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Brandal v. Shangin (12/14/2001) sp-5514
Brandal v. Shangin (12/14/2001) sp-5514
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, e-mail
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
HENRY BRANDAL, )
) Supreme Court No. S-9695
Appellant, )
) Superior Court No. 3AN-96-6523 CI
v. )
) O P I N I O N
LORRAINE SHANGIN, )
) [No. 5514 - December 14, 2001]
Appellee. )
______________________________)
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.
Allison E. Mendel and Penny Agallianos, Mendel & Associates,
Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews, Eastaugh, and Bryner,
Justices. [Carpeneti, Justice, not participating.]
EASTAUGH, Justice.
1. INTRODUCTION
This appeal concerns property division and child support disputes arising from
Henry Brandal and Lorraine Shangin's divorce. We hold that the trial court did not err in
classifying Henry's right to use his grandmother's Chignik Lagoon land as a marital asset,
or in valuing the original cost of this asset. But because we conclude that it was error to use
compound rather than simple interest to calculate the present value of that asset, we remand
for further calculations. We affirm the trial court's fifty/fifty distribution of the EXXON
VALDEZ settlement proceeds. We remand for application of a recapture analysis to the
$6,800 Alyeska permit payout Henry claims he used for post-separation living expenses. We
affirm the trial court's decision to delay payment of Lorraine's child support arrearages, and
hold that the trial court did not err by requiring Henry, should he sell his limited entry
permit, to use the sale proceeds to satisfy his property division debts to Lorraine.
II. FACTS AND PROCEEDINGS
Henry Brandal and Lorraine Shangin married in January 1979 and have four
children. The eldest was born in August 1979; the youngest are twins born in September
1983.
Henry received an interim limited entry salmon seine permit for the Chignik
Lagoon area in 1978. A late application prevented Henry from receiving a full permit and
the interim permit is nontransferable and must be renewed annually. The parties stipulated
that the interim permit was Henry's separate property.
In 1979 the couple purchased a $5,800 mobile home for Henry's grandmother.
In exchange for the mobile home, Henry's grandmother allowed the couple to use some of
her land in Chignik Lagoon. Lorraine testified that the intent behind this exchange was that
the couple would transfer the Chignik Lagoon property to their name, but that they failed to
follow through on the title transfer. She testified that "it was a verbal agreement that that
was our land, it belonged to us. It was given to us." Henry testified that "the tentative
agreement was that if anything ever happened in the marriage that it would go back in the
family since it was my grandfather's land. . . . No matter what[,] it would go back into the
family if anything should happen to me or our marriage."
Henry and one of his crew members built a house on the Chignik Lagoon land
in the fall of 1979. The family lived in the house during the summer fishing months, and
lived elsewhere for the winter months. The trial court found that the failure to transfer title
to the couple occurred while the parties were still together, and that therefore "Ms. Shangin
is stuck with the failure to follow through,"and the "real estate . . . is not part of the marital
estate." Nonetheless the trial court held that the parties purchased the right to live on the
property with marital money, and that the right to live on the property was part of the marital
estate.
The EXXON VALDEZ oil spill severely depressed commercial fishing in the
Chignik area for several years. The couple was forced to file for bankruptcy in 1991. Henry
is part of a class action law suit, and anticipates collecting in excess of one million dollars
under the EXXON VALDEZ settlement. The settlement will potentially include three
classes of damages - permit devaluation, vessel devaluation, and seasonal losses for 1989-
91. The trial court found that the recovery is marital property, with "the exception of the
portion of the recovery related to devaluation of his permit, which is not marital property,
because the permit was not marital property. . . ." The court divided the marital portion of
the EXXON VALDEZ recovery fifty/fifty. In 1994 Henry received a payment of $6,800 for
what he called the "Alyeska permit payout"- Alyeska's share of the EXXON VALDEZ
oil spill claim. The court charged this settlement payout against Henry's side of the ledger.
The parties separated in October 1993. Lorraine moved out of the family's
Anchorage home, leaving the four boys with Henry. Lorraine did not pay child support
during this time, although she bought the children clothing and sent food to Henry and the
children. The trial court ordered Lorraine to pay support arrearages, and required her to
submit salary documents so the arrearages could be calculated. The trial court held that
neither party had to pay the other until Henry received the money from the EXXON
VALDEZ claims. The court ordered that "[i]n the event Ms. Shangin is owed money by Mr.
Brandal, she may also have a lien against his interim use permit, or if that ripens into an
actual permit, to the extent that's allowed by law, although I suspect - I question whether
that's allowed. But she can't enforce it and require sale of the permit." The court also ruled
that "[i]f it turns out that money is paid on the EXXON VALDEZ litigation, then the parties
- whoever has the judgment may try to execute against other assets at that time, but not
before."
III. DISCUSSION
Property division consists of three steps: (1) assessing the nature of the
property (marital or nonmarital); (2) valuing the property; and (3) equitably allocating the
property. [Fn. 1]
A. Standard of Review
We review the trial court's conclusions regarding the marital nature of
property for abuse of discretion. [Fn. 2] Property value determinations are factual decisions that
we will overturn only if they are clearly erroneous. [Fn. 3] We review the trial court's equitable
allocation of property for abuse of discretion and will reverse only if the allocation is clearly
unjust. [Fn. 4] Any legal determinations made during this process are reviewed de novo. [Fn. 5]
B. The Trial Court Did Not Err in Finding that the Right to Use the Chignik
Lagoon Land Was a Marital Asset.
Henry argues that the court erred in finding that the right to use the Chignik
Lagoon land was a marital asset. He contends that Lorraine already received compensation
for her share of the $5,800 purchase price in the form of the right to use the land during the
marriage. Henry argues that allowing Lorraine to collect the amount of the original
investment affords her a double recovery. We disagree.
Although determining whether property is a marital asset is a legal question, [Fn. 6] that
determination turns here on a factual finding. The trial court found that the there was
an "agreement whereby that land might ultimately be conveyed to them." The trial court
found that although Henry and Lorraine failed to secure the transfer of the land, they did use
marital money to purchase the trailer, and that the trailer purchase "was related to their right
to live in and use"the Chignik Lagoon property.
We hold that the record supports these findings and that these findings support
the trial court's legal conclusion that the right to use the Chignik Lagoon land is a marital
asset. Property acquired during a marriage is presumed to be marital, and the party arguing
to the contrary bears the burden of proof of showing that the property is separate. [Fn. 7] Henry
has not met this burden. The superior court's findings are supported by Lorraine's testimony
regarding the agreement. Henry does not argue that these factual findings were clearly
erroneous.
Henry also argues that the right to live on the property was a family gift or
inheritance, and is therefore not properly part of the marital estate. He offers no factual
support for this characterization and the record demonstrates that the parties exchanged
marital funds for the right to live on the land. Although Henry testified that they were
allowed to use the land with the understanding that the land would never leave the family,
Lorraine testified that it was intended that the title would be placed in both their names. On
this record, it was not clear error for the trial court to resolve this factual question in
Lorraine's favor.
Even if the right to use the Chignik Lagoon property is characterized as a gift,
Lorraine's testimony supports the trial court's finding that the gift was given to both parties.
A gift received "by both parties jointly, of course, constitutes marital property subject to
division."[Fn. 8] Additionally, the parties lived each fishing season in the house built on the
Chignik Lagoon property, demonstrating an intent to treat the right to use the land as a
marital asset. "Separate property becomes marital only upon a showing that the parties
intended to treat it as marital."[Fn. 9]
We hold that the trial court did not err in characterizing the right to use the
Chignik Lagoon land as a marital asset. Because Henry retains the ability to exercise his
right to use the land, the trial court appropriately placed this asset on Henry's side of the
ledger.
C. The Trial Court Did Not Clearly Err by Relying on the Trailer Cost in
Valuing the Right to Use the Chignik Lagoon Land, but Should Have Used
Simple, Not Compound, Interest to Calculate the Present Value of that
Right.
The trial court found that the total value of Henry's right to live on the Chignik
Lagoon property was $46,497.39 as of November 1, 1999. That total reflected the $5,800
purchase price of the trailer Henry and Lorraine bought for Henry's grandmother, plus
interest between the 1979 purchase date and November 1, 1999.
Henry argues that the trial court erred in valuing the right to use the Chignik
Lagoon land. Lorraine argues that the trial court appropriately valued the property based on
the evidence before it.
We agree with Lorraine's analysis regarding the trial court's reliance on the
$5,800 purchase price of the trailer. The trial court held that
the only evidence that I have in the record regarding the value
of the right to continue to use that property is the amount that
Ms. Shangin and Mr. Brandal paid for that right when they first
purchased it, which was $5,800. So the right to use that
property has a value of $5,800, together with interest from the
time it was paid back in 1979 to present.
Henry argued at trial that the parties' right to use the Chignik Lagoon land
cannot be valued because the right "has no market value"as it cannot "be sold to a third
party." He also suggested that the trial court "pay Ms. Shangin half the value of the trailer,
and we certainly couldn't argue with that." The trial court adopted Henry's suggestion of
valuing the right to use the land by unraveling the transaction that produced the right, thus
using the cost of the trailer that was traded for the right to use the Chignik Lagoon land to
determine the value of that right. Lorraine does not cross-appeal the use of this valuation
method.
The trial court correctly observed that the parties had offered no additional
evidence on the value of the right. "It is the duty of the parties, not the court, to ensure that
all necessary evidence is presented at trial."[Fn. 10] On this record it was not clear error to value
the right by unraveling the original transaction. [Fn. 11]
Henry also argues that the total with interest is "wrong." He asserts that the
correct total of the trailer cost plus interest should be $18,364.87, not $46,497.39 as found
by the trial court in the findings of fact prepared by Lorraine's counsel. Henry did not raise
this objection in his motion to reconsider. He contends that the miscalculation is plain error,
requiring reversal even though he did not raise the issue below.
Lorraine argues that Henry's figures use simple interest, while hers rely on
compound interest, and that compound interest measures the "opportunity cost of using the
money to purchase the right."
The trial court's findings and conclusions do not discuss any circumstances or
reasons justifying use of compound interest. The findings of fact and conclusions of law
submitted by Lorraine do not set out the formula used to calculate the $46,497.39 figure, but
it does appear that the interest rate was compounded.
Absent specific factual findings that compound interest is appropriate, simple
interest is used in this type of calculation. [Fn. 12] Plain error is present "'where an obvious
mistake has been made which creates a high likelihood that injustice has resulted.' "[Fn. 13] We
hold that it was plain error to use compound interest here, absent a finding that compound
interest was necessary to measure the asset's value accurately. We remand for recalculation
of the interest component of this asset.
D. The Trial Court Did Not Err in Dividing the Marital Portion of the
EXXON VALDEZ Settlement Equally.
Henry argues that the court erred in dividing the marital portion of the
EXXON VALDEZ settlement equally. Henry argues that he is the custodial parent of the
couple's four children, that he is going to remain in Chignik Lagoon while Lorraine lives and
works in Anchorage, and that he wants to give some of the settlement to his sons as crew
share. Henry concludes that these concerns warrant a departure from an equal division. We
are not convinced.
We have "repeatedly held that an equal division of property is presumptively
valid."[Fn. 14] Henry, as the party seeking deviation from the norm, bears the burden of showing
that the property division is clearly unjust. [Fn. 15] Henry has not met this burden. As Lorraine
points out, any crew shares based on debts acquired during the marriage would be subtracted
from the settlement as marital debts. The trial court considered this argument in its oral
findings, holding that it was addressing Henry's monetary needs as the custodial parent with
the award of child support arrearages rather than a greater share of the marital estate. For
a trial court to award "one spouse a greater share of the marital property simply to ease his
or her burden of child support constitutes reversible error."[Fn. 16]
We therefore affirm the trial court's equal division of the marital portion of the
EXXON VALDEZ settlement because Henry has failed to overcome the presumption of
validity.
E. It Was Error to Charge the $6,800 Alyeska Permit Payout to Henry
Without Benefit of a Recapture Analysis.
The trial court treated the $6,800 Alyeska permit payout as marital property
and charged that amount to Henry. Henry first argues that the $6,800 was compensation for
the devaluation of his limited entry permit, which the trial court had held to be his separate
property. Lorraine argues that Henry waived this argument by not raising it below.
Henry's closing argument at trial did not discuss the characterization of the
$6,800 payout. Henry did not raise the issue in his motion for reconsideration. He therefore
waived any argument that the Alyeska payout should not be classified as a marital asset. [Fn. 17]
Henry next argues that it was error to charge the payout against him because
he spent the $6,800 before trial, and it was therefore unavailable for division. Lorraine
argues that Henry did not carry his burden of proving that he used the $6,800 for normal
living expenses.
Normally, an asset that no longer exists at the time of trial is not available for
distribution. [Fn. 18] The asset may be recaptured where there is evidence of dissipation, waste,
or conversion with the intent to deprive the marital estate. [Fn. 19] If the Alyeska settlement was
used for marital purposes or normal living expenses, recapture is inappropriate. [Fn. 20] It was
error to charge the settlement amount to Henry without first conducting a recapture analysis.
We vacate the assessment of this amount to Henry and remand for further proceedings
consistent with this opinion.
F. The Trial Court on Remand Should Decide Whether It Is in the Children's
Best Interests to Allow Lorraine to Delay Payment of Her Child Support
Arrearages.
Henry argues that it was error to allow Lorraine to delay payment of her past
due child support until she received her share of the EXXON VALDEZ claim money. Henry
contends that because child support is a special debt on behalf of children that is separate
from property division, the trial court had no authority to allow Lorraine to delay payment.
A trial court has discretion to approve an offset against marital property for
child support when it is in the child's best interests. [Fn. 21] In this case the offset applies only to
child support arrearages, and does not affect the amount of Lorraine's ongoing child support
obligation. The trial court found that until the EXXON VALDEZ settlement is paid, neither
party has the resources to pay the other party.
When the trial court entered its order, Henry owed Lorraine $27,648.69 to
equalize the property division. This amount was likely to exceed Lorraine's child support
arrearages. Our holding today may result in substantial changes in the value of the assets
charged to Henry. In light of probable changes in the totals each party is to receive, we need
not decide whether it was an abuse of discretion to delay the settlement of the accounts
between the parties until the EXXON VALDEZ settlement is received. The trial court did
not make best interests findings on this issue. We therefore remand. If on remand the trial
court finds that it is in the children's best interests to do so, it may then offset child support
arrearages against the marital property distribution. [Fn. 22]
G. The Trial Court Did Not Err in Ordering Henry to Use Proceeds from Any
Sale of His Fishing Permit to Satisfy His Property Division Debts to
Lorraine.
Henry argues that the trial court erred by granting Lorraine a lien against
Henry's interim limited entry permit. Lorraine argues that Henry has not adequately
analyzed this issue, and that AS 09.38.015 does not prevent a creditor from having a lien
against the permit that simply guarantees her a right to the proceeds should the debtor sell
the permit.
The trial court's post-trial oral remarks contain this order:
In the event Ms. Shangin is owed money by Mr. Brandal, she
may also have a lien against his interim use permit, or if that
ripens into an actual permit, to the extent that's allowed by law,
although I suspect - I question whether that's allowed. But she
can't enforce it and require sale of the permit.
The written order later entered states that "[i]f it is determined that the claim will never be
paid, Lorraine will be deemed to have a lien against Henry's limited entry permit, and may
collect any award owed to her out of any sale proceeds of the permit."
Read in isolation, the written order appears to encumber Henry's limited entry
permit. Such an order would be contrary to statute. [Fn. 23] But we look to both the oral comments
and the written findings of fact and conclusions of law to clarify the scope of the order. [Fn. 24]
The trial court orally specified that it deemed Lorraine to have a lien against Henry's permit
"to the extent that's allowed by law." The limitations the trial court placed on the "lien"
demonstrate that the court was effectively entering an order against Henry's person requiring
him to turn over sale proceeds under pain of contempt, rather than creating some sort of a
security interest in the permit itself.
We hold that the trial court did not abuse its discretion in requiring Henry, in
the event he sells the permit, to use the money to satisfy his property division debts to
Lorraine.
H. The Trial Court Did Not Fail to Apply the Merrill Factors.
Henry argues in his conclusion that the trial court erred by making only
cursory reference to the Merrill factors and in dividing the marital estate equally. [Fn. 25] Our
reading of the record shows that the trial court did meaningfully refer to the Merrill factors,
and did not clearly err in finding that Henry and Lorraine are similarly situated. Henry does
not cite any evidence that would call these findings into question.
Additionally, Henry did not raise this issue below or in his points on appeal.
Issues not presented to the trial court or included in the points on appeal are waived. [Fn. 26] We
therefore decline to review the trial court's application of the Merrill factors.
IV. CONCLUSION
We AFFIRM the classification of Henry's right to use the Chignik Lagoon
land as a marital asset, and the use of an unusual method to value the asset. We hold that it
was error to use compound interest to value the asset, and REMAND for further calculations.
We AFFIRM the equal distribution of the marital portion of the EXXON VALDEZ
settlement proceeds. We REMAND for application of a recapture analysis of the $6,800
Alyeska permit payout Henry allegedly used for normal living expenses. We REMAND for
determination whether it is in the children's best interests to delay payment of Lorraine's
past-due child support, and AFFIRM the trial court's order requiring Henry to use sale
proceeds from his limited entry permit to satisfy his marital property division debts to
Lorraine.
FOOTNOTES
Footnote 1:
Wanberg v. Wanberg, 664 P.2d 568, 570 (Alaska 1983).
Footnote 2:
Jones v. Jones, 835 P.2d 1173, 1175 (Alaska 1992) (citation omitted).
Footnote 3:
Doyle v. Doyle, 815 P.2d 366, 368 (Alaska 1991) (citations omitted).
Footnote 4:
Cox v. Cox, 882 P.2d 909, 913-14 (Alaska 1994) (citing Doyle, 815 P.2d at
368).
Footnote 5:
Id. at 913 (citing Lewis v. Lewis, 785 P.2d 550, 552 (Alaska 1990); Lantz v. Lantz,
845 P.2d 429, 431 n.1 (Alaska 1993)).
Footnote 6:
Wanberg, 664 P.2d at 570 ("The first stage of the process is in large part a legal
determination, involving the interpretation of AS 09.55.210(6), and applying legal principles
to the facts of the case.").
Footnote 7:
Coffland v. Coffland, 4 P.3d 317, 321-22 (Alaska 2000).
Footnote 8:
Julsen v. Julsen, 741 P.2d 642, 648 n.9 (Alaska 1987).
Footnote 9:
Harrelson v. Harrelson, 932 P.2d 247, 251 (Alaska 1997) (citations omitted).
Footnote 10:
Zimin v. Zimin, 837 P.2d 118, 122 (Alaska 1992) (citing Hartland v. Hartland, 777
P.2d 636, 640 (Alaska 1989)).
Footnote 11:
Id. at 122 (holding that absent evidence of present value of disputed property,
it was not error to value property based on debt payments made during marriage) (citing
Hartland, 777 P.2d at 640 (holding that reviewing courts cannot reverse and remand cases
for new findings where parties had adequate opportunity to introduce evidence but failed to
do so)).
Footnote 12:
Alyeska Pipeline Serv. Co. v. Anderson, 669 P.2d 956, 956-57 (Alaska 1983)
("AS 09.30.070 does not provide for compound interest on judgments."); Estate of Gregory v.
Gregory, 487 P.2d 59, 64 (Alaska 1971) (holding that compound interest was not necessary
to put estate in position it would have been in had administratrix not diverted assets for
personal use, because doubt existed as to whether money would have been invested absent her
diversion).
Footnote 13:
Compton v. Chatanika Gold Camp Properties, 988 P.2d 598, 601 (Alaska
1999) (quoting Murray v. Feight, 741 P.2d 1148, 1156-57 (Alaska 1987)).
Footnote 14:
Julsen, 741 P.2d at 645 (citations omitted).
Footnote 15:
Id. (citing Hurn v. Hurn, 541 P.2d 360, 360 (Alaska 1975)).
Footnote 16:
Arndt v. Arndt, 777 P.2d 668, 670 (Alaska 1989) (citing Houger v. Houger,
449 P.2d 766, 771 (Alaska 1969)).
Footnote 17:
Reid v. Williams, 964 P.2d 453, 456 (Alaska 1998) (citing Brooks v. Brooks, 733
P.2d 1044, 1053 (Alaska 1987)).
Footnote 18:
Cox, 882 P.2d at 918 n.5 (citing Gallant v. Gallant, 882 P.2d 1252, 1255 n.5
(Alaska 1994)).
Footnote 19:
Jones v. Jones, 942 P.2d 1133, 1139 (Alaska 1997) (citing Foster v. Foster, 883
P.2d 397, 400 (Alaska 1994)).
Footnote 20:
Id.
Footnote 21:
State, Dep't of Revenue, Child Support Enforcement Div. v. Pealatere, 996
P.2d 84, 87 (Alaska 2000).
Footnote 22:
Id. (upholding trial court's determination that it was not in best interest of
children to force father to sell his tools to pay mother, and that it would be preferable
to allow mother to use her share of the tools to offset her child support obligation in
light of explicit factual findings supporting trial court's decision).
Footnote 23:
AS 16.43.150(g) provides that "an entry permit may not be (1) pledged,
mortgaged, leased, or encumbered in any way. . . ."
Footnote 24:
Park v. Park, 986 P.2d 205, 207-08 (Alaska 1999) (reviewing both written
findings and post-trial oral remarks for consideration of statutory factors).
Footnote 25:
Merrill v. Merrill, 368 P.2d 546, 547 n.4 (Alaska 1962).
Footnote 26:
Gunderson v. University of Alaska, 902 P.2d 323, 327 n.5 (Alaska 1995)
(citing Moran v. Holman, 501 P.2d 769, 769-70 (Alaska 1972)).
-9- 5514
