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Hixon v. Sarkesian (11/18/2005) sp-5958
Hixon v. Sarkesian (11/18/2005) sp-5958
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
| ELIZABETH M. S. HIXSON,
| ) |
|
| ) Supreme Court No. S-
11489 |
|
Appellant, | ) |
|
| ) Superior Court
No. |
|
v. | ) 1JU-90-514
CI |
|
| ) |
|
MICHAEL S. SARKESIAN, | ) O P I N I O
N |
|
| ) |
|
Appellee. | ) [No. 5958 - November 18,
2005] |
|
| ) |
|
|
|
|
Appeal from the Superior Court of the State
of Alaska, First Judicial District, Juneau,
Larry C. Zervos, Judge.
Appearances: Elizabeth M. S. Hixson, pro se,
Juneau. Loren Domke, P.C., Juneau, for
Appellee.
Before: Bryner, Chief Justice, Matthews,
Eastaugh, and Fabe, Justices. [Carpeneti,
Justice, not participating.]
MATTHEWS, Justice.
I. INTRODUCTION
Elizabeth Hixson appeals the denial of her motion to
modify the child support obligations of her ex-husband, Michael
Sarkesian. Sarkesian lives and works in Switzerland. Hixson
contends that a fluctuation in the exchange rate between Swiss
francs and U.S. dollars constitutes a material change in
circumstances for modification under Alaska Civil Rule
90.3(h)(1). Because we agree that the superior court needed to
follow both the methodology specified in Rule 90.3(h)(1) and the
same methodology it previously used to calculate support, we
reverse and remand.
II. FACTS AND PROCEEDINGS
Elizabeth Hixson and Michael Sarkesian divorced in
1991; they had two children from the marriage.1 After an appeal
of the divorce decree, the parties reached a settlement agreement
in 1995 to set child and spousal support, and to resolve property
distribution issues.2 The parties adopted the superior courts
findings and conclusions on child support made before the appeal.
Sarkesian has lived in Switzerland since the divorce
and is paid in Swiss francs.3 The superior court calculated
support by converting Sarkesians income in Swiss francs to
dollars and multiplying his annual adjusted income in dollars by
twenty-seven percent, the amount specified for support of two
children in Rule 90.3(a)(2). Support was set at $2,138.80 per
month.
In August 2000 Sarkesian moved to modify his child
support because a decline in income reduced his support
obligation by more than fifteen percent, satisfying the
presumption for modification in Civil Rule 90.3(h)(1).4 The
superior court agreed that his income was lower both because he
no longer received bonuses and because of a substantial decline
in the value of the franc as compared to the dollar.5 Hixson
argued on appeal that the superior court erroneously applied Rule
90.3s income cap.6 We agreed Sarkesian was entitled to reduction
in child support but concluded that support should be based on
Sarkesians actual income of $85,015.41, not on the income cap.7
On remand, the superior court set child support at $1,912.85 per
month by converting Sarkesians income in Swiss francs to dollars
and multiplying his annual adjusted income by twenty-seven
percent.
In 2003 Hixson moved to modify Sarkesians child
support, contending that fluctuations in the exchange rate would
result in increasing Sarkesians support obligation by more than
fifteen percent, meeting the presumption for modification. The
superior court denied the modification, concluding that even
accepting Hixsons exchange rate of 1.33336 Swiss francs to the
dollar, the benefit to Sarkesian led to only an eight percent
increase in his support obligation. Hixson filed a motion to
reconsider, which was denied. She appeals.
III. DISCUSSION
Hixson and Sarkesian agree that Sarkesians income in
Swiss francs is essentially unchanged since child support was
last modified in 2001.8 Their dispute centers on whether and how
fluctuations in the exchange rate should be assessed in
determining whether to modify child support.9
Civil Rule 90.3(h)(1) permits modifications of final
child support awards upon a showing of a material change in
circumstances. Moreover, [a] material change in circumstances
will be presumed if support as calculated under this rule is more
than 15 percent greater or less than the outstanding support
order.10 Support awards are set based on a percentage of income
approach. When one parent has primary custody of two minor
children, support is usually set at twenty-seven percent of the
non-custodial parents annual adjusted income.11
The superior court viewed the exchange rate as income
under the definition in the Rule 90.3 commentary: [Income from
all sources] should be interpreted broadly to include benefits
which would have been available for support if the family had
remained intact.12 The court calculated the benefit of the
exchange-rate shift to Sarkesian by determining how much the new
exchange rate saved Sarkesian on purchases of dollars used to pay
child support. Then the court calculated the difference between
the outstanding support order and a new order based on Sarkesians
annual adjusted income plus the exchange-rate savings. Because
Sarkesians support obligation would increase by only eight
percent, which was not a material change of circumstances, the
court denied modification.
Hixson argues the courts method was inconsistent with
both Rule 90.3(h) and the courts past practice in her case.
Hixson argues that evaluating Sarkesians child support either in
dollars or Swiss francs meets the fifteen-percent threshold for
modification if the court multiplies Sarkesians annual adjusted
income by twenty-seven percent and compares this amount to the
outstanding support award. Sarkesian argues that the superior
court erroneously viewed the exchange rate as income, and further
contends that his support should not be modified because his
income in Swiss francs is largely unchanged.
We agree that the method used was erroneous because an
exchange-rate fluctuation is not income under Rule 90.3(a).
Although not exclusive, the list in the commentary largely
denotes money received through work or investments, or from the
government.13 Exchange-rate fluctuations do not fit into any of
these categories, even though they clearly can affect income.
Even though exchange-rate fluctuation is not income,
Sarkesians argument that the exchange rate should not be
considered in deciding whether to modify support lacks merit.
Rule 90.3(h)(1) requires comparison of support orders, rather
than annual adjusted incomes: A material change of circumstances
will be presumed if support as calculated under this rule is more
than 15 percent greater or less than the outstanding support
order.14 Sarkesian concedes that a parents foreign income must be
converted into dollars before support can be calculated. When
comparing support in two different time periods, the exchange
rate used to convert foreign income into dollars is not held
constant. Therefore, calculated support may change even when
annual foreign income does not. Applying the exchange rate in
this fashion does not create a system based on cost of living,
rather than income, as Sarkesian contends. Although the amount
of support that Sarkesian pays in dollars may change due to
shifts in the exchange rate, he still has available the same
percentage of his income in Swiss francs for purposes other than
child support.
We also reject Sarkesians arguments that considering
the exchange rate in deciding whether to modify support would
lead to frequent relitigation of support and pose a problem in
deciding whether the shift is permanent or temporary. Frequent
relitigation of support is unlikely because support is based on
the non-custodial parents annual income and can be modified only
upon a showing of a material change of circumstances. Therefore,
support is usually modified no more than once a year.
Additionally, the court would not have to decide whether the
exchange rate used for conversion is permanent or temporary under
Curley v. Curley.15 The court could use an average currency
exchange rate over an appropriate period, or a rate on a
specified date.
Finally, we note that this result complies with the
parties agreement and the courts past practice in this particular
case.16 The parties agreed on the methodology to calculate
support in 1995 when they incorporated the superior courts
findings of fact and conclusions of law in their settlement
agreement. The superior court set support by converting
Sarkesians income in Swiss francs to dollars and multiplying his
annual adjusted income in dollars by twenty-seven percent, the
amount specified for support of two children in Rule 90.3(a)(2).
The superior court followed this same method when it modified
support in August 2000 and, on remand, in May 2003. We conclude
that this same method is required now.17
IV. CONCLUSION
We REVERSE the order denying the motion to modify child
support and REMAND for further proceedings consistent with this
opinion.
_______________________________
1 Hixson v. Sarkesian, 66 P.3d 753, 756 (Alaska 2003).
2 Id.
3 Id.
4 Id.
5 Id.
6 Id. at 757.
7 Id. at 758-59.
8 Sarkesians gross income in Swiss francs is unchanged,
but because of an increase in taxes, his adjusted income in Swiss
francs has declined slightly.
9 Although the standard of review for decisions on
motions to modify child support is generally abuse of discretion,
we review this decision de novo because it involves a question of
law based on undisputed facts. Karpuleon v. Karpuleon, 881 P.2d
318, 320 n.3 (Alaska 1994).
10 Civil Rule 90.3(h)(1) provides in full:
A final child support award may be
modified upon a showing of a material change
of circumstances as provided by state law. A
material change of circumstances will be
presumed if support as calculated under this
rule is more than 15 percent greater or less
than the outstanding support order. For
purposes of this paragraph, support includes
health insurance payments made pursuant to
(d)(1) of this rule.
11 Alaska R. Civ. P. 90.3(a).
12 Alaska R. Civ. P. 90.3 cmt. III(A) (2004-05). We use
the commentary as guidance to interpret the civil rules.
Rusenstrom v. Rusenstrom, 981 P.2d 558, 562 (Alaska 1999).
13 Alaska R. Civ. P. 90.3 cmt. III(A) (2004-05), which
states in part:
Income includes, but is not limited to:
1. salaries and wages (including overtime
and tips); 2. commissions; 3.
severance pay; 4. royalties; 5. bonuses
and profit sharing; 6. interest and
dividends, including permanent fund
dividends; 7. income derived from self-
employment and from businesses or
partnerships; 8. social security; 9.
veterans benefits; 10. insurance benefits in
place of earned income such as workers
compensation or periodic disability payments;
11. workers compensation; 12.
unemployment compensation; 13. pensions;
14. annuities; 15. income from trusts;
16. capital gains in real and personal
property transactions to the extent that they
represent a regular source of income; 17.
spousal support received from a person not a
party to the order; 18. contractual
agreements; 19. perquisites or in-kind
compensation to the extent that they are
significant and reduce living expenses,
including but not limited to employer
provided housing and transportation benefits
(but excluding employer provided health
insurance benefits); 20. income from life
insurance or endowment contracts; 21. income
from interest in an estate (direct or through
a trust); 22. lottery or gambling
winnings received either in a lump sum or
annuity; 23. prizes and awards; 24. net
rental income; 25. disability benefits;
26. Veteran Administration benefits; 27.
G.I. benefits (excluding education
allotments); 28. National Guard and
Reserves drill pay; and 29. Armed Service
Members base pay plus the obligors allowances
for quarters, rations, COLA and specialty
pay.
14 Alaska R. Civ. P. 90.3(h)(1) (emphasis added).
15 588 P.2d 289, 291 (Alaska 1979) (finding that a change
in circumstances must be more or less permanent rather than
temporary).
16 See Flannery v. Flannery, 950 P.2d 126, 132 (Alaska
1998) (concluding that court must make efforts to respect the
parties contractual obligations and expectations because parents
original agreement sets the baseline for considering motions to
modify based on changed circumstances).
17 Hixson argues that support can be calculated and paid
in either dollars or Swiss francs. We conclude that support
should be set in dollars so as to be consistent with the parties
agreement.
