You can
search the entire site.
or go to the recent opinions, or the chronological or subject indices.
Abood v. Abood (09/02/2005) sp-5937
Abood v. Abood (09/02/2005) sp-5937
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
| PATRICK C. ABOOD,
| ) |
|
| ) Supreme Court Nos. S-
11154/11173 |
|
Appellant/Cross-Appellee, | ) |
|
| ) Superior Court No.
3AN-02-7310 CI |
|
v. | ) |
|
| ) O P I N I O
N |
|
KIMBERLY I. ABOOD n/k/a | ) |
|
KIMBERLY I. FARNSWORTH, | ) [No. 5937 - September 2,
2005] |
|
| ) |
|
Appellee/Cross-Appellant. | ) |
|
| ) |
|
|
|
|
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage, Mark Rindner, Judge.
Appearances: Janet D. Platt, Law Offices of
Janet D. Platt, Anchorage, for
Appellant/Cross-Appellee. R. Scott Taylor,
Sonosky, Chambers, Sachse, Miller & Munson,
LLP, Anchorage, for Appellee/Cross-Appellant.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, Fabe, and Carpeneti, Justices.
EASTAUGH, Justice.
MATTHEWS, Justice, with whom FABE, Justice,
joins, concurring.
I. INTRODUCTION
Patrick and Kimberly Abood both appeal aspects of the
property division accompanying their divorce. We affirm. We
conclude that the superior court did not clearly err in finding
that settlement proceeds paid to Kimberly during the marriage for
personal injuries she received about five years before the
marriage were not transmuted into marital property. We also
conclude that the superior court did not clearly err in finding
that the marital home was transmuted into marital property even
though Kimberly was not on the title and Patrick had purchased
the home before they married. We conclude that the superior
court did not clearly err in finding that the $174,814 increase
in value of Patricks street sweeping business was marital because
it was the result of active appreciation. We conclude that the
superior court did not abuse its discretion in assigning a
recapture value of a marital vehicle Kimberly sold before trial,
or by not dividing the value of a set of tires and rims from that
vehicle. We also conclude that the court did not abuse its
discretion in characterizing the 2001 federal income tax refund
as Patricks separate property.
II. FACTS AND PROCEEDINGS
Kimberly and Patrick married in 1994. They neither had
nor adopted children. Kimberly and Patrick separated, and
Patrick petitioned for divorce in 2002. At the time of trial,
Kimberly was forty years old and one semester away from earning
her second masters degree. Patrick was forty-six and owned and
operated a successful street-sweeping business, Knik Sweeping.
The superior court granted the divorce and distributed the
property. Patrick and Kimberly both appeal aspects of the
property division.
One dispute concerns personal injury settlement
proceeds Kimberly received during the marriage to compensate her
for injuries she received before the marriage. Kimberly had been
the victim of a 1989 vehicular accident in which she sustained
serious injuries that continue to plague her and may require
further surgery. She sued General Motors for her injuries and
settled with GM in 1999, receiving net proceeds of $1.6 million.
This money was deposited into Patricks business and personal
checking account. Two months later the parties placed the $1.6
million, along with another $300,000 in marital funds, in five
Merrill Lynch joint Cash Management Accounts (CMAs) with rights
of survivorship. The superior court found that the proceeds from
the settlement remained Kimberlys separate property, but that the
$300,000 contribution was marital.
Another dispute concerns the superior courts
characterization of the home as marital property. In 1993
Patrick bought the house that the couple shared before and during
the marriage. Several improvements were made to the house before
and during the marriage. The parties stipulated to its value but
disputed whether it should be categorized as marital or as
Patricks separate property. The superior court found that the
house had been transmuted into marital property.
The parties dispute the division of Patricks business,
Knik Sweeping. At the time of trial, Patrick operated Knik
Sweeping as a sole proprietorship and used the business checking
account as his all-purpose business and personal account.
Patrick purchased equipment during the marriage with funds from
that checking account. The superior court found that the
equipment acquired during the marriage was marital property and,
alternatively, that the businesss increase in value was marital
property through active appreciation.
After the parties separated, Kimberly traded in her
Mercedes-Benz for a new Jeep. Kimberly agrees that the Mercedes-
Benz was marital property and that she received less than fair
market value for it, but the parties dispute the amount to be
recaptured. The superior court did not rule on Patricks request
that it charge Kimberly with the value of a set of Mercedes-Benz
rims and tires that she traded for an extended warranty on the
Jeep.
Patrick and Kimberly filed a joint tax return in 2001,
the last full year of their marriage. After they made payments
from marital funds, Patrick used his post-separation earnings to
make a Simplified Employee Pension Plan (SEP) contribution for
2001, reducing the couples tax liability for that year. The
superior court found that the resulting tax refund was Patricks
separate property.
III. DISCUSSION
A. Standard of Review
The equitable division of marital assets involves a
three-step procedure. First, the superior court must determine
what specific property is available for distribution.1 Next, it
must find the value of this property.2 Finally, it must
determine how an allocation can be made most equitably.3
The superior court has broad discretion in fashioning
the property division in a divorce case.4 We review the superior
courts determination of the availability of property for
distribution for abuse of discretion.5 We review the superior
courts factual findings for clear error.6 Likewise, a finding
that the parties intended to treat property as marital will be
disturbed only if it is clearly erroneous.7 A finding of fact is
clearly erroneous when the reviewing court is left with a
definite and firm conviction that the trial court has made a
mistake.8
B. The Product Liability Settlement Proceeds
Kimberly received $1.6 million in a 1999 settlement
with General Motors following the 1989 vehicular accident in
which she suffered serious, long-term injuries. The superior
court found that the settlement funds remained Kimberlys separate
property. Patrick argues that the settlement funds were
transmuted into marital property when they were deposited into
jointly owned brokerage accounts. Because we discern no clear
error in the superior courts finding, we affirm.
Transmutation is the process by which one spouses
separate property becomes marital property, and occurs when a
married couple demonstrates an intent, by virtue of their words
and actions during marriage, to treat one spouses separate
property as marital property.9 Commingling separate property
with marital property does not automatically lead to a finding of
transmutation.10 But placing property in joint title raises a
presumption of transmutation.11 Patrick argues that although the
funds were initially Kimberlys separate property, a presumption
of transmutation arose when she commingled the funds with marital
property in Patricks business checking account and then placed
them into the jointly held Merrill Lynch CMAs.
Kimberly testified that the parties chose not to
segregate the settlement proceeds from other funds within the
CMAs for administrative convenience, to obtain better money
managers, and to receive better brokerage rates. The rationale
of better brokerage rates was disputed at trial, but there was
evidence that the Aboods were able to obtain money management for
the marital funds that would have been unavailable without
combining them with Kimberlys settlement proceeds.12
We have held that evidence of administrative
convenience may rebut the presumption of transmutation.13 In
anticipation of the personal injury settlement, the Aboods
consulted their neighbor, broker Margaret Price, but did not
ultimately fund an account with her, choosing instead to invest
through Merrill Lynch. Price testified that the Aboods wanted
the money to be invested and to grow in value for the future.
Price also testified that Kimberly spoke to her about a separate
account and that they decided to create a joint account as a
matter of convenience, and that they thought that it would just
be easier to do the investments together, rather than to do
separate pots of money. Kenneth Jones, the couples financial
advisor at Merrill Lynch, similarly testified that the Aboods
wanted to save their money for the long term.
The nature of the personal injury settlement is also
relevant. We have held that the purpose for which the [tort]
recovery is received controls its classification.14 If the
recovery is compensation for non-economic damages, the settlement
is separate property of the claimant spouse.15 This principle
recognizes the intensely personal nature of these sorts of
injuries,16 and suggests that courts should be hesitant to find
that a recipient intended to donate to the marriage the funds
that she received in compensation for her injuries. Kimberly
testified that the settlement was intended to compensate her for
her physical injuries, which were described in detail in General
Motors Corp. v. Farnsworth.17 Thus, the personal nature of the
settlement funds supports the superior courts conclusion that
Kimberly did not intend to donate her personal property to the
marriage.
Kimberly testified that the funds were invested to
provide for her future medical needs. This testimony reflects an
intent to retain the funds as separate property. Patrick argues
that setting aside money for Kimberlys future medical expenses
was an investment for a marital purpose and indicates an intent
to treat the funds as marital property. But this contention,
absent evidence of an intent to benefit the marriage, is not so
persuasive that the superior court was obliged to accept it. The
potential for future medical expenses results from the discrete,
premarital event for which Kimberly received the settlement
money. Because Kimberly will incur future medical expenses
attributable to the accident regardless of her marital status,
the superior court could properly find a lack of intent by
Kimberly to donate the settlement funds to the marriage.
Kimberlys medical expenses not covered by insurance were paid out
of marital funds and were not reimbursed with settlement funds.
But the use of marital funds to pay a spouses ongoing medical
expenses does not compel a finding that the spouse intended to
donate to the marriage the separate settlement proceeds the
receiving spouse testifies were set aside to pay for future
medical expense attributable to the premarital injury.
Patrick argues that the superior court erred in
according weight to Kimberlys trial testimony that she intended
to preserve the settlement funds as separate property and that
she assumed Patrick knew of this intent. We have said that, in
attempting to give effect to the intention of the parties,
looking to their testimony as to their subjective intentions or
understandings will normally accomplish no more than a
restatement of their conflicting positions.18 Thus, self-serving
testimony is ordinarily not probative.19 But we have not
foreclosed the consideration of trial testimony of prior
intentions in all circumstances. Here, the circumstances and
purposes of the settlement corroborate Kimberlys testimony.
Furthermore, [i]t is the function of the trial court, not of this
court, to judge witnesses credibility and to weigh conflicting
evidence.20 It was not error for the superior court to credit
this testimony.
Patrick also argues that withdrawals from the CMAs for
marital purposes and the use of the CMAs to secure a margin loan
that was used for marital purposes demonstrate that Kimberly
intended to treat the settlement funds as marital. The superior
court found that the withdrawal came out of the remaining portion
of the $300,000 marital fund contribution to the CMAs, and
declined to find that the use of the CMAs to secure the margin
loans converted the settlement funds into marital property.
The superior courts finding that the withdrawals came
from marital funds was the logical result of the finding that the
CMAs contained both marital and separate funds. Withdrawals for
marital purposes from accounts that contain funds from both
separate and marital sources are not inconsistent with the
continued existence of both separate and marital property in the
accounts.21 The superior courts finding that the withdrawals came
out of marital funds was not clearly erroneous.22
We considered the effect of using separate property to
secure margin loans for marital purposes in Gardner v. Harris.23
We held there that this use did not automatically transmute the
separate property into marital property.24 Patrick argues that
Gardner is inapposite here because the property in Gardner was
bonds, whereas here the property is fungible money. This
argument is without merit. As we will see below, funds in the
CMAs are traceable to Kimberlys separate settlement funds.
Because a fact finder can distinguish between funds attributable
to the settlement proceeds and funds from other sources within
the jointly held CMAs, we discern no meaningful distinction
between the funds in this case and the corpus of the bonds in
Gardner.
Nor did Patricks participation in research into
investment options and limited direction of investments compel a
finding that Kimberly intended to treat the settlement funds as
marital property. Rather, Patricks participation in meetings
with financial advisors after the funds were invested at Merrill
Lynch demonstrates an appropriate involvement in the oversight of
the marital funds.
In Gardner, the non-owning spouse had more control
over the funds than Patrick could exercise here.25 Furthermore,
Kenneth Jones testified that he would regularly recommend
strategies that Kimberly and Patrick would then approve. This is
not active management by Patrick that would compel a finding of
transmutation.26 We therefore cannot say that the superior courts
finding that Kimberly did not intend to treat the settlement
funds as marital property was clearly erroneous.
But even property that the owner intended to remain
separate may be marital if it is inextricably commingled with
marital property.27 We must therefore determine whether the
disputed Merrill Lynch funds were traceable to the settlement
check. When classifying secondary assets, courts must first
identify the specific asset from which it was derived (the source
asset), and then determine the classification of that asset. 28
When the source asset is also secondary property, tracing
continues until either a separate or a marital primary source
asset is found.29 Separate property may be traceable to its
separate source despite being mixed with marital property in the
same secondary asset.30 To characterize a mixed secondary asset,
the superior court must determine the character of each source
asset and the amount of value each source contributed to the
mixed whole.31 The marital and separate interests in a mixed
secondary asset are ordinarily in the same ratio as the marital
and separate contributions used to acquire the asset.32
The funds in the Merrill Lynch CMAs were deposited in a
single transaction from Patricks checking account. The checking
account was a mixed asset, containing both the settlement funds
and marital proceeds from Knik Sweeping. The $1.9 million
transferred from the checking account to the CMAs consisted of
$1.6 million from Kimberlys settlement check from GM and $300,000
in marital funds already in the checking account. The funds in
the Merrill Lynch CMAs were therefore readily traceable to
primary separate and marital sources. The contribution ratio
dictates that 16/19 of the CMA funds are Kimberlys separate
property and 3/19 of the CMA funds are marital property.
Patrick argues in passing that $76,000 of the $300,000
transferred from the Knik Sweeping checking account to the
Merrill Lynch CMAs is his separate property. The $76,000 was
transferred into the Knik Sweeping checking account shortly
before the $1.9 million was transferred to the Merrill Lynch
CMAs. Patrick testified that the $76,000 was attributable to his
separate property, but did not demonstrate that it was deposited
in the CMAs or that he intended to maintain it as separate
property after placing it under joint title. The superior court
therefore did not clearly err in finding the entire $300,000 to
be marital property.
Likewise, the superior court did not clearly err in
finding that Kimberly did not intend to transmute the settlement
proceeds into marital property. We therefore affirm its finding
that the settlement funds remained Kimberlys separate property.
C. The Marital Home
Patrick bought the marital home before the marriage
without any contribution from Kimberly, and made several
improvements. The superior court found that the house was
transmuted into marital property. Patrick argues that the
superior court erred in finding that he intended to donate the
home to the marriage.
We have enunciated four factors for determining whether
real property is transmuted into marital property:
(1) the use of the property as the parties
personal residence, and (2) the ongoing
maintenance and managing of the property by
both parties, as well as (3) placing the
title of the property in joint ownership and
(4) using the credit of the non-titled owner
to improve the property.[33]
Kimberly does not contend that the house title was
placed in joint ownership. Nor was her credit used to improve
it. But the first factor is satisfied because the property was
used as the couples home both before and during the marriage.
Furthermore,
so long as the parties do marry, the trial
court is free to consider the parties entire
relationship, including any period(s) of
premarital cohabitation, in making its
property division under AS 25.24.160(a)(4),
so long as the court observes the distinction
which AS 25.24.160(a)(4) draws between assets
acquired prior to and during coverture.[34]
Thus, as long as the trial court recognized that the home was
originally Patricks separate property and that the period of
premarital cohabitation is relevant only to Patricks intent to
treat the property as marital, it could have properly considered
this period of time in determining Patricks intent to donate the
home to the marriage.
We next consider the second factor. To establish
ongoing management and maintenance, the non-owning spouses
participation must be significant and evidence an intent to
operate jointly.35 Participation in limited maintenance and
management tasks is insufficient,36 as are minor efforts at
remodeling.37 Past cases have held that transmutation occurs when
the non-owning spouse takes an active role in the operation of
the property as a business.38 But the test is applied differently
in different circumstances,39 and where the property at issue is
the marital home, different management and maintenance activities
may demonstrate an intent to hold the property jointly.40
Here, there was evidence of ongoing management and
maintenance by both parties. Kimberly testified that after the
marriage we basically tore up the floor boards, tore down the
ceilings, did everything from [s]heetrock to Corian counters to
new tile in the entryway, new carpeting, paint, new appliances,
new lighting fixtures. She also testified that they put in a new
shower, windows, and closed the sunroom windows, and that she
participated in these improvements. Cleaning and maintenance
were also her responsibility. Patrick testified that they made
considerable improvements while living in the house and that
marital improvements included carpet, paint, sheetrock, and
landscaping. As noted above, if parties later marry, a superior
court may consider periods of premarital cohabitation when
dividing the home.41 Patricks appellate characterization of these
efforts as periodic repairs and maintenance is unconvincing.
These projects amount to more than minor efforts at remodeling,
and are consistent with an intent to hold the home jointly.
In arguing that these improvements do not evince an
intent to hold the home jointly, Patrick points to the lack of
added value to the home above normal market appreciation. This
focus would be more appropriate if Kimberly were relying on the
doctrine of active appreciation.42 But especially for a
residence, added value is not a requisite for finding an intent
to hold the property jointly. Because the superior court could
properly find that the house was used as the marital home and
that Kimberlys participation in maintaining and managing the home
demonstrated an intent to hold the property jointly, its finding
that the home was transmuted into marital property was not
clearly erroneous.
The concurrence argues that the court should adopt a
rebuttable presumption that a separately titled house is
transmuted from separate property to marital property when it is
used for a substantial period of time as the marital residence.43
It is not necessary to reach that issue in this case because we
affirm the superior courts finding of transmutation. Moreover,
the parties have not argued that we should or should not adopt
such a presumption for Alaska and the superior court did not
apply any such presumption. Because we have not had the benefit
of briefing on the issue, the court declines to reach the issue
in this case.
D. The Assets of Knik Sweeping
The superior court found that the equipment purchased
during the marriage, valued at trial at $176,925, was marital
property. Patrick argues that the equipment is not a stand-alone
asset, but is part and parcel of Knik Sweeping. He therefore
argues that it was error to characterize that portion of the
equipment purchased during the marriage with marital funds as
marital property. Kimberly argues that the superior courts
finding rests on a straightforward reading of AS 25.24.160(a)(4).
Because we affirm on the alternative grounds adopted by the
superior court, with a virtually identical result, we do not
address either partys arguments on this point.
The superior court alternatively found that the
$174,814 increase in Knik Sweepings value during the course of
the marriage was marital property. The doctrine of active
appreciation states that when the separate property of one spouse
increases in value due to marital effort, the increase in value
is marital property.44 Active appreciation requires findings that
(1) the separate property appreciated during the marriage, (2)
the parties made marital contributions to the property, and (3)
there was a causal connection between the marital efforts and the
appreciation.45 The non-owning party bears the burden of proving
the first two elements.46 If the non-owning party meets its
burden, the spouse owning the separate property bears the burden
of showing a lack of causal connection between the marital
contributions and the propertys increased value.47
Patrick argues that Kimberly failed to marshal any
evidence to demonstrate the value of Knik Sweeping at the
inception of the marriage or the value at the time of marital
separation and that she thus failed to meet her burden of proof
to support a finding of active appreciation during the marriage.
But Patrick offered evidence of appreciation during the marriage
through his business valuation expert Ronald Greisen, who
testified that Knik Sweeping was worth $129,485 at the beginning
of the marriage and $304,299 at separation. Patrick worked for
Knik Sweeping during the marriage. Furthermore, marital funds
were used to purchase sweeping equipment during the marriage.
Both the time and funds are marital contributions to the
property, satisfying Kimberlys burden.48 Because Patrick does not
argue that there was no causal connection between the marital
efforts and the increase in value, the superior court could
properly find active appreciation in the amount of $174,814.
This is substantially identical to the amount awarded by the
superior court.
E. The 2001 Mercedes-Benz
After the couple separated, Kimberly traded in her 2001
Mercedes-Benz for a 2003 Jeep. She received less than fair
market value for the Mercedes-Benz, which the parties agree was
marital property. The superior court assigned the Mercedes-Benz
its Kelley Blue Book value as of the trial date. Patrick argues
that this was error, and that the superior court should have
assigned the Mercedes-Benz its value as of September 12, 2002, a
date near the trade-in date.
Property generally should be valued as close to the
trial date as possible.49 Recapture is appropriate if a spouse
has dissipated or wasted marital property between separation and
trial.50 Recapture is an equitable doctrine, designed to put the
parties in the positions they would have been in had the waste
not occurred.51 Kimberly agrees that recapture of some of the
Mercedes-Benzs value to the marital estate was appropriate.
Patrick argues that when recapturing the Mercedes-Benzs
value, the superior court should have valued the property as of
the date of waste.52 But in this case the Blue Book provides an
accurate means of determining the fair market value of dissipated
property at the time of trial, when the Mercedes-Benz would have
been valued had Kimberly not exchanged it.53 Using the 2003
valuation leaves Patrick in the same position he would have been
in had Kimberly not traded in the Mercedes-Benz.
The superior court did not clearly err in valuing the
Mercedes-Benz as of the date of trial rather than as of September
12, 2002.
F. The Mercedes-Benz Rims and Tires
Patrick argues that the superior court erred in not
assigning a value to the extra tires and rims for the Mercedes-
Benz. Kimberly testified that she traded them for an extended
warranty on her new Jeep after separation and before trial.
Due to a lack of evidence, the court was without a
reliable method of valuing the tires and rims. Kimberly
testified that the warranty that she received for the rims and
tires was worth between $1,000 and $1,200, but her testimony on
this point appears to have been very uncertain. Patrick argues
that a dealer invoice establishes that the rims and tires were
worth $3,180 as of September 12, 2002. But the invoice date
suggests that the invoice may not be for the tires and rims in
dispute here. There was no indication that the tires and rims in
question were in the same condition as the tires and rims
documented in the invoice. Patrick offered no testimony about
the invoice or the value of the rims and tires. Any value
assigned to the tires and rims would be speculative.
A party who fails to produce sufficient evidence may
not challenge the inadequacy of evidence on appeal.54 In Miles v.
Miles, we held that when neither party was able to produce
documentation of the actual payments on the property, there is no
reason to conclude that the superior courts finding [that the
payments at issue held a de minimis value] was clearly erroneous.55
Patrick produced only an invoice that may not reflect the value
of the disputed rims and tires. We therefore conclude that
Patrick has not demonstrated that the superior court erred, or
that any error harmed him here. We also note that the value was
relatively small in comparison with the other assets at issue in
this case.56
G. The 2001 Income Tax Refund
Patrick and Kimberly separated on April 11, 2002. They
made payments on their 2001 income tax liability from marital
funds, and ultimately filed a joint income tax return in October
2002. After the separation but before filing the tax return,
Patrick contributed post-separation funds to a personal SEP
account. Although he made the contribution in 2002, he applied
the deduction to the parties 2001 tax liability. The IRS issued
a tax refund of $8,753, which the superior court found to be
Patricks separate property.
Kimberly argues in her cross-appeal that the refund is
the result of payments and deductions attributable to the
parties, and that no one factor can be said to have caused the
refund, which is therefore marital property. This may be true as
a general proposition,57 but may not always be the case in the
divorce context.
Because marital contributions were inadequate to
eliminate liability, the parties still owed federal income tax at
the time of separation. Patricks efforts came after separation
and supplemented the marital resources used to satisfy the tax
obligation. The reduction in tax liability due to Patricks SEP
contribution eliminated the need for further marital payments and
caused payments to exceed liability, resulting in the refund. In
these circumstances, we cannot say that the chronological
causation methodology applied by the superior court was an abuse
of its discretion.
We also note that Patricks SEP contribution benefitted
Kimberly by eliminating the marital tax liability. In dividing
marital property, courts must consider expenditures of separate
property to obtain and preserve marital property.58 Courts have
discretion to credit the contributing spouse.59 Thus, even if the
refund should have been characterized as marital property, the
superior court could have properly credited Patrick with the
refund in light of the benefit Kimberly received. That Kimberly
did not reap the full benefit of this use of Patricks property
does not render the superior courts characterization so
inequitable as to warrant reversal. The superior court did not
err in characterizing the 2001 federal income tax refund as
Patricks separate property.
IV. CONCLUSION
For the foregoing reasons we AFFIRM with respect to the
settlement funds, the marital home, the Mercedes-Benz, the tires
and rims, and the 2001 tax refund. We also AFFIRM the superior
courts finding concerning Knik Sweeping.
MATTHEWS, Justice, with whom FABE, Justice, joins, concurring.
I write separately because I believe this court should
hold that there is a rebuttable presumption that transmutation of
a separately titled house into marital property occurs when the
house is used for a substantial period of time as the marital
residence. We implied such a result in Chotiner v. Chotiner,
where we gave as an example of an act or acts which demonstrate
[a transmutative] intent the act of the parties in using the
premises as their personal residence.1 Further, immediately
after we gave the personal residence example in Chotiner, we
stated: Similarly, placing separate property in joint ownership
is rebuttable evidence that the owner intended the property to be
marital.2 The upshot of these statements is that the use of a
house as a marital residence presumptively shows that the owner-
spouse intends to donate it to the marital estate, in much the
same way as placing property in joint ownership presumptively
shows that the owner-spouse intends that the property so placed
will be marital in character. I think that we should recognize
this link in the present case.
Most common law presumptions are created because proof
of the basic fact establishes the existence of the presumed fact
to a sufficiently high degree of probability that it is fair and
expedient to assume the existence of the presumed fact:
Most presumptions have come into existence
primarily because the judges have believed
that proof of fact B renders the inference of
the existence of fact A so probable that it
is sensible and timesaving to assume the
truth of fact A until the adversary disproves
it.[3]
The connection between using a separately titled house
as a marital residence for a substantial period of time, the
basic fact, and transmutation of the house into marital property,
the presumed fact, is very close. We recognized this in Chotiner
in the language which I quoted above. Further, our decisions
subsequent to Chotiner involving marital home transmutation
claims have consistently found that transmutation took place.4
Transmutation can be either the product of the intent of the
owner-spouse or of the use of marital funds and efforts to
maintain the property in question. Often, an owner-spouse will
intend transmutation when a house is used for a marital
residence. But even where this is not the case, marital
residences are almost always maintained (including making
mortgage payments) with marital funds and efforts. Creating a
presumption recognizing this connection will tend to streamline
divorce proceedings by eliminating much wasted effort by counsel
and the courts. Further, the existence of such a presumption
will demonstrate that it is only rarely that a marital residence
is not transmuted and thus highlight the need to take special
steps (such as pre-nuptial agreements or maintenance of the
residence with separate property) in cases where the owner-spouse
wishes to avoid transmutation.
_______________________________
1 Green v. Green, 29 P.3d 854, 857 (Alaska 2001) (quoting
Wanberg v. Wanberg, 664 P.2d 568, 570 (Alaska 1983)).
2 Id.
3 Id.
4 Cox v. Cox, 882 P.2d 909, 913 (Alaska 1994).
5 Green, 29 P.3d at 857.
6 See, e.g., Leis v. Hustad, 22 P.3d 885, 887 (Alaska
2001) (Property value determinations are factual decisions that
we will overturn only if there is clear error.).
7 Cox, 882 P.2d at 913.
8 Dingeman v. Dingeman, 865 P.2d 94, 96 (Alaska 1993).
9 Schmitz v. Schmitz, 88 P.3d 1116, 1125 (Alaska 2004);
see also Brett R. Turner, Equitable Distribution of Property
5.24, at 277 (2d ed. 1994).
10 Brown v. Brown, 947 P.2d 307, 311 (Alaska 1997).
11 Leis, 22 P.3d at 888 (quoting Chotiner v. Chotiner, 829
P.2d 829, 833 (Alaska 1992)).
12 Cf. Gardner v. Harris, 923 P.2d 96, 99-100 (Alaska
1996) (approving separate characterization of bonds transferred
to marital account for joint account and used to obtain better
financing for marital property).
13 See Julsen v. Julsen, 741 P.2d 642, 646-47 (Alaska
1987) (holding that inherited stock remained separate because it
was placed in joint trading account only as an administrative
convenience and non-owner spouse did not participate in account
management).
14 Bandow v. Bandow, 794 P.2d 1346, 1348 (Alaska 1990).
15 See id. at 1349.
16 Id.
17 Gen. Motors Corp. v. Farnsworth, 965 P.2d 1209, 1212
(Alaska 1998).
18 Day v. A & G Constr. Co., 528 P.2d 440, 444 (Alaska
1974) (emphasis added).
19 Peterson v. Wirum, 625 P.2d 866, 870 (Alaska 1981).
20 Knutson v. Knutson, 973 P.2d 596, 599-600 (Alaska
1999).
21 Compare Gardner v. Harris, 923 P.2d 96, 97 (Alaska
1996) (The parties there both made credit card transactions and
wrote checks against the account; they each contributed their
paychecks to the account; and they applied the bonds interest
income . . . toward joint expenses. ).
22 See Turner, supra note 9, 5.23, at 271 (If the funds
were used to purchase an asset for a marital or family purpose,
they probably came from the marital portion of the mixed
source.).
23 Gardner v. Harris, 923 P.2d 96, 97 (Alaska 1996).
24 Id. at 100 (Until the credit was used the bonds
remained Harriss separate property. When the bonds were called,
however, the portion that was used for credit was lost, and the
remaining proceeds remained Harriss separate property.).
25 Gardner, 923 P.2d at 97 (both [parties] possessed
independent authority over [the] account, including individual
discretion over whether to trade or cash in the VMT bonds.).
Here, however, the permission of both spouses was needed to
withdraw funds from the CMAs.
26 See id. at 99.
27 Schmitz v. Schmitz, 88 P.3d 1116, 1128 (Alaska 2004)
([U]ntraceable assets are marital property.) (citing Turner,
supra note 9, 5.23, at 266).
28 Id. at 1127-28 (quoting Turner, supra note 9, 5.23, at
263).
29 Id. at 1128.
30 Id.
31 Id.
32 Id. (internal quotation omitted).
33 Cox v. Cox, 882 P.2d 990, 916 (Alaska 1994) (internal
citations and quotation marks omitted).
34 Murray v. Murray, 788 P.2d 41, 42 (Alaska 1990)
(internal citation omitted).
35 Keturi v. Keturi, 84 P.3d 408, 417 (Alaska 2004)
(quoting McDaniel v. McDaniel, 829 P.2d 303, 306 (Alaska 1992)).
36 Brooks v. Brooks, 733 P.2d 1044, 1054 (Alaska 1987).
37 Wanberg v. Wanberg, 664 P.2d 568, 573 & n.19 (Alaska
1983) (finding testimony that [t]he only thing I had to do with
that, basically, was the remodeling of the Cosmetic Company, and
. . . [c]ollecting [rents] insufficient to establish ongoing
management and maintenance).
38 See Keturi, 84 P.3d at 417 (non-owning spouse
contributed by collecting rent, cleaning between renters,
assisting in finding renters, maintaining coin-operated laundry
room, partially landscaping property, and borrowing money from
parents for mortgage payment); Wanberg, 664 P.2d at 572 (non-
owning spouse contributed by remodeling, redecorating,
entertaining tenants, helping with general maintenance,
collecting rents and accounts payable, paying bills, keeping
business records, preparing information for accountants, and
doing bookkeeping).
39 Keturi, 84 P.3d at 417.
40 See Harrelson v. Harrelson, 932 P.2d 247, 251-52
(Alaska 1997) (finding intent to hold jointly when wifes name not
on title, but she contributed financially to [the condominiums]
construction and acted as [husbands] agent for the building of
the condominium, making all interior decorating decisions and
generally supervising the construction).
41 See Murray, 788 P.2d at 42.
42 See Harrower v. Harrower, 71 P.3d 854, 858 (Alaska
2003) (stating that increase in value of separate property is
marital under active appreciation theory if resulting from
marital efforts). See discussion infra Part III.D.
43 Concurrence at 1.
44 Harrower, 71 P.3d at 858.
45 Id.
46 Id. at 859.
47 Id.
48 Schmitz, 88 P.3d at 1125 (noting that time and energy
of both spouses during the marriage is to be considered in
dividing marital property and holding that neither spouse
should be able to erase his or her contributions of time and
energy from the marital estate by rolling them back into a
business which he began before the marriage. ) (quoting
Lowdermilk v. Lowdermilk, 825 P.2d 874, 877-78 (Alaska 1992)).
49 See Ogden v. Ogden, 39 P.3d 513, 521 (Alaska 2001);
Ogard v. Ogard, 808 P.2d 815, 819 (Alaska 1991).
50 Foster v. Foster, 883 P.2d 397, 400 (Alaska 1994).
51 See Ramsey v. Ramsey, 834 P.2d 807, 809 (Alaska 1992)
(A valuation date should be chosen which will provide the most
current and accurate information possible and which avoids
inequitable results.).
52 See Foster, 883 P.2d at 400 ([T]he court can recapture
the asset by giving it an earlier valuation date and crediting
all or part of it to the account of the party who controlled the
asset.).
53 See also Ramsey, 834 P.2d at 809 (stating that date of
valuation should be as close as practicable to date of trial).
54 Hartland v. Hartland, 777 P.2d 636, 640 (Alaska 1989).
55 Miles v. Miles, 816 P.2d 129, 132 (Alaska 1991).
56 See Gilstrap v. Intl Contractors Inc., 857 P.2d 1182,
1185 (Alaska 1993) (Burke, J., dissenting) ([T]he relative
insignificance of the claim when compared to the costs of a
remand should spur this court to avoid a remand if at all
possible.).
57 See Phillips v. Phillips, 351 S.E.2d 178, 180 (S.C.
App. 1986) (An income tax refund is nothing more than a return of
income. The returned income here is clearly marital property and
the wife should have been awarded her equitable portion
thereof.).
58 Ramsey, 834 P.2d at 809.
59 Id.
1 829 P.2d 829, 832-33 (Alaska 1992).
2 Id. at 833 (emphasis added).
3 2 McCormick on Evidence 343, at 438 (John W. Strong,
ed., 5th ed. 1999).
4 See e.g., Miller v. Miller, 105 P.3d 1136 (Alaska
2005); Keturi v. Keturi, 84 P.3d 408 (Alaska 2004); Green v.
Green, 29 P.3d 854 (Alaska 2001).
