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Dunn v. Dunn (1/16/98), 952 P 2d 268
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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, phone
(907) 264-0608, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
LARRY G. DUNN, )
) Supreme Court No. S-7589
Appellant, )
) Superior Court No.
v. ) 3PA-94-920 CI
)
ANGELA IRENE DUNN, ) O P I N I O N
)
Appellee. ) [No. 4933 - January 16, 1998]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Palmer,
Beverly W. Cutler, Judge.
Appearances: Kenneth C. Kirk, Anchorage, for
Appellant. David A. Golter, Tull & Associates, Palmer, for
Appellee.
Before: Compton, Chief Justice, Matthews,
Eastaugh, Fabe, and Bryner, Justices.
EASTAUGH, Justice.
I. INTRODUCTION
Larry Dunn appeals the superior court's decisions
calculating his imputed income, adding dividends earned in his
Individual Retirement Account (IRA) to his income to calculate
child support, and finding that he owed Angela Dunn $13,000 to
compensate her for her portion of a van and for house improvements.
We affirm.
II. FACTS AND PROCEEDINGS
Angela and Larry Dunn were married in Valdez in December
1992. Larry was an electrician, earning $46,000 per year. They
kept their separate bank accounts, and Larry added Angela's name to
his checking account. They also started a joint savings account.
At the time they married, Larry was building a house in Valdez.
Angela and Larry moved into that house in May 1993. Larry retired
in May, but continued to work on the house. Using his savings,
Larry bought a 1993 van for family use, and put its title in his
name. Angela frequently drove it to work. Their son, Glen, was
born in July 1993.
In February 1994 Larry had an operation on his right
shoulder to correct his inability to raise his arm. The surgery
was successful, but he was still unable to lift heavy objects
overhead or do repetitive overhead work for more than brief
periods.
The Dunns sold the Valdez house and moved to Wasilla in
March 1994. With the proceeds of the house sale, Larry bought land
in Wasilla for the purpose of building another house. Angela moved
out of the Wasilla home in August 1994 and filed for divorce.
Trial was held in September 1995 on custody, child
support, and property division issues. In the property division,
Angela received $16,000, representing carpeting and furnishings in
the Valdez house, half the value of the van, and other property
sold during the marriage. Larry had to pay the guardian ad litem's
fees plus $3,000 for Angela's attorney's fees. Angela received
custody of Glen and monthly child support of $557. The parties
were divorced in December 1995.
In January 1996 Larry filed a motion for reconsideration
or rehearing, supported by a physician's statements concerning his
shoulder condition. The superior court denied Larry's motion.
Larry appeals.
III. DISCUSSION
A. Child Support
1. Larry's potential income
Larry argues that the court erred in estimating Larry's
potential income when calculating child support. The trial court's
determination of Larry's imputed income is a factual finding which
we will review under the "clearly erroneous"standard. See R.F. v.
S.S., 928 P.2d 1194, 1196 n.2 (Alaska 1996). A finding is clearly
erroneous if it leaves us with a "definite and firm conviction on
the entire record that a mistake has been made." Id.
Larry contends that because of his shoulder injury, he
will be unable to earn the $30,000 per year that the trial court
imputed to him as income. Larry claims that the trial evidence
proved his disability, but was inadequate to support the court's
determination. He also argues that the superior court did not
adequately explain its imputed income findings. Larry asserts that
Angela's opposition to reconsideration provided no evidence
refuting the doctor's statements accompanying Larry's motion.
Angela contends that the superior court properly
explained its decision. She argues that Larry did not carry his
burden of convincing the court of his limited earning capacity, and
that Larry could not properly present new evidence to the court
when he moved for reconsideration.
The commentary to Alaska Civil Rule 90.3 states that the
trial court may determine an obligor parent's potential income when
calculating child support if the parent is voluntarily unemployed
or underemployed. Alaska R. Civ. P. 90.3 cmt. III.C. [Fn. 1] The
trial court determines the potential income considering the
parent's work history, qualifications, and job opportunities. Id.
When determining the potential income of the obligor
parent, the trial court must also balance the needs of the
dependent children against the needs of the obligor for a career
change. See Nass v. Seaton, 904 P.2d 412, 418 (Alaska 1995);
Kowalski v. Kowalski, 806 P.2d 1368, 1371 (Alaska 1991) (no relief
from a child support obligation except under the most extreme
circumstances (citing Houger v. Houger, 449 P.2d 766, 770 (Alaska
1969))). "A noncustodial parent who voluntarily reduces his or her
income should not automatically receive a corresponding reduction
in his or her child support obligation." Nass, 904 P.2d at 418
(citing Pattee v. Pattee, 744 P.2d 658, 662 (Alaska 1987)).
In Kowalski, for instance, we found that the trial court
did not abuse its discretion in assessing the obligor's earning
capacity based on the finding that the obligor was voluntarily
unemployed. 806 P.2d at 1372. We recognized that the noncustodial
parent had the burden of establishing his earning capacity. Id.
However, in Nass, we remanded because the trial court had not
entered sufficiently detailed findings of fact in determining the
obligor's potential income after finding that the obligor was
voluntarily underemployed. 904 P.2d at 418-19. We remanded so the
trial court could make findings "which disclose its methodology, as
well as the factual basis, for its determination of the appropriate
imputed potential income." Id. at 419; cf. Adrian v. Adrian, 838
P.2d 808, 812 (Alaska 1992) (holding that trial court failed to
provide raw numbers for child support calculation and may have
relied too heavily on attorney's proposed findings and conclusions
of law).
The superior court found that Larry's imputed income for
child support purposes should be $30,000. The court explained its
reasoning:
I think here in these facts I should find that
Mr. Dunn is underemployed, significantly underemployed if he
chooses not to obtain any employment. . . .
So I'm going to find, I'm going to assess
child support against Mr. Dunn as follows:
I'm going to count as income . . . a
$30,000 a year income for being employed with his skill level at
least a significant portion of the time.
In other words, the Court's not saying he
has to go out and get a $45,000 a year job and add that to
everything else he has. . . . The Court's saying I'm going to
assume he can do two-thirds of that. . . .
He's clearly sitting on significant
investments that really do not produce any money, and investments
could produce money. He's living in a $195,000 house that he
basically owns free and clear. And that's certainly something he
has the choice to do if he's completely on his own. But he's
brought a child into the world. . . . [B]ecause he has the son I
think he doesn't have the same free choice to do that as he would
if he had no son.
The court's analysis of Larry's unemployment is
reasonable because Larry was in his early fifties, had voluntarily
retired, and was building houses. Larry testified that recurring
shoulder pain limited his job opportunities, [Fn. 2] but the
evidence also established that he was able to continue building his
house.
At the time of the guardian ad litem's report, Angela was
unemployed and living with Glen and a teenage son from a prior
marriage. The evidence was adequate to demonstrate that the needs
of the child were substantial, and that there was no substantial
justification for excusing the noncustodial parent from employment.
Imputing income to the noncustodial parent was therefore warranted.
The superior court decided that Larry's potential income
would be two-thirds of his previous income of $45,000. Given the
evidence, the calculation of imputed income was not arbitrary.
Larry provided no quantitative trial evidence about the extent of
his impairment or the income he could expect if he entered the job
market. Based on the trial evidence, it was not clear error to
find Larry's potential income was $30,000.
2. Including IRA dividends in Larry's income
Larry argues that the superior court erred in treating
dividends earned in Larry's IRA as income when it calculated child
support. This contention raises a question of law which we review
applying our independent judgment. Wright v. Wright, 904 P.2d 403,
408 n.7 (Alaska 1995). We adopt the rule of law that is most
persuasive in light of precedent, reason, and policy. Id.
Larry asserts that earnings in an IRA are not mentioned
in the commentary to Rule 90.3 and that such earnings can be
considered a withdrawal from a pension or profit-sharing plan,
which is exempted under certain circumstances. See Alaska R. Civ.
P. 90.3 cmt. III.A. Larry also argues that IRA earnings would not
be available to support a child in an intact family because a large
tax penalty would be incurred if the funds were withdrawn early.
He theorizes that including earnings in an IRA would unreasonably
burden courts calculating child support.
Angela claims that Rule 90.3 and its commentary do not
prevent a court from including IRA earnings in a child support
calculation. She denies that the tax consequences upon withdrawal
would matter.
We have not considered whether earnings in an IRA should
be considered income to a noncustodial parent for child support
purposes. Other jurisdictions, however, have ruled on the issue,
finding that interest earned in an IRA can be considered as income
when calculating child support. See, e.g., In re Marriage of
Tessmer, 903 P.2d 1194, 1196 (Colo. App. 1995) (holding that gross
income can include interest or dividends accruing to father's IRA);
In re Pedersen, 862 P.2d 411, 414 (Mont. 1993) (holding that court
can attribute income to assets, including those in an IRA); Rapp v.
Rapp, 623 N.E.2d 624, 626 (Ohio App. 1993) (stating that "annual
interest from an obligor's IRA or employee savings plan could be
considered as gross income when determining child support").
The commentary to Rule 90.3 lists numerous benefits that
courts should treat as income when calculating child support.
Alaska R. Civ. P. 90.3 cmt. III.A. The commentary does not list
earnings in an IRA, but the list is non-exclusive. Id. Dividends
in an IRA are very similar to several of the benefits on the list,
such as interest and dividends, income from trusts, income from
life insurance or endowment contracts, or income from interest in
an estate. Id. Larry's IRA earnings for the first months of 1995
were mostly in the form of dividends.
The tax treatment of each of these benefits varies, but
an obligor can account for these differences when listing
deductions on the child support guidelines affidavit. We are
unable to determine whether Larry's child support guidelines
affidavit incorporated any tax consequences of IRA withdrawals.
Larry's trial counsel submitted the affidavit, and the superior
court relied on it. Because Larry has not objected to these final
calculations, he has waived any argument that the court failed to
deduct IRA withdrawal penalties.
Larry also claims that the purpose of the IRA --
retirement savings -- distinguishes it from other types of
investments. This argument is unconvincing, because many
investments have a savings purpose, and may be made at least in
part in anticipation of retirement.
Larry argues that IRA earnings should be considered to be
pension or profit-sharing benefits. He quotes the commentary to
Rule 90.3, which states that withdrawals from pension or profit-
sharing plans "will not be counted as income to the extent that the
proceeds have already been counted as income for the purposes of
calculating child support." Alaska R. Civ. P. 90.3 cmt. III.A.
Dividends accruing in an IRA, however, have not been counted as
income to the noncustodial parent. Additionally, proof of the
dividends is not usually difficult, and does not unduly burden the
superior court. The superior court calculated the dividends
accruing in Larry's IRA from his IRA financial statement and the
figures his attorney supplied.
The superior court did not err in including dividends
earned in Larry's IRA as income for purposes of calculating child
support.
B. Property Division
1. Carpet for the Valdez house
Larry argues that the superior court erred in finding
that Angela had paid for carpeting for the Valdez house. He
asserts that Angela did not establish by a preponderance of the
evidence that she gave $6,000 to Larry to pay for carpeting for the
Valdez house. The trial court's factual findings on this issue
"shall not be set aside unless clearly erroneous, and due regard
shall be given to the opportunity of the trial court to judge the
credibility of the witnesses." Horton v. Hansen, 722 P.2d 211, 215
n.7 (Alaska 1986).
Larry argues that Angela's evidence is particularly weak
because she introduced no bank statements. He also claims that
because Angela was never involved in building the house, it would
have been inconsistent for her to give him money for the house.
The evidence on this dispute is not crystal clear. The
superior court based its finding on the parties' testimony and on
a bank statement from their joint checking account showing a
deposit of $6,000 in May 1993. It is irrelevant to speculate about
what might have been proven had excluded exhibits, such as other
bank statements, been admitted into evidence. The record is also
unclear about whether Angela would have contributed her own money
to purchase materials for the Valdez house.
Angela testified that she remembered giving Larry $6,000
out of her separate account to pay for carpeting for the Valdez
house. On cross-examination, Angela was unsure about the form of
her payment to Larry or whether Larry had deposited the amount.
Larry also testified about the alleged gift from Angela,
and testified that she had not put any money into the Valdez house.
He admitted, however, that he did not know where the $6,000 deposit
had come from, and he conceded that the money could have come from
Angela's account.
Because Larry did not directly contradict Angela's
testimony that she gave the money to Larry, the trial court's
finding that Angela gave Larry $6,000 for carpeting is not clearly
erroneous, even though the other evidence was equivocal.
2. The van
Larry argues that the superior court erred in awarding
Angela credit for half the value of the van under a rescission
theory of property division. He asserts that treating the van as
marital property was inconsistent with applying the rescission
theory of Rose v. Rose, 755 P.2d 1121 (Alaska 1988). We will
review the trial court's allocation of property under the abuse of
discretion standard, reversing the trial court's determination only
if the allocation is clearly unjust. Jones v. Jones, 835 P.2d
1173, 1175 (Alaska 1992). However, "[w]hether the trial court
applied the correct legal standard in exercising its broad
distributive discretion is a separate legal issue which we review
de novo." Compton v. Compton, 902 P.2d 805, 808 n.2 (Alaska 1995).
Larry claims that the van should be considered his
separate property, because he bought the van with his savings. He
further asserts that even applying the equitable distribution
principle, the court should have awarded the van to him as separate
property, on the theory the van was never converted to marital
property because Angela never maintained it or had title to it.
Angela replies that the superior court's division of the
van should be reversed only if the decision is unjust. She asserts
that because she sold her car, quit her job, and drove the van more
often than Larry, the division of the van was not unjust. She also
reasons that the court allocated $7,000 to her because it did not
grant her reorientation alimony or give her a portion of either of
the houses Larry built.
Separate property becomes marital only upon a showing
that the parties intended to treat the property as marital.
Chotiner v. Chotiner, 829 P.2d 829, 832 (Alaska 1992). We held in
Rose that for marriages of short duration in which assets have not
been commingled, "the trial court may, without abusing its
discretion, treat the property division as an action in the nature
of rescission, aimed at placing the parties in, as closely as
possible, the financial position they would have occupied had no
marriage taken place." 755 P.2d at 1125. We have refused to apply
Rose when the parties have commingled assets. See Cox v. Cox, 882
P.2d 909, 914 (Alaska 1994); Bell v. Bell, 794 P.2d 97, 102 (Alaska
1990).
The circumstances of the Dunns' divorce allow for a Rose
rescission. Their marriage was short (twenty months), and, except
for the van, they did not commingle their assets. The superior
court divided most of the property using a rescission theory,
giving the parties their separate bank accounts, and giving Larry
his retirement savings and the Wasilla house. The court, however,
divided the van using equitable distribution principles. See AS
25.24.160(4); Merrill v. Merrill, 368 P.2d 546, 547 (Alaska 1962).
The court found that
the Astro [van] was basically donated to the
marriage and should be considered marital property subject to an
equitable division, that . . . there was clearly commingling in
buying that Astro. . . . He wanted her to sell her car. He
basically bought the Astro. He may have bought it out of his
premarital funds, but it was used as the family car. In fact, as
the testimony told it, she, Angela, was the primary driver of the
Astro for a while. . . . That was the family vehicle. The money
that came from selling her car was swallowed up and I think the
Astro should be subject to an equitable division on that ground.
The court also justified its treatment of the van by noting that it
did not divide any of Larry's earnings from building the houses and
did not award reorientation alimony.
Under these circumstances, the superior court did not
abuse its discretion by treating the van as a marital asset. That
treatment was adequately supported with evidence that Angela sold
her car on Larry's advice, that the van was bought during the
marriage for family use, and that Angela drove the van most of the
time. Although Larry bought the van with his separate savings,
evidence that the parties intended the van to be a family vehicle
warranted the finding that the van was marital property. The
superior court did not err in awarding Angela half the value of the
van.
IV. CONCLUSION
We AFFIRM the judgment of the superior court.
FOOTNOTES
Footnote 1:
The commentary to Civil Rule 90.3 provides:
The court may calculate child support based on
a determination of the potential income of a parent who voluntarily
is unemployed or underemployed. . . . Potential income will be
based upon the parent's work history, qualifications and job
opportunities. The court also may impute potential income for
non-income or low income producing assets.
Alaska R. Civ. P. 90.3 cmt. III.C.
Footnote 2:
Because it is not appropriate to present new evidence on a
motion for reconsideration, we will not consider the evidence Larry
submitted with his reconsideration motion. See Neal & Co. v.
Association of Village Council Presidents Reg'l Hous. Auth., 895
P.2d 497, 506 (Alaska 1995) ("We refuse to allow a motion for
reconsideration to be used as a means to seek an extension of time
for the presentation of additional evidence on the merits of the
claim."); Alaska R. Civ. P. 77(k)(1).
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