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Sloane v. Sloane (3/2/01) sp-5368
Sloane v. Sloane (3/2/01) sp-5368
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
SALLY K. SLOANE, )
) Supreme Court No. S-9195
Appellant, )
) Superior Court No.
v. ) 3AN-96-9905 CI
)
GEORGE R. SLOANE, ) O P I N I O N
)
Appellee. ) [No. 5368 - March 2, 2001]
______________________________)
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
Eric T. Sanders, Judge.
Appearances: Michael R. Wirschem, Houston &
Houston, Anchorage, for Appellant. Susan D. Mack, Law Office of
Susan D. Mack, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
CARPENETI, Justice.
I. INTRODUCTION
Sally Sloane contests several aspects of the superior
court's final judgment and a subsequent order regarding attorney's
fees in her divorce from George Sloane. Because the superior court
did not abuse its discretion or otherwise err with regard to any of
the issues raised on appeal, we affirm the trial court's decision.
II. FACTS & PROCEEDINGS
Sally Sloane (Sally) and George Sloane (George) were
married on November 29, 1958, in Las Vegas. They have four adult
children.
Beginning in 1955, George worked as a journeyman
electrical lineman through the International Brotherhood of
Electrical Workers union. He has worked in this capacity to the
present, with a break in service from 1970 until 1982.
Sally was the primary care giver of the parties'
children. Additionally, Sally has an extensive work history during
the couple's marriage. Sally worked nearly forty hours a week at
various family businesses doing administrative work during the
1970s. In addition, she worked as an accountant with the State of
Nevada; she also has approximately ten years experience as a real
estate agent. Starting in 1991, Sally performed administrative
work for a family business, Carts and Parts, Inc. (CPI). Sally
moved to Idaho in 1996 to handle all of the preliminary work on the
family's expansion of their airport storage business. She has a
Bachelor of Arts degree in human resources development and an
Associate of Arts degree in travel industry management.
The parties owned a number of small businesses during the
marriage, including two equipment rental businesses, a parking lot
sweeping business, and an airport storage business. Carts and
Parts, Inc. was created in 1991 and was engaged in washing shopping
carts, wire baskets, trucks, and heavy equipment. The couple's son
Gary worked for CPI for six years. Gary agreed to buy CPI from his
parents on April 3, 1997.
Both Sally and George benefitted from the CPI sale
agreement. Sally was paid $10,000 for her ownership interest in
CPI, and George received a note from CPI for $25,000 to compensate
him for the estimated value of wages owed to him. The note was
secured by issuance of one half of all of CPI's stock to George.
George later sold the shares back to Gary for ten dollars.
Sally alleges that she suffers from numerous health
problems. She complains of ongoing complications from a surgery in
1991 to remove her ovaries. She also claims that she requires
surgery on her hands, toes, and nose. Sally presented evidence to
the superior court that she suffers from various medical problems,
including bilateral carpal tunnel syndrome, diabetes,
hyperlipidemia, abnormal liver function, irritable bowel syndrome,
and hiatal hernia.
The Sloanes separated permanently on December 20, 1996,
and have been living as separate economic units since that time.
George Sloane filed for divorce on December 18, 1996.
Both Sally and George were residents of the State of Alaska when
the complaint was filed. On February 4, 1997, the court entered an
order for interim spousal support requiring George to pay Sally
$3,000 per month during the pendency of the case. Between the
entry of that order in February 1997 and trial in February 1999,
George made direct payments of $44,500 and indirect payments (for
which he received credit) of about $7,500. Accordingly, he
accumulated arrearages of about $23,000 by the time of trial. The
case was tried February 16-25, 1999.
The superior court entered its "Findings of Fact and
Conclusions of Law" on May 27, 1999. Sally was awarded $412,270.02
of marital property, which equaled fifty-seven percent of the
total. [Fn. 1] The court's deviation from an equitable division
was based upon George's greater earning potential. The trial judge
intended to "give Mrs. Sloane approximately one-half of Mr.
Sloane's income until a reasonable date of retirement."
In dividing the marital property, the court assigned the
CPI note to George and ascribed the note a value of ten dollars.
The court also ordered George to pay the $23,000 in spousal support
arrearages with an additional $500 in interest.
In October 1999, the court issued an order awarding Sally
attorney's fees of $3,186, an amount equal to one half the sum
George's union legal fund paid for his fees along with extra
expenses Sally incurred in preparing the post-trial paperwork.
Sally filed this appeal challenging six specific aspects
of the superior court's final judgment and subsequent order of
attorney's fees: (1) the valuation of the $25,000 note from CPI to
George; (2) the decision to grant only fifty-seven percent of the
marital assets to her; (3) an award of $500 in interest owed on
missed interim support payments in lieu of a specific calculation
of interest; (4) the denial of her claim for future medical and
insurance expenses; (5) the award of attorney's fees; and (6) the
failure to award money to reimburse her for relocation during
litigation.
III. STANDARDS OF REVIEW
The trial court has broad discretion in fashioning
property divisions in divorce actions. [Fn. 2] The valuation of
marital property is a factual determination "which will not be set
aside on appeal unless it is clearly erroneous." [Fn. 3] A
valuation is clearly erroneous and should be set aside if the
reviewing court is left with a definite and firm conviction on the
entire record that a mistake has been made. [Fn. 4] The superior
court's equitable distribution of property "is reviewable under the
abuse of discretion standard, and we will not disturb the trial
court's allocation 'unless it is clearly unjust.'" [Fn. 5]
The award of attorney's fees in divorce actions is within
the broad discretion of the trial court. [Fn. 6] An award of
attorney fees will not be reversed unless it is arbitrary,
capricious, or manifestly unreasonable. [Fn. 7]
IV. DISCUSSION
A. The Superior Court's Valuation of the Note from CPI to
George Was Not Clearly Erroneous.
Sally argues that the $25,000 note from CPI was a marital
asset that George unilaterally converted to a gift. In the
property division, the court valued the note at ten dollars and
awarded it to George.
In April of 1997 the Sloanes sold CPI to Gary and
memorialized the sale in a written agreement. It provided that
Sally would receive $10,000 and George would receive a note for
$25,000. In order to secure payment on the note, 10,000 of the
20,000 shares of CPI stock were transferred to George. The note
was meant to compensate George for wages and contributions made to
CPI during the marriage. George later sold the shares back to Gary
for ten dollars.
Sally contends that the valuation of the note at $25,000
in the April 1997 sale agreement is determinative of the note's
value. She mistakenly relies upon our holding in Money v. Money.
[Fn. 8] In that case, we held that a trial court may use a buy-
sell agreement for valuation purposes, [Fn. 9] but we did not go so
far as to require the trial court to do so. In fact, reliance on
a buy-sell agreement often depends on the support of other
valuation techniques. [Fn. 10] In Brosnan v. Brosnan, [Fn. 11] we
held that it was error for a trial court to assign a note its face
value when both parties agreed that the note had little or no
chance of actually being repaid. [Fn. 12]
The superior court in this case heard extensive evidence
regarding the April 1997 agreement for the sale of CPI. At one
point during George's testimony, the court directed specific
questions to him regarding his attitude and expectation with regard
to the agreement. George testified that Sally's attorney prepared
the agreement and presented it to him during a brief window of time
before Sally was scheduled to leave on a flight. He acknowledged
that the equity in CPI likely was not $10,000 when it started and
CPI was unlikely to have much revenue in the future. George
claimed that he intended for CPI to provide a solid foundation for
Gary's future. He testified that he had not requested the $25,000
note, that he did not believe that he would ever collect on it, and
that it was included in the agreement only because Sally's attorney
had done so.
The CPI sale agreement acknowledged that George and Sally
were involved in divorce proceedings. The agreement included a
clause by which George waived his right to claim that the $10,000
Sally received from the sale was a marital asset. Yet Sally now
seeks contribution from George's proceeds of that same sale, and
she seeks to value those proceeds at $25,000.
The circumstances surrounding the sale of CPI suggest
that the value of the note was not $25,000. George signed the
agreement under time constraints on terms determined unilaterally
by Sally's attorney. And Sally has not presented any evidence to
refute George's claim that CPI would not have sufficient funds to
repay the note. The superior court did not commit clear error by
holding that the value of the note was only ten dollars.
B. The Superior Court's Division of the Marital Property Was
Not an Abuse of Discretion or Clearly Unjust.
1. The superior court did not err in assigning fifty-
seven percent of the marital property to Sally
Sloane.
The superior court awarded Sally fifty-seven percent of
the marital property based primarily on the disparate earning
capacity of the parties during the three years before George, then
62, reached retirement age. Sally argues that the court erred by
not providing additional support to her because of her advanced
age, station in life during the marriage, and health problems.
A property division must fairly allocate the economic
effects of divorce by considering the Merrill [Fn. 13] factors, as
codified at AS 25.24.160(a)(4). Included in those factors is the
"station in life of the parties during the marriage," [Fn. 14] as
well as "the age and health of the parties." [Fn. 15] A fifty-
fifty distribution of marital assets is presumptively the most
equitable, [Fn. 16] but the superior court has broad discretion to
divide the property unequally if it finds that such a division is
just, based on the statutory factors. [Fn. 17]
a. Sally's age
The superior court specifically considered Sally's age.
However, the court did not find her age to be important because
George is of a comparable age and both are approaching retirement.
The superior court stated, "[s]he is 60 years old. I completely
understand that. I factor that in just as if I factored in Mr.
Sloane's age in terms of his capacity as well." Since the court is
charged with the task of fairly distributing the effect of the
divorce between two parties of equally advanced age, the fact that
Sally was sixty years old, by itself, is insufficient grounds to
challenge the court's finding. Sally has not presented a cogent
argument to this court why her advanced age deserves any additional
consideration beyond that given to it by the superior court.
Sally's reliance upon Broadribb v. Broadribb [Fn. 18] is
misplaced. In that case, we upheld a superior court's award of
spousal maintenance payments. Mr. Broadribb's pension was not
subject to court division, and Ms. Broadribb's age was relevant
because at forty-eight she was likely too old to "accrue any
substantial employer-provided pension in her remaining work years."
[Fn. 19] In this case, George's pension was subject to court
division, so a consideration of Sally's age relative to her ability
to earn her own pension is not relevant.
b. Sally's station in life
Sally also argues that the court did not consider her
station in life during marriage. However, Sally neither raised
this issue before the superior court nor presented evidence or
argument in her briefs that would have made her station in life
relevant to the property distribution. Accordingly, this argument
has been waived. [Fn. 20]
c. Sally's health
Finally, Sally argues that the superior court did not
properly consider her health in making its findings. Sally
contends that the court failed to consider the substantial evidence
that she had presented about her non-surgical medical needs.
Sally's health is potentially relevant to the court's
decision in two ways. It is relevant to her ability to work and
support herself, and it is also relevant in considering health-
related costs that Sally will incur in the future.
Contrary to Sally's assertions, the superior court did
consider her health; it simply was not convinced that Sally needed
any of the surgeries that she alleged. The court also commented
that Sally's treatment at the Mayo Clinic might be overly
expensive.
Sally has been able to work in an administrative capacity
in family businesses for several years. [Fn. 21] The superior
court concluded that Sally's health concerns were not so serious as
to prevent her from continuing to work in the future. The court
found that Sally's medical records did not necessarily support her
health concerns. A review of the medical evidence presented to
this court supports the superior court's findings. Despite the
fact that Sally continually alleged the need for several surgeries,
not a single medical document that she presented to the court
clearly states that need. In addition, the medical evidence on
which Sally relies does not conclusively state the consequences of
her ongoing health concerns. Without such definite support for her
health claims, the trial court's finding that Sally would be able
to work in the future was not clearly erroneous.
Moreover, even if the court's conclusion that Sally was
capable of being gainfully employed was incorrect, it would be
harmless error. In calculating and dividing the marital estate,
the court valued Sally's future earnings at zero. Therefore, it
was not reversible error for the court to award fifty-seven percent
of the marital property to Sally based upon health problems that
may keep her from working in the future.
2. The superior court did not err by failing to award
Sally Sloane additional money for ongoing medical needs.
Sally raises two arguments with regard to the way the
superior court dealt with her claims for ongoing medical needs.
First, she argues that the superior court failed to properly
consider her claim for COBRA [Fn. 22] premiums and future medical
expenses because the court disposed of those requests based on its
division of marital property rather than considering those claims
independently under the provisions of AS 25.24.160(a)(2). Second,
she argues that the superior court improperly denied her proposal
to bifurcate the divorce proceeding.
a. Future medical costs
Sally claims that the property division was based
exclusively on the earning capacity of the parties and did not
consider their relative expenses. She claims that she will have to
pay $579 a month in COBRA premiums that her husband will not have
to pay because such benefits will be covered as a part of his
employment. Sally also complains that she will have considerable
medical expenses after the divorce.
With regard to the COBRA premiums, the superior court
found "that because Mrs. Sloane has received in excess of 50% of
the marital estate and because she is capable of being gainfully
employed, she should be responsible for these premiums." The
property division favoring Sally awarded her one-half of George's
estimated earnings until retirement. In addition, because the
court estimated her own income at zero, she will have available any
income that she earns from her own employment during that period.
In light of that division, we hold that it was not error for the
superior court to decline to require George to pay Sally's COBRA
premiums.
With regard to Sally's claim for other future medical
expenses, the court noted that Sally's continued coverage under
COBRA would cover ninety percent of her future medical costs.
Sally argues that "after the three years COBRA coverage expired she
would be virtually uninsurable." But the evidence she presents
fails to specifically demonstrate that she will have medical costs
that she will not be able to pay. Sally's speculation that she
will be "uninsurable" is not supported by estimates of coverage
from private independent insurance companies, consideration of
government medicare benefits, or any other evidence.
Since the superior court found that Sally was capable of
work but did not ascribe any value to her future income in the
property division, the superior court did not abuse its discretion
in finding that Sally should be able to provide for her future
medical needs from this income. Sally has not presented sufficient
evidence to establish that she faces medical costs that will exceed
what she will be able to pay.
We upheld a property division on facts very similar to
those presented here in Davila v. Davila. [Fn. 23] In that case,
Ms. Davila suffered from chronic foot problems and presented
evidence of over $100,000 in costs that she would face for
attorney's fees and costs, rehabilitation, hospital bills, and
health insurance. [Fn. 24] Despite this showing, the superior
court held that a distribution of property amounting to $132,683 in
assets was sufficient to cover plaintiff's health expenses. [Fn.
25] In part, our decision was based on the fact that the plaintiff
failed "to demonstrate that her needs have not been met as a result
of this distribution." [Fn. 26] This case appears to present an
equally reasonable decision by the superior court. Sally's share
of the property distribution exceeds $400,000 and she has not
presented evidence of costs approaching the $100,000 claimed by Ms.
Davila. As a result, Sally has not established that the trial
court's distribution was clearly unjust. b. Reque
st
for bifurcation
Sally argues that the superior court improperly rejected
her proposal for a bifurcation of the legal divorce. Specifically,
she asked the court to divide the property immediately, but to
delay the legal divorce for three years. This arrangement would
allow her to continue health insurance as a spouse under George's
coverage without having to pay COBRA premiums.
The court rejected that request. The court concluded
that divorce should be granted when parties inform the court that
they are unable to remain married, and that to delay granting
divorce for financial or insurance reasons like this "would be
illegal, . . . kind of a fraud."
Sally relies upon AS 25.24.155(a)(2) to permit the
requested bifurcation. However, that statutory provision is wholly
inapplicable to the purposes intended here. Alaska Statute
25.24.155(a)(2) limits the situations in which custody
determinations or property divisions in divorce proceedings can be
reserved until later. Other statutes specifically permit
reservation of custody decisions or property divisions, [Fn. 27]
but no statute permits the reservation of a divorce decree.
The superior court's finding that there was an
incompatibility of temperament between the parties and that it was
impossible for them to live together as husband and wife is not
disputed. Under the circumstances, George was entitled to a decree
of divorce pursuant to AS 25.24.050(5)(C). Thus, it was not error
for the court to refuse the bifurcation request.
3. The court's refusal to reimburse Sally for expenses
incurred in traveling to Alaska for litigation was not arbitrary,
capricious, or manifestly unreasonable.
Sally was a resident of Alaska when this action was
filed. The trial was held over a period of six days in February of
1999. Sally has lived in Idaho since 1996. She argues that the
superior court improperly rejected her claim for travel and living
expenses from February to May of 1999 incurred by attending the
trial in Alaska. The superior court summarily denied any award or
consideration of a partial award on this point. Sally argues that
her request should have received more consideration than the
court's statement: "I'm not going to award anything for that."
However, Sally has failed to point to any law supporting
her right to have these expenses reimbursed. At best, Sally makes
a request for additional trial costs that should be rejected. [Fn.
28] In the absence of any legal support for her claim, the
decision of the superior court was not error.
C. The Superior Court Did Not Err by Granting $500 Interest
for Late Support Payments Rather than Using a Specific Calculation.
Prior to trial, George was ordered to pay Sally $3,000
per month in interim spousal support. George did not make all such
payments. [Fn. 29] The parties agree that as of February 1999
George owed a total of approximately $23,000 to Sally. The court
ordered George to pay this amount in four installments between
March and June 1999. When Sally requested that the statutory
interest rate run on those payments, the court ordered that an
additional $500 in interest be added to the final payment.
In her brief to this court, Sally contends that
additional interest is owed for the varying periods prior to
judgment when those support payments were in arrears. However,
that is not the objection that Sally made to the award of interest
in the trial court. To the extent that her argument was preserved
below, it was an argument for post-judgment interest.
Sally objected to $500 as an award of post-judgment
interest which would accrue from the time of the award in February
to its final payment in June. Her objection to this amount of
interest in the court below was based on her concern that the
interest would be more if George failed to make the payment in
June. The court informed Sally that it would quickly rectify the
situation if she reported that George had not paid. Since the only
argument that Sally has preserved through her objection below is a
complaint about post-judgment interest, and because George paid the
amount ordered by the court, which was slightly more than post-
judgment interest calculated at the statutory rate, we find no
error.
D. The Allocation of Attorney's Fees to Sally Was Not
Arbitrary, Capricious, or Manifestly Unreasonable.
Sally argues that the award to her of $3,186 -- one-half
the amount George received from his union legal fund -- for
attorney's fees was insufficient. Since the money George received
from his union legal fund is marital property, Sally argues, she
deserves one-half of that money by right. The fact that the court
refused to give her any more money, Sally continues, is tantamount
to a complete refusal of her request for attorney's fees.
This court's opinion in Sanders v. Sanders [Fn. 30]
governs in divorce cases like this one where the property division
is based primarily on the relative economic situation and earning
power of each party. Generally, if the parties are in comparable
economic situations, each side should bear its own costs. [Fn. 31]
The superior court's property division giving fifty-seven percent
of the marital property to Sally was intended to put the parties in
a comparable economic situation; therefore, no additional
attorney's fee awards were warranted. The award to Sally of one-
half of George's receipts from the union legal fund was consistent
with an equal division of the assets to parties on equal economic
footing.
Sally also argues that the marital property award is
insufficient because she owes over $40,000 in fees. Yet part of
the rationale behind the fee rules in divorce cases is the desire
to allow the parties to litigate on a "fairly equal plane." [Fn.
32] Having leveled the playing field, it does not make sense to
hold one party liable for the litigation choices and expenses of
the other. Such tactical decisions by one party do not
"demonstrate the financial disadvantage that justifies an
attorney's fee award in a divorce case." [Fn. 33] The superior
court's award of attorney's fees clearly was not capricious,
arbitrary, or manifestly unjust.
V. CONCLUSION
The superior court's valuation of the note from CPI to
George was not clearly erroneous, its division of martial property
was not clearly unjust, and its treatment of the interest and
attorney's fees issues was legally correct. For these reasons, we
AFFIRM the decision of the superior court in all respects.
FOOTNOTES
Footnote 1:
George was awarded $310,001.31 of marital property.
Footnote 2:
See AS 25.24.160(a)(4); Berry v. Berry, 978 P.2d 93, 95
(Alaska 1999).
Footnote 3:
Musser v. Johnson, 914 P.2d 1241, 1242 (Alaska 1996).
Footnote 4:
See Money v. Money, 852 P.2d 1158, 1161 (Alaska 1993); Peters
v. Juneau-Douglas Girl Scout Council, 519 P.2d 826, 833 (Alaska
1974).
Footnote 5:
Berry, 978 P.2d at 95 (citations omitted).
Footnote 6:
See Kowalski v. Kowalski, 806 P.2d 1368, 1372 (Alaska 1991).
Footnote 7:
See Lone Wolf v. Lone Wolf, 741 P.2d 1187, 1192 (Alaska 1987).
Footnote 8:
852 P.2d 1158, 1161 (Alaska 1993).
Footnote 9:
See id.
Footnote 10:
See id.
Footnote 11:
817 P.2d 478 (Alaska 1991).
Footnote 12:
See id. at 480-81.
Footnote 13:
See Merrill v. Merrill, 368 P.2d 546, 548 n.4 (Alaska 1962).
Footnote 14:
AS 25.24.160(a)(4)(A).
Footnote 15:
AS 25.24.160(a)(4)(B).
Footnote 16:
See Miles v. Miles, 816 P.2d 129, 131 (Alaska 1991).
Footnote 17:
See Laing v. Laing, 741 P.2d 649, 651 (Alaska 1987).
Footnote 18:
956 P.2d 1222 (Alaska 1998).
Footnote 19:
Id. at 1226.
Footnote 20:
See Adamson v. Univ. of Alaska, 819 P.2d 886, 889 n.3 (Alaska
1991).
Footnote 21:
Indeed, the superior court noted that Sally's abilities in
this regard surpassed George's.
Footnote 22:
Federal law requires employers to offer divorced spouses of
employees optional participation in the employer's group health
plan for a limited time. See 29 U.S.C. sec.sec. 1161-1163. Since
this
provision was originally contained in the Consolidated Omnibus
Budget Reconciliation Act in 1986 (Pub. L. No. 99-272), these
continuing benefits are commonly referred to as COBRA benefits.
Footnote 23:
908 P.2d 1027 (Alaska 1995).
Footnote 24:
See id. at 1034.
Footnote 25:
Id. at 1034.
Footnote 26:
Id. at 1033.
Footnote 27:
See AS 25.24.150(f) (allowing reservation of child custody
decisions only if standards in AS 25.24.155(a) are met); AS
25.24.160(c) (permitting reservation of property division if
requirements of AS 25.24.155(a) are met).
Footnote 28:
See discussion infra Part D.
Footnote 29:
Of the $75,000 in interim payments ordered, George paid
$44,500 in direct support and approximately $7,500 in indirect
support.
Footnote 30:
902 P.2d 310 (Alaska 1995).
Footnote 31:
See id. at 318-19.
Footnote 32:
Broadribb, 956 P.2d at 1229.
Footnote 33:
Sanders, 902 P.2d at 319.
