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v. Hammer (11/12/99) sp-5199
Hammer v. Hammer (11/12/99) sp-5199
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
KENNETH J. HAMMER, )
) Supreme Court No. S-8415
Appellant, )
) Superior Court No.
v. ) 1JU-96-1370 CI
)
KATHERINE F. HAMMER, ) O P I N I O N
)
Appellee. ) [No. 5199 - November 12, 1999]
)
Appeal from the Superior Court of the State of
Alaska, First Judicial District, Juneau,
Walter L. Carpeneti, Judge.
Appearances: Mary E. Guss, Ketchikan, for
Appellant. Loren Domke, Loren Domke, P.C., Juneau, for Appellee.
Before: Matthews, Chief Justice, Compton,
Eastaugh, Fabe, and Bryner, Justices.
BRYNER, Justice.
FABE, Justice, concurring in part and
dissenting in part.
I. INTRODUCTION
The superior court awarded long-term alimony to Kenneth
Hammer's former spouse, Katherine (Kathi), in light of her physical
disability, lack of employment skills, and minimal job prospects.
The court also ordered Ken to pay child support for the Hammers'
son, who resides with Kathi. Ken contends that Alaska law does not
permit long-term alimony and that the evidence did not justify
awarding alimony here. He also contends that the superior court
erred in establishing his child support obligation without
calculating his adjusted annual income. We affirm the award of
alimony, concluding that Alaska law allows long-term alimony awards
and that the evidence establishes that the award actually entered
was just and necessary. But we hold that a remand is necessary
because the superior court erred in failing to calculate Ken's
adjusted annual income -- an error potentially affecting its child
support and alimony decisions.
II. FACTS AND PROCEEDINGS
Ken and Kathi Hammer married in Petersburg in 1973; Kathi
filed for divorce in July 1996. While married, they had three
children. Only the youngest, Jens, was still a minor at the time
of trial.
Kathi was forty-five years old at the time of trial. She
has been deaf since infancy. Her education includes high school
and bookkeeping training. Kathi's primary employment was as a
homemaker and mother. Although Kathi had few employment skills,
she occasionally worked as a bookkeeper, spending a total of about
four and one-half years of her twenty-three-year marriage in
bookkeeping jobs. At the time of divorce, she was capable of
earning about $15,000 annually.
Ken was forty-six years old at the time of trial and had
worked for the Alaska Marine Highway System since 1974. He had
received steady salary increases in this position and by the time
of trial enjoyed gross earnings of $91,000. As time permitted, Ken
also worked as a commercial fisherman and diver. Although his
income from these activities varied annually, his gross earnings
from fishing for the year before trial totaled $9,600.
The Hammers' primary marital assets included the family
residence, a Petersburg warehouse with adjacent tidelands property,
and five retirement accounts related to Ken's marine highway
employment. The court awarded the family residence to Kathi and
the warehouse to Ken. It awarded the benefits from two of the five
retirement accounts to Kathi, ordered Ken and Kathi to share
equally in the proceeds from two other accounts, and retained
jurisdiction over the remaining account, which had not yet vested.
In total, the court awarded property valued at $148,720 to Kathi
and $148,574 to Ken, exclusive of the two retirement accounts that
Kathi and Ken will share equally.
The court also awarded Kathi primary physical custody of
Jens and ordered Ken to make child support payments to Kathi. In
establishing Ken's child support payment, the court noted that his
gross annual income exceeded $95,000. But it did not calculate his
adjusted annual income. Instead, evidently assuming that a gross
income that high left no need for more precise calculation, the
court simply concluded that Ken's adjusted annual income exceeded
$72,000 -- the income cap established in Alaska Civil Rule
90.3(c)(2) for purposes of calculating child support payments.
Accordingly the court ordered Ken to make monthly child support
payments to Kathi of $1,200 -- the payment specified under Rule
90.3(a)(2) for a non-custodial parent with one child whose adjusted
annual income equals or exceeds the $72,000 cap.
The court went on to find that "Kathi's unique
circumstances and the illiquidity of most of the marital assets
justify the award of long-term alimony." More specifically, the
court found that Kathi's need for long-term alimony resulted from
her disability, her limited work experience and job prospects, her
continuing parental obligations, and the lack of readily available
marital funds to meet her ongoing needs:
Her circumstances include very little job
experience gained during a marriage of long duration while she
cared for [three] children, physical impairment (deafness) which
severely limits her income-earning potential and necessitates
medical bills and the need to travel for medical services, and her
responsibility to provide single parenting to the parties' child
for three more years. The great bulk of the marital assets are
tied up in retirement accounts and the parties' home.
Relying on these findings, the court ordered Ken to pay Kathi
alimony of $1,400 per month until July 2000, when Jens reaches age
eighteen, and $1,600 per month thereafter until Kathi remarries or
begins to receive payments from Ken's retirement accounts.
The court based the amount of this award on its estimate
of Kathi's financial needs and employment prospects. It began by
determining that Kathi's reasonable monthly expenses would total
$2,600 and that her monthly earning capacity after taxes would be
$1,000. But the court concluded that Kathi "should not be required
to seek employment while she has the responsibility of caring for
Jens." Thus, by setting alimony at $1,400 per month during this
period, the court supplemented Kathi's child support income in an
amount that yielded total payments equaling Kathi's monthly needs.
And by increasing Kathi's alimony from $1,400 to $1,600 after
Jens's eighteenth birthday, the court sought to maintain payments
commensurate with Kathi's needs, since Kathi would then lose $1,200
in monthly child support payments but would be free to work and
could expect to gain approximately $1,000 in monthly earnings.
Ken appeals, contending that the award of long-term
alimony is legally improper and factually unwarranted and that the
amount of the child support award is based on a flawed calculation
of his income.
III. THE SUPERIOR COURT PROPERLY AWARDED LONG-TERM ALIMONY TO KATHI
BUT BASED THE AMOUNT OF THE CHILD SUPPORT AWARD ON AN INCORRECT
DETERMINATION OF KEN'S INCOME.
A. Alaska Law Permits Long-Term Alimony When "Just and
Necessary."
In challenging the superior court's alimony order, Ken
first questions whether Alaska law permits long-term awards of
alimony. [Fn. 1] But the plain language of AS 25.24.160(a)(2)
expressly authorizes courts to award alimony "for a limited or
indefinite period . . . as may be just and necessary."[Fn. 2] In
ordinary usage, an "indefinite"award is one of "unlimited"
duration or one "continuing with no immediate end."[Fn. 3] We
must interpret this statutory language according to its common
meaning unless it has acquired a particular meaning through
legislative definition or prior judicial construction. [Fn. 4]
Ken suggests that our recent case law has applied
AS 25.24.160(a)(2) narrowly, defining only two permissible
categories of alimony -- rehabilitation and reorientation alimony
-- each involving awards of brief duration. [Fn. 5] But Ken is
mistaken. We have acknowledged the concept of long-term alimony in
a number of cases. [Fn. 6] Thus, in keeping with
AS 25.24.160(a)(2), our case law allows alimony of indefinite
duration when it is "just and necessary."[Fn. 7]
B. The Court Did Not Abuse Its Discretion in Finding Long-
Term Alimony Just and Necessary.
Ken next asserts that an extended alimony award is in any
event not justified under the facts of the present case. In
support of this assertion, he reviews at length the evidence that
favors his position. Yet our function on appeal is not to reweigh
the evidence; we review alimony awards for abuse of discretion and
will reverse an award only when definitely and firmly convinced
that the superior court made a mistake. [Fn. 8]
Here the trial court carefully considered the evidence in
light of the statutory factors governing awards of alimony. [Fn. 9]
The court justified the long-term award based in part on Kathi's
lack of work experience, her responsibilities as Jens's primary
custodial parent, and her deafness, lack of job prospects, and
limited ability to retrain for employment. It found that all of
these factors severely impaired Kathi's employability. The court
also found that Kathi's needs could not be met through an uneven
division of marital assets.
While Ken argues that the record does not support the
court's findings, we disagree. Ken asks us to analyze each of
Kathi's circumstances in isolation, but we believe the superior
court's cumulative approach is more appropriate. [Fn. 10] We note
that Kathi will be raising Jens as a single parent, undergoing job
retraining, coping with her thyroid problem and undertaking
associated travel, as well as supervising repairs to the marital
residence. In facing all of these demands, she will be challenged
by her deafness, limited work experience, limited education, and
lack of nearby family. The difficulties Kathi will face in
attempting to be self-sufficient are a consequence of her long-term
marriage. Furthermore, as the superior court accurately observed,
Kathi's work in the home allowed Ken to produce the wealth that is
the current source of the marital estate's economic value.
In short, our review of the record discloses substantial
evidence supporting the court's findings and persuades us that the
court's alimony award did not amount to an abuse of discretion. We
thus affirm the court's findings with respect to Kathi's economic
needs and earning potential. We also affirm its conclusion that a
long-term award of alimony is both just and necessary.
C. The Court Erred in Computing Ken's Income.
Ken maintains that the superior court erred in
determining the award of his child support obligation on the basis
of his gross annual income rather than his adjusted annual income.
He also maintains that the court's mistaken focus on his gross
income unfairly influenced its ruling on the issue of alimony.
Ken's argument has merit. Civil Rule 90.3(a) requires
courts to calculate child support awards on the basis of "adjusted
annual income"; the rule defines that term as a "parent's total
income from all sources minus"various mandatory deductions and
expenses, including "federal income tax, social security tax, [and]
mandatory retirement deductions."[Fn. 11] Here, the superior
court did not calculate Ken's adjusted annual income for purposes
of establishing his child support payment; it simply concluded,
based on Ken's $95,000-plus gross annual income, that his adjusted
income would exceed Rule 90.3's $72,000 income cap. Given Rule
90.3(a)'s express directive to calculate adjusted annual income,
the court erred in using Ken's gross annual income as the basis for
its child support award. [Fn. 12]
Nevertheless, given the sizeable amount by which Ken's
gross annual income exceeds the $72,000 cap for adjusted annual
income, it is appropriate to inquire whether this error was
harmless. In this regard, Ken contends that several significant
components of his gross income would have been deductible had the
court actually calculated his adjusted annual income. First, Ken
correctly asserts that the court should have deducted from his
gross income the more than $17,000 in federal taxes that the state
withheld from his prior year's wages; Rule 90.3(a)(1)(A) expressly
requires this deduction. [Fn. 13] Ken next asserts that the court
should have deducted his mandatory Supplemental Benefit System
(SBS) withholdings. Again, he is correct, since these mandatory
withholdings are akin to mandatory retirement expenses, which
Rule 90.3(a)(1)(A) specifically lists as deductible. [Fn. 14]
Ken further questions the court's findings concerning his
gross earnings as a commercial fisherman. Noting that his annual
income from fishing commercially fluctuated drastically over the
three years before trial, he contends that the court should have
used a three-year average income instead of his prior year's
earnings to predict his future income. Ken also argues that the
court erred in failing to deduct self-employment taxes and out-of-
pocket expenses from his gross fishing income when it calculated
his income.
This court has approved income averaging where a parent's
income undergoes yearly fluctuations. [Fn. 15] Moreover, the
Commentary to Rule 90.3 permits the practice in appropriate cases.
[Fn. 16] Furthermore, the Commentary to Rule 90.3 makes clear that
income from self-employment includes "gross receipts minus the
ordinary and necessary expenses required to produce the income."
[Fn. 17] The Commentary further provides that courts have
discretion to determine which business expenses may be deducted.
[Fn. 18] Nevertheless, the superior court did not acknowledge the
option of income averaging in its findings nor did it explain its
reasons for relying on Ken's most recent year of earnings. In
addition, the court failed to mention any fishing-related taxes or
expenses in its findings. This lack of findings precludes accurate
review of the court's decision to attribute $9,600 to Ken as annual
fishing income. [Fn. 19]
Finally, Ken argues that the court erred in failing to
deduct $11,533.25 in state per diem. Marine highway employees
receive per diem for out-of-pocket expenses, generally for meals
and lodging when they are in foreign ports. For certain items,
such as hotels and some meals, employees must provide receipts to
receive compensation. These expenses are not taxed. For other
expenses, employees receive a contractual daily rate and need not
submit receipts. These expenses are taxed.
At trial, the superior court suggested that only Ken's
untaxed per diem would be deductible from gross income for purposes
of computing adjusted annual income; the court's comments implied
that his taxed per diem covers non-necessary expenses and should
therefore be counted in adjusted income. [Fn. 20] Ken contends
that this ruling is mistaken and that all of his per diem must be
excluded from adjusted annual income. But we find the superior
court's reasoning sound and conclude that it did not err in
distinguishing between taxed and untaxed per diem for purposes of
calculated adjusted annual income. [Fn. 21]
Even excluding Ken's taxed per diem as a permissible
deduction from gross income, the potential cumulative impact of the
other allowable deductions casts serious doubt upon the superior
court's conclusion that Ken's adjusted annual income exceeds
$72,000. If this conclusion was mistaken, the mistake might have
had a direct impact on the court's child support order; the mistake
also might have indirectly influenced its decision on alimony.
Under these circumstances, the failure to calculate Ken's adjusted
annual income cannot be deemed harmless.
IV. CONCLUSION
Accordingly, we AFFIRM the superior court's award of
long-term alimony but REMAND for calculation of Ken's adjusted
annual income. If the calculation establishes that Ken has an
adjusted annual income of less than $72,000, the superior court
will be required to recalculate Ken's child support obligation and
should also reconsider its original award of alimony to determine
whether it continues to be just and necessary. [Fn. 22]
FABE, Justice, concurring in part and dissenting in part.
I agree with the court that the trial judge properly
awarded long-term alimony to Kathi. And I agree that the trial
court should have performed the calculations and adjustments needed
to reach a precise figure for Ken's adjusted annual income. But
its failure to do so does not require a remand of this case for
further findings. Ken's gross income exceeds $100,000 per year.
Even after taking into account all arguably proper deductions, his
adjusted gross income tops Rule 90.3's income cap of $72,000.
Because the trial court's bottom line was correct, its failure to
perform the necessary calculations is harmless. I would therefore
affirm the child support obligation established by the superior
court.
The superior court made a specific finding that Ken's
gross income exceeded $100,000 for 1996. This figure was comprised
of "[t]otal gross earnings from the ferry system [of] $91,391.05;
Permanent Fund dividend [of] $1,131; [and] commercial fishing
income [of] $9,600,"totaling $102,122.05. The court identifies
three deductions that the trial judge should have made to Ken's
gross income in determining Ken's adjusted annual income for Rule
90.3 purposes: federal income taxes of $17,000; mandatory SBS of
$3,843; and non-taxable per diem of $6,287. These adjustments
total $27,298 and, when subtracted from Ken's gross income, render
an adjusted annual income of $74,824.05. Thus, if the majority
were to give the appropriate level of deference to the trial
court's income findings, it could only conclude that the trial
court's conclusion that Ken's adjusted annual income exceeded Rule
90.3's $72,000 cap was correct.
Yet the court chooses to question the trial judge's
finding regarding Ken's fishing income because the trial judge "did
not acknowledge the option"of averaging Ken's fishing income over
several years and "failed to mention"any fishing-related taxes or
expenses in its findings. [Fn. 1] In so doing, the court ignores
the fact that neither Rule 90.3 nor our case law compels income
averaging. As the commentary to Rule 90.3 recognizes, income
averaging is not required -- it is merely a tool that the trial
court "may choose"to employ when past income has been erratic.
[Fn. 2] While the trial court has the choice of income averaging
in such cases, it need not exercise this option nor need it make
express findings when it elects not to do so. It was thus wholly
appropriate for the trial court to rely on Ken's 1996 fishing
income in determining his adjusted annual income for that year.
Nor did the trial court miss any significant fishing
expenses or taxes. Ken testified that his only fishing expenses
for 1996 were $400-$500 in "actual out-of-pocket outlays"including
his "share of fuel and groceries, clothes, a share of the gear that
was lost, hooks and ganions." And there was no testimony or
argument at trial about the "fishing taxes"that apparently concern
the court. [Fn. 3] Thus, the trial court's failure to address
fishing expenses was at most a $500 error, resulting in a 1996
fishing income of $9,100. Indeed, Ken's lawyer conceded at trial
that Ken's fishing income for 1996, after out-of-pocket expenses,
"was approximately $9000 net." (Emphasis supplied.) Thus, even if
the trial court neglected to consider fishing-related expenses,
this would not affect the conclusion that Ken's adjusted annual
income exceeded $72,000.
In sum, I do not believe that a remand is necessary in
this case. The superior court did not err in its findings on Ken's
gross income for 1996, and after the appropriate adjustments to
that gross income figure are made, Ken's adjusted annual income
still exceeds Rule 90.3's $72,000 income cap. Thus, the trial
court's failure to perform all necessary calculations in
determining child support was harmless. For this reason, I
respectfully dissent.
FOOTNOTES
Footnote 1:
This is a question of law that we review de novo. See
Fitzgerald v. Puddicombe, 918 P.2d 1017, 1019 (Alaska 1996).
Footnote 2:
AS 25.24.160(a)(2) states:
(a) In a judgment in an action for divorce or
action declaring a marriage void or at any time after judgment, the
court may provide
(2) for the recovery by one party from
the other of an amount of money for maintenance, for a limited or
indefinite period of time, in gross or in installments, as may be
just and necessary without regard to which of the parties is in
fault; an award of maintenance must fairly allocate the economic
effect of divorce by being based on a consideration of the
following factors:
(A) the length of the marriage and
station in life of the parties during the marriage;
(B) the age and health of the parties;
(C) the earning capacity of the parties,
including their educational backgrounds, training, employment
skills, work experiences, length of absence from the job market,
and custodial responsibilities for children during the marriage;
(D) the financial condition of the
parties, including the availability and cost of health insurance;
(E) the conduct of the parties,
including whether there has been unreasonable depletion of marital
assets;
(F) the division of property under (4)
of this subsection; and
(G) other factors the court determines
to be relevant in each individual case . . . .
Footnote 3:
Webster's Third New International Dictionary 1147 (1967).
Footnote 4:
Alaska Hous. Fin. Corp. v. Salvucci, 950 P.2d 1116, 1121
(Alaska 1997).
Footnote 5:
Ken cites Davila v. Davila for the proposition that "[t]here
are two distinct types of continuing spousal support[,] . . .
rehabilitative alimony . . . [and] [r]eorientation alimony." See
908 P.2d 1027, 1033 n.9 (Alaska 1995) (citations and internal
quotations omitted).
Footnote 6:
See, e.g., Gallant v. Gallant, 945 P.2d 795, 801 (Alaska
1997); Jones v. Jones, 835 P.2d 1173, 1178-79 (Alaska 1992);
Hilliker v. Hilliker, 755 P.2d 1111, 1112 (Alaska 1988).
Footnote 7:
Hilliker, 755 P.2d at 1112 (quoting AS 25.24.160(3)); accord
Gallant, 945 P.2d at 801.
Footnote 8:
Dodson v. Dodson, 955 P.2d 902, 905 (Alaska 1998).
Footnote 9:
These factors are set out in AS 25.24.160(a)(2)(A)-(G). See
supra note 2. Ken argues in part that the superior court did not
adequately address the income-producing potential of the retirement
accounts and other property that it awarded to Kathi. But the
income-producing capacity of property is a statutory factor that
the court must consider in deciding on an equitable property
division. See AS 25.24.160(a)(4)(I) (providing that courts must
examine "the income-producing capacity [of property]"in dividing
a marital estate). That factor does not directly apply to
decisions on alimony, which, as noted above, are governed by
subsection 160(a)(2). Moreover, it is unclear from the record
whether the disputed accounts have any present income-producing
potential; we note that the parties disagree concerning the
accounts' current availability. Because the superior court will
have discretion to reconsider the property division on remand, Ken
may ask the court to give this issue further consideration.
Footnote 10:
See Gallant, 945 P.2d at 801-02 (awarding long-term alimony to
spouse who managed home during marriage, possessed limited work
experience, and suffered from health problems).
Footnote 11:
Civil Rule 90.3(a) provides:
(a) A child support award in a case in
which one parent is awarded sole or primary physical custody . . .
will be calculated as an amount equal to the adjusted annual income
of the non-custodial parent multiplied by a percentage specified in
subparagraph (a)(2).
(1) Adjusted annual income as used in
this rule means the parent's total income from all sources minus:
(A) mandatory deductions such as federal
income tax, social security tax, mandatory retirement deductions
and mandatory union dues;
(B) child support and alimony payments
arising from prior relationships which are required by other court
or administrative proceedings and actually paid;
(C) child support for children from prior
relationships living with the parent, calculated by using the
formula provided by this rule; and
(D) work related child care expenses for
the children who are the subject of the child support order.
Footnote 12:
Cf. Neilson v. Neilson, 914 P.2d 1268, 1275-76 (Alaska 1996)
(failure to deduct obligor's State of California income taxes from
income calculation was clear error); Bergstrom v. Lindback, 779
P.2d 1235, 1236 (Alaska 1989) (recognizing the mandatory-
deductions clause of Rule 90.3(a)(1)(A)).
Footnote 13:
Rule 90.3(a)(1)(A) is set out supra note 11; see also Neilson,
914 P.2d at 1275-76 (ruling that the lower court's failure to
deduct obligor's State of California income taxes from income
calculation was clear error).
Footnote 14:
See supra note 11.
Footnote 15:
See Zimin v. Zimin, 837 P.2d 118, 123 n.9 (Alaska 1992).
Footnote 16:
See Alaska R. Civ. P. 90.3 Commentary III.E.
Footnote 17:
Alaska R. Civ. P. 90.3 Commentary III.B.
Footnote 18:
See id.; see also Renfro v. Renfro, 848 P.2d 830, 833 (Alaska
1993) (internal quotations omitted) (quoting Coghill v. Coghill,
836 P.2d 921, 926 (Alaska 1992)) (holding that the trial court has
discretion, on the evidence presented, to choose "the best
indicator of . . . future earning capacity").
Footnote 19:
See Davila v. Davila, 876 P.2d 1089, 1094-95 (Alaska 1994)
(holding that the trial court must make adequate findings,
particularly regarding the financial needs and abilities of both
parties); accord Renfro, 848 P.2d at 834.
Footnote 20:
At trial, Ken's counsel suggested that the court deduct both
taxable and non-taxable per diem, because "[i]t just reimburses him
for what he had to spend . . . ." The court replied, "I don't
think the federal government believes that. Why would they be
taxing him, then?"
Footnote 21:
Though the point became moot at the end of trial because the
court did not actually calculate Ken's adjusted annual income, it
will have renewed relevance on remand.
Footnote 22:
Ken separately claims error in the value the superior court
attributed to the warehouse and tidelands lot adjacent to the
family residence in Petersburg. The court valued the property at
$29,300 and awarded it to Ken. The parties agree that the court
erred in failing to deduct from this value the current debt of
$5,422.26 owed on the property. On remand, the court should
revalue this property and determine whether this change warrants an
adjustment of the overall property division.
We also note that the written findings in the record
incorrectly state that the parties have four, rather than three,
children. This mistake has no effect on the judgment but should be
corrected on remand in the interest of accuracy.
FOOTNOTES (Dissenting in Part/Concurring in Part)
Footnote 1:
Op. at 12.
Footnote 2:
Alaska R. Civ. P. 90.3 Commentary III.E.
Footnote 3:
Op. at 12.
