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Broadribb v Broadribb (5/8/98), 956 P 2d 1222
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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
MICHAEL PETER BROADRIBB, )
) Supreme Court No. S-7885
Appellant, )
) Superior Court No.
v. ) 3AN-95-1073 CI
)
SANDRA JANE BROADRIBB, ) O P I N I O N
)
Appellee. ) [No. 4982 - May 8, 1998]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Brian Shortell, Judge.
Appearances: Patrick J. McKay, Law Offices of
Patrick J. McKay, Anchorage, for Appellant. Janet D. Platt, Law
Offices of Janet D. Platt, Anchorage, for Appellee.
Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.
FABE, Justice.
I. INTRODUCTION
After twenty-four years of marriage, Michael and Sandra
Broadribb, both British citizens, divorced. Michael is a corporate
executive and Sandra is a homemaker. In light of the length of
their marriage and the discrepancy between the parties' earning
capacities, the superior court awarded Sandra a greater share of
the marital assets. Michael appeals five aspects of the court's
property division: (1) the award of spousal support; (2) the award
of survivor benefits; (3) the failure to consider potential tax
consequences of exercising stock options; (4) the use of an
approximate currency exchange rate; and (5) the finding that
Michael began his employment in 1971. He also appeals the award of
attorney's fees. We affirm.
II. FACTS AND PROCEEDINGS
Michael and Sandra Broadribb are British citizens who
married in 1971 in Wales, United Kingdom. At the time of the
divorce, Michael was 46 years old and Sandra 48 years old. The
parties moved to Anchorage in 1992 when Michael was transferred to
Alaska by his employer, British Petroleum Exploration, Inc. (BP).
The couple previously lived in Aberdeen, Scotland, where they
purchased a home. At the time this appeal was filed, Michael
continued to reside in Anchorage, but Sandra had returned to
Aberdeen.
During their marriage, Sandra was the primary caretaker
of the parties' three children. [Fn. 1] Sandra completed her
schooling at age sixteen with a typing certificate. After high
school, she worked for two years as a receptionist and typist. Her
last full-time job was as a receptionist in 1975. From 1976 to
1989, she was not employed outside the home. From 1989 to February
1992, she performed part-time clerical work at annual salaries from
œ3,000 to œ6,879. In 1992 her hourly wage was approximately œ3.90.
[Fn. 2] Sandra was unable to work from 1992 to 1996 in Anchorage
due to visa restrictions.
Michael was the primary wage earner in the marriage. He
is an executive at BP and has a degree in chemical engineering.
During the marriage, he was promoted up the corporate ladder. His
gross compensation in 1995 was $286,014. [Fn. 3] He received a
salary increase in 1996 and has earned and will continue to earn
valuable BP shares, stock options, and other employment benefits,
including a vested pension.
The parties separated in January 1995. In February 1995
Sandra filed a complaint for divorce. The case was tried by
Superior Court Judge Brian Shortell over four days in June 1996.
The divorce decree was issued in October 1996.
The court entered extensive findings. It found that
Sandra was entitled to a greater share of the marital estate than
Michael under AS 25.24.160(a)(4). Sandra was awarded assets,
including the family home in Abderdeen, worth œ273,563; Michael was
awarded assets worth œ165,241. The largest asset awarded to
Michael was his BP pension and survivor benefits, with an actuarial
present value of œ132,082. The court concluded that under British
law the benefits were not subject to a Qualified Domestic Relations
Order or to division by the court so that Sandra "will not get her
share of the pension (œ27,000 or $40,000 per year) accrued during
marriage." The court noted that Sandra had separate assets worth
œ21,977 and $7,521, and that Michael had separate assets worth
œ9,856 and $13,520.
The court also found that Sandra had presented evidence
to show her reasonable living expenses in Aberdeen to be œ31,689
(which the court estimated as $47,500) per year, as well as "start
up"costs of œ15,500. The court awarded Sandra maintenance of
$3,000 per month for three years and $2,000 per month for two
additional years. It also awarded her rehabilitative alimony in
the amount of tuition and related charges at a vocational training
program in Aberdeen. This award is contingent upon her enrollment
in the program.
As of August 1996, Michael had incurred more than $41,000
in attorney's fees and costs, and Sandra had incurred in excess of
$95,000. The court found that the discrepancy was justified and
that Sandra's fees were reasonable. At the time, Sandra still owed
$55,695.05 of the $95,000 total. The trial court awarded Sandra
$40,000 in attorney's fees.
Michael appeals several aspects of the court's division
of property and the award of attorney's fees.
III. DISCUSSION
A. Standard of Review
In Cox v. Cox, 882 P.2d 909 (Alaska 1994), we summarized
the standards of review for many of the elements of divorce
proceedings as follows:
The trial court has broad discretion in
fashioning a property division in a divorce action. This court
reviews the trial court's determination of what property is
available for distribution under an abuse of discretion standard.
If in the course of determining what property is available the
trial court makes any legal determinations, such determinations are
reviewable under the "independent judgment"standard. All
questions of law are reviewed de novo with this court adopting the
rule of law that is most persuasive in light of precedent, reason
and policy. However, the trial court's findings that the parties
intended to treat property as marital are disturbed only if clearly
erroneous. The valuation of available property is a factual
determination that should be reversed only if clearly erroneous.
The equitable allocation of property is reviewable under an abuse
of discretion standard and will not be reversed "unless it is
clearly unjust."
Id. at 913-14 (citations omitted).
B. Spousal Support
Michael advances two arguments relating to the superior
court's award of spousal support: first, that the court failed to
account for the investment value of the marital home; and second,
that a portion of the maintenance payments should be characterized
as rehabilitative alimony and should be made contingent upon
Sandra's enrollment in vocational training. We reject both
arguments.
A trial court may award spousal maintenance as "just and
necessary"to "fairly allocate the economic effect of divorce." AS
25.24.160(a)(2). In awarding spousal support, a trial court may
consider, inter alia, the length of the marriage, the parties'
respective earning capacities, and the division of property. See
AS 25.24.160(a)(2)(A), (C), (F). "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).
The superior court found that the available property in
this case was insufficient to compensate Sandra adequately or to
provide adequately for her reasonable future living expenses. [Fn.
4] It further found that because Michael's pension is not subject
to court division, Sandra "will not get her share of the pension
(œ27,000 or $40,000 per year) accrued during marriage." Given
Sandra's age and limited earning capacity, the court concluded that
"it is questionable whether she will accrue any substantial
employer-provided pension in her remaining work years,"and that
she will therefore need to invest a significant sum to provide for
her future needs. Against the backdrop of these findings, the
court awarded Sandra spousal maintenance in the amount of $3,000
per month for three years, and $2,000 per month for two additional
years. Based on its extensive findings regarding Michael's
financial status, the court concluded that he would be able to pay
this amount of maintenance. [Fn. 5]
Michael argues that the superior court erred by failing
to take into account the investment value of the family residence
awarded to Sandra. He contends that the superior court should have
attempted to meet Sandra's need for maintenance by ordering sale or
rental of the home rather than by ordering alimony payments.
According to Michael, sale of the marital home would make œ167,552
available for investment. He contends that at the "risk free
investment rate"of 8.5%, the annual investment income from the
sale proceeds of the home would be œ14,660.
The superior court carefully considered and expressly
rejected this argument. First, it found that retention of the home
will provide stability and continuity for Sandra and their son
Peter. Second, based on detailed findings regarding Sandra's
financial needs, the superior court concluded that she will "need
the equity in the home to help provide for her future retirement
needs." Third, and most significantly, the court concluded that
Michael's calculations failed to account for sale and moving
expenses and for the cost of buying a more modest home. [Fn. 6]
The court observed that after taking these costs into account,
Sandra would have less than œ45,000 to invest. Even at Michael's
suggested 8.5% interest rate, the investment income from this sum
would be insufficient to cover Michael's spousal support obligation
and to provide for Sandra's future needs.
The superior court's detailed findings provide ample
support for its decision. We conclude that the superior court did
not err in awarding the marital home and maintenance to Sandra
rather than ordering sale or rental of the home.
Michael further argues that the $1,000-per-month
difference between the maintenance payments for the first three
years and the maintenance payments for the following two years
should be characterized as rehabilitative alimony and should be
contingent upon Sandra's enrollment in vocational training.
We conclude that the graduated payments are justified as
spousal support. The superior court's thorough findings regarding
Sandra's financial needs and earning capacity and Michael's ability
to pay alimony justify characterizing the award as spousal
maintenance. As the $3,000-per-month award for the first three
years falls well short of providing for Sandra's reasonable future
living expenses of approximately $47,500 per year, it is not
clearly unjust. The superior court found that Sandra will incur
significant "start-up"costs as she adjusts to divorced life.
Moreover, the court found that Sandra has been out of the work
force for many years and possesses job skills "insufficient to
enable her to obtain adequate employment to support herself." The
gradual reduction of maintenance payments over several years is an
appropriate means of aiding Sandra's adjustment to divorced life.
C. Survivor Benefits
Michael's benefits plan includes survivor benefits
payable only to his "spousal dependents"upon his untimely death.
According to the testimony of the parties' accountant, the plan
defines "spousal dependents"as including an ex-spouse, a current
spouse, or a live-in acquaintance dependent upon Michael at the
time of his death. The superior court found that "[t]he marital
interest in survivor's benefits is a valuable asset that must be
considered in valuing a vested retirement plan." Because the
survivor benefits are not subject to court division, the court
credited Michael with their actuarial present value.
Michael concedes that the "majority of these benefits
were clearly earned during the marriage,"and that the superior
court "correctly viewed [these benefits] as being marital assets."
He argues, however, that because the survivor benefits are payable
only upon his death, he can never receive them and therefore they
are of no value to him. He further contends that because Sandra
may qualify as a spousal dependent upon his death, she may receive
some of the benefits.
The survivor benefits are the equivalent of a vested life
insurance policy without a redeemable cash value. Although Michael
will not receive the benefits directly during his lifetime, they
will provide for his spousal dependents upon his death, relieving
him of the responsibility to make other arrangements for them.
Thus, the survivor benefits are of value to Michael.
As they relate to Sandra, the survivor benefits merely
function to insure that Michael is able to pay the maintenance
award ordered by the court. Because only spousal dependents are
eligible to receive the benefits, Sandra will only receive payment
from the survivor benefits if Michael dies before he has fulfilled
his spousal maintenance obligation to her. It appears from the
record before us that she will receive survivor benefit payments in
the place of, not in addition to, the maintenance payments she was
awarded under the property division. [Fn. 7] We conclude that the
superior court did not err by crediting Michael with the value of
the survivor benefits.
D. Tax Consequences
Through his employer, Michael has options to purchase
6,677 shares of corporate stock at a price of œ2.48 per share. In
October 1996 the superior court noted that the price per share on
the open market was œ5.915. The options must be exercised between
June 22 and December 21, 1998. The options are marital assets.
The superior court ordered that if the market price exceeds the
option price during that period, Michael must exercise the options
and "equally divide any proceeds (market price minus contract
price)"with Sandra. Michael argues that the court's failure to
consider the tax consequences of exercising the options represents
clear error. We disagree.
The superior court is required to consider only the
"immediate and specific tax consequences of its division of
property." Oberhansly v. Oberhansly, 798 P.2d 883, 887 (Alaska
1990). Where tax consequences are speculative and not immediate,
such that it is far from certain that a taxable event will occur,
the superior court is not required to consider them. See Money v.
Money, 852 P.2d 1158, 1163 (Alaska 1993).
The tax consequences associated with the exercise of the
options are speculative. The only evidence presented concerning
taxation was the testimony offered by the parties' personal
accountant. He testified that if Michael were a resident of the
United Kingdom, the shares acquired through the exercise of the
options would not be taxed until they were sold, implying that the
mere exercise of the options would not be a taxable event. Such a
sale would be subject to the English capital gains tax. The
accountant further testified that there is an annual œ6,300
exclusion from the English capital gains tax. Thus, by selling the
shares over a period of several years, Michael might avoid taxes
altogether, even if he were a resident of the United Kingdom. No
evidence was offered as to the tax consequences of exercising the
options or selling the shares acquired through the exercise of the
options if either or both of those acts occurred while Michael
resided in the United States. Under these circumstances, the court
did not err in failing to take the tax consequences concerning the
options into account in dividing the marital property. [Fn. 8]
E. The Currency Exchange Rate
Michael argues that the superior court erred by employing
the approximate currency exchange rate of $1.5 to œ1.0 and that it
therefore inaccurately valued the assets received by each party
under the property division. He contends that the court should
have employed a conversion rate of $1.55 to œ1.0. [Fn. 9]
We reject his argument. First, the superior court
calculated the division of property such that British assets were
valued in pounds and American assets were converted from dollars to
pounds. As almost all of the parties' assets were already valued
in British pounds, they were never converted from pounds into U.S.
dollars. The currency exchange rate was therefore irrelevant to
valuation of the majority of the parties' assets. [Fn. 10]
Second, no evidence was presented at trial in support of
Michael's proposed exchange rate. Michael's counsel merely
referred to an unidentified newspaper as the basis for his proposed
rate of $1.55 to œ1.0. In the absence of evidentiary support for
his proposed rate, there is no reasonable basis for believing that
it is more accurate than the rate used by the trial court.
F. Michael's Date of Employment
The superior court found that for the purposes of BP's
severance program, Michael's employment began in June 1971.
Michael disputes this finding, arguing that he worked for and was
credited with employment by BP during the years he was a student,
starting in 1968. [Fn. 11]
The court based its finding on Michael's 1992 resume,
which states that he has "21 years Operations/Technical/Safety
experience within the petroleum industry with BP,"and which lists
his activity for the years 1968-71 as "University Student"in a
"Chemical Engineering degree [program]." Furthermore, Michael
offers no clear evidence that BP considers him to have begun
employment in 1968. [Fn. 12] In light of the evidence supporting
the superior court's finding and in the absence of any clear
evidence to the contrary, the court's conclusion that Michael began
his employment with BP in 1971 was not clearly erroneous.
G. Attorney's Fees
An award of attorney's fees in divorce actions is within
the broad discretion of the trial court. See Wright v. Wright, 904
P.2d 403, 410 n.11 (Alaska 1995). On appeal, this court will not
disturb an attorney's fee award unless it appears that the trial
court's determination was manifestly unreasonable. Id.
Alaska Statute 25.24.140(a) empowers a trial court in a
divorce action to require one spouse to pay another spouse's
attorney's fees and costs. [Fn. 13] See Beard v. Beard, 947 P.2d
831, 833 (Alaska 1997). Awards of attorney's fees in divorce cases
are not based on the prevailing party rule. See Hartland v.
Hartland, 777 P.2d 636, 644 (Alaska 1989). Rather, this court has
repeatedly held that awards of attorney's fees "are to be based
primarily on the 'relative economic situations and earning powers
of the parties.'" Beard, 947 P.2d at 833 (quoting Kowalski v.
Kowalski, 806 P.2d 1368, 1372 (Alaska 1991)). "This standard
ensures that 'both spouses have the proper means to litigate the
divorce action on a fairly equal plane.'" Id. (quoting Lone Wolf
v. Lone Wolf, 741 P.2d 1187, 1192 (Alaska 1987)).
The superior court found that Sandra had incurred
attorney's fees and costs in excess of $95,000, of which $55,695.05
was still owed to her attorney. The court awarded her $40,000 in
partial payment of attorney's fees. The court based the award on
its findings that Michael's earning power and economic status were
far superior to Sandra's. Michael borrowed money and paid the
$40,000 in full.
Michael argues that his current economic status is not
substantially better than Sandra's because after the court's
property division he was "left with no substantial liquid assets."
We disagree. First, Michael was able to borrow money and pay the
award of attorney's fees. This fact indicates that although he may
not have had sufficient liquid funds to pay the award, his current
economic status enabled him to do so. Second, his future earnings
will enable him to repay the money he has borrowed. Moreover,
although Sandra may have received liquid assets in the division of
property sufficient to pay the $40,000, the court found that she
will need to rely on these assets well into the future, as her
earnings will be vastly smaller than Michael's and she is without
a pension. We therefore conclude that the award of attorney's fees
was not manifestly unreasonable.
IV. CONCLUSION
The judgment of the superior court is AFFIRMED.
FOOTNOTES
Footnote 1:
The parties share joint legal custody of their only remaining
minor child, Peter. Peter attends boarding school in England. His
vacations are divided equally between Michael and Sandra.
Footnote 2:
The parties agree that the proper exchange rate is between
$1.50 and $1.55 per œ1.
Footnote 3:
His gross compensation was $227,873 in 1992, $308,884 in 1993,
and $292,621 in 1994. Michael's wages are not subject to
deductions for FICA and medicare.
Footnote 4:
The court found that Sandra's "future living expenses of
œ31,689 per year (approximately $47,500)"were reasonable and not
convincingly refuted by Michael. The court noted that this amount
is less than Sandra's actual annual living expenses since
separation.
Footnote 5:
The court also observed that Michael will be able to deduct
the gross amount of alimony payments on his United States income
tax return.
Footnote 6:
Michael's argument that renting the home would generate œ2,000
a month in income for Sandra also fails to account for such costs.
Footnote 7:
The trial court ordered that Michael "shall maintain
unencumbered life and disability insurance made payable to [Sandra]
in an amount sufficient to secure and satisfy the balance of his
financial obligations"to her. Michael is free to demonstrate to
the superior court that the survivor benefits satisfy his
obligation to provide insurance sufficient to assure payment of
spousal support.
Footnote 8:
In support of his argument that the superior court failed to
consider the tax consequences of exercising the option shares,
Michael also relies upon the parties' accountant's testimony
regarding taxation of "scheme shares." The accountant's testimony,
however, indicates that the scheme shares are different than the
option shares. Michael's reliance on this testimony is therefore
misplaced.
Footnote 9:
For the purpose of determining future support payments, the
court established that Michael may use an average currency exchange
rate that has been in effect for thirty consecutive days at the
time of the payment. Michael concedes that the court has therefore
"taken care of what future problems may lie when one assumes an
'approximate' exchange rate of foreign monies,"and thus alleviated
the "most onerous effects"of the $1.50 currency exchange rate.
Footnote 10:
Michael was awarded $33,916 and Sandra $12,364 worth of assets
originally valued in U.S. dollars. The value of these assets was
converted from dollars into pounds for purposes of the property
division.
Footnote 11:
Michael appears to raise this argument because the portion of
the severance program benefits accrued during the marriage are a
marital asset. Were Michael able to establish that the benefits
began to accrue in 1968, three years before the parties were
married, then a greater portion of the severance payments would not
be considered marital assets divisible by the court.
Footnote 12:
Michael refers to "testimony from [the parties' accountant]
that BP Exploration, Inc. considers Michael's employment to have
begun in 1968." This testimony, however, is far from clear.
Footnote 13:
AS 25.24.140 provides in pertinent part:
(a) During the pendency of the action, a
spouse may, upon application and in appropriate circumstances, be
awarded expenses, including
(1) attorney fees and costs that
reasonably approximate the actual fees and costs required to
prosecute or defend the action; in applying this paragraph, the
court shall take appropriate steps to ensure that the award of
attorney fees does not contribute to an unnecessary escalation in
the litigation . . . .
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