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Gallant v. Gallant (9/12/97), 945 P 2d 795
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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) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
A. JOHN GALLANT, )
) Supreme Court No. S-7497
Appellant, )
) Superior Court No.
v. ) 3AN-88-12539 CI
)
SHANNON L. GALLANT, now known ) O P I N I O N
as SHANNON WEED, )
)
Appellee. ) [No. 4884 - September 12, 1997]
)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
James A. Hanson, Judge.
Appearances: A. John Gallant, pro se,
Anchorage. Kenneth P. Jacobus, Kenneth P. Jacobus, P.C., Anchorage, for
Appellee.
Before: Compton, Chief Justice, Matthews,
Eastaugh, Fabe, and Bryner, Justices.
COMPTON, Chief Justice.
I. INTRODUCTION
John Gallant appeals from a judgment of the superior
court resolving a number of claims in a family law proceeding. We
affirm in part and reverse in part.
II. FACTS AND PROCEEDINGS
John Gallant and Shannon Weed were married in 1975. They
have three children, John Jr., born in 1976, Joshua, born in 1977,
and Carli, born in 1981. They separated in 1988 and were divorced
in 1991.
John and Shannon ultimately agreed that John would have
custody of Joshua and Carli, while Shannon's sister would have
custody of John Jr. However, the parties failed to resolve issues
of child support, division of assets and liabilities, and
reorientation alimony. Following a trial on these issues, the
superior court divided the marital assets equally, but assigned all
of the marital debt to John. The court also awarded five years of
reorientation alimony to Shannon and denied John's request for
attorney's fees.
John appealed. This court remanded the case for further
findings concerning the determination of John's adjusted income,
allocation of the debt, the amount and duration of reorientation
alimony, and the failure to award attorney's fees. Gallant v.
Gallant, 882 P.2d 1252, 1254-55 (Alaska 1994).
On remand, the superior court entered additional findings
supporting its prior decision. The superior court also ruled on
several matters which had arisen following the initial trial,
including disputes concerning past child support and interim
spousal support payments. This appeal followed.
III.DISCUSSION
A.The Superior Court Erred by Reducing Shannon's Child
Support Payments without Entering Supporting Findings.
1.Standard of review
John first claims that the superior court made several
errors in calculating Shannon's child support obligations. "The
standard for reviewing a child support award is whether the trial
court abused its discretion." Murphy v. Murphy, 812 P.2d 960, 962-63 (Alaska
1991). An abuse of discretion exists if the reviewing court forms "a definite
and firm conviction based on the record as
a whole that a mistake has been made." Lone Wolf v. Lone Wolf, 741
P.2d 1187, 1191 (Alaska 1987).
2.The superior court erroneously reduced Shannon's
support payments by 100% during visitation periods.
Under Alaska Civil Rule 90.3(a)(3), "[t]he court may
allow the obligor parent to reduce child support payments up to 50%
for any period in which that parent has extended visitation of over
27 consecutive days."[Fn. 1] Commentary IV.B. indicates that the
trial court may reduce the payments by more than 50% "for good
cause,"but that "[t]he court must specify in writing the reason
for the variation." Alaska R. Civ. P. 90.3(c)(1) & Commentary
IV.B.
Following the first trial, Joshua and Carli each visited
Shannon for several periods in excess of twenty-seven days. On
remand, the superior court reduced Shannon's child support payments
by 100% for each of these periods. The court provided no
explanation for this variation from the 50% presumptive maximum
contained in Civil Rule 90.3(a)(3), stating only that Shannon had
supported the children while they visited her. [Fn. 2] We conclude
that the superior court erred, because it reduced Shannon's support
obligation by more than 50% without providing any reason for its
variation from Rule 90.3(a)(3). Accordingly, the payments for the relevant
periods must be reduced by 50% instead of 100%. [Fn. 3]
3.The superior court erred by reducing Shannon's
support payments by 100% for periods in which Joshua resided in medical
facilities.
In the years following the first trial, Joshua spent
several significant periods receiving treatment in medical
facilities. The treatment was financed by the health insurance of
the parties. The superior court reduced Shannon's payments by 100%
for each of these periods, on the ground that she had "fully
provided for the support of Joshua during those days"through her
insurance. These reductions were in error.
No case squarely addresses the effect of a child's
extended hospitalization on a parent's support duties. However,
Civil Rule 90.3 is designed not only to ensure that the obligor
parent bears a fair share of the support burden, but also to ensure
that the obligee parent is reimbursed for necessary support expenses. [Fn. 4]
Health care costs aside, an obligee's expenses
should not be affected any differently when a child is absent from
his or her home in order to obtain treatment than when the child is
absent for a visit with the other parent. As is the case with
visitation, "[t]he spouse with primary custody . . . will have
somewhat lower expenses during [the child's absence] even though
that parent's fixed costs such as housing will not decrease."
Alaska R. Civ. P. 90.3 Commentary IV.B. Moreover, the obligor
parent is less likely to "spend significant funds directly for the
children"during hospital stays than during visits, assuming that
health care costs are covered by the insurance that parents must
maintain for their children under Civil Rule 90.3(d). Id. Since an obligee
parent may suffer a reduction in child support payments
of up to 50% during extended visits with the obligor parent under
Civil Rule 90.3(a)(3), it is not unjust to the obligee to reduce
the obligor's payment to the obligee by 50% during periods of
extended hospitalization. Such a reduction is something of a
windfall to the obligor, for the assumption of Civil Rule
90.3(a)(3) is that the obligor will pay the board and associated
expenses of the child during extended visits. This is not the case
during periods of hospitalization. As a result, hospital stays
should have a smaller impact on an obligor's child support payments
than visits with the obligor would have. Thus, Shannon should not
ordinarily be entitled to a reduction of a full 50% of her child
support obligation during such periods. It follows that the
superior court erred by reducing her payments by 100% in the
absence of supported findings. These payments therefore must be
reduced by at least 50% instead of 100%, in accordance with the
views expressed herein. [Fn. 5]
4.Although the superior court prematurely denied
John's motion for post-majority support, that denial qualifies as harmless
error.
John also challenges the superior court's denial of his
motion to extend [Fn. 6] child support for Joshua beyond Joshua's
eighteenth birthday. [Fn. 7] The superior court could have denied
that motion on the merits, if it made the requisite findings. [Fn. 8]
However, the superior court denied the motion, and awarded
attorney's fees against John, without permitting him to reply to
Shannon's opposition to that motion or her accompanying request for attorney's
fees. While this action constituted error, that error
was harmless.
Under Bowman v. Blair, 889 P.2d 1069 (Alaska 1995), it is
error to award attorney's fees before the opposing party has an
opportunity to respond. Id. at 1075. Such error is prejudicial,
and therefore grounds for reversal, if, as a matter of law, the
opposing party could have prevailed on the issue. Id. The same
logic that bars ruling on a motion before the opposing party has a
chance to respond applies to a ruling before a party can file a
reply, albeit with less force. [Fn. 9]
Here, as in Bowman, the court erroneously granted
Shannon's request for attorney's fees, without considering any
response from John. The superior court should have considered
John's reply before ruling on the motion. The timing of the ruling
may have prejudiced John, since he presented evidence supporting
Joshua's eligibility for support in his motion for reconsideration,
which apparently was absent from his original motion.
However, while the superior court erred by ruling on the
motion prematurely, that error was harmless. John's motion for
reconsideration apprised the court of the additional information
and arguments he would have presented in his reply. The refusal of
the court to grant reconsideration indicates that the court's
decision was not altered by that material. As noted, that decision
did not constitute an abuse of discretion. Moreover, John has not
challenged the award of attorney's fees on appeal, arguing only
that "[d]enial of the request for ongoing support was plain error."The
superior court's premature decision therefore did not result in
prejudice to John.
B.The Superior Court Properly Refused to Permit John to
Deduct the Expenses of His Closely Held Corporation from His Net Income.
John argues that the court erroneously refused to permit
him to deduct from his calculation of net income expenses from a
closely held corporation. Determination of net income is a
question of fact and is reviewed under the clearly erroneous
standard. See Brosnan v. Brosnan, 817 P.2d 478, 480 (Alaska 1991).
A factual finding will be deemed clearly erroneous if the reviewing
court is "left with a definite and firm conviction on the entire
record that a mistake has been made, even though there may be
evidence to support the finding." Id. (quoting Martens v. Metzgar,
591 P.2d 541, 544 (Alaska 1979)).
The Commentary to Civil Rule 90.3 permits those with
income from closely held corporations to deduct "ordinary and
necessary expenses required to produce the income." Alaska R. Civ.
P. 90.3 Commentary III.B. Such deductions may not include "any
other business expenses determined by the court to be
inappropriate." Id. This deduction is intended to apply to
closely held corporations that serve as an income source of the
party in question. The deduction is not available in the case of
corporations which effectively serve as tax or income shelter
devices. John's primary income stemmed from his wages as a
corrections officer, rather than from his closely held corporation.
Indeed, John has not presented any evidence that he has ever realized any
income at all from the closely held corporation. The
superior court therefore did not err by refusing to permit John to
deduct from his net income expenses incurred in the name of that
corporation.
C.The Superior Court's Findings Were Adequate to Support an
Award of Extended Spousal Support.
John also challenges the amount and duration of the
superior court's award of "reorientation alimony."[Fn. 10] "An
award of alimony is within the trial court's discretion and will be
set aside only if it is unjust or unnecessary." Richmond v.
Richmond, 779 P.2d 1211, 1215 (Alaska 1989). [Fn. 11] While we
have frequently reversed lengthy alimony awards, see, e.g., Davila
v. Davila, 908 P.2d 1025, 1027 (Alaska 1995), we have indicated
that, under the right circumstances, AS 25.24.160 would authorize
alimony awards with a variety of durations. See Money v. Money,
852 P.2d 1158, 1163-64 (Alaska 1993) (approving an alimony award
lasting two years); Hilliker v. Hilliker, 755 P.2d 1111, 1112
(Alaska 1988) ("Permanent alimony may be awarded when it is 'just
and necessary.'") (quoting AS 25.24.160(3)). In this case, we
conclude that the superior court improperly designated the award as
"reorientation alimony,"but that the award was proper as extended
spousal support.
The award extends for too long a period to qualify as
reorientation alimony. "[R]eorientation alimony is essentially
transitional and may be awarded for brief periods to provide
support pending the sale of marital property or to enable a spouse
to get a job appropriate to the spouse's existing skills." Davila, 908 P.2d
at 1027 (quotation omitted). "[G]iven the transitional
purposes of reorientation alimony, it is difficult to imagine
circumstances under which an award of reorientation alimony
extending for longer than one year would be justified."Id.
(quotation omitted). Accordingly, in Davila this court overturned
an award of reorientation alimony that extended for four years, in
the absence of findings which "set forth exceptional circumstances
supporting more than one year of reorientation alimony." Id. This
award, which extends for nearly seven years, similarly would be
invalid if analyzed as reorientation alimony. [Fn. 12]
However, we conclude that the superior court did not err
in awarding Shannon extended spousal support. The superior court
made extensive findings concerning Shannon's need for extended
support following the marriage. In particular, the court found
that "Mr. Gallant's present and future earning capacity far exceeds
that of Ms. Weed." It determined that John's income earning
capacity was not decreased following his separation from Shannon,
that his "station in life"had improved following the separation,
and that he had excess income of at least $1,000 per month. The
court also noted that John was able to maintain "full control of
his life after the parties' separation"in part because he had
"developed an extensive work history"during the parties' marriage.
In contrast, the court concluded that Shannon had spent
significant periods of time out of the job market in order to care
for the parties' children and, thus, did not "obtain any meaningful
job skills during the marriage." It found that Shannon had expenses that
typically exceeded her income and that, although she
had found work as a grocery clerk, her income fell far below
John's. It also determined that Shannon suffered from a number of
health problems, which severely hindered her ability to earn a
living and resulted in significant medical expenses. Finally, the
superior court noted that Shannon has had to assume significant
debts to meet her medical expenses and that she sometimes has been
unable to afford needed medication.
These findings provide ample support for the superior
court's conclusion that Shannon required significant support for an
extended period. John's challenge to the award therefore fails,
despite the superior court's mischaracterization of that award as
reorientation alimony.
D.The Superior Court Did Not Err by Awarding Relocation
Costs and Interim Support Payments to Shannon.
On remand, the superior court awarded Shannon unpaid
relocation expenses and interim spousal support arrearages, in
accordance with an earlier order. John challenges this award as an
erroneous factual finding by the superior court. [Fn. 13]
The original order awarded Shannon $2,000, to be paid
from the proceeds of the trailer sale. However, the order provided
no guidance in the event that the sale of the trailer did not
generate sufficient funds to meet that obligation. The superior
court apparently interpreted the order as granting Shannon an award
of $2,000, to be met by John if the sale proceeds proved
insufficient. The superior court's interpretation of the order is
as reasonable as John's view, under which Shannon was awarded only the
proceeds of the trailer sale, rather than a set amount of
$2,000. John has presented no evidence that he had in fact paid
the additional relocation costs, which would be appropriate under
the superior court's interpretation of the order. The superior
court's decision therefore was not clearly erroneous.
John also objects to the superior court's finding that he
owed $258 in arrearages for interim spousal support. The original
order required John to pay Shannon $350 per month, reduced in $50
increments for every $100 by which Shannon's gross income exceeded
$700. In order to induce Shannon to submit pay stubs in a timely
manner, if Shannon failed to submit pay stubs for any given month,
the court permitted John to assume that his obligation could be
calculated using the highest income level previously provided.
The superior court awarded arrearages for six months in
which John failed to pay support. John has not argued that the
superior court miscalculated his obligations based on Shannon's
actual income. Instead, John contends that he received no pay
stubs for these months. He also claims that four of these months
followed his receipt of a pay stub indicating that Shannon's income
was high enough to relieve him of any duty to pay support for that
month. John therefore argues that he owed no support for the
months in question.
If Shannon's failure to provide pay stubs estopped her
from claiming that her income for the months in question was lower
than the highest pay stubs she did provide, John's claim would be
correct. However, there is no indication that the original order was intended
to operate in that fashion. To the contrary, the
order permitted John to "assume"that his obligations for months in
which he received no pay stub could be calculated with reference to
the highest prior stub, in order to provide Shannon with an
incentive to submit pay stubs in a timely fashion. The superior
court did not indicate that Shannon would waive her right to
eventual payment if she failed to send pay stubs, although it is
clear she would lose the ability to demand timely payment. Shannon
was not estopped from collecting support based on her actual
income, and the superior court did not err by allowing her to
collect such support.
E.The Superior Court Did Not Abuse Its Discretion by
Allocating the Entire Marital Debt to John.
Following remand, the superior court assigned the entire
marital debt of $8,600 to John as part of the division of marital property.
[Fn. 14] John objects to that division. The court's
division of marital property is reviewed for an abuse of discretion
and reversed only if "clearly unjust." See Richmond, 779 P.2d at
1213. The factors to be considered include "the respective ages of
the parties; their earning ability; the duration and conduct of
each during the marriage; their station in life; the circumstances
and necessities of each; their health and physical condition; [and]
their financial circumstances." Merrill v. Merrill, 368 P.2d 546,
547-48 n.4 (Alaska 1962). Consideration of these factors reveals
no error in allocation of the debt to John.
The superior court assigned the entire debt to John in
part because he was "the party with the greater earning capacity"and thus
"more likely to meet the debt allocated to him." This
decision was based on a number of factual findings, including
conclusions that John's station in life had improved following the
separation; that Shannon had "struggled financially"after the
separation; that her earning capacity fell far below John's; and
that her earning capacity and financial stability were both
compromised by serious health problems. The court also found that
John "was directly responsible for creating the debts and keeping
[Shannon] in the dark about them." This conclusion is supported by
findings that John had incurred debts without Shannon's knowledge
and controlled the family's finances during the marriage. These
findings address the factors outlined in Merrill, and therefore
provide adequate support for the superior court's conclusion.
Since the noted evidence does not give rise to "a definite and firm
conviction based on the record as a whole that a mistake has been
made,"the superior court did not abuse its discretion by assigning
the entire debt to John. Lone Wolf, 741 P.2d at 1191.
F.The Superior Court Did Not Err by Refusing to Award
Attorney's Fees to John.
Finally, John challenges the superior court's refusal to
award attorney's fees to him, and its attendant failure to find
that Shannon had acted in bad faith during the litigation. "The
award of attorney's fees in a divorce action is committed to the
sound discretion of the trial court . . . [and] will not be
disturbed on appeal unless it is arbitrary, capricious, manifestly
unreasonable, or stems from an improper motive." Notkin v. Notkin,
921 P.2d 1109, 1114 (Alaska 1996) (citations and quotations omitted). "The
relevant considerations in awarding fees in a
divorce action are the 'relative economic situation and earning
power of each party.'" Musser v. Johnson, 914 P.2d 1241, 1243
(Alaska 1996) (quoting Streb v. Streb, 774 P.2d 798, 803 (Alaska
1989)). "A court may also award attorney's fees where 'a party has
acted in bad faith or engaged in vexatious conduct.'" Id. (quoting Kowalski
v. Kowalski, 806 P.2d 1368, 1373 (Alaska 1991)).
The superior court's refusal to find that Shannon had
engaged in bad faith or vexatious conduct did not constitute error.
"[M]ere evasiveness in responding, contentiousness over difficult
issues, or delay in completing discovery do not, in themselves,
constitute bad faith or vexatious conduct." Kowalski v. Kowalski,
806 P.2d 1368, 1373 (Alaska 1991). "Conduct justifying an
increased award must be such that the parties are prevented from
litigating the action on an equal plane." Id. John challenges a
number of Shannon's actions. However, he has not shown that those
actions prevented him from litigating the matter on an "equal
plane." While Shannon's actions might be adequate to support a
finding that she engaged in bad faith conduct, the evidence is
insufficient to compel the conclusion that she did so. As a
result, the superior court's finding that she had not acted in bad
faith was not error. [Fn. 15]
Absent a finding of bad faith, the superior court's award
did not constitute error. The superior court concluded that John's
earning power exceeded Shannon's, and that his economic situation
was the more favorable of the two. This conclusion is supported by a number
of findings concerning the yearly income and financial
position of each party. Accordingly, the superior court did not
abuse its discretion by refusing to award attorney's fees to John.
IV.CONCLUSION
The superior court erred in its resolution of several
issues concerning child support and income calculation. The
judgment of the superior court regarding these issues is REVERSED
as noted above. In all other respects, [Fn. 16] however, the
decision of the superior court is AFFIRMED.
FOOTNOTES
Footnote 1:
This credit is limited to 50% in order to reflect the fact
that the obligor parent's "fixed costs such as housing will not
decrease"during visits. Alaska R. Civ. P. 90.3 Commentary IV.B.
Footnote 2:
Shannon contends that "[t]aken as an entire document, the
findings of fact and conclusions of law adequately set forth the
reasoning for the trial court's decision." The superior court did
make findings regarding the income disparity between John and
Shannon. The parties' respective support obligations reflect that
disparity. Findings that an income gap existed are insufficient by
themselves to justify all deviations from the rules, especially
when the basic support award already had taken that disparity into
account. Shannon's contention lacks merit.
Footnote 3:
Shannon argues that the court should treat any error in this
regard as de minimis, since the amount at stake for each child for
each year is approximately $100. See Wickwire v. City & Borough of
Juneau, 557 P.2d 783, 786 (Alaska 1976) (Boochever, J., dissenting)
(arguing that claim should be dismissed as de minimis). This claim
fails. According to Shannon, the alleged error resulted in a total claim in
excess of $600. This amount, while not significant,
exceeds the amount at stake in Wickwire, which this court refused
to dismiss as de minimis.
Footnote 4:
If support payments followed only the amount an obligee parent
actually expends in support of the children, Civil Rule 90.3 would
permit a 100% payment reduction during visits, since the obligee
will often provide full support for the children during such
periods. The fact that Civil Rule 90.3 does not do so indicates
that support payments are at least as closely related to the
obligee's fixed expenses, such as housing, as to the obligor's
actual expenses during visits. See Alaska R. Civ. P. 90.3
Commentary IV.B.
Footnote 5:
The superior court's treatment of 1992 merits particular
attention. In that year, Joshua spent over 200 days in treatment.
The superior court credited each party with half of the time Joshua
spent in treatment, and awarded child support for this year as for
shared physical custody. Alaska R. Civ. P. 90.3(f)(1) ("A parent
has shared physical custody . . . if the children reside with that
parent for a period specified in writing of at least 30 percent of
the year."). While the court's approach was unusual, it appears to
be a reasonable solution to the problem of awarding support in this
anomalous year. As a result, the court's action concerning this
year did not constitute an abuse of discretion.
Footnote 6:
Modification of a support order is proper upon a material and
substantial change in circumstances. See Burrell v. Burrell, 696
P.2d 157 (Alaska 1984). John's motion rests on a claim that his
continued support of Joshua, over a period during which he remained
in school, would qualify as such a change.
Footnote 7:
AS 25.24.140(a)(3) allows a court, under "appropriate
circumstances,"to award post-majority support for "unmarried 18-year-old
children of the marriage who are actively pursuing a high
school diploma or an equivalent level of technical or vocational
training and living as dependants with the spouse."
Footnote 8:
Neither the statute nor case law suggests that a court
automatically abuses its discretion if it refuses to modify support
in any particular case where a child meets the criteria for
continued support. Shannon's financial plight could provide a
sound basis for denial of continued support in this instance.
Footnote 9:
Since a replying party has already had an opportunity to
present the party's case in the initial motion, a reply is less
crucial than an opportunity to oppose a motion.
Footnote 10:
This court already has upheld the superior court's conclusion
that some amount of alimony was justified. Gallant, 882 P.2d at
1255.
Footnote 11:
AS 25.24.160(a)(2) authorizes alimony awards which are "just
and necessary." A court must consider "a number of statutory and
case law factors"to determine whether an award of alimony is
appropriate in a given case. Gallant, 882 P.2d at 1255.
Footnote 12:
This court upheld a multi-year award in one pre-Davila case.
See Money v. Money, 852 P.2d 1158, 1163-64 (Alaska 1993) (finding
that a two-year reorientation award was acceptable "to aid the
plaintiff while she is preparing to enter the job market"and "to
help her organize her portion of the marital estate assets").
However, the award in this case extends for more than three times
the duration of the award in Money and strains the concept of an
award for a "brief period."
Footnote 13:
Since this claim involves interpretation of the original
order, it might be viewed as a question of law rather than a
question of fact. If so, it would be subject to de novo review.
However, since the superior court's interpretation of the order was
correct, the result would not change were we to apply that standard
of review.
Footnote 14:
Two pensions, the only significant assets, were divided evenly
after adjusting for prior withdrawals by John.
Footnote 15:
John also contends that the court erred by failing to consider
new evidence regarding this issue upon remand. "Ordinarily, a
remand for additional findings does not obligate the trial court to
hear new evidence." Murray v. Murray, 856 P.2d 463, 466 (Alaska
1993) (holding that decision to receive new evidence on remand lies
within trial court's discretion). Since no evidentiary hearing was
called for, and since John had an opportunity to present evidence
on this issue at the original trial, the superior court did not
abuse its discretion regarding this issue.
Footnote 16:
At several points, John contends that the proceeding was
"tainted"by the informality of the judge. However, neither John's
listed points on appeal nor the substantive arguments within his
opening brief provide any discussion of this issue. As a result, we
will not consider arguments concerning a "taint"in the
proceedings.
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