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Tybus v. Holland (10/15/99) sp-5194
Tybus v. Holland (10/15/99) sp-5194
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
DONALD PETER TYBUS, )
) Supreme Court Nos. S-8559/8560
Appellant/ )
Cross-Appellee, ) Superior Court No.
) 3AN-95-7735 CI
v. )
) O P I N I O N
CATHERINE ELLEN HOLLAND, )
) [No. 5194 - October 15, 1999]
Appellee/ )
Cross-Appellant. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Dan A. Hensley, Judge.
Appearances: William T. Ford, Anchorage, for
Appellant/Cross-Appellee. Deidre S. Ganopole,
Anchorage, for Appellee/Cross-Appellant.
Before: Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.
FABE, Justice.
I. INTRODUCTION
Donald Tybus and Catherine Holland appeal various aspects
of the superior court's property division and alimony award.
Because the superior court acted within its discretion when it set
the date of separation, classified Catherine's student loans as
marital, distributed the marital estate unequally, distributed
pensions through the use of Qualified Domestic Relations Orders
(QDROs), awarded a judgment lien to Catherine to ensure that Donald
would pay marital debts, awarded rehabilitative alimony to
Catherine, and ordered each party to pay his or her own attorney's
fees, we affirm on those issues. We remand for the limited purpose
of ensuring that QDROs were entered for all of the parties'
pensions.
II. FACTS AND PROCEEDINGS
Catherine Ellen Holland and Donald Peter Tybus were
married in 1983 in New York. They had no children.
When the couple married, Donald had a master's degree in
architecture and worked for the federal government as an architect,
while Catherine had a G.E.D. and had finished one year of college.
Shortly before they married, Catherine received a full scholarship
to college but at Donald's request moved with Donald to California
instead of continuing school. In California, Catherine worked for
the federal government as a clerk-typist. After four years in
California, Donald received a job transfer to Virginia. Catherine
quit her job to supervise the couple's move. In Virginia, she
began working for the government again but did not retain any
seniority from her previous government service. After two years in
Virginia, Donald was transferred to Germany. Catherine's seniority
did not transfer and she was effectively demoted. In 1990 Donald
was transferred to Washington, D.C. Catherine was promoted, but
her promotion was rescinded when Donald was transferred to Alaska.
In 1994 Catherine obtained her B.A. in business. She
wished to continue her education by obtaining a master's degree in
either psychological counseling or business. After consulting with
Donald, she decided to obtain the counseling degree even though it
would lead to less of a financial benefit.
In September 1995 Donald moved out of the marital home
and filed for divorce. The couple entered marital counseling, but
the counseling was unsuccessful. In April 1996 Donald had the
locks changed on the marital home to keep Catherine out; Catherine
testified that she then knew the marriage was really over. In
October Catherine briefly believed that the couple would reconcile,
but when Donald told her he did not wish to preserve the marriage,
Catherine finally accepted that the marriage had ended.
After the parties separated in 1996, Catherine decided
that she needed to earn an M.B.A. in order to support herself. She
opted to finish her counseling degree, then in progress, after she
learned that she would have fewer M.B.A. requirements if she
completed the counseling degree. Catherine obtained her master's
degree in psychological counseling in 1997, incurring $10,000 in
student loans.
Judge Dan A. Hensley held trial in October 1997 in
Anchorage. Donald asked the court to divide the couple's property
and award attorney's fees. Catherine requested property division,
spousal support, and attorney's fees.
Judge Hensley set the date of separation as April 1996,
the date that Donald changed the locks on the marital residence.
The primary assets to be divided at trial were: the marital
residence, valued at $11,000 after adjusting for the mortgage,
credit card and other consumer debt in the amount of $21,039,
Catherine's student loans in the amount of $10,000, $3,962 in tax
refunds, two automobiles, a variety of personal property, and a
dog. Each party also possessed a retirement account. At the
request of the parties, the court divided Donald's Civil Service
pension and Catherine's Thrift Savings Plan equally through a QDRO.
At the time of trial, Catherine's earning capacity was
$32,000 per year while Donald's was $65,000 per year. Donald also
testified that he expected to receive an inheritance of
approximately $130,000 within one or two years after trial.
Because the trial court found that Catherine had limited earning
potential, it distributed the marital estate unequally in her
favor. Catherine received one of the cars, the tax refunds, a
$2,000 advance on marital assets, and approximately one-third of
the personal property, for a total of $12,985 in assets plus her
share of the pensions.1 Donald received the other car, the marital
residence, approximately two-thirds of the personal property, the
consumer debt, the student loans, and the dog, for a net liability
of $9,778 plus his share of the pensions.
To allay Catherine's concerns that Donald's late payment
of bills in her name would negatively affect her credit rating,
Judge Hensley awarded Catherine a judgment lien in the amount of
the debts in her name, secured by Donald's expected inheritance.
Because it found that the unequal division of the marital
estate did not rectify the disparity in earning power between the
parties, the trial court also awarded Catherine rehabilitative
alimony. The court ordered Donald to pay Catherine $750 per month
for two years so that Catherine could go back to school and earn an
M.B.A.
Finally, the court ordered that both parties pay their
own attorney's fees.
Donald appeals, arguing that the trial court abused its
discretion by classifying the student loans as a marital liability,
unequally distributing the property, requiring security for
Donald's payment of the marital debts, and awarding rehabilitative
alimony to Catherine. Catherine cross-appeals, arguing that the
trial court abused its discretion by setting the date of separation
as April 1996 and requiring each party to bear his or her own
attorney's fees.
III. STANDARD OF REVIEW
Trial courts exercise broad discretion in the division of
marital assets.2 Property division upon divorce is a three-step
process. First, the court determines what property is marital and
thus available for division.3 We generally review classification
of property for an abuse of discretion,4 although classification of
some items may present a question of law to which we apply our
independent judgment.5 Second, the court places a monetary value
on the marital property.6 We will reverse this factual
determination only if it is clearly erroneous.7 Third, the court
equitably distributes the marital property.8 We review this step
for an abuse of discretion and will affirm unless the division is
clearly unjust.9 We review a trial court's award of rehabilitative
alimony, determination of the date of separation, and decision
whether or not to award attorney's fees for an abuse of
discretion.10
IV. DISCUSSION
A. The Trial Court Did Not Abuse Its Discretion When It Set
the Date of Separation as April 1996.
The proper date after which property should be classified
as post-marital is "ordinarily the date of the functional
termination of the marriage."11 Alaska law has defined this as the
point at which "the marriage has terminated as a joint enterprise"
or when a couple is no longer "functioning economically as a single
unit."12 Determination of the separation date is a fact-specific
inquiry.13
Here, the trial court set the date of separation as April
1996, when Donald changed the locks on the marital residence.
Judge Hensley found that Donald did not clearly communicate to
Catherine before that time his wish to end the marriage but that
when he changed the locks to exclude her from the home, "at that
point both parties should have understood that the relationship was
terminated." We agree.
Catherine argues that "the changing of the locks had
little effect on the parties' relationship"because they continued
to have a sexual relationship until October 1996. This argument
has no merit. First, as Donald points out, Catherine cites no
authority for the proposition that sexual contact between the
parties is a dispositive factor in determining date of separation.
And even though some situations might exist in which a couple's
continuing intimate relationship indicated their desire to keep the
marriage intact, this is not such a case.
Catherine reasons that it would be unfair to allow one
party to "unilaterally effect a 'final separation' by forming a
subjective intent to end the marriage, even as they are giving a
contrary message to their spouse and continuing to engage in
conjugal relationships." But Donald adequately communicated his
intent to end the marriage when he re-keyed the marital home.
Indeed, Catherine herself testified that she first recognized that
the marriage was over when Donald changed the locks. Although she
also testified that she briefly believed that the couple's one
later sexual episode might indicate that Donald had changed his
mind, we agree with the superior court that the marriage was
functionally over and that Catherine and Donald were no longer part
of a joint enterprise in April 1996.
2. The Trial Court Did Not Abuse Its Discretion When It
Classified Catherine's Student Loans as Marital.
Donald challenges both the superior court's
classification of Catherine's student loans as marital property and
the court's allocation of that debt to him. With regard to the
loans' classification, Catherine responds that Donald waived this
argument by not raising it in the lower court. We agree.
We will not consider arguments that parties fail to raise
in the lower court, let alone arguments they have conceded below,
unless the trial court committed plain error.14 Here, Donald argued
below only that the court should allocate the student loan debt to
Catherine, not that it was a non-marital debt. Indeed, he included
the student loans in the list of marital property in his trial
brief. In closing argument, Donald's attorney stated that the
loans "should remain on Catherine's side of the ledger"but did not
argue that they were non-marital debts. Accordingly, we decline to
consider the classification argument because Donald waived it.
3. The Trial Court Did Not Err in Its Unequal Division of
the Marital Property.
Donald argues generally that the overall division of
property, including the court's assignment of Catherine's student
loans to him, was unfair. In particular, he argues that the record
did not justify the trial court's decision to allocate all the
marital debts to Donald. We disagree.
When dividing marital property, trial courts must
consider the so-called Merrill factors,15 now codified at AS
25.24.160(a)(4). Although a fifty-fifty distribution of marital
assets is presumptively the most equitable,16 trial courts have
broad discretion to fashion property settlements and may divide the
assets and liabilities unequally if they find that such a division
is just after consideration of the statutory factors.17
Here, the trial court discussed each applicable statutory
factor and stated that it based its decision to distribute the
marital assets unequally primarily on the parties' unequal earning
power, stations in life, and conduct during the marriage. The
trial court specifically focused upon its factual finding that
Catherine's earning power was less than half of Donald's.
Donald does not dispute this rationale or point to any
statutory factor that the trial court failed to consider; indeed,
he concedes that the trial court's factual findings regarding
unequal earning power "might have justified a property division in
Catherine Holland's favor." But he insists that the trial court's
findings did not "justify ordering [him] to pay all of the marital
obligations." Although the trial court's property division
certainly favored Catherine, it does not rise to the level of being
clearly unjust. Donald's income at the time of trial was $65,000
per year, and he testified that he took home about $4,000 per
month, compared to Catherine's annual salary of $32,000 and monthly
earnings of $1,800. And while Catherine testified that she was
borrowing money and living "bare to the bone,"Donald testified
that he had monthly disposable income of over $2,200. Under these
circumstances, the trial court committed no error in allocating the
marital debt to Donald.
D. The Trial Court Was Not Required to Value the Retirement
Benefits, but Erred in Failing to Consider whether
Catherine Had a Federal Employment Retirement System
Benefit.
Donald next contends that the trial court erred because
it did not value both parties' pensions, instead dividing each
pension equally through entry of a QDRO. QDROs allow superior
courts to retain jurisdiction over nonvested pensions and order
payments of the former spouse's portion of the pension when it
vests.18 Although Catherine responds by arguing the merits of this
issue, we hold that Donald has waived this argument.
As stated above, we will not consider arguments on appeal
if the parties failed to raise those arguments in the lower court,
let alone arguments they have conceded below, unless we find that
the trial court committed plain error.19 In its oral findings, the
trial court noted that "[t]his case was tried under the assumption
that the court would simply divide each pension equally through a
Qualified Domestic Relations Order." Not only was this valuation
method a premise underlying the trial, but both Catherine and
Donald explicitly asked the court to deal with the pensions in this
manner. In her trial brief, Catherine stated to the court that
"[t]he parties' pensions and retirement benefits should be divided
equally with QDROs." Donald also asked the court to value and
distribute the pensions in this manner, telling the court that
"[t]he parties agree that their respective federal pensions should
be divided by appropriate Qualified Domestic Relations Orders."
Accordingly, Donald waived his claim that the trial court was
required to value and divide the pensions.
Donald raises one other point regarding the QDROs,
however. He notes that the trial judge's findings of fact and
conclusions of law make no mention of any Federal Employee
Retirement System (FERS) benefits. Review of the record indicates
that there was a dispute at trial as to whether Catherine has any
FERS accounts; she testified that she did not, while Donald
asserted before and during trial that Catherine did possess such an
account. The trial court's order divided Donald's retirement
benefits and ordered that Catherine's Thrift Savings Account be
equally divided as well. But it made no mention of Catherine's
FERS benefits. This indicates that the court may not have entered
a QDRO for every existing retirement pension. Accordingly, we
remand so that the court can determine whether Catherine does have
a FERS account.20 If so, the court should enter a QDRO
appropriately dividing that pension between the parties.
5. The Trial Court Did Not Err When It Required Donald to
Use His Non-marital Inheritance as Security for Payment
of Marital Debts.
Donald next contends that the trial court committed
reversible error when it granted Catherine a judgment lien for
payment of the bills in her name secured by Donald's expected
inheritance. In entering this order, the trial court discussed
Donald's history of poor money management and unpaid bills and
Catherine's concerns that Donald's uneven payment of bills in her
name would negatively affect her credit rating.
First, Donald argues that there is no need for a judgment
lien because the record does not support the finding that Donald
might fail to make the required payments. This claim has no merit.
Donald testified that he had made late payments or skipped
payments on a variety of bills in his own and Catherine's name and
stated that "for the last three or four years, I have not done a
good job of paying bills as far as on time"due to a lack of
organization. Based on this record, the trial court had ample
reason to be concerned that Donald might not timely pay off all of
the marital debts.
Second, Donald argues that using the inheritance for
security is tantamount to ordering Donald to use separate property
to pay marital debts. But as Catherine notes, the trial court did
not actually order that he use non-marital funds to pay any marital
bills; it merely granted Catherine a way to ensure that bills in
her name would be paid. Moreover, Alaska law supports the idea
that trial judges have discretion to require security for payment
of marital debts; we have held that although trial courts are not
required to secure indebtedness, "creative suggestions [for
providing security] . . . come within the ambit of the superior
court's discretion."21 The trial court here did not abuse that
discretion, and we thus affirm its decision to require security.
F. The Trial Court's Award of Rehabilitative Alimony Was Not
an Abuse of Discretion.
Both Donald and Catherine argue that the trial court's
award of rehabilitative alimony was an abuse of discretion. Donald
contends that no alimony at all was warranted, while Catherine
maintains that the alimony awarded was insufficient. We reject
both claims and affirm the rehabilitative alimony award.
A trial court awards rehabilitative alimony to enable a
party to complete education, job training, or other "means directly
related to the end of securing for one party a source of earned
income."22 Alimony awards are allowable when "just and
necessary,"23 and "[t]his court leniently reviews awards of limited
duration, such as the one here."24 The party seeking rehabilitative
alimony should present an educational or job training plan so that
the reviewing court can determine whether a support award is
necessary and appropriate.25
At trial, Catherine presented a plan to increase her
earning capacity. She testified that she wanted to enter an M.B.A.
program costing $10,000 to $14,000. The program would take four
years to complete and would result in an earning capacity in excess
of $40,000 per year.26 The trial court ordered Donald to pay
Catherine $750 per month for two years so that Catherine could go
back to school and earn an M.B.A.
Donald attacks the award of rehabilitative alimony on
three grounds. First, he claims that the record does not support
the court's finding that Catherine made career sacrifices to
further his career. This argument is meritless. The evidence
supports a finding that during the marriage, the couple moved from
New York to California, to Virginia, to Germany, to Washington,
D.C., and then to Alaska. Each time, Donald received a promotion
or a lateral transfer, while Catherine was demoted or laid off.
Donald attempts to rebut this evidence by pointing out that neither
spouse enjoyed living in California and that Catherine's continuing
education did allow for some career advancement. These points are
only tangentially relevant because they do not counter the large
quantity of evidence showing that Catherine limited her career to
further Donald's. Donald thus has failed to show that the trial
court's findings were clearly erroneous.
Second, Donald argues that Catherine is already
employable and does not need alimony. We disagree. We have
approved alimony awards to spouses who were minimally employed at
the time of divorce.27 Donald argues that we should not adopt a
rule that would allow "already self-supporting [spouses] to further
enhance their income capacity in the future"and instead should
restrict alimony to divorcing spouses who are truly unable to
support themselves. But Judge Hensley found that Catherine's
earning capacity was minimal and unlikely to increase without
additional education. The court noted that Catherine's earning
capacity was $32,000 per year and that it was unlikely to increase
without further schooling. The court found that this income level
was barely sufficient for Catherine's support: "[S]he can support
herself at $32,000.00, but at a minimal level with no cushion to
pay for unexpected expenses or anything but the necessities." This
finding is supported by Catherine's testimony that she lived in an
unsafe neighborhood and needed to borrow money to get by. Under
these circumstances, we will not disturb Judge Hensley's decision
that rehabilitative alimony was necessary and just in this case.
Third, Donald contends that Catherine should not receive
alimony payments to obtain her M.B.A. because she would already
have an M.B.A. if she had not chosen to pursue her counseling
degree. This claim is meritless. We have held in the past that
spouses who advanced their employability through education during
the marriage but still needed further education to be marketable
were entitled to alimony.28
On the other hand, Catherine argues that the trial court
abused its discretion by awarding too little alimony. At trial,
Catherine requested $54,000 in alimony over a five-year period.
She stated that although the cost of her schooling was only $10,000
to $14,000, she wanted the extra money to move to a nicer
neighborhood. She argues now that the court abused its discretion
by recognizing that she needed further education, but refusing to
fund that education completely. But the court had no duty to award
alimony that would fully fund Catherine's plan. Further, the trial
court's actual award exceeded the tuition expenses that Catherine
testified she would need to complete her M.B.A. program. We
therefore believe that the trial court did not abuse its discretion
in making the award that it did. Accordingly, we affirm the
rehabilitation alimony award.
7. The Trial Court Was Not Required to Award Attorney's Fees
to Catherine.
Citing Notkin v. Notkin,29 Catherine maintains that the
trial court abused its discretion by refusing to award her fees
because it ignored its own findings that Catherine's economic
situation and earning power were inferior to Donald's. In Notkin,
we noted that "the relative economic situation and earning power of
each party"were relevant to a trial court's decision to award
attorney's fees.30 In support of her argument that the Notkin
factors required an award of attorney's fees to her, Catherine
cites the trial court's findings that Donald's earning capacity
greatly exceeded hers, that her income was barely enough to live
on, and that Donald was in a better position to pay the fees. But
we have repeatedly held that a party's economic situation includes
more than simply earning power; the property division itself is
relevant to the trial court's decision to award fees.31 In
particular, we have stressed that a party who receives a property
settlement sufficient to cover incurred attorney's fees should
expect to pay his or her own attorney's fees.32
The trial court here noted that "Donald is clearly in a
better position to pay attorney's fees"-- presumably due to his
greater earning potential -- but stated that "because of the
unequal property division and the alimony order, I think it's
equitable that each party be responsible for his or her own
attorney's fees." Catherine has sufficient assets from the
property award such that she can be reasonably expected to shoulder
her own fees. The trial court awarded Catherine $3,962 in cash
from tax refunds. She also received $2,023 in personal property,
$2,000 cash from Donald as an advance on marital assets, and
rehabilitative alimony of $750 per month for two years -- a total
of $18,000 -- which exceeds the direct costs of obtaining her
M.B.A. These assets should be more than sufficient to pay for
approximately $6,000 in attorney's fees. Thus, the trial court's
decision to require the parties to pay their own attorney's fees
was not an abuse of discretion.
V. CONCLUSION
Because the superior court acted within its discretion
when it set the date of separation, classified Catherine's student
loans as marital, unequally distributed the marital estate,
distributed pensions through the use of QDROs, awarded a judgment
lien to Catherine to ensure Donald would pay marital debts, awarded
rehabilitative alimony to Catherine, and ordered each party to pay
his or her own attorney's fees, we AFFIRM those aspects of the
court's decision. But because the court may not have divided every
existing retirement pension by a QDRO, we REMAND for that limited
purpose.
Footnotes:
1 This figure includes $2,000 that Donald paid Catherine
pursuant to a pre-trial stipulation.
2 See Johns v. Johns, 945 P.2d 1222, 1224 (Alaska 1997).
3 See Brotherton v. Brotherton, 941 P.2d 1241, 1243 (Alaska
1997) (citing Moffitt v. Moffitt, 749 P.2d 343, 346 (Alaska 1988)).
4 See id. at 1243.
5 See Cox v. Cox, 882 P.2d 909, 913 (Alaska 1994).
6 See Brotherton, 941 P.2d at 1244 (citing Wanberg v.
Wanberg, 664 P.2d 568, 570 (Alaska 1983)).
7 See id.; Musser v. Johnson, 914 P.2d 1241, 1242 (Alaska
1996).
8 See Brotherton, 941 P.2d at 1244.
9 See Cox, 882 P.2d at 914 (quoting Doyle v. Doyle, 815
P.2d 366, 368 (Alaska 1991)).
10 See Beard v. Beard, 947 P.2d 831, 834 (Alaska 1997)
(attorney's fees); Hanlon v. Hanlon, 871 P.2d 229, 231 (Alaska
1994) (date of separation); Bays v. Bays, 807 P.2d 482, 485 (Alaska
1991) (rehabilitative alimony).
11 Hanlon, 871 P.2d at 231.
12 Id. at 231 (quoting Schanck v. Schanck, 717 P.2d 1, 3 &
n.7 (Alaska 1986)).
13 See Hatten v. Hatten, 917 P.2d 667, 671-72 (Alaska 1996);
Hanlon, 871 P.2d at 231.
14 See Wettanen v. Cowper, 749 P.2d 362, 364 (Alaska 1988)
(holding argument waived because litigant not only failed to raise
argument in lower court but also because he "implicitly conceded"
the inapplicability of his argument).
15 See Merrill v. Merrill, 368 P.2d 546, 547-48 n.4 (Alaska
1962).
16 See Miles v. Miles, 816 P.2d 129, 131 (Alaska 1991).
17 See Laing v. Laing, 741 P.2d 649, 651 (Alaska 1987).
18 See Laing, 741 P.2d at 657-58.
19 See Wettanen, 749 P.2d at 364.
20 See Laing, 741 P.2d at 657-58 (directing trial courts to
enter orders, such as QDROs, retaining jurisdiction over nonvested
pensions).
21 See Money v. Money, 852 P.2d 1158, 1163 (Alaska 1993).
22 Schanck v. Schanck, 717 P.2d 1, 5 (Alaska 1986).
23 Nelson v. Nelson, 736 P.2d 1145, 1147 (Alaska 1987)
(quoting AS 25.24.160(3)).
24 Ulsher v. Ulsher, 867 P.2d 819, 822 (Alaska 1994); see
also Harrelson v. Harrelson, 932 P.2d 247, 254-55 & n.9 (Alaska
1997).
25 See Myers, 927 P.2d at 327-29; Ulsher, 867 P.2d at 822 &
n.5.
26 Catherine's testimony was sufficient to satisfy the
requirement set forth in Myers v. Myers, 927 P.2d 326 (Alaska
1996), that a rehabilitation plan "identif[y] a career goal, a
degree program aimed at realizing that goal, and a time frame
during which the degree may be earned through reasonable
diligence." Id. at 328.
27 See Ulsher, 867 P.2d at 822.
28 See Myers, 927 P.2d at 328.
29 921 P.2d 1109 (Alaska 1996).
30 Id. at 1114 (quoting Hartland v. Hartland, 777 P.2d 636,
644 (Alaska 1989)).
31 See Money, 852 P.2d at 1165; Siggelkow v. Siggelkow, 643
P.2d 985, 989 (Alaska 1982).
32 See Money, 852 P.2d at 1165 (refusing to alter trial
court's award of limited attorney's fees because the requesting
party's portion of the property "includes more than enough cash to
cover her remaining attorney's fees"); H.P.A. v. S.C.A., 704 P.2d
205, 212 (Alaska 1985) ("Assuming that Husband possesses greater
financial resources and greater earning capabilities, Wife's
resources and capabilities are sufficient enough that a court could
reasonably expect her to pay her own fees."); Siggelkow, 643 P.2d
at 989 (reversing award of attorney's fees to wife and ordering
parties to pay their attorney's fees because "Marilyn received a
substantial property award from which she could have paid her
attorney's fees").
-20- 5194
