 479-80 (Alaska 1991); Thomas v.
Thomas, 815 P.2d 374, 376-78 (Alaska 1991). While the federal IFQ
program and the state system of limited entry permits differ in
various ways, interests held through either regulatory scheme are
of value for essentially the same basic reason, namely, for the
right of limited access to fishery resources they provide.
An IFQ creates a property interest which, if marital, is
subject to division.
C. The Superior Court Abused Its Discretion in Finding that
the Entire Interest in the IFQ Is Marital Property and in
Determining that Lori Was Entitled to Half the Value of
this Interest.
Donald observes that even if the Fergusons were married
during 1988, 1989, and 1990, the qualifying years for participation
in the IFQ program, the actual size of the quota share to which he
is entitled is based on his participation in the fisheries from
1984 and 1985 through 1990, participation both prior to and during
the marriage. Thus, he argues, Lori should only be awarded half
the value of that portion of the quota share that is derived from
landings during the marriage years; the portion of the quota share
that is calculated on the basis of landings prior to the marriage
should be considered separate pre-marital property. We agree with
Donald and hold that the superior court abused its discretion in
determining that the entire interest in the IFQ was marital
property subject to division.
The value of Donald's interest in the IFQ depends on the
size of his quota share. In determining that Lori was entitled to
half the value of the entire interest in the IFQ, the superior
court effectively treated as marital property that part of Donald's
quota share that will be calculated on the basis of his labor prior
to the marriage. Insofar as the value of Donald's interest in the
IFQ is based on work he performed prior to the marriage, however,
it is separate property; it "is marital property only to the extent
that it is attributable to work performed during the marriage."
Chotiner v. Chotiner, 829 P.2d 829, 832 (Alaska 1992) (holding that
military severance payments based on years of service are part
separate and part marital property, in proportion to the number of
years spent in the service prior to and during marriage); see also
Doyle v. Doyle, 815 P.2d 366, 370 (Alaska 1991) (affirming superior
court's award to wife of one-half of husband's retirement pension
accrued only during the years of the marriage).
We reverse the superior court's award of half the total
value of Donald's interest in the IFQ to Lori. On remand, the
superior court must determine what percentage of the value of
Donald's interest in the IFQ is the result of his labor in the
fisheries prior to the Fergusons' marriage. The total value of the
interest in the IFQ must then be reduced by this percentage before
the court equally divides the marital portion of the interest that
remains.
IV. CONCLUSION
We AFFIRM the superior court's conclusion that the
interest in the IFQ is property subject to division if marital, but
REVERSE its conclusion that the entire interest in the IFQ is
marital property. We REMAND for a determination of what percentage
of the IFQ's value is based on landings during the marital years.
On remand, Lori should be awarded half the value of this percentage
of the total value of the interest in the IFQ.
ENDNOTES:
1. The court awarded Donald the actual interest in the IFQ.
2. The Limited Entry Act, AS 16.43, was passed by the Alaska
legislature in 1973 "to promote the conservation and the sustained
yield management of Alaska's fishery resource and the economic
health and stability of commercial fishing in Alaska by regulating
and controlling entry into the commercial fisheries in the public
interest and without unjust discrimination." AS 16.43.010(a).
"The Act specified that after January 1, 1974, 'no person may
operate gear in the commercial taking of fishery resources without
a valid entry permit or a valid interim-use permit[.]'" Commercial
Fisheries Entry Comm'n v. Apokedak, 606 P.2d 1255, 1257 (Alaska
1980) (quoting AS 16.43.140).
3. Indeed, a limited entry permit was before the superior court
in the Fergusons' divorce proceedings. Donald never argued that
this permit could not be "property"subject to potential division;
rather, he argued that it was his separate property, an argument
with which the court agreed.
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