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Korn v. Korn (5/10/2002) sp-5571
Korn v. Korn (5/10/2002) sp-5571
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
PAULA KORN, )
) Supreme Court No. S-9809
Appellant, )
) Superior Court No.
v. ) 3AN-98-9539 CI
)
LARRY KORN, ) O P
I N I O N
)
Appellee. ) [No. 5571 - May 10, 2002]
________________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Karen L. Hunt, Judge.
Appearances: Peggy A. Roston, Law Office of
Peggy A. Roston, Anchorage, for Appellant.
Robert C. Erwin and Roberta C. Erwin, Erwin &
Erwin, LLC, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
BRYNER, Justice.
I. INTRODUCTION
I. This appeal arises from the divorce of Paula and Larry
Korn. In dividing the couples marital property, the trial court
included on Paulas side of the ledger $14,400 in interim spousal
support that she had received from Larry and $45,000 in estimated
rental value imputed to Paula because she had lived in the
marital residence rent-free for eighteen months after separation.
Because interim spousal support and imputed rental value are not
actually marital property and the trial court did not explain why
it counted them as marital property, we remand for
reconsideration and additional findings.
II. FACTS AND PROCEEDINGS
In September 1998 Paula Korn filed for divorce from
Larry Korn, her husband of more than thirty-four years. The next
month the couple permanently separated; Paula remained in the
marital residence and received twelve monthly interim spousal
support payments of $1,200 from Larry. The superior court held a
trial on disputed property questions and issued its final
decision dividing the couples marital property in June 2000. The
decision awarded Paula a slightly greater share of the marital
estate than Larry, basing this allocation on the parties
disparate income and earning potential.
The final decision included a table that listed marital
assets and showed how the court had distributed them. Among
other assets listed on Paulas side of the ledger, the table
showed her as receiving $14,400 in interim spousal support
payments (twelve monthly payments of $1,200) and $45,000 in
estimated rental value imputed to Paula for living rent-free in
the marital residence after separating from Larry. The decision
did not explain the courts reasons for treating these items as
marital property and assigning them to Paula.
Paula appeals, challenging these rulings.
III. DISCUSSION
I. A trial court must follow a three-step process when dividing
a couples marital property. First, the court must determine what
property is marital and thus available for distribution.1
Second, the court must place a monetary value on the marital
property.2 Last, the trial must determine how to allocate the
marital property most equitably.3 Here, Paulas arguments concern
the first step of this process identifying marital property. We
first consider her challenge to the superior courts treatment of
interim spousal support as a marital asset; we then consider her
argument concerning imputed rental value.
Our cases often have distinguished between spousal
support and marital property. In Lewis v. Lewis we remanded a
trial courts division of marital property because the trial court
failed to explain why it had merged interim support payments into
the allocation and distribution of marital property.4 We held
that alimony is in no way a property settlement, but is the
provision made for the support of the wife.5 We confirmed this
ruling in Jones v. Jones: declining to rule that the trial court
erred in refusing to take interim support into account in its
order dividing the marital property, we observed that such
action would have been inconsistent with our holding in Lewis
concerning the role of interim support in the allocation and
distribution of marital property.6 In Ulsher v. Ulsher we denied
a plaintiffs contention that alimony should be factored into the
division of the marital estate, holding that [p]ayments that do
not divide property cannot be considered part of a property
division.7 And in McDougall v. Lumpkin we vacated the trial
courts distribution of marital property because the property
division may have been used to balance the legally unrelated
alimony award.8
As these cases indicate, spousal support is not marital
property. Yet here the trial court treated Paulas interim
support as marital property. The court did not explain its
reasons for doing so. Lacking any findings to justify treating
interim support as marital property, we must vacate this portion
of the decision and remand for reconsideration and additional
findings.9
The trial court also placed on Paulas side of the
ledger a rental value of $45,000 the courts estimate of the
amount that should be imputed to Paula for living rent-free in
the marital residence for eighteen months after separating from
Larry. But the courts decision to treat unrealized rents as a
marital asset raises several concerns.
Because the parties had never previously rented out
their residence and evidently had no plans to rent it, the home
had no clearly established rental value. And though the trial
court apparently estimated the homes rental value from its fair
market value, the court failed to specify how it calculated one
value from the other. The court simply wrote:
Plaintiff has been living in the residence
paying the utilities since separation. She
had no opinion as to the rental value;
defendants opinion of the rental value is
$3500[ ] per month. Given the stipulated
value of the residence, a stream-of-income
analysis would indicate rental value is more
likely to be $2500 per month. She has
received $45,000 rental value from the
residence since separation.
Moreover, counting unrealized rents as a marital asset
tends to conflict with the usual rule requiring marital assets to
be valued as close as practicable to the date of trial.10
Whatever asset-like value Paula might have obtained from her post-
separation use of the marital residence, it is clear that she
consumed the value as it was received, and no such marital asset
actually existed when the trial court divided the marital
property.
Although we have sometimes recognized that orders
dividing marital property may recapture a marital assets pre-
trial loss in value, we have held that such orders must be
supported by findings that the assets value was dissipated,
wasted, or converted to a non-marital form by the party who
controlled the asset during the period of separation.11 We also
occasionally have held that trial courts may credit a spouse for
making payments of post-separation income to preserve marital
property.12 And in one such case, Rodriguez v. Rodriguez, we
recognized that the spouses post-separation use of the property
could offset this credit, since any benefit [the spouse] may have
imparted to the marital estate was offset by the benefit he
received from the estate by living rent-free.13 Yet in these
cases, too, we have required trial courts to make factual
findings on whether a credit is appropriate.14 But here, the
trial court made no findings to explain why it decided to impute
rental value to Paula or how it arrived at the value it imputed.
Nor is it apparent that the court considered the need
for such a finding. As already mentioned, neither imputed
rental value nor interim spousal support is actually a marital
asset. Hence, any allowance for these items in the property
decision should have been reflected in the third step of property-
division process as an adjustment to the equitable division of
marital assets that actually existed.15 Yet by listing imputed
rental value and interim spousal support on Paulas side of the
ledger, the court identified these items as real marital assets,
thereby confusing the first and third steps of the process.
Collapsing the three-step process in this way could easily have
distracted the trial courts attention from the need for
additional findings. For while the property decision ostensibly
awarded this property to Paula, the decisions real effect
clouded by listing the items as marital assets whose award to one
party or the other generally requires little particularized
explanation was to charge Paula for having used imputed rental
value and for having received non-marital payments from Larry
charges that dramatically reduced Paulas equitable share of
actual marital assets, and so required careful explanation.
In short, without knowing why the court decided these
points as it did, we cannot determine whether the individual
adjustments were justified or whether the final property division
was equitable as a whole. Accordingly, we must vacate the
superior courts decision and remand the case for reconsideration
and appropriate findings.16
IV. CONCLUSION
The superior courts order dividing the parties marital
property is VACATED, and this case is REMANDED for additional
proceedings as directed in this opinion.
_______________________________
1 McDougall v. Lumpkin, 11 P.3d 990, 992 (Alaska 2000).
We generally review the trial courts classification of property
for abuse of discretion, but when an items classification
presents a question of law, we apply our own independent
judgment. Id.
2 Id. This is a factual determination, which we reverse
only if clearly erroneous. Id.
3 Id. We review a trial courts equitable division of
property for an abuse of discretion and will affirm unless the
division is clearly unjust. Id.
4 785 P.2d 550, 554 (Alaska 1990).
5 Id. (quoting In re Marriage of Reilly, 577 P.2d 840,
843-44 (Mont. 1978)).
6 835 P.2d 1173, 1176-77 (Alaska 1992).
7 867 P.2d 819, 821-22 (Alaska 1994).
8 11 P.3d 990, 995 (Alaska 2000).
9 See Lang v. Lang, 741 P.2d 1193, 1195, 1196 (Alaska
1987) (remanding for findings to explain why trial court included
interim support payments in final distribution of marital
property, because court must provide sufficiently detailed and
explicit findings to give this court a clear understanding of the
basis of the trial courts decision, and to enable it to determine
the ground on which the trial court reached its decision)
(internal quotations omitted).
10 McDaniel v. McDaniel, 829 P.2d 303, 306 (Alaska 1992)
(quoting Ogard v. Ogard, 808 P.2d 815, 819 (Alaska 1991)).
11 Green v. Green, 29 P.3d 854, 859 (Alaska 2001)
(internal quotations omitted).
12 See, e.g., Berry v. Berry, 978 P.2d 93, 96 (Alaska
1999); Dodson v. Dodson, 955 P.2d 902, 912 (Alaska 1998);
Harrelson v. Harrelson, 932 P.2d 247, 253 (Alaska 1997); Ramsey
v. Ramsey, 834 P.2d 807, 809 (Alaska 1992).
13 908 P.2d 1007, 1013 (Alaska 1995).
14 Berry, 978 P.2d at 96; see also Cox v. Cox, 882 P.2d
909, 919-20 (Alaska 1994) (noting absence of findings on whether
post-separation payments of marital expenses should change
property distribution and remanding for such findings).
15 Moreover, such an adjustment should have recognized
that, at most, Larrys credit could be no more than one-half of
the value Paula received by living rent-free in the house, for
she was a half owner. Cf. Wood v. Collins, 812 P.2d 951, 958
(Alaska 1991) (holding that ousted domestic partner was entitled
to half the rental value of the former couples condominium for
the post-separation period).
16 If the superior court determines after reconsidering
the issues of rental value and interim support that
reconsideration of other issues or of the entire property
decision might be warranted, the court may, in its discretion,
broaden the scope of the proceedings on remand.
