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Edelman v. Edelman (12/27/2002) sp-5652
Edelman v. Edelman (12/27/2002) sp-5652
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
TAMMI L. EDELMAN, )
) Supreme Court No. S-10408
Appellant, )
) Superior Court No.
v. ) 3HO-93-242 CI
)
DUANE F. EDELMAN, ) O P I N I O N
)
Appellee. ) [No. 5652 - December 27,
2002]
_______________________________ )
Appeal from the Superior Court of the State
of Alaska, Third Judicial District, Homer,
Harold M. Brown, Judge.
Appearances: Michael Hough, Homer, for
Appellant. Allison E. Mendel, Mendel &
Associates, Anchorage, for Appellee.
Before: Fabe, Chief Justice, Matthews,
Eastaugh, Bryner, and Carpeneti, Justices.
FABE, Chief Justice.
I. INTRODUCTION
This appeal concerns the manner in which property was
divided in a divorce proceeding and the denial of attorneys fees
and costs to the former wife. Tammi Edelman challenges the trial
courts refusal to compel Duane Edelman, her former spouse, to
assign half of his claims from the Exxon Valdez oil spill so that
the Exxon funds administrator can pay her directly. Instead of
assigning half of Duanes Exxon claims to Tammi, the superior
court decided to retain jurisdiction until it could determine the
value of the Exxon claims. Tammi also disputes the trial courts
denial of attorneys fees and costs to her. Because the trial
court did not abuse its discretion in retaining jurisdiction over
the Exxon claims and requiring the parties to bear their own
fees, we affirm the superior courts decision.
II. FACTS
Duane and Tammi Edelman married in 1976. Their only
child, J.E., was born in 1983. The couple separated in October
1992 and Tammi filed for divorce in June 1993. The superior
court granted Tammi a decree of divorce on April 14, 1994.1
Duane is a seasonal fisherman and a claimant in the
Exxon Valdez Oil Spill litigation. He holds two types of claims
against Exxon. The first is for income lost from the Cook Inlet
salmon set net fishery and from hauling Prince William Sound
herring. The second is for devaluation of his salmon set net
permit. The superior court awarded the lost income claims
equally to Tammi and Duane.
Duane and Tammi petitioned for bankruptcy in March
1994, after they had filed for divorce but before the superior
court granted the final divorce decree. Originally filed under
Chapter 13, the Edelmans bankruptcy petition was converted to
Chapter 7 on October 24, 1994. Ultimately, the parties appear to
have changed the bankruptcy from joint to individual, as Duane
received a discharge in his name alone on February 9, 1995.
Tammi did not pursue bankruptcy for herself.
III. PROCEDURAL HISTORY
This is the second time that this case has come before
us. In Edelman v. Edelman (Edelman I), we addressed the division
of the marital property, alimony, and attorneys fees.2 With
regard to the marital property, we held that (1) the set net
salmon fishing permit was Duanes separate property; (2) the
superior courts valuation of the marital residence was clearly
erroneous; (3) compensatory damages from Duanes Exxon Valdez
claims which replaced lost fishing income during marriage should
be classified as marital property, to be divided equally between
Tammi and Duane; (4) compensatory damages from Duanes Exxon
Valdez claims for devaluation of his set net permit should be
classified as Duanes separate property;3 (5) the superior court
erroneously awarded Duane his entire pension fund without
accounting for Tammis share of the marital portion; and (6) Tammi
was not entitled to reorientation alimony.4 We remanded to the
superior court for revaluation of the marital residence,
determination of whether Tammi was entitled to credit for post-
separation payments she made on the marital residences mortgage,
and determination of the value of Duanes pension fund.5 We also
remanded on the issue of attorneys fees which we said must be
based primarily on the relative economic situations and earning
power of the parties.6
On remand, the trial court affirmed its original award
of the marital home to Tammi and adjusted the appraisal value of
the home to $165,000. The equity in the home at the time of
courts order was $73,588.22.7 The trial court held that Tammi
was not entitled to credit for post-separation mortgage payments.
The court awarded the pension plan to Duane. The trial court
also provided that [a]ny recovery for lost income from Exxon
should be divided equally between the parties.
Shortly after the trial court issued its memorandum
decision and order on remand, Tammi filed a motion for attorneys
fees and costs. She argued that Duanes greater earning capacity
and comparative job security, combined with his alleged vexatious
conduct in delaying the divorce proceedings, compelled an award
in her favor for fees and costs. Duane argued in his opposition
to Tammis motion that Tammi could pay her own fees and that he
had not engaged in vexatious conduct.
In addition to her motion for attorneys fees and costs,
Tammi requested that Duane sign two Exxon assignments. The
assignments authorized the Exxon Qualified Fund Administrator to
pay the assigned amount to Tammi directly.8 Duane refused to sign
the assignments, claiming the documents did not comport with the
trial courts decision. Tammi moved to compel Duane to execute
the assignments.
The trial court denied both of Tammis motions in its
October 11, 2001 supplementary order on remand. On the
attorneys fees and costs issue, the trial court held that Tammi
could pay her own fees and that Duane had not engaged in
vexatious conduct. With regard to the proposed assignments of
the Exxon awards, the trial court decided to retain jurisdiction
over the division of the Exxon claims to monitor distribution of
that asset, if and when it occurs. The court noted that the
amounts may be subject to third-party claims, such as that of the
bankruptcy trustee, and concluded that the assignments were not
necessary; rather, some document providing notice of the
existence of Plaintiffs interest to the fund administrator should
be all that is necessary.
Tammi appeals the denial of attorneys fees and the
denial of the motion to compel Duane to sign the assignments.
IV. STANDARD OF REVIEW
We review procedural decisions of the superior court
under the abuse of discretion standard.9 We will only reverse a
trial courts decision not to award attorneys fees if it was an
abuse of discretion.10
V. DISCUSSION
A. The Exxon Claims
Tammi argues that the trial court abused its discretion
in refusing to require Duane to execute the assignments of the
Exxon awards. Her primary argument is that the trial court
modified her original award of half of the Exxon lost income
claims to something significantly less by deciding to retain
jurisdiction. She argues that the bankruptcy trustees claims
against Duane may be deducted from the Exxon awards before the
awards are distributed equally to Tammi and Duane, thus
diminishing her share.
The only potential merit in Tammis argument that the
trial courts supplementary order on remand modified her award of
fifty percent of the Exxon lost income claims to something
significantly less comes from a perceived discrepancy between
what we said in Edelman I and the trial courts language in its
supplementary order.11 Following our decision in Edelman I, the
superior court stated in its decision on remand that [a]ny
recovery for lost income from Exxon should be divided equally
between the parties. However, the superior court later stated in
its supplementary order on remand that [a]ny Exxon damages
arising out of Mr. Edelmans Cook Inlet Set Net permit belong[] to
Defendant since that set net permit is his separate property.
But in Edelman I, we held that the set net damages reflecting the
loss of marital wages are marital property.12 This apparent
discrepancy is not fatal because the set net claim is comprised
of two types of damages: (1) compensatory damages for loss of
revenue in 1989-91 due to the drop in price of sockeye salmon,
and (2) damages for devaluation of his set net permit.13 We
interpret the trial courts supplementary order to reflect our
determination that only the damages for devaluation of the set
net permit go exclusively to Duane as separate property. Tammis
share of the Exxon lost income claims continues to be fifty
percent.
The superior court did not abuse its discretion by
retaining jurisdiction over the Exxon claims. Both parties
concede that the exact amount and time of payout of the Exxon
claims are unknown. We have held that when an asset is incapable
of valuation at the time of trial because of future
contingencies, the trial court should retain jurisdiction over
its division until valuation is possible.14 Duane is in
bankruptcy; Tammi chose not to pursue bankruptcy. Some of Duanes
debts may be marital debts. Presumably, the bankruptcy trustee
will not have a claim to Tammis share of marital property to pay
debts that are solely Duanes; however, that issue is for the
bankruptcy court to determine. We affirm the trial courts
decision to retain jurisdiction over the awards and not to compel
Duane to assign Tammis fifty percent share of the Exxon claims to
her.
B. Attorneys Fees and Costs
Tammis second claim on appeal is that the trial court
abused its discretion in denying her attorneys fees. She asked
the court to award her $47,732.00 in attorneys fees and $5,209.68
in costs. The trial court denied Tammi any attorneys fees. She
argues two points on appeal: that the trial court failed to base
its decision on the relative economic situations and earning
powers of the parties as directed by this court in Edelman I and
that Duane engaged in vexatious conduct. Duane counters that
income disparity alone is not a basis for an award of attorneys
fees and points out that, as the trial court noted, Tammi
received over $45,000 in spousal support, sixty percent of the
marital estate, and that she has already remarried and had
additional children. He also asserts that Tammis lack of income
is due to her lifestyle choice to stay home with her children.
The decision to award attorneys fees is within the
trial courts broad discretion.15 The trial court may award a
divorcing spouse attorney fees and costs that reasonably
approximate the actual fees and costs required to prosecute or
defend the action.16 The purpose of awarding attorneys fees in
divorce proceedings is to assure that both spouses have the
proper means to litigate the divorce action on a fairly equal
plane.17 The court must base its decision whether to award fees
primarily on the parties relative economic situations and earning
powers.18 However, parties who are in comparable economic
situations should bear their own fees and costs.19 Thus, even if
one spouse earns less than the other, if that spouse has
resources sufficient for the superior court to reasonably expect
[him or her] to pay [his or her] own fees, it is not an abuse of
discretion to require [the lower wage earning spouse] to do so.20
The lower court determined that it did not need to
determine what [Tammis] actual income earning capacity might be
because it found that Tammi has the resources to pay her own
attorneys fees and she was not compromised from litigating on an
equal plane with [Duane] as a result of any disparity in income
earning capacity. Tammi argues that the trial court thus failed
to follow our specific direction to base its decision about
attorneys fees on remand upon the relative economic situations
and earning powers of the parties.21 We disagree. Partial
attorneys fees are awarded as a matter of course under Civil Rule
82 to the prevailing party. Civil Rule 82, however, does not
apply to judgments in divorce cases. In such cases costs and
fees are based on the relative economic situations and earning
powers of the parties, rather than on a prevailing party
determination.22 In essence, we instructed the lower court to
apply the divorce exception to Alaska Civil Rule 82.23 The
divorce exception provides that when the parties economic status
is generally equal, it is ordinarily error to make any award of
costs or fees.24 Tammis resources included: $45,000 in interim
support from Duane, the marital home, and the potential for
additional recovery from her fifty percent share of the Exxon
claims. The equity in the marital home at the time of the trial
courts decision was $73,588.22. The superior court awarded Duane
the marital portion of his retirement/pension fund valued at
$45,000 and fifty percent of the Exxon lost income claims. Duane
is in bankruptcy. Because Duanes economic situation is not
significantly better than Tammis, we hold that the trial did not
abuse its discretion when it denied Tammi attorneys fees.
The trial court may also increase an award of attorneys
fees where a party has acted in bad faith or vexatiously.25 The
court must follow a two-step process to make an award of enhanced
fees: It must determine the appropriate fee award under the
general rule and then it may increase that award to account for a
partys misconduct.26 Failure to follow this two-step process is
an abuse of discretion.27 Additionally, the court must make
explicit findings of bad faith or vexatious conduct and clearly
explain its reasons for deviating from the general rule.28 When
the court finds that one spouses misconduct has unnecessarily
increased the other spouses costs, the court must identify the
nature and amount of these increased costs.29
Tammi argues that the trial court abused its discretion
when it stated that [i]t would be difficult and time consuming
for this court to attempt reconstruction of the events by
examination of the five volumes of pleadings in this case to
determine whether Duane acted vexatiously.30 The superior court
did not err in declining to find that Duane engaged in bad faith
or vexatious conduct. A review of the record shows that Tammi
made only generalized allegations in her motions for attorneys
fees that Duane delayed the divorce proceedings and that his
alleged delay tactics rose to the level of bad faith and
vexatious conduct. The party who seeks an increased award of
attorneys fees must show that the other partys vexatious or bad
faith conduct prevented him or her from litigating on an equal
plane.31 Tammi has not demonstrated with sufficient specificity
that Duanes actions were vexatious or in bad faith. The superior
court therefore did not err in finding that Duane did not act in
bad faith or engage in vexatious conduct.
VI. CONCLUSION
Because the trial court did not abuse its discretion in
retaining jurisdiction over the Exxon claims and requiring the
parties to bear their own fees, we AFFIRM the superior courts
decision.
_______________________________
1 Edelman v. Edelman, 3 P.3d 348, 350 (Alaska 2000).
2 e property,
3 Because the set net fishing permit is Duanes separate
property, we ruled that the permit devaluation claim is also his
separate property. Edelman, 3 P.3d at 355. Permit devaluation
accounts for seventeen percent of Duanes Upper Cook Inlet salmon
set net claim. Therefore, Duane will receive seventeen percent
of the Cook Inlet set net claim as separate property in the event
that the claims are paid. The remaining proceeds will represent
lost marital income and will be divided equally between Duane and
Tammi.
4 Edelman, 3 P.3d at 352-58.
5 Id. at 354, 356.
6 Id. at 359.
7 The court arrived at this amount by subtracting the
amount of the first and second mortgages on the home at the time
of Duane and Tammis separation, $74,026.61 and $9,750.00, and the
amount of an IRS lien, $7,635.17, from the appraisal value of the
marital home at the time of trial, $165,000.
8 The proposed Assignments of Proceeds read in pertinent
part:
I, DUANE F. EDELMAN . . . irrevocably
assign[] ONE-HALF (1/2) all of my claims,
settlement or proceeds from the Exxon Valdez
Oil Spill Litigation Tender Exxon Claim to
TAMMI BLUMENTRITT f/k/a TAMMI EDELMAN . . . .
I direct the Exxon Qualified Settlement Fund
administrator . . . to pay the assigned sum
to the assignee . . . .
And
I, DUANE F. EDELMAN . . . irrevocably
assign[] ONE-HALF (1/2) all of my claims,
settlement or proceeds from the Exxon Valdez
Oil Spill Litigation Upper Cook Inlet Salmon
Set Netters Exxon Claim, except compensation
for Devaluation of Limited Entry Permit, to
TAMMI BLUMENTRITT f/k/a TAMMI EDELMAN. . . .
I direct the Exxon Qualified Settlement Fund
administrator . . . to pay the assigned sum
to the assignee . . . .
9 Nelson-Lizardi v. Lizardi, 49 P.3d 236, 238 (Alaska
2002).
10 Davila v. Davila, 908 P.2d 1027, 1031 (Alaska 1995).
11 Edelman I, 3 P.3d at 355.
12 Id.
13 Id.
14 Root v. Root, 851 P.2d 67, 68 (Alaska 1993).
15 Nicholson v. Wolfe, 974 P.2d 417, 427 (Alaska 1999).
16 AS 25.24.140(a)(1).
17 Nicholson, 974 P.2d at 427 (quoting Kowalski v.
Kowalski, 806 P.2d 1368, 1372 (Alaska 1991)).
18 Edelman I, 3 P.3d at 359.
19 Nicholson, 974 P.2d at 427.
20 Davila v. Davila, 908 P.2d 1027, 1035 (Alaska 1995).
21 Edelman I, 3 P.3d at 359.
22 L.L.M. v. P.M., 754 P.2d 262, 263-64 (Alaska 1988).
23 The divorce judgment exception to Civil Rule 82 is
based on a broad reading of AS 25.24.140(a)(1), Burrell v.
Burrell, 537 P.2d 1, 6 (Alaska 1975), and on the reality that
there usually is no prevailing party in a divorce case. Id. at
264.
24 Id.
25 Kowalski v. Kowalski, 806 P.2d 1368, 1373 (Alaska
1991).
26 Id.
27 Id.
28 Id.
29 Id.
30 The Edelmans case was originally assigned to Superior
Court Judge Charles K. Cranston. Upon his retirement, the case
was assigned to Superior Court Judge Harold M. Brown who
explained in his supplementary order:
[T]his court has no independent recollection
of the conduct of either party prior to its
appointment to the bench. It would be
difficult and time consuming for this court
to attempt reconstruction of the events by
examination of the five volumes of pleadings
in this case. . . . [T]he conduct of the
parties [since the case was assigned to Judge
Brown] does not independently justify an
award of [increased] attorneys fees.
31 Gallant v. Gallant, 945 P.2d 795, 803 (Alaska 1997);
see also Wright v. Wright, 904 P.2d 403, 411 (Alaska 1995)
(affirming award of enhanced fees where former husband concealed
$1,337,136 in marital assets and wife spent $125,000 in attorneys
and accountants fees to track them down).
