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Zito v. Zito (12/18/98), 969 P 2d 1144
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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
WILLIAM ZITO, )
) Supreme Court Nos. S-8220/8229
Appellant and Cross-Appellee, )
) Superior Court No.
v. ) 4FA-88-00760 CI
)
KATHLEEN ZITO, ) O P I N I O N
)
Appellee and Cross-Appellant. ) [No. 5055 - December 18, 1998]
)
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Mary E. Greene, Judge.
Appearances: Lynn E. Levengood, Downes,
MacDonald & Levengood, P.C., Fairbanks, for Appellant/Cross-
Appellee. Valerie M. Therrien, P.C., Fairbanks, for
Appellee/Cross-Appellant.
Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.
BRYNER, Justice.
Eight years after dissolving the marriage of Kathleen and
William Zito, the superior court granted Kathleen's motion to
approve a qualified domestic relations order that divided the
marital share of William's retirement benefits; at the same time,
the court denied Kathleen's request for survivor benefits. Both
parties appeal. We hold that the court had authority to approve
the post-dissolution QDRO and that it properly did so because the
parties agreed when they dissolved their marriage to divide
William's retirement benefits; but the court also should have
awarded Kathleen survivor benefits, since they are an integral part
of what the parties agreed to divide.
I. FACTS AND PROCEEDINGS
William and Kathleen Zito dissolved their twenty-two-year
marriage in 1988. Kathleen prepared the petition for dissolution,
which contained a stipulated division of marital property.
Kathleen and William discussed the property division and agreed
upon it before filing it. William had been working for
approximately twelve years as an electronics technician at the
University of Alaska's Geophysical Institute in Fairbanks. Among
the marital assets for division listed in the petition was
William's retirement fund. The parties agreed to divide it as
follows:
Retirement Fund (12 yrs invested). Value
$22,500. Owned by H. (Awarded to [Joint]). Wife to be entitled to
« of the amount accrued during the life of the marriage.
On July 19, 1988, the superior court issued an order of
dissolution, which incorporated the parties' property agreement.
Following the dissolution, William continued to work for
the Geophysical Institute, making additional contributions to his
retirement fund. Eight years after the dissolution, he informed
Kathleen that he interpreted the property agreement's stipulation
concerning his retirement fund to require only that he pay Kathleen
half the fund's stated $22,500 value, and interest accruing from
the date of dissolution. After unsuccessfully seeking to obtain
information concerning the status of William's retirement fund,
Kathleen filed a motion for court approval of a qualified domestic
relations order (QDRO) to enforce her understanding of the
agreement. She asserted that the agreement was intended to give
her half of the fund's benefits accrued during the marriage.
William opposed Kathleen's motion, arguing that the plain
language of the original agreement entitled Kathleen to no more
than one-half of the 1988 stated cash value of his retirement fund.
William also insisted that, without a showing of grounds to modify
the dissolution decree under Alaska Civil Rule 60(b), the court
lacked jurisdiction to alter the decree by adding a QDRO.
Superior Court Judge Mary E. Greene held an evidentiary
hearing to determine the meaning of the original agreement fund.
After considering testimony from William and Kathleen, Judge Greene
granted Kathleen's motion to approve a QDRO. Judge Greene found
that the dissolution petition's provision distributing William's
retirement benefits was ambiguous:
I find that it could be read either of two
ways. You could read it as one-half of the amount in the benefits
account, which [implies] a buy-out or a cash-out, or it could be
read as one-half of the marital portion of retirement benefits,
which is one-half of the amount of retirement benefits.
Judge Greene went on to resolve the ambiguity in
Kathleen's favor, finding it most likely that the parties intended
Kathleen to receive half of the retirement benefits accrued during
the marriage, "distributed at the time of retirement, or whatever
the plan allow[s]."
In reaching this conclusion, Judge Greene considered the
totality of the evidence bearing on the meaning of the original
agreement. Noting that another provision in the property division
agreement expressly called for Kathleen "to be bought out of « the
equity"in the marital residence, the judge found the absence of
express buy-out language in the retirement-fund provision to be a
telling indicator of the parties' intent to divide William's
pension benefits rather than to arrange a buy-out of Kathleen's
interest.
The judge also found the provision dealing with division
of equity in the marital residence significant in another respect.
The dissolution petition listed the value of the parties' equity
as $52,900; yet the parties' testimony established that they
actually settled William's buy-out of Kathleen's interest for
considerably less than half of the listed equity value. They based
this settlement on an appraisal prepared after the dissolution
petition had been filed but before the dissolution was finalized.
This suggested to the court that they did not regard the values
listed in the petition as binding, thus making it unlikely that
they meant to rely on the listed value of the retirement fund as a
basis for a buy-out. The court thought it more likely that the
agreement concerning William's retirement fund reflected "a process
[for dividing the benefits] as opposed to necessary values [for use
in a buy-out]."
Judge Greene noted several other factors favoring the
same conclusion, including William's failure to make any post-
dissolution efforts to pay Kathleen the buy-out value that he
claimed he had agreed to pay her, the wording of the retirement-
fund provision, which Judge Greene found consistent with language
that laypersons might be expected to use in dividing future
retirement benefits, and the fact that a buy-out agreement for the
present value of a retirement benefit was not the most common
practice at the time of dissolution.
Although Judge Greene approved a QDRO, she declined to
order that Kathleen be given survivor benefits covering her
interest in the retirement plan. Finding no "agreement as to
either life insurance or survivor benefits,"the court struck from
Kathleen's proposed QDRO a paragraph directing that Kathleen "shall
be treated as a surviving spouse to the extent of benefits acquired
during the marriage[.]"
William appeals, challenging the court's jurisdiction to
issue the QDRO and its interpretation of the original property-
division agreement. Kathleen cross-appeals, challenging the
court's refusal to award survivor benefits.
II. DISCUSSION
A. William's Appeal
Although William's brief lists sixteen specific issues,
these issues raise two basic points: (1) that the court lacked
authority to modify the original dissolution decree by adding a
QDRO, and (2) that the court misinterpreted the clear language of
the agreement dividing William's pension. Neither point is well
taken.
William argues that the superior court has no inherent
power to modify the terms of a property settlement incorporated in
a final dissolution order. [Fn. 1] He asserts that the court thus
lacked jurisdiction to issue a QDRO unless Kathleen established
grounds for relief from judgment under Alaska Civil Rule 60(b).
William points out that Kathleen neither alleged nor proved any
such grounds. But no such grounds were necessary. Assuming that
the original dissolution order included an agreement to divide the
marital interest in retirement benefits, issuance of a post-
dissolution QDRO would neither add to nor modify the original
judgment. A QDRO simply enforces a court order calling for
division of retirement benefits. [Fn. 2] "The superior court has
inherent power, and also the duty, to enforce its decrees."[Fn. 3]
William goes on to argue that the provision in the
dissolution petition dealing with his retirement fund unambiguously
describes the parties' agreement for William to buy out Kathleen's
interest in the fund for $11,250 -- half its listed value. Our
examination of the record, however, leads us to conclude that Judge
Greene did not err in deciding that the retirement-fund agreement
is ambiguous. Moreover, the record strongly supports Judge
Greene's detailed findings resolving this ambiguity in Kathleen's
favor. [Fn. 4]
William asserts that any ambiguity in the agreement must
be resolved against Kathleen because she wrote the petition for
dissolution. [Fn. 5] But that rule has no relevance here, for it
"applies only to contracts of adhesion where the parties are 'of
such disproportionate bargaining power that [one of them] could not
have negotiated for variations in the terms of [a] standard
[contract].'"[Fn. 6]
Finding no error, we affirm the court's decision granting
Kathleen's motion to approve the QDRO.
 B. Kathleen's Cross-Appeal
Kathleen challenges the trial court's refusal to include
a provision in the QDRO granting her the right to survivor benefits
for her portion of William's retirement fund. At the evidentiary
hearing, Kathleen candidly acknowledged that when she drafted the
provision dividing the marital portion of William's retirement
fund, she did not specifically consider the issue of survivor
benefits. Relying on Kathleen's testimony, Judge Greene found that
the dissolution decree did not include an agreement for survivor
benefits.
After Judge Greene decided this case, however, we issued
an opinion in Wahl v. Wahl [Fn. 7] approving an award of survivor
benefits under similar circumstances. [Fn. 8] We observed in Wahl
that, "[t]o the extent that a party earns retirement benefits
during marriage, the benefits are marital assets and are subject to
equitable division."[Fn. 9] For this reason, we held that "each
spouse is presumptively entitled to an equal share of the
retirement benefits earned during the marriage."[Fn. 10] And
after observing that "[t]he superior court has inherent power, and
also the duty, to enforce its decrees,"we concluded that "[i]t was
within the superior court's inherent power to award . . . a
survivor annuity."[Fn. 11]
Like the present case, Wahl involved no express agreement
concerning survivor benefits, and no evidence suggesting that the
parties had actually considered such an agreement. Yet we held
that a survivor annuity "was appropriate to ensure that Ilene
[Wahl] would receive the full benefit of her property interest
should Jerrold [Wahl] predecease her."[Fn. 12] This holding
implicitly recognizes that survivor benefits are an intrinsic part
of "the retirement benefits earned during the marriage,"of which
"each spouse is presumptively entitled to an equal share."[Fn. 13]
We make explicit here what Wahl left implicit: Barring an express
understanding to the contrary, an agreement for equitable division
of retirement benefits earned during a marriage presumptively
encompasses survivor benefits.
Accordingly, Kathleen was not required to prove a
separate agreement concerning her right to survivor benefits.
Rather, an award of survivor benefits "was appropriate to ensure
that [she] would receive the full benefit of her property
interest."[Fn. 14] We must therefore remand this case for
amendment of the QDRO to restore the deleted paragraph providing
for Kathleen's survivor benefits.
We also note an apparent error in the approved QDRO.
Paragraph seven of the QDRO states that Kathleen's share of the
retirement benefits should consist of "« of the amount accrued
during the time period from December 18, 1966, through July 19,
1988 (259 months), divided by [William's] total number of months in
the plan[.]" The 259-month span mentioned in this language
reflects the total length of the Zitos' marriage, not the period
during which William accrued retirement. William apparently began
working for the University of Alaska in 1976, since the petition
for dissolution claims only twelve years of accrued retirement
contributions as of 1988. If the petition is correct, the accrual
period listed in paragraph seven should be 144 months, not 259
months. The superior court should address this issue on remand.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the superior court's
order granting Kathleen's motion to approve the QDRO, we REVERSE
its denial of Kathleen's request for an award of survivor benefits,
and we REMAND to the superior court for amendment of the QDRO as
directed in this opinion.
FOOTNOTES
Footnote 1:
1 See, e.g., Morris v. Morris, 908 P.2d 425, 427-28 (Alaska
1995).
Footnote 2:
2 See Wahl v. Wahl, 945 P.2d 1229, 1232 (Alaska 1997); seealso AS 39.35.680(34) (defining "qualified domestic relations
order").
Footnote 3:
3 Wahl, 945 P.2d at 1232.
Footnote 4:
4 Contract principles govern in interpreting property
settlement agreements that are incorporated in dissolution decrees.
See Keffer v. Keffer, 852 P.2d 394, 397 (Alaska 1993). In
resolving disputes concerning the meaning of an agreement, the
court begins by "viewing the contract as a whole and the extrinsic
evidence surrounding the disputed terms,"in order to determine if
those terms are ambiguous -- that is, if they "are reasonably
subject to differing interpretation." Wessells v. State, Dep't of
Highways, 562 P.2d 1042, 1046 (Alaska 1977); see also Keffer, 852
P.2d at 397. When the court finds ambiguity, it must attempt to
resolve it by determining the reasonable expectations of the
contracting parties. See Wessells, 945 P.2d at 1046, 1048; Keffer,
852 P.2d at 397. Contract interpretation ordinarily raises
questions of law that are reviewed de novo. See Wahl, 945 P.2d at
1231 n.2. But when the trial court must determine the meaning of
a contract based on extrinsic evidence that raises conflicting
inferences, "our inquiry is limited to determining whether the
trier of fact's choice of inferences is supported by substantial
evidence." Id. at 1232 n.3 (citing Alyeska Pipeline Serv. Co. v.
O'Kelley, 645 P.2d 767, 771 n.2 (Alaska 1982)).
Footnote 5:
5 See, e.g., Wessells, 562 P.2d at 1048; Restatement
(Second) of Contracts sec. 206.
Footnote 6:
6 Little Susitna Constr. Co. v. Soil Processing, Inc., 944
P.2d 20, 25 n.7 (Alaska 1997) (quoting Graham v. Rockman, 504 P.2d
1351, 1357 (Alaska 1972)).
Footnote 7:
7 945 P.2d 1229 (Alaska 1997).
Footnote 8:
8 See id. at 1232.
Footnote 9:
9 Id. at 1231 (citing Rice v. Rice, 757 P.2d 60, 61 (Alaska
1988)).
Footnote 10:
10 Id. (citing Gabaig v. Gabaig, 717 P.2d 835, 842 (Alaska
1986)).
Footnote 11:
11 Id. at 1232.
Footnote 12:
12 Id.
Footnote 13:
13 Id. at 1231.
Footnote 14:
14 Id. at 1232.
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